On 21 July 2006 staff at the Electoral Commission sent an email to representatives of all the main political parties, including Peter Watt (and myself, which is why I happen to have a copy). Click on the thumbnail to see the full version.
Attached was a draft new edition of the Electoral Commission’s guidance on donations. This is what paragraph 4.29 of the document said:
If the original source of the donation is someone other than the individual or organisation that transfers the donation to the party, the individual or organisation making the transfer is acting as an agent for the original donor. Where a person acts as an agent in making a donation, they must ensure that the party is given all the relevant information as listed at paragraph 5.4 (s. 54 (6)). Transferring a donation to an agent rather than directly to a party must not be used as an attempt to evade the controls on permissibility and transparency.
In other words: a donor can’t hide a donation by passing it on through other people. This information was in previous editions of the guidance, and was also (using exactly the same words) in the final version published by the Electoral Commission (and available on their website, see page 19).