Good news all in all for both the Electoral Commission and for the laws regulating donations to political parties with the decision today by an Appeal Court to overturn a previous strange ruling by a magistrate in the case of a series of donations to UKIP that the Electoral Commission had investigated and decided broke the law.
The donations, from an Alan Bown, totalled £367,697 and were given by him personally, despite not being on the electoral register at the time. This made them impermissible. Until this case, everyone’s interpretation of the law had been that, for better or worse, it is completely black and white in this regard. Either a donation is permissible, and can be kept, or it is impermissible, and is therefore forfeited in full.
That made the ruling by a magistrate when UKIP pursued this case very surprising. For the magistrate decided the donations were impermissible but ruled that only £18,481 should be forfeit. On reading the reports on the judgement I couldn’t work out the grounds on which that ruling could stand up to appeal and it looks like I was right because today the Appeal Court has ruled the full £367,697 must be forfeit.
The Electoral Commission’s Peter Wardle said:
Parliament decided that political parties should only be able to accept money from individuals if they are on a UK electoral register. This provides a straightforward test of whether they should accept money or not. They simply need to check the electoral register. The United Kingdom Independence Party did not take these simple steps.
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41 Comments
So Bown’s crime was worse than Michael Brown’s, in your view? How very predictable.
Michael Crick seems to think rather differently.
Wouldn’t laugh too hard or soon, Mark, given the on-going investigation in to Michael Brown’s £2.7m donation to the Lib-Dems.
If UKIP’s defence of acting in good faith where a legal donor, (but for an error of local government recording his place on the electoral register), giving his own money is not good enough for the court, how will they interpret an illegal donor giving money he had defrauded?
Is the local government office concerned liable in any way for this error?
Don’t count those chickens, Mr Pack…
Wow, who sent all the party-line parrots over here?
I’d imagine they will interpret it based on whether ‘good faith’ was accompanied by due diligence. Parties are supposed to check the electoral register for these things when accepting donations.
Michael Brown’s £2.4m donation (you could at least cite the correct figure) was made in accordance with the Electoral Commission’s rules, so far as anybody can tell. This donation was not. It really is that simple.
If, as claimed by UKIP, Mr Bown was eligible to be on the register throughout this process, and the failing was on the part of his local authority then I think the approach of :
Technically guilty – but extenuating circumstances – therefore a nominal fine and a warning to be ever so careful in future
is entirely reasonable.
Turning to our own Brown-related difficulties, I would remand the swivel-eyed monomaniacs on here (you know who you are) that this has already been extensively reviewed by the EC who considered that the party had carried out reasonable checks.
Incidentally, do you SEMs pursue, with equal enthusiasm, a campaign to require certain cricketers / cricket clubs to return money from a certain Alan Stanford ??
We don’t count chickens, we count people. It’s called democracy, something rather lost on those with who’ve been flipping their properties and tending to their moats.
When are we going to see Michael Ashcroft do as he said he would when he became a peer: become domiciled.
If the Ashcroft Party are to get an outright majority, then they’re going to need every penny of his non-dom non-donations if their performance in Bedford is anything to go by.
Naturally, if UKIP did go under, it might actually help on that front.
How fantastically predictable. Next time I should ask Ryan to whip up a bit of code to auto-add the comments. Remembering of course to ensure the code doesn’t allow for spotting the difference between what the Electoral Commission has actually said in the two cases 😉
Bishop Hil: not as far as I’m aware. I don’t think they would be even if someone asked the council if they were on the register, told they were, made a donation and then discovered they had been given the wrong answer. That extreme case could provide some fun for lawyers looking at different angle, e.g. to take legal action against the council.
Iain: no, to me the key difference is in how the parties behaved. UKIP didn’t carry out the necessary checks; the Liberal Democrats did (which is why the Electoral Commission has investigated the checking procedure the party undertook and not taken any action over it being faulty).
(By the way – as you can see from some of the comments above, we’re happy to publish critical comments on The Voice. However, we do draw the line at one person pretending to be several different people, all of whom by some miracle hold exactly the same view. As a result some comments have been moderated.)
Quite clearly donating money to a political party (even illegally) is not as unacceptable as defrauding other people of their cash.
But of course your point is not really about Bown/Brown, but about the actions of UKIP and the Liberal Democrats. And yes, a party accepting money from someone who is obviously not permitted to donate it, without doing any simple checks (as UKIP did), is quite obviously wrong, whereas whatever you think about the propriety of the Lib Dem acceptance of Brown’s money, the picture is certainly considerably more complicated than that.
And I am not sure any of us would be happy with a situation in which Michael Crick replaced the Electoral Commission…
I suspect that the Electoral Commission’s tactic may be to sort out the UKIP case and then go after the Lib Dem case.. With a judgement from the Court of Appeal or House of Lords in their favour in the UKIP case, it will be hard for the courts to come to a different conclusion in the Lib dem case.
“the Electoral Commission has investigated the checking procedure the party undertook and not taken any action over it being faulty”
Mark – evidently you missed the reports in the Summer that “Investigators have stepped up an inquiry into a £2.4m donation to the Liberal Democrats from a convicted fraudster … Investigators have stepped up an inquiry into a £2.4m donation to the Liberal Democrats from a convicted fraudster”:
http://www.guardian.co.uk/politics/2009/aug/16/lib-dems-face-fraud-funding-inquiry
It shouldn’t take too much thought to see that judicial confirmation of the legal situation – that “Either a donation is permissible, and can be kept, or it is impermissible, and is therefore forfeited in full” – so far from being “good news” for the Lib Dems, actually places the party in a very precarious position.
Sorry – the quotation there should have read:
Investigators have stepped up an inquiry into a £2.4m donation to the Liberal Democrats from a convicted fraudster … Officials from the Electoral Commission have taken the unprecedented step of obtaining computer records, emails and witness statements from the City of London police that helped to convict Michael Brown of a £10m theft.
http://www.guardian.co.uk/politics/2009/aug/16/lib-dems-face-fraud-funding-inquiry
All skewed by the fact that the Lib Dems hold themselves up to be holier than thou when the truth is rather different…
By crikey. Is this for real?
A Lib Dem gloating over the potential death of a rival party and then claiming the moral high ground when opprobrium floats his way?
Anything for a few votes, eh Mark? Now, go through that bit about why the people (you remember … those voter chappies) are disgusted by politics, again.
I totally disagree with every thing UKIP stand for; however I’m not sure the effective bankrupting of a democratic political party is a cause for celebration. However misguided these people may be, they are entitled to representation.
Anxiety keeping you up late Mark?
@ Mark
Complete nonsense.
First the two cases have little more than superficial similarities. in UKIPs case all that was needed was a check on electoral registration. That involves a trip to the library or a phone call to the Council (assuming they don’t have a copy). Checks in the Brown case (if they were insufficient which the EC haven’t held to be the case) would have had to go to whether he was actually carrying on a business. As you yourself have suggested this could involve checks on audited accounts, visits to business premises etc it’s clear that they are on a much larger scale, more complex and to some degree subjective.
Secondly, whether Brown obtained his money fraudulently or not is simply not a matter for the EC to consider. A donation of stolen money, if made by a permissible donor, is not a breach of PPERA (which is not to say it might not be illegal in other ways, could be recovered by the original owner, or advisable for a political party)
Finally, if the EC have deliberately delayed an investigation for reasons of securing a particular outcome (there being no relevant points of law which needed resolving), there would be a case that they had acted unreasonably.
@David
I agree. I think this particular law would be much better if an individual who, at the time of the donation, was resident in and eligible to register to vote in the UK was a permissible donor. That would mean someone who accidentally dropped off the register could still donate. It is slightly less clear but that is at the expense, reasonable I think, of widening the pool of potential donors. This case is particularly hard on Mr Bown who has done little wrong and has “lost” about £1/3 million
@Jo
10:52pm late? Somerset must have got considerably less exciting since I left 🙂
The mess UKIP finds themselves in is of their own making.
In 2001 Sir Jack Hayward made a £50,000 donation to the United Kingdom Independence Party from a joint bank account.
It was established by the Electoral Commission that one of the signatories was not on the electoral roll.
UKIP working with the Electoral Commission returned the impermissible payment to the donor. This incident has always acted as a reminder to UKIP Head Office that ensuring your donors are on the electoral register is vitally important. In this earlier case the donor’s wife, Lady Hayward, replaced the shortfall a few months later.
John de Roeck a former UKIP Treasurer confirmed that he amended the forms supplied to the Party by the Electoral Commission and added a space for the Electoral Registration number on the forms against each donation. He confirmed the reason was simply to have a reminder on the donation reporting form to avoid later problems that may have occurred if unavailable, and to avoid having to refer back to Treasurers.
Treasurers who had difficulties obtaining Electoral Registration numbers were recommended to obtain them from their local Returning Officers. The Electoral Commission would verify these roll numbers as a matter of course.
As regard this latest donation. UKIP were warned numerous times by the Electoral Commission – UKIP chose to ignore them. UKIP decided to take a stand instead of giving the money back for it to be re donated later.
For all of Nigel Farage’s whinging and moaning of ‘establishment conspiracies’ and blaming everyone else, he can’t make any excuses. The mess UKIP finds themselves in with the Electoral Commission is of their very own making due to their tardy book keeping and ignoring the Electoral Commission.
I wonder whether the solution might be to allow donations only from individuals on the ER in future? Firms, real, imaginary, UK, overseas, etc, trade unions, charities, and other organisations would simply not be allowed to fund political parties. Any “purchases” would have to be shown to be at “arms-length” prices. Of course that is not straightforward, but tax offices have to do it all the time for transfer pricing studies, and their expertise would be called on if a company purchases a pencil for £1000…
I think the general feeling amongst the Lib Dems must be complete inevitability. They always thought they would have to pay the Brown donation back but disliked the campaign run by the Times distracting them constantly after the GE in 2005. I can’t believe it’s now 2009 and still the issue isn’t resolved. I would advise the Lib Dems to come clean and pay the money just to pop the endless stream of column inches inflicted upon them by this snivelling criminal of a donor. It’s the only issue that keeps coming up time and time again.
@Hywel Can Somerset *get* any less interesting?
@Tim I’ve been thinking about arguing for state funding of political parties but am not sure if this would resolve the cash for questions/peerages for donors issues. What is clear is that we cannot go forward as we are – it’s as important as expenses. Maybe we should axe expenses and pay for parties instead.
Jo…you’ve overlooked something rather essential. a) you would need the money to pay back. You’ve seen the reports of the accounts. Wise up. b) who would you like the money paid back to? “The Company that paid the money in the first place” you say. Er, it no longer exists. “Then pay it back to the director – give it to the wayward Brown”. Er, it was not his money in the first place. That’s now money laundering. “Well, never mind that, give it to him anyway.” Eh? How does that happen then? Where is he? Nobody knows. My guess is that it could be a nice hotel on the Indian Ocean coast of Kenya or Tanzania. As good a place to start as any. Easy to get to. Visa on arrival, pretty chaotic administration in the arrivals hall, good chance bits of paper go astay regularly. Keep spending good money and nobody is going to ask too many questions – yep, here’s where we start.
Now who do we send out as a search party? Any suggestions, anyone?
If you are entitled to be on the electoral roll but cannot donate because you have been missed off, just fill in the simple form you can get from your local council. It may take a month or so to get listed, but then you can make a legal donation. This is what any party treasurer should tell someone like Mr Brown who wants to make a donation but does not appear on the electoral roll. Is that so hard?
“First the two cases have little more than superficial similarities. in UKIPs case all that was needed was a check on electoral registration. That involves a trip to the library or a phone call to the Council (assuming they don’t have a copy). Checks in the Brown case (if they were insufficient which the EC haven’t held to be the case) would have had to go to whether he was actually carrying on a business. As you yourself have suggested this could involve checks on audited accounts, visits to business premises etc it’s clear that they are on a much larger scale, more complex and to some degree subjective.”
You’ve illustrated perfectly why it’s unwise for Mark to describe it as “Good news” that a court has ruled that “Either a donation is permissible, and can be kept, or it is impermissible, and is therefore forfeited in full.”
If the Electoral Commission eventually decides that the donation was impermissible – and they could decide that a few months before a general election – the party’s next line of defence would have to be that they couldn’t have been expected to know that.
Not that I find it a particularly plausible one, considering what we know about the company – and considering that no one denies that donation through the company was a device to get round the fact that Brown as an individual was not a permissible donor. But if the implication of the appeal court judgment is as Mark describes, then that line of defence won’t be possible.
What the courts seem to be missing here is the intention of the law. Is it the intention to put a party into such financial difficulties that it has to be made bankrupt? I’d very much doubt it. And, in any case, what happens with the donation if the donor subsequently states that he doesn’t want it back?
So UKIP have to pay back a donation which is now ruled to be illegal. My problem is that they have elected MEP’s using that money who now get to stay in office for five years. Surely it’s the electorate who have been truly defrauded here?
KL: If UKIP can not pay (same goes for any other party) they can fold up, and restart following week, with a change of name. It would become the Independence Party of the United Kingdom, other people might still call it UKIP, the purple would still be the colour, the main players would be the same. You can probably think of a parallel approach taken by a limited company.
“And, in any case, what happens with the donation if the donor subsequently states that he doesn’t want it back?”
It isn’t returned to the donor but to the General Fund.
Courts will look at the intention of the law but will also consider that (in this case) a relatively straightforward check was all that was needed.
@Philip Young The issue isn’t whether the Lib Dems have the money to pay back. If a single mother is overpaid by tax credits she cannot use this argument. She has to go overdrawn or sell items or get into debt to pay it back. This should be the case with a political party. It must have been spent on something (clearing debts probably) so this will just have to be reversed and the debt would have to re-appear. As @Hywel says it would be returned to the General Fund, not Michael Brown. Michael Brown is in jail for god’s sake!!!
Jo: nope. He’s not. He’s probably dipping his toes in the Indian Ocean…reading the Fleet St. papers that he has delivered to him while sipping a Pimms. Didn’t he skip bail? Or have I missed something.
“Brown, now 43, was convicted in absentia of fraud in 2008 and sentenced to seven years in jail.”
http://www.guardian.co.uk/politics/2009/aug/16/lib-dems-face-fraud-funding-inquiry
Where the hell have you been?
Crossing the Sahara, actually. You can still pick up the headlines, though. You said it…He was convicted in absentia. He was not there, as he has done a runner. So, no Jo, he is not in jail. He’s somewhere warmer (didn’t spot him in my sandy bit however, as I would have loved a conversation).
By the way, he didnt give a penny to the party. Like Lord Ashcroft, it was a COMPANY that donated the money. People who say Ashcroft gives dosh to the Conservatives should also note this distinction. Its NOT the same thing.
How do you know he’s crossing the Sahara? He could still be giving cash in hand donations to the Lib Dems if he’s not in jail…perhaps the Lib Dems helped him escape!
Herbert Brown @ 9:13
“If the Electoral Commission eventually decides that the donation was impermissible – and they could decide that a few months before a general election – the party’s next line of defence would have to be that they couldn’t have been expected to know that.”
No, the party’s line of defence would have to be that the donation was permissible. “We couldn’t have been expected to know” would only be useful if the Electoral Commission not only said that the donation was impermissible, but also that the party was guilty of an offence in accepting it.
However, I agree with you that the UKIP ruling is potentially very bad news for us.
It was Phillip who was crossing the Sahara; he has suggested that Brown is in East Africa, as South America and Spain are no longer good bolt holes for people on the run. Were you unaware of the Brown affair whilst you were a Liberal Democrat member? At the time Brown did a runner you were a Liberal Democrat members, so did you help him escape? BTW if you were a member in 2005 you could be liable to pay £40, if the party has to pay back the £2.4 – just like tax credits. Where does all this bitterness come from Jo? Reading your blog I’m picking up a sudden hostility towards your former colleagues. One minute your Nick and Jeremy’s greatest fan, the next you’re engaged in character assassination.
‘Nick and Jeremy’s greatest fan’? Don’t think being told of by Jeremy’s office while a Lib Dem blogger gained me any points on the fanatical front…
Yes, as my former colleagues were Lib Dems and I’m now not a Lib Dem member so it follows that my blog will be quite hostile to the Lib Dems.
I monitored the media whilst the Brown affair was unfolding so was very much aware, yes.
Where does all the bitterness come from? Have a look in parliament at the moment…it ain’t exactly causing peace…
@Mark Pack.
I assume that double identity comment was referring to my friend who made a post here on my machine just prior to myself. IP addresses are a wonderful thing but thank God we don’t have them assigned like National Insurance numbers.
Mark Pack is not quite correct to say that the Court of Appeal decided that all of the donations should be forfeit.
Actually the Court of Appeal merely quashed the decision of the Magistrate and sent the case back to the Magistrates Court for rehearing. The Court of Appeal expressed the view that except in exceptional circumstances an impermissible donation should be forfeit, but it is for the Magistrates to decide. The legislation states that the Magistrates *may* order that the donation be forfeit, not that they must do so. The Magistrates should therefore only order a donation to be forfeit if it is just to do so. Circumstances which should be taken into account include whether the donation has been returned to the donor, as double forfeiture is not expected. It would also be relevant to consider whether the donor knew that he was not registered to vote, and knew the donation was impermissible. Otherwise, the donor is entitled under equitable principles to have the donation returned, and justice requires the party to return the donation rather than pay the Electoral Commission.
The Court cannot order only part of a donation to be forfeit, but in this case there was a series of donations. Magistrate decided that only those donations accepted after UKIP became aware that Mr Bown was not registered to vote should be forfeit. In my view that was a reasonable and logical decision and there is nothing in the Court of Appeal’s decision to prevent the Magistrate from making the same decision again, as long as clear reasons are given. Parliament gave political parties the right to appeal to the Crown Court against a decision to order forfeiture, and did not give the Electoral Commission a similar right to appeal, so it must be questionable whether Parliament intended to allow the possibility of judicial review. If Parliament had intended both parties to have the right of appeal, it could have granted both parties that right. The Administrative Court should only interfere with decisions of lower courts where they are clearly mistaken. I would expect the Supreme Court to grant an appeal and to consider carefully whether the Magistrate’s decision should be upheld.
There are also other mistaken comments in this blog. Under section 60(5) of the Political Parties Elections and Referendums Act 2000 (‘PPERA’) any claim by the Electoral Commission for forfeiture of a donation must be against the party, though it be an unincorporated association, and not against any member personally. Therefore I don’t see how any individual member can be compelled to contribute. Any such payment is to be made “out of the funds of the party”. The party cannot be forced to borrow, though a judgment could be enforced against assets such as a lease of offices. This makes it pointless for the courts to order parties to pay amounts in excess of the total value of their assets.
Also, where someone receives say a payment of benefit and has spent the money in the mistaken belief he was entitled to it, equitable estoppel may prevent the DWP from claiming it back.