The dodgy donor Michael Brown has been found guilty in absentia, the BBC reports:
Top Lib Dem donor stole millions
A bogus international bonds dealer who donated £2.4m to the Liberal Democrats has been found guilty of stealing more than £30m from clients.
Southwark Crown Court heard Michael Brown defrauded £36m, including £8m from former Manchester Utd chairman Martin Edwards.
He was tried in his absence after skipping bail and is still on the run.
Lib Dem leader Nick Clegg said the party had done all the necessary checks and was “totally unaware” of the fraud.“We took that money in good faith, everyone recognises,” he told the BBC.
Brown will not be sentenced until apprehended.
He had channelled the gift to the Liberal Democrats through a company called 5th Avenue Partners, Southwark Crown Court heard.
The Electoral Commission had ruled it was “reasonable” for the party to regard his donation as “permissible”.
Here’s your opportunity to fill the comments, once more, with a variety of “you should pay it back” sentiments, regularly countered by the party hacks retorting that we couldn’t possibly have known and the Electoral Commission has our back.
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22 Comments
I suppose if someone mugged a little old lady and gave the money to their local Lib Dems there would be a certain expectation that the Lib Dems would give the money back, even if they “couldn’t possibly have known” where it had come from.
There might be. But if they gave several thousand pounds of many years and then it turned out to be stolen, should a cash-strapped local party be forced to pay it back? What about shops where money was spent?
Graeme
Maybe not, but “we’ve spent the money and we can’t afford to pay it back” is a rather different argument from “we couldn’t possibly have known and the Electoral Commission has our back”.
If Detective Sergeant Nigel Howard of City of London Police’s Economic Crime Department can tell The Times “It’s just a company that didn’t trade in anything. He just had it as an off-the-shelf company.” then presumably he would agree that it was a criminal offence for the party to not return the donation.
Sounds like a call to Sgt. Howard on 0300 123 1212 wouold be in order.
I’m sure we couold leave that pleasure to you Mark.
‘Lib Dems’ existence acknowleged in British national media – shock’
Sod the pathos of little old ladies for a second.
If a man comes into a dealership and buys a car, and then it turns out that the money used to buy the car is stolen several years post mortem, the dealership wouldn’t be required to pay back the money!
We haven’t done anything wrong in taking donations. We are an innocent bystander in this affair.
Grammar Police:
“I’m sure we couold leave that pleasure to you Mark.”
I’ll let you know how I get on.
If there was no amalgam, then the party can rely on the defence of bona fide change of position.
If there was an amalgam, then it will be necessary to prove fault – probably recklessness.
Both the above defences apply to personal claims.
It is theoretically possible that the donation could be traced in equity, but unlikely in practice given the large sums moving in and out over the intervening years.
If the party provided Mr Brown with any kind of service in consideration of his donation, then there are absolute defences available both at common law and in equity which defeat both personal and proprietary claims.
And some of these possible actions will be time barred.
“If the party provided Mr Brown with any kind of service in consideration of his donation, then there are absolute defences available both at common law and in equity which defeat both personal and proprietary claims.”
Well, that’s a comfort. For the same reason that “shops where money was spent” by bank robbers aren’t required to pay back the money, I suppose.
To be honest, as an ignorant layman I suspected the victims of this thief would have no legal recourse against the recipients of his largess.
Part of me is dying to ask what this shady character was promised by the party “in consideration of his donation”. Influence on policy? A peerage? Dinner with Nick Clegg? [Second prize:] A week of dinners with Chris Huhne?
But in any case – and please be honest, Mr Sesenco – if some thief dropped a lot of his ill-gotten gains into your lap, and was later convicted of stealing the lot, would you really feel quite morally comfortably about hanging on to the money and defending your conduct on the basis of whether there was an “amalgam”, whatever that may be*.
[* I thought it was something to do with dental fillings.]
CCF:
I am merely setting out what the law actually is. If you don’t like it, complain to the Law Commission.
The law in this area is informed by the notion of “security in wealth”. If one receives money in good faith and spends that money in the honest belief that the donor had acquired it by lawful means, why should one be liable to disgorge an equivalent sum? If one’s conscience is not affected, why should one be liable?
Sensenco posted some tosh about the law of restitution, all of which supposes that then Lib Dems acted perfectly reasonably and did all they had to do to establish that there was a business, which of course they did not because as the police have enlightened us, there was no business, just a newly formed company, with no accounts, no staff, no VAT registration, no FSA registration. If the Lib dems had done half of the due diligence that a bank, lawyer or accountant has to eprform on a new client they would have realised pretty quickly that there was no business.
So as the Electoral Commission put it in October 2006:
“It is not clear to the Commission that 5th Avenue Partners Ltd was carrying on business in the UK at the time the donations were made. If not, then the donations were impermissible. Under Section 58 of the Political Parties, Elections and Referendums Act 2000, the Commission has the power to apply to a court for an order that the party must forfeit to the Consolidated Fund an amount equal to the value of any impermissible donation.”
So you lose the money under Electoral Law.
Whether you stand to lose the money again from various law suits from Brown’s victims is another matter, but unlike the patsies at the Electoral Commission (although Sam Younger has moved on), a judge is going dismiss the “good faith” defence on the basis that the party officers were simply negligent if they thought they saw a business that wasn’t there.
But Mark, the bit you fail to include the first bit from the Electoral Commission quote above:
“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, totaling just over £2.4m, as permissible. It remains the Commissions 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.”
Just because it turns out their was no business doesn’t mean that it was unreasonable to assume that there was. Plenty of people were taken in by Brown (plenty of rich and successful people who gave him huge piles of cash that they believed he could turn into more). It’s taken the banks and the police years to put together a watertight case – and even so the jury took hours to convict him of fraud. I’ve said this to you before Mark, it’s not as clear-cut as you want it to be. Sorry!
The only real question for me is whether morally, we should make some attempt to return the money – difficult to do practically when we’re talking about £2.5 million. Then again our finances are in rude health compared to the millions of debt that both Lab/Cons have.
Sesenco
For (I presume) someone with legal training, it’s remarkable how often you miss entirely the point of what people are saying.
As I said, I suspected Brown’s victims would have no legal recourse against the party.
What I asked you was precisely whether your conscience would be affected if you benefited from the proceeds of crime, and whether you would feel comfortable hiding behind a legal defence and hanging on to the money.
Grammar Police
I know it’s de rigueur for “party hacks” to miss out the concluding paragraph of the Commission’s statement, but doing so in the present circumstances is more comical than usual:
“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.”
Obviously there are two questions here: (1) whether it was reasonable at the time for the party to assume the donations were permissible and (2) whether they were in fact permissible. The Commission may have ruled that the answer to (1) is “Yes”, but the problem is that the answer to (2) now appears to have been established to be “No”.
Hi CCF, it wasn’t actually deliberate that I didn’t add that end bit of the quote above (I’d actually thought that Mark Williams had quoted it within the bit he quoted – I see now he hadn’t; but also, it rather goes without saying, we wouldn’t be having this debate if there wasn’t a chance that the Commission would change their mind over 3 years later).
I think you’re only missing: (3) if the answer to (1) is “yes”, does it make a difference legally whether (2) is “yes” or “no”? I’m not an expert in electoral law, so I don’t know the answer to that one. But odd isn’t it, that no one “official” has come out and said that legally the Party has to return the money – it can’t be as clear cut as some people would like.
Whatever criticisms can be made of the party in accepting the donation, I don’t think they’re stupid enough not to have taken legal advice on this. I’m assuming that if their position was that indefensible they would be making arrangements to pay an equivalent back to the Consolidated Fund.
I’m not saying that there might not be very good moral/political arguments for making some attempt to pay the money over – if nothing else because Lab/Con apologists love to use it to muddy the water over their own much more dodgy financial affairs (eg F1 advertising, cash for peerages, ‘Yachtgate’ anyone?). I think the worst that can be levelled at the Lib Dem leadership that accepted the donation is stupidity.
Btw, I love your definition of “party hack” though. If only you knew!
Grammar Police
“Party hack” was just referring back to the conclusion of Alex Foster’s original article.
I don’t really think it’s strange that the Commission hasn’t instantly issued a judgment that the money must be repaid. Obviously they’d have to “consider the matter further” before pronouncing on it.
And I don’t think it’s strange that the party hasn’t announced that it’s making arrangements to give up the money. I’m sure the party won’t do that unless it’s forced to!
I’ll begin by admitting I haven’t read the Electoral Commission’s 2006 ruling, only the extracts reproduced here, and I have no legal training. But it seems to me that (a) the EC has made no final determination whether the donation was permissible (“It is not clear…” etc.) and (b) if the result of the court case leads the EC to conclude that the donation was impermissible they may still seek a court order (“Nevertheless, we have always said …” etc.). In fact, I think it likely that the EC would do so, because £2.4m is simply too large a sum to shrug off. However, given that the EC has already stated that we’re not to blame (“The Electoral Commission has previously made clear …” etc.) I doubt they’ll ask for all of it. Or even most of it.
“But it seems to me that (a) the EC has made no final determination whether the donation was permissible”
I think they did on the facts at the time. But pretty much reserved the right to reopen the matter in the light of future developments.
That’s pretty much the position any investigating body would take.
Grammar Police:
You seem to miss the point that in part it is not up to the Electoral Commission, rather it is a matter of law and a question of equal treatment of all parties. If it is established that the donation was impermissible at the time that it was made, then according to the law it has to be repaid otherwise a criminal offence is committed (and the EC may choose to take whatever steps to apply to the courts for the confiscation of the funds if necessary).
Once it gets to the courts, then I think the Lib dems will get a much less sympathetic hearing. The Electoral Commission is keen to maintain the democratic process, which includes a measure of support for political parties (it is not there to destroy parties). The courts are simply there to establish the facts and interpret the law in the light of those facts. On th eissue of permissibility of the donation, I think they will have very little sympathy. If the issue was of not spotting a business when 5thAvenue claimed there was none, I suspose they could be lenient, but the issue is the reverse, of seeing a business where there was none, and where quite frankly beyond Nrown’s suits and fancy cars there was no evidence of a business.
The courts won’t look at flashy cars and Mayfair flats. They will look at company incorporation dates, accounts, registrations, none of which support the idea that there was an active business.
Note that the Electoral Commission has never said that the donation was permissible just that it was reasonable for the Lib Dems to consider that it was. That might sound like saying the donation was permissible, but Peter Wardle, the Chief Executive is a former Inland Revenue inspector, and in Revenue speak that would be like saying HMRC is not convinced about your assessment but is prepared to live with it for the moment, but if facts emerge in future which should change our view we reserve the right to amend that assessment but will do so without penalties.
It is quite clear that the Electoral Commission have never considered the matter closed, and the Lib Dems have spent the money at their own risk. I have no doubt that if this was only a £2,400 donation it would have been refused as too much trouble.
The Times reports that the party has lost its biggest donor, Lord Jacobs, who will sit as an independent crossbencher but may join one of the other parties:
http://www.timesonline.co.uk/tol/news/politics/article5302686.ece
“He said he could not support tax policies which leave those on minimum wage paying combined income tax and employee national insurance of 31 per cent tax on about half their income. He said this “quite frankly is a disgrace and utterly regressive.””
Apparently he also wants tax cuts for the rich, so I’m not quite sure how the sums are meant to add up.
The report comments:
The resignation could not have come at a worse time for the party as it waits to hear whether it must forfeit the £2.4 million donation from Michael Brown, who was convicted of multi-million pound theft and fraud last month.
How much did Lord Jacobs contribute to party funds before he received his
peerage?