Reform of political donations: within the gift of the Lib Dems?

Yesterday’s Observer reported that one of the Lib Dems’ bigger donors, Sudhir Choudhrie, faces allegations of “accepting tens of millions of pounds in kickbacks from an arms deal between an Israeli company and the Indian government”:

Sudhir Choudhrie, who has personally donated £95,000 to the party and whose relatives’ companies have donated a further £475,000, was named as a key arms broker in foreign reports. … This is the second time that Choudhrie, 59, has been accused of being paid an illegal commission from a major arms deal in India. The allegations are said to be politically motivated, and to coincide with the country’s general election.

The timing of the allegations is embarrassing for Nick Clegg, the party leader, who called for a curb of the arms trade and a boycott of sales of arms to Israel earlier this year. The claims that one of their donors is an arms broker will concern senior Liberal Democrats, who are still smarting from the exposure of their biggest ever donor, Michael Brown, as a convicted serial fraudster in 2006.

As James Graham notes over at his Quaequam Blog! it’s hard to see exactly how this is embarrassing for Nick, despite the Observer’s unsubstantiated smears. After all, surely the concern about big donors is that they will influence the party’s policy in some way, that money will talk louder than principle?

That was why Labour was severely compromised by Bernie Ecclestone’s donation; and Wafic Said’s largesse is why the Tories have found themselves silenced over the disgraceful BAe Al Yammamah deal.

There is absolutely no suggestion that the Lib Dems’ policies are for sale. Nor was there when Lord Jacobs, another major donor, quit the party last year over policy disagreements.

But James goes on to suggest that Nick Clegg needs to take a stand, just as he has on MPs’ expenses, and unilaterally declare the Lib Dems will not accept gifts totalling more than £100,000 in any given year:

there is a lesson here for Clegg that he would do well to heed. Politics and money are a toxic mix. Even when nobody can be said to have done anything wrong, too often it leads to the wrong sort of headlines. And one thing the Lib Dems can’t afford to be seen as, as they creep up the polls (and I have to admit I’m relatively optimistic about how we might do in the next general election), is just another part of the shameless political class. …

With the economic climate and public mood such as it is, I think now is the perfect time for him to go one step further. He should impose a cap on the party, regardless of what the law says, and call on the other parties to do the same.

At what point that cap should be should be considered. In an ideal world, he might consider self-imposing his own £25,000-per-year cap, but given the other parties are unlikely to play ball, at least in the short term, that might be going a little too far. But what about £25,000-per-quarter? It would be simpler to administer than an annual cap and would go some way to matching the rhetoric with action while not leaving the party at a massive competitive disadvantage.

And how would it affect the party in real terms? Well, for the most part, even our large donations are in the tens of thousands rather than the hundreds of thousands (and even millions). In 2008, only two companies donated more than £100,000 – the Joseph Rowntree Reform Trust Ltd. and Marcus Evans Ltd. (a non-cash donation). So in reality we would lose very little.

What we would gain is some degree of immunisation from this sort of story – and complete immunisation from things like the Michael Brown scandal. We would also be seen to be practicing what we preach – something we aren’t seen to be doing nearly often enough. In the longer term, I suspect that will be worth far more than a couple of hundred thousand pounds.

What do LDV readers think of James’s suggestion? Would it, as he believes, knock on the head the media’s stories against the Lib Dems? Or would it simply be ignored by the media, while severely handicapping the party’s ability to compete against Labour and the Tories in the forthcoming elections?

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  • Matthew Huntbach 20th Apr '09 - 12:12pm

    it’s hard to see exactly how this is embarrassing for Nick, despite the Observer’s unsubstantiated smears

    This is like saying its hard to see how MPs’ expenses could be embarrassing – it’s all done according to procedures, no-one lied, in the wider scheme of things it’s trivial amounts of money, worse is done in the private sector blah blah.

    Of course it’s embarrassing.

    And, sorry, but if there are people giving large amounts of money like this, I don’t think I can be sure it doesn’t mean they don’t catch the ear of the leader and other senior figures more easily than the ear would be caught by someone who didn’t have any money to offer.

    That serious political parties which intend to make a major contribution to the government of this country should have a big dependence on a small number of very rich people who just happen to toss them the odd tens of thousands of pounds is a huge embarrassment. It shouldn’t happen.

    The issue here is that the general public just don’t understand how political parties work. We have lost the idea of what they ought to be – collections of volunteers who get together in order to choose from among their numbers ordinary people to represent us in Parliament who couldn’t possibly get there under their own steam. We urgently need to get back to that idea and sell ourselves as that. Make it the centrepiece of our party political broadcasts and go on and on about it until people understand. WE’RE ORDINARY PEOPLE JUST LIKE YOU, EXCEPT WE HAVE GOT TOGETHER TO CHANGE THE WAY THIS COUNTRY IS RUN.

    What is so difficult about this concept that we can’t do it? The Labour Party used to do it, though it filtered ordinary people through the Trade Union movement, but it has completely lost that feeling now – well, except perhaps amongst the quite elderly who might just remember that’s how it was.

    Most people who aren’t involved in politics (i.e. 99% of the country) seem to think that political parties are branches of the state or at least are very rich (“MPs get paid lots of money innit?”) and so just expect them to be there, putting up candidates for election etc. I often find people are astonished to find it’s all done by volunteers, and if no-one volunteered it wouldn’t get done.

    Sell ourselves AGAIN AND AGAIN AND AGAIN that way, and we’ll get the volunteers who’ll give us small amounts of time and money. Sell ourselves as some top-down Westminster-centred organisation, whose members are happy little brainwashed followers of the leader, and we won’t. People won’t join us for the same reason they won’t voluntarily work for Tesco’s or Sainsbury’s. We’re a brand and the role of the general public is to pick which brand it wants when it makes its choice, it doesn’t question how that brand gets to be there and people who are salesman for a brand get paid for it. I remember delivering Focus, and finding myself alongside a paid leaflet deliverer. He though I was mad to do such a thing for free, he could not comprehend why anyone would do that. Could we encourage that person or anyone else to see why they might?

  • George Turner 20th Apr '09 - 5:51pm

    In the US the donation limit for an individual donor to a political candidate is 2,500 dollars. Yes that is right, I didnt miss out a few zeros. The problem there, as I suspect will happen here if any cap is enforced is that there will be a million ways around it. 10,000 dollar a plate fundraisers for example, bundlers, who give out stacks of cash to their friends who then write checks for that amount to the party.

    I think that the whole system of party financing needs a much deeper exploration

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