Today’s Telegraph splashes with the story, Revealed: secret new life of fugitive Lib Dem donor, devoting its first three pages to the tale of Michael Brown’s new life on the run in a Caribbean hideout.
Michael Brown, as our readers will not need reminding, donated £2.4m to the party just before the 2005 general election. His subsequent arrest and conviction on several counts of fraud have been an embarrassment to the Lib Dems ever since.
The Telegraph’s story is, shock horror, a little partial, though. Take this paragraph: ‘The Liberal Democrats have steadfastly resisted all attempts to force them to repay Brown’s donations. They insist they received the money in good faith from his British firm.’ Which is half-true.
What the Telegraph skates over is that there have been two investigations by the Electoral Commission into the party’s decision to accept Michael Brown’s donation, in 2006 and again in 2009.
On each occasion, the Commission cleared the party of wrong-doing, ruling that ‘it remains the Commission’s view that the Liberal Democrats acted in good faith,’ and that sufficient checks were carried out by the party and its officers. Let’s remember, it took a lengthy investigation by the Serious Fraud Office to find evidence to convict Mr Brown. Let’s also remember that there were plenty of wealthy businesspeople happy to hand over their cash to Mr Brown in the hope of turning a profit; presumably they too trusted him.
None of this balance is offered by the Telegraph; but then it is perhaps the most Lib Dem-hating paper of all, and has form with unsubstantiated smears targeting Nick Clegg and the party.
I therefore take with a pinch of salt the paper’s unsourced suggestion that ‘it is understood that the Electoral Commission may soon reopen the case.’ The Telegraph has hinted at this before, stating in June that the parliamentary ombudsman would decide by the end of the month whether to order the Commission to investigate the donation for a third time. No news yet.
The reality is that we all know the Michael Brown story has damaged the party, its reputation for integrity, even though it is the Lib Dems who have consistently campaign to clean-up the corrosive influence of big money in British politics on which both Labour and the Tories are dependent.
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39 Comments
After you with that salt, Stephen. If the test is “did the lib dems do due diligence before accepting the donation” and two post-hoc investigations have decided yes, I can’t see how any further investigation will decide differently.
So did the Lib Dems given the money back?
g – the money was spent in good faith as it was received in good faith. The party doesn’t have the money to give back. And in my view unless it can be shown the party was culpable it shouldn’t have to.
And just to be clear: the LDs have “resisted” repaying the money in the sense that the party does not have £2.4m to give to anybody, so to all the people who claim it should, the response is simply:
“*shrug* How?”
“*shrug* How?”
The honourable thing to do would be to have a campaign to raise the money from members and supporters.
Here we go again. At most one of the following is true:
A. Michael Brown has a legal and/or moral responsibility to compensate his victims.
B. The Liberal Democrats have a legal and/or moral responsibility to compensate Michael Brown’s victims.
I believe that A is true, and I should hope most people agree. Therefore B is false. And even if A were not true, I have yet to hear a rational argument for B. (A and B cannot both be true, or the victims would be due two lots of compensation.)
Martin Edwards (the former Man Utd chairman so not a mug when it comes to handling money*) was taken in by Brown enough to be conned out of £8 million. It’s safe to assume that Brown was a fairly persuasive con-merchant.
(* except perhaps when signing Massimo Tiabi I suppose!)
The reality is that we all know the Michael Brown story has damaged the party, its reputation for integrity, even though it is the Lib Dems who have consistently campaign to clean-up the corrosive influence of big money in British politics on which both Labour and the Tories are dependent.
g – the money was spent in good faith as it was received in good faith. The party doesn’t have the money to give back. And in my view unless it can be shown the party was culpable it shouldn’t have to.
Unbelievable. Neither Labour nor the Tories have taken money from a criminal’s ill-gotten gains (in recent years), yet you try and claim the moral high ground for the one party that has!
Even if the money was not from a criminal it is absurd that you would criticise the other parties for the ‘corrosive influence of big money’ after you pocket millions from a single donor.
Yes, political funding needs cleared up. Yes, the Lib Dem’s suggestions are worth taking seriously. No, you are not any better than the others.
The Lib Dems aren’t allowed to “pay back” contributions to anyone. And if they are meant to make an ex-gratia payment to someone, to whom? Lots of people claim that Brown owes them money. I hope someone manages to seize his assets and get him into the bankruptcy courts. That’s how these things are normally dealt with.
I’m a member – why should I have to pay back money {to whom?} because someone else broke the law?
Out of curiosity, I believe that if some one pays you for an item (e.g. by cheque) and it then transpires that they obtained the money by fraud, you can be required to pay the money back. In those circumstances I don’t think it matters what your personal financial situation is.
Why is the law different for a political party that is given monies that were originally obtained by fraud?
The only person the Lib Dems could pay the money to is Michael Brown. And I’d like to see the headlines in the Telegraph if they did that ‘Lib Dems subsidise millionaire fugitive’ or similar. It’s not going to happen because the party has been proved to have acted properly – even if Mr Brown didn’t.
@Chris – the law is far from so straightforward. There is a procedure called tracing where you can recover assets from a third party. However where the recipient has acted in good faith and has disposed of the asset (ie spent it on something non-tangible like a holiday) then you won’t be able to.
And if you think it through that must be the case – otherwise how could a person or a charity ever spend a donation it received without detailed checks that it hadn’t come from a fraudulent source?
Someone did start legal action against the party in about 2008 so I’d suggest that if it was straightforward then they would have got a settlement by now
Chris_sh
So every time you buy something you provide evidence that your money was honestly obtained?
Checks were made on the Brown donation. Brown was a sophisticated fraudster and the people he cheated will have to go after him to get something of their money back. If Browns donation were declared illegal then it would be repaid to the Electoral Commission not to Brown’s clients.
I can see that attracting a lot of donations, from both of the people who can’t see that this whole “honourable thing” is just a cynical attempt to get the LDs out of the way so that Labour and the Tories can get back to taking turns abusing.
I suppose it would also be possible to pay it to the primary victim, noted millionaire Martin Edwards, so that he can build another swimming pool to relax in while his team of private detectives continues searching for the other £30m.
@Hywel
I agree that the law is not straightforward, I wasn’t aware that someone had started proceedings so it will be interesting to see the final outcome.
@Manfarang
I think you’ll find that it is seller/recepient beware when it comes to this area of law. You may remember that some time back a bunch of crooks were conning people by buying high value items with dodgy cheques. When the fraud was uncovered the recepients of those cheques were required to pay the money back, even though they believed that everything was legal when they received such cheques.
I’m asking why political parties are dealt with in a manner that seems inconsistent with the way the individual on the street is treated. It is being discussed on this site, which is why I’m asking the question here, also this ruling will have set a precedent for all political parties – hence I did say political parties and not the LDP.
@chris-sh
“I think you’ll find that it is seller/recepient beware when it comes to this area of law. ”
Could you provide some authority for this (statute, case law, common law principle etc). That’s not a general principle of law I’m aware of.
@Andrew Suffield
Part of the problem would be that Brown defrauded a lot of people and only donated part of that money to the party. Settling with one “creditor” would be pretty inadvisable unless it closed down any potential claims by other parties.
If recipients of donations from organisations that then were bankrupted by illegal practices have a moral responsibility to repay these donations then should we ask all the recipients of Baring Foundation grants for repayments?
Chris_sh – Political parties are not treated differently. If an individual on the street was given some eggs, made a cake, and was then told that the eggs were in fact stolen (but had taken them in good faith, and maybe checked out the individual a bit etc…), she or he would not be required to hand over the cake or purchase some eggs to give back. The egg-thief would be culpable and responsible.
@g – the moral high ground could (I am not saying should btw) surely be claimed because we a) acted in good faith and b) didn’t give anyone a peerage and c) refused to let the donation change our behaviour: http://news.bbc.co.uk/1/hi/6319793.stm
@Hywel & Henry
You may wish to cast your mind back a few years, there were a series of high profile cases where fraudsters were paying for cars or other high value items with dud cheques. There were many cases where the individual sold the car, they saw the money going into their account and then a few days later it disappeared when the bank took the money back. Effectively individuals lost the item they sold and the money from the sale.
Also, regarding the egg analogy, if you receive an item that is stolen then it does not belong to you, it belongs to the original owner regardless of whether it was received/bought in good faith. As such it can be taken from you, in your case (with the eggs) they obviously can not be returned, but I believe that a court can make an order for the original owner to receive compensation for the value of the goods.
chris_sh
There is a difference in what a person thinks the law should be and what the law is.
Brown did nor give the Lib Dems a dud cheque and the Lib Dems acted in good faith.
There is some hope for those cheated by Brown. The Dominican Republic can
cancel Brown’s visa on the grounds he has used a false name and passport to enter
that country.Thus he would have to leave and be able to be extradited from another
country back to the UK.
@g “Neither Labour nor the Tories have taken money from a criminal’s ill-gotten gains”
The Lib Dems didn’t ‘take’ any money, they were given it, and at the time there wasn’t even the slightest suggestion that Brown was a criminal.
@chris_sh
“Also, regarding the egg analogy, if you receive an item that is stolen then it does not belong to you, it belongs to the original owner regardless of whether it was received/bought in good faith. As such it can be taken from you, in your case (with the eggs) they obviously can not be returned, but I believe that a court can make an order for the original owner to receive compensation for the value of the goods.”
If you truly believe that, then you would presumably argue that it is really the owners of advertising hoardings, newspaper proprietors, printing firms, direct mail companies etc – everybody who ultimately received this money donated “for campaigning” – who should repay the money to Brown’s creditors.
Is that, in fact, what you are arguing?
Simon Shaw Posted 12th September 2011 at 3:38 pm
“If you truly believe that, then you would presumably argue that it is really the owners of advertising hoardings, newspaper proprietors, printing firms, direct mail companies etc – everybody who ultimately received this money donated “for campaigning””
Did they receive the money directly from Brown?
@chris_sh
Could you explain why that is relevant?
As I understand it:
Suppose A steals a car and sells it to B;
B then sells it to C
At that point it is established that the car is stolen
It’s C who loses out
What you seem to be suggesting is that B should lose out, not C. Why?
@chris_sh
“What you seem to be suggesting is that B should lose out, not C. Why?”
I’m not suggesting anything actually, if you go back I asked:
“Why is the law different for a political party that is given monies that were originally obtained by fraud?”
Other people then put forward cases (such as the egg case) stating that people would be exempt. I pointed out that (within my understanding of the law) that those circumstances would not exempt some one from returning goods/monies.
If the law is such that those further down the chain should repay, then fine – however at least you now seem to acknowledge that the Party should repay the money.
@chris_sh – that is precisely my point, which you pick up in the second paragraph of your 12:50pm comment: To go back to the analogy: If you cannot return the goods because they have been transferred into an intangible asset, you will not have to pay anything except as you say: ‘I believe that a court can make an order for the original owner to receive compensation for the value of the goods.’ I think this is true if and only if there is some evidence to suggest that the recipient knew about it.
Basically, I don’t think anyone is being treated differently.
Can someone find the relevant Act please, I am feeling a bit like we’re disagreeing over something that needs referencing…
To be honest this isn’t so much about the letter of the law, as a question of morality. It’s about whether or not you can claim the moral highground after taking money that was obtained illicitly? I don’t think you can, unless you give it back. I accept the reasons for not giving it back – you’ve spent it and nobody is likely to donate £2.4m to you. But you have to acknowledge this taints you instead of indulging in this holier than thou attitude which typifies the lib dems. You stink as much as everyone else.
Although I am curious, if £2.4m donations aren’t often given to the Lib Dems, were due diligence checks done? Did the party expect anything in return – afterall it is an extraordinary large sum, especially so for one given to a smaller party?
Or was it just too tempting a gift to question accepting?
“You may wish to cast your mind back a few years, there were a series of high profile cases where fraudsters were paying for cars or other high value items with dud cheques. There were many cases where the individual sold the car, they saw the money going into their account and then a few days later it disappeared when the bank took the money back. Effectively individuals lost the item they sold and the money from the sale.”
That’s not a principle of law (which you were previously suggesting) – that is the operation of payment by cheque and the bank clearing system (this has been exploited in many “Nigerian” style money frauds as a cheque can be cancelled after the money has appeared in someone’s account).
You are also talking about contract law which is not relevant to this situation as there was no contractual relationship between the Lib Dems and Brown.
“if you receive an item that is stolen then it does not belong to you, it belongs to the original owner regardless of whether it was received/bought in good faith. As such it can be taken from you, in your case (with the eggs) they obviously can not be returned, but I believe that a court can make an order for the original owner to receive compensation for the value of the goods.”
Again do you have some reference for the point of law you are proposing.
There could be a contract void ab initio where a person didn’t own the property in the first place so can’t sell it. But see above – there was no contract here. The only cases I know of in this area (Shogun Motors v somebody) involve tangible property which still existed and so could be returned.
Alternatively you might be talking about an equitable remedy (your referring to can rather than will so you seem to be referring to a discretionary power) but generally equity will act to protect an innocent party who has acted in good faith. But again I don’t think you can trace (in the legal sense) property which has been disposed of.
@Henry
I’ve asked Chris twice – on the “he who asserts must prove” basis I think it’s for him to establish his case 🙂
If this is both true and relevant here – which I decline to get caught up in – then it would imply that the people who ultimately received the money from the LDs would be responsible for repaying it. (Applying this principle consistently would appear to lead to absurdity as the money diffuses through the economy, so I don’t think that can be right)
It was spent on TV advertising, incidentally.
The impression I got from the Telegraph article was that the people Michael Brown is alleged to have conned were rich to an extent which most LibDem members can barely imagine, so although this may make them deserving cases in the eyes of the Telegraph, they don’t get much sympathy from me.
We don’t seem to have got a definitive answer on the legal position, but cash is rather different from an identifiable asset such as an antique or a car. M. Brown gave the LibDems money for a specific purpose back in 2005 when he was believed by all to be an honest man, and the party spent it then on the purpose for which he gave it. Is the suggestion really that all money he paid out throughout his life is somehow tainted? Should the utilities and telecoms companies he paid back then also be required to give money back? (Their moral case would be weaker, as the services they provided no doubt helped him carry out his questionable activities.)
“Is the suggestion really that all money he paid out throughout his life is somehow tainted?”
Under the proceeds of crime act you can be found to have been “living a criminal lifestyle” and (roughly) everything you have can be taken. However that doesn’t extend to money that you’ve paid out for things that no longer exist – so you can’t go after the win merchant who provided 100 bottles of champagne which have now been drunk (assuming it was a bona fide good faith transaction).
“We don’t seem to have got a definitive answer on the legal position,”
I’ve been debating this with people for about 4 years. No-one has yet identified a clear answer that would support a forced repayment.
hywel
Well, I’m glad I got involved in this conversation, previously it wasn’t of much interest to me. I’m also glad that I asked the question as it made me look into it (as some of the answers supplied here seemed very strange). It would appear that the Party isn’t currently treated differently to the person on the street as that person would not be liable to pay money to the Electoral Commission, but they may still be liable to repay the money to the original owners (which may still happen to the Party in this case – maybe under a case of unjust enrichment?).
However, it would also seem that my misunderstanding originated in the myth that has been created that the LDP was told it did not need to repay the money (which I think any reasonable person would assume that they meant the money didn’t need to paid to the original owner – hence it also seems to be the belief of many here), they were told that they didn’t have to pay the money to the Commission, which is not actually the same thing.
I have also found that the fact that the money has been spent is not a defence in itself, so people on the site who are saying we shouldn’t repay it as it was spent are in fact wrong (Lipkin Gorman v Karpnale – the change of position defence).
However – to your points:
“That’s not a principle of law ”
Surely the principle is that stolen property belongs to those who originally owned it?
Seller beware/buyer beware have been in the law for a long time (you can look it up) – recipient beware may not actually be called that – but a recipient of property needs to make sure that they are not handling stolen property or they could end up in trouble and can be seriously out of pocket.
“You are also talking about contract law which is not relevant to this situation as there was no contractual relationship between the Lib Dems and Brown.”
A contract does not always need to be written and it can also be implied. If a political party tells a donor that there will be no benefit given in exchange for the donation (which is what people are saying the donor was told), or if they agree to spend the money in a certain manner then surely they are creating a contract stating the conditions attached to the donation being given/received.
“Again do you have some reference for the point of law you are proposing.”
You may wish to peruse the Theft Act 1968, it lays down detail of what is classed as stolen property (property includes money). In general if you appropriate something with the intent to permanently deprive the owner of it, then it is theft. It also states that “appropriate” can include an assumption of ownership even if you didn’t steal the property yourself. So, for instance, you could take property in good faith and later find out that it is stolen, if you continue to assume ownership (e.g. you do not return it/hand it in) then you could be found guilty of theft. In other words, if it is stolen it is not yours.
Regarding ownership (i.e. who owns stolen property), you can just google something along the lines of “stolen property purchased in good faith” and you’ll probably see lots of occasions/cases where people have had property taken off them that they bought in good faith.
Regarding compensation – you could try looking at http://www.inbrief.co.uk/court-judgements/compensation-magistrates-court.htm as a starter.
“your referring to can rather than will so you seem to be referring to a discretionary power”
Pretty much all court decisions are discretionary, allowing the judge to assess all cases on their merits before passing judgement – aside from murder, what other cases force a judge to pass a specific sentence/judgement).
So why do you believe that the Party should not repay the money now that they know it was not legally owned by the donor? You mentioned earlier that some one started action, do you have details of that (case name). If the original owners have lodged a case, then in all honesty this could become the gift that keeps giving for your political opponents (to some extent it is at the moment – although it could be knocked on the head by changing position and reaching a settlement with the original owners).
Chris_sh
The money was not given by Brown personally since he was living overseas but through
his company in the UK which was the owner of the money.
You may say that it was not a real company but the same could be true of a company of another big donor
to the Tory Party.
Has the Tory party repaid rhe Polly Peck donations?
@Manfarang
I’m not certain it’s a good comparison, not unless he is found guilty at his trial (I believe the trial is next year?).
Having said that, I was under the impression that the Tories promised to repay the money in the event of him being found guilty of fraud, is that not the case?
@Chris – you deserve a fuller response which I’ll do when I have a bit of time.
However:
“Regarding ownership (i.e. who owns stolen property), you can just google something along the lines of “stolen property purchased in good faith” and you’ll probably see lots of occasions/cases where people have had property taken off them that they bought in good faith.”
I’ve googled that phrase.
I get 7 results. Of which this page is the top result!
@Hywel
Thanks – I’ll try to remember to check back, but articles disappear to the back of the list so fast that sometimes I lose track of them – so in case I “lose it” I’ll apologise in advance, though I am interested in you take on the whole thing as you appear to know more about law than I (I have bookmarked this – but with my memory that’s not much of a guarantee either) .
7 replies? I’ve just tried and it gave me something daft like 35k+ results? You didn’t put in the speech marks did you, if so try without.
One entry that caught my eye may show that even buying from somewhere that is supposed to be 100% safe can catch you out. It would be laughable if it wasn’t for the grief the poor bloke went through.
http://edinburghnews.scotsman.com/topstories/Police-sold-me-a-stolen.6808936.jp
The Electoral Commission cannot absolve the Lib Dems from the consequences of the civil law of Unjust Enrichment . The law may still require them to repay when requested. I understand that US lawyers are suing for £683 000 under this legislation. Ordinary members of your party’s electorate are expected to regurgitate excess payments promptly and ignorance of unjust gain is irrelevant in law. Your party has had benefit of this donation for a year knowing that it emanated from fraud.
Like their multimillionaire coalition partners they think that they too are above the Law both civil and criminal whether it is by fraudulent expenses or in keeping money that does NOT belong to them.