BBC News website ticker. “The Lib Dems may have to pay back a £2.4m donation. More soon.”
More to follow.
UPDATE: False (ish) alarm. There’s still nothing concrete:
“The Liberal Democrats could still be forced to pay back £2.4m in donations from convicted perjurer Michael Brown, the Electoral Commission has said.
The watchdog has previously said the party could keep the cash donated by Mr Brown’s company 5th Avenue Partners ahead of the last election.
But new information has come to light about the company which may make the donation “impermissible,” it said.
It will reach a final decision “in the next few weeks”.”
Electoral Commission Statement
“The Electoral Commission has previously made clear its view that it was reasonable for the Liberal Democrats – based on the information available to them at the time – to regard the donations they received from 5th Avenue Partners Ltd in 2005, totalling just over £2.4m, as permissible.
“It remains the Commission’s view that the Liberal Democrats acted in good faith at that time, and the Commission is not re-opening the question of whether the party or its officers failed to carry out sufficient checks into the permissibility of the donations.
“Nevertheless, we have always said that if any additional information that has a bearing on the permissibility of the donations comes to light, for example as a result of the ongoing police investigation or legal proceedings relating to the affairs of 5th Avenue, we would consider the matter further.”
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25 Comments
Ahh I just posted the same on the forum!
We really should just pay this back and kill the story
Sounds like the Electoral Commission moving the goalposts yet again. How can you trust an organisation that deals with the functioning of political parties yet bans anyone who has ever had any connection with one from being employed by them?
At least we know what to charge them for their stand at Conference next year…
I agree with Martin (and have done for a while).
Although this comes under the heading of “easy for us to say”…
Gareth, far more easily that you could trust an organisation that deals with the functioning of political parties yet whose staff was full of people who’d worked for them.
Gareth is way offbeam here. The Electoral Commission always hedged their bets regarding this donation. A year ago there was nothing to suggest that 5th Avenue Partners was not a trading company, therefore the Electoral Commission were in no position to ban the donation.
A year on and 5th Avenue Partners have not filed any accounts and been declared fraudulant by the High Court. Therefore, by my reading of the PPERA 2000, the donation is illegal. Full stop. The Commission would therefore be seriously remiss if they didn’t revisit the case.
The real question is, following this revelation, whether the Electoral Commission insist that it is repaid, or let the Lib Dems off the hook. In this respect they are damned if they do and damned if they don’t. If they do, they risk causing real financial difficulty for a political party for no other reason than the fact that a couple of individuals at the top made a miscalculation. There is absolutely no suggestion of any wrongdoing on their part, or that they were somehow corrupt. If they don’t, then the next time a screw up like this happens, they’re authority will be fatally undermined.
It is very clear that the legislation is flawed in that all the onus is on the party to make checks within 30 days, while there is no limit to the time after which the donation can subsequently be declared illegal. The Times have suggested a system whereby the Commission has to green light donations above a certain amount before parties can spend them; I’m inclined to agree. But the party knew about these potential legislative landmines before the donation was accepted and in that respect far more caution should have been exerted in the first place.
And that isn’t simply 20/20 hindsight talking. Seriously – would you accept such a huge donation off a ponytailed, permatanned expat who refused to register to vote in the UK? We never accepted money from Al Fayed when he was briefly waving his chequebook in our general direction in the 90s because although that donation would have been perfectly legal, we knew there would be a political cost. Why weren’t political lightbulbs going off in the heads of the people who accepted this donation?
As well as quoting the above it is worth pointing out that the Electoral Commission are clear that it is:
“the Commission’s view that the Liberal Democrats acted in good faith at that time, and the Commission is not re-opening the question of whether the party or its officers failed to carry out sufficient checks into the permissibility of the donations.”
There is little doubt that others (Guido) will use this to try and cause the Party problems. Accepting the donation may well have been inadvisable, that doesn’t make it illegal.
I wonder how muck CK knew about this. Imagine the calls for him to resign if he was still the leader.
Fortunatly Ming will be seen as not responsible and as CK is out of the news his role – if any will be ignored.
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‘There is little doubt that others (Guido) will use this to try and cause the Party problems. Accepting the donation may well have been inadvisable, that doesn’t make it illegal.’
It WOULD be illegal however if the company that gave the donation was not technically a company, but instead merely a front for illegal activity. It all hinges on the High Court’s ruling last month. The Electoral Commission have to weigh up this new evidence, and that’s precisely what they’re doing.
You know what we should do… pay it back. And by that I mean the members; let’s send our £30 to Cowley Street and show our support.
Personally I think I’ll wait for them to ask, first 😉
Yes, we should pay it back, but only to get rid of the story. Those whose money it may have been before it got into Brown’s hands do not deserve it back! Or need it!
However, I do disagree slightly with James. I think it is appalling to have a system that says you can make all these checks, we can tell you you’ve done everything we would expect and then go spend the stuff and then, eighteen months later, we can come along and tell you to hand it back.
I do hope they will bear in mind what the judge said in his judgement, that it was clear that Brown was doing his utmost to make it look convincingly as if 5th Avenue UK was trading. If it took all the legal resources of HSBC eighteen months to prove otherwise I don’t see how they can hold the party responsible or demand it be handed back.
Totally different though about the potential for a civil suit on the part of the other “partners” in 5th Avenue – I’m only on about having a quango that can decide to reopen a case it said was permissible at the time way down the line. Every party should be worried about that. Imagine Labour being told that Maxwell’s contributions had to go to the Pergamon pensioners…:)
Clearly, the original judgment was that our party ‘acted in good faith’. To now force us to give it back would set a dangerous precedent. The idea that any party could be forced to repay any donation retrospectively, after it had received and spent it ‘in good faith’ is patently unfair and unworkable. And frankly, those who think we should just give it back anyway fail to appreciate that the ‘Guidos’ of this world would just portray that as a sign of a guilty conscience!
‘However, I do disagree slightly with James. I think it is appalling to have a system that says you can make all these checks, we can tell you you’ve done everything we would expect and then go spend the stuff and then, eighteen months later, we can come along and tell you to hand it back.’
Don’t get me wrong, I think it is pretty appalling as well. But do you honestly think we’d be sympathetic if one of the other parties had got themselves into this situation.
And I do refute – strongly – the contention that political parties should accept money from unregistered expats about which they know very little, just because he seems to check out.
Oh dear what a sad affair and to think we all were led to believe that the Lib Dems were the saints in political life when in fact they are just the opposite in every way possible.
Serves you right.
Fool
“Oh dear what a sad affair and to think we all were led to believe that the Lib Dems were the saints in political life when in fact they are just the opposite in every way possible.”
The Electoral Commission said we acted in good faith, whatever happens. So your remark is inaccurate in this case.
Steve
“the ‘Guidos’ of this world would just portray that as a sign of a guilty conscience!”
Why cares what Guido thinks? I’m interested in what the legions of voters who have no idea who Guido is but do read the news think.
I don’t care what Guido thinks, I was referring to earlier comments. Frankly, I think Guido has got pretty tawdry recently!
Martin, I think that you would be far better off supporting the Save Bedford Hospital party (which to date has declined all donations) than the Liberal Democrats. Do feel free to join us.
“which to date has declined all donations”
Nyesss. You’re fighting one constituency. We’re fighting 650.
Thanks Barry but I don’t live in Bedford!!
All this talk of acting in “good faith” is just a front and a legal ruse to argue that the party has no liability. By claiming good faith the party hopes (i) to mount a defence against its actions and (b) to mitigate any penalties such as the confiscation of an amount equal to the donation. Indeed, the party’s solicitors Wragge & Co. have said that they will sue anyone who says differently.
Of course the Electoral Commission aren’t going to accuse any political party of not acting in good faith – that is for the judge to decide if it goes to court, which would not be a pretty sight.
The reality is that it was widely reported in October 2005 that Reg Clark, the party treasurer, had expressed his concerns but was overruled by Lord Rennard. Given that (i) Brown was not a UK resident (ii) the donor company had no premises and no employees at the time the donations were made and (iii) the company was relatively newly incorporated and had never filed any accounts, then either Brown was *really* convincing or the party turned a blind eye – not exactly acting in “good faith”.
When asked about the nature of Brown’s business, Rennard said airily that it was “something in derivatives”. One would have thought that a lawyer such as Rennard (acting in good faith) would have been a little more specific. It would have been very easy to check other facts, such as Brown or the company’s FSA registration (which of course doesn’t exist).
Furthermore if the party thinks they have been misled, why are they not pushing for Brown to be prosecuted uner s61 PPERA 2000 which makes it an offence to provide misleading information to a party treasurer regardng a donation? Perhaps because any prosecution would fail.
Given the history and the purpose of the legislation and the size of the donation, more care should have been taken and claims of “good faith” do not wash.
Where do you start with Mark Williams’s post?
I particularly enjoyed a lawyer such as Rennard
🙄
I think it would be very worrying for ALL political parties if we were asked to pay it back – and yes it would casue us some financial difficulties, but just think of what it would to the tories who had to change auditors to get a “going concern” verdict on their accounts…..
If all the correct checks were carried out, and the Courts accept that we acted in good faith and we showed no intent to break the law, why on earth are we as activists forming a q to beat people up over this?
LOTS of people were taken in by Michael Brown – get over it.
People really are acting like News of The Screws Readers – you’ll be off trying to burn down paediatricians’ offices once you’ve bankrupted the party and sacked all the staff….
I notice that it is a Magistrates Court which the Electoral Commission would have to apply to, and there is a right of appeal to the Crown Court. Section 58 says that the Court **may** order an impermissible donation to be forfeited, not that it shall or must do so. This means that a decision to make such an order should only if it is fair, reasonable and just to do so.
Also the proceedings are against the Party and not individual members, and the payment must be made “out of the funds of the Party”, so if the funds of the Party are insufficient, there can be no question of any member being legally required to contribute.
The Court must consider the purpose of the legislation, which is to ensure that foreign registered companies, carrying on business in the UK, or UK registered companies which are only carrying on business abroad, do not make any major contribution to political parties in the UK.
Notice that it makes no difference at all whether the majority of the shares in the company are held by members who are registered to vote in the UK, or whether the directors are registered to vote in the UK.
Why Parliament thought this new law to be a good idea and important enough to enact, is anyone’s guess.
What would a Magistrates Court make of all this nonsense – who knows, but the Electoral Commission is supposed to upholding the democratic system in this country, not in the business of trying to destroy political parties, so I trust that no action will be taken by them over this.
Of course a separate question is whether the donation of the funds to a political party was lawfully authorised by those investors who entrusted the money to the company, if they were entitled to a say, and if repayment is to be made it should surely be to those who have lost their money, not to the Consolidated Fund.
Also I notice that there is nothing in this legislation about donations being made for the purchase of honours being impermissible, and I think the Electoral Commission should be given the job of overseeing the whole question of the probity of donations, not just considering the narrow question of whether some absurd pointless and nonsensical rules were followed.