Zac Goldsmith, the Conservative candidate for Richmond Park, is facing questions from the Electoral Commission for apparently making donations whilst not being on the electoral register.
This would be against the law and the Electoral Commission has taken a hard line in other cases where donations have been made by someone not on the register, most notably in the case of UKIP and the £363,697 it received from Alan Brown.
Saturday’s Financial Times* gave more details:
Conservative officials admit that Mr Goldsmith, 33, was not on the electoral roll when he gave £7,000 to his local party, a breach of the rules that would normally lead to the money being forfeited…
The Electoral Commission on Friday confirmed it was in correspondence with the Conservative party on the issue and that donations to political parties were “not permissible” if a donor was not on the electoral roll.
Other than this story’s own interest, it’s worth highlighting as a reminder to Liberal Democrat local parties about the need to carefully check the electoral register for their own donors. Just because you think someone is registered, it doesn’t mean that they are. (Different rules of course apply to donations from other sources, such as trusts, companies or trade unions.)
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40 Comments
Does this also cover Zac Goldsmith’s donations to the Green Party in Devon?
I thought the interesting part was that Mr Goldsmith reportedly spent £90,000 of his own money last year campaigning to win the seat.
If only I had £90,000 to spend on buying, er, I mean, campaigning in, a parliamentary constituency . . .
(the budget for the constituency in which I live is about £2000 a year!)
The Lib Dems could win a whole clutch of currently neglected “safe” urban Labour seats if we had even as much as £20,000 a year to spend…
It is worth bearing in mind that Mr Goldsmith’s money comes not from his own efforts but from (1) his father’s ruthless corporate raiding, and (2) the exploitation of tenants and serfs over the centuries by the Fitzalan-Howards and sundry other aristocrats.
BTW, if Zac Goldsmith cares so much about the environment, why does he pollute it with his fag effluent?
My local party’s budget isn’t too much either, but you do have to keep an eye on these things. Anything of £200 or more has to be investigated, and Mark is right that it’s easy to assume someone is on the register when they’re not… I’ve got a council by-election coming up and have just realised that five of our 20 members in the ward aren’t registered to vote!!!
Surely this is the most simple of simple rules to follow when making donations to parties?
Geeeesh.
http://lettersfromatory.wordpress.com
One of the sitting councillors in Sheffield (not a Lib Dem) wasn’t on the register until the day before the deadline for rolling register updates prior to the May local elections.
I’d never noticed before because I knew the councillor was on previously and had never thought to check. It could so easily happen to one of ours though.
Zac Goldsmith strikes me as being fairly sensible. I read the Ecologist. I do wonder why he belongs to a party which hates and fears his views?
Asquith – sensible is not a word normally associated with Goldsmith Jnr.
Shameful that donations should be accepted by millionaires who aren’t on the electoral register. By the way, where is Michael Brown? I assumed that he had been kidnapped by the Provisional Wing of the Liberal Democrats, but it looks like he will be tried in his absence. Perhaps once that is done the ELectoral Commission will no longer be able to hide behind their excuse that the details surrounding Brown’s donations are sub jice and they do not wish to be found in contempt of court.
Or perhaps the Electoral Commission will just uphold their original view that the donation by 5th Avenue & Partners was lawful?
It’s *much* easier for someone to check whether they’re on the electoral register themselves before they donate cash to, er, themselves, than it is to discover that the director of a company that’s donated money to you is actually allegedly dodgy. Hell, it took the police and banks months, if not years, to discover it.
Shame the Lib Dems get a couple of weeks to carry out the necessary checks!
Their original view was that the dobnation was permissible based on the evidence available to them at the time.
It would have been equally easy to get a copy of the donor company’s accounts from Companies House (none available), get their VAT number (normal for a trading company particularly one that can donate £2.4 million), check out their FSA registration (mandatory for “something in derivatives”, but of course none there) or even pop round to their offices in Upper Brook Street to have a look (actually an attic flat that was unused when Brown out of town) – not usual practice for every £50 donation, but maybe worth the effort for £2.4 million, non? Any city firm failing to undertake the same level of due diligence can expect to be canned.
It took the rest of the world less than a day to sniff a rat on this one – I had my complaint into the Electoral Commission in 2 days, and I wasn’t the first. For the Lib Dems to be hanging onto the money after a High Court judge said Brown’s company never had any business just shows what a nunch of shysters the Lib Dems really are.
Yes, Mark, it would appear we were guilty of taking a donation from someone who later turned out to be dishonest. I smell the usual Tory tactic of trying to condemn someone elses honest mistakes as a plethora of their crooked dealings comes to light…
It’s an old and tired Tory trick. Can I suggest you try a new one? Being ethical and honest for example?
“…a nunch of shysters…” I quite like that, has a sort of weird poetry to it.
Due diligence on donations under PPERA can be summed up in one phrase. There is no such thing! City firms are required to undertake certain types of due diligence under the regulations by which they operate. Those just don’t apply to political donations.
What Mark is suggesting is a list of steps that could have been undertaken in the light of subsequent facts. Checking VAT/FSA registrations simply isn’t required under PPERA. This would be why the Electoral Commission have said that the donation was “permissible”. That’s a slightly unfortunate phrasing as it appears a little weasel-worded – however political donations are of two types. Permissible and Impermissible.
There is a real practical point here though. If it were possible for the Electoral Commission to decided now, 3 years later, that the donation should be returned, how could a political party ever spend a donation with any security that they wouldn’t be required to repay it.
better still than more checks, ban all donations by companies.
What is required is proof that a company is operating a business in the UK. It is the easiest thing in the world to set up a company, put some money in its bank account and pay that money to a political party. The simple principle that applies in the City and elsewhere, over and above the ruules, is “know your customer”. If you don’t know who they are, find out.
I am not suggesting that any of those particular facts should have been checked, simply that they obviously weren’t because if they were the whole facade would have collapsed. It remains the case that nobody, even Brown, has been able to produce a scrap of evidence that the company was engaged in any legitimate business. That implies that the Liberal democrats did not have any proof. For most businesses, audited accounts would be sufficient. Where not available a diligent enquirer would ask for other proof.
To answer your point about whether a party should be at risk indefinitely for the forfeit of a donation, in most cases where donations come from well known companies the issue will not arise, but I am sure that the Electoral Commission would probably be sympathetic if the facts were borderline (e.g. a donation from a company whose business was being run down, or where there was clearly substantial investment prior to trading even if there was no turnover), or perhaps even if the company produced fraudulent accounts, but the principle should be applied strictly otherwise, particularly when sums as large as £2.4 million are at stake. If the party is not sure of the donations permissibility, it should be refused.
One more point on due diligence on this donation. I seem to remember that although Brown appear to be a very willing donor, there was quite a lot of schmoozing by senior Lib Dems to get the full £2.4 million. Perhaps some of the effort put into marketing could be diverted to compliance next time.
“in most cases where donations come from well known companies the issue will not arise”
Barlow Clowes, Maxwell, Polly Peck, Equitable Life – all pretty well known companies! (They didn’t all make political donations but the point is that even for big well regarded companies you can’t be certain what the real position is).
The business was set up and was clearly operating to some extent as it had acquired property. AIUI the Electoral Commission were consulted at the time the donation was accepted as to any checks that were made.
“I am sure that the Electoral Commission would probably be sympathetic if the facts were borderline”
But what if the facts previously thought to be borderline subsequently turned out to be more clear cut. The point here is that the EC have said that the donation was permissible. There is no grey area and the timescale for acting is very short (another area where political donations differ from the “due diligence” position)
“or perhaps even if the company produced fraudulent accounts,”
That sort of blows your “checks on trading activity” line out of the water really…
Sadly Mark Williams, we can all be wise after the event. However, I know if I’m on the electoral register or not. Mr Goldsmith didn’t? I suspect he was too busy spending his money campaigning.
@Hywel Morgan:
re: your list of shysters- they were all eprmissible donors. Whether one would want to be associated with them is a matter of taste, not of the law.
re: borderline cases. The facts can always change, and the EC can always take a view on whether a donation is permissible. The EC have always caveated that statement by saying “based on the facts known to them at the time”, and as you are no doubt aware they have also said that they reserve the right to change their mind in this case if they become aware of different facts, so spend the money at your peril.
re: presentation of fraudulent accounts, it doesn’t undermine my argument at all. Whether the Electoral Commission goes to the court to apply to have the donation forfeited is entirely within their discretion. If they think that a party treasurer acted on false information then I hypothesize that they might relent (but they might not). If they find that there was no business activity in 5th Ave Partners they care free to take whatever course of action they see fit.
re: “the business was operating because it had acquired property” – first of all, the first donations were made before the property was acquired, second the property a flat was a residential address not an office, and thirdly the acquisition of property is not an indicator of whether a company is in business. Peter Wardle, chief exec of the EC and a former Revenue inspector has made it clear that he follows the Revenue / tax law on this, that a business is defined by its activities and that the ownership of property is not an indication of a business (unless it is clearly used in the business as a business premises or leased out).
@Grammar Police (re wisidom after the event): some of us can also be wise before the event, but the fact that so many people smelt a rat on this donation, but the Lib Dems didnot (or ignored it) shows that the Lib Dems were incompetent. This was a donor who was courted over several months and I believe the party treasurer expressed doubts over this donor (although that didn’t stop him trying to tap Brown for a few thou for his own business – you couldn’t make it up!).
Martin Land:
Are you referring to me personally, when you suggest that I try being ethical and honest? There is a presumption on your part that I am a Conservative member, but if that proved incorrect your statement would clearly refer to me and would be defamatory.
Mark Williams @ 6:08 “I am not suggesting that any of those particular facts should have been checked, simply that they obviously weren’t because if they were the whole facade would have collapsed.”
Sorry, but you’ve got your facts wrong. Those were checked and the checks passed.
If Michael Brown makes the Lib Dems incompetent – what does Zac Goldsmith make the Tories?
“first of all, the first donations were made before the property was acquired, second the property a flat was a residential address not an office,”
Hang on – weren’t you suggesting that turning up to inspect the property was one of the checks the party could have undertaken?
Where can I get a list of all the companies that donate to political parties? I would love to boycott their goods and services and tell others to do so as well – and write to the companies to inform them – it would certainly give me some satisfaction
I obviously meant the Tories – and Labour ? – I would buy more from those companies who give to us!
Mark; if you are not a Tory then start making intelligent and fair-minded comments. Hywel has very carefully and comprehensivly explained the history and the judgement of the Electoral Commission, so if you are not a Conservative Member, please turn you venom on them. They will give you new material everyday, so that way you could be fresh and original and not have to harp on about the same, SINGLE affair.
@Martin Land:
My comments are indeed fair-minded. There is no doubr that Richmond Conservatives made a mistake, but it is clear that Goldsmith was eligible to be on the Electoral Register (as far as I am aware he does not have to be registered in Richmond to make a dontaion there), so more fool him. It is also clear that the money he was spending was to pay for his own campaign which in a sense means that it is outside the purpose of this part of PPERA, which is to limit the range of potential donors. It is not intended to prevent Goldsmith donating to his own campaign. If he had been an independent this would not have been an issue.
The reason I bring out the Brown donations is that is such a large donation, it was clearly solicited over several months, people at the top of the party were involve in its solicitation, and a High Court judge has found that there was no business in the donor company. All of which reflects very badly on the competence of the Liberal Democrats as a party.
@Hywel Morgan:
“Hang on – weren’t you suggesting that turning up to inspect the property was one of the checks the party could have undertaken?”
Why not? To establish that there was a business, seems perfectly reasonable if the company has not published any accounts. Whatever the business was could well have been carried on at another place before the property was acquired.
I don’t see what your point is here.
@bored LibDem
“Sorry, but you’ve got your facts wrong. Those were checked and the checks passed.”
What was checked and who said they passed? The two 5th Avenue companies were wound up by Companies House without ever filing any accounts. There never was an FSA registration for Michael Brown or 5th Avenue.
Show me one person who has ever done business with 5th Avenue Partners in the UK and and I’ll shut up and go away.
I’m sorry, but even if Mark Williams is a Tory fair-mindedness compels me to agree with some of his criticisms. I can quite understand why Michael Brown’s interest in the party was cultivated – the chance of boosting our prospects at the 2005 general election with a massive unexpected increase in available money must have been overwhelmingly tempting. Unfortunately it is not the first time that the party has fallen into this trap: the Liberal Party was comprehensively ripped off in the 70s by a Canadian conman whose name escapes me (I don’t think the name he was known to the party by was his real one anyway). Liberals are generally inclined to think well of their fellow men: having been in business for 30 years I have learned the hard way that a modicum of suspicion is quite healthy. If something looks too good to be true it usually is.
Mark Williams @ 2:56 – sorry, wrong again. The offices were inspected.
Mark Williams – despite your ranting – you can’t escape the fact that the Electoral Commission held that the donation was lawful (even if only “on the evidence it had at the time”) – why do you expect the Party to be any more choosy than the body regulating it.
Sadly the Lib Dems don’t do financial malpractice quite as well as Labour or Cons.
Grammar Police Says:
20th August 2008 at 10:19 pm
“Mark Williams – despite your ranting – you can’t escape the fact that the Electoral Commission held that the donation was lawful (even if only “on the evidence it had at the time”) – why do you expect the Party to be any more choosy than the body regulating it. ”
Any person seeking to uphold the law would seek to act within the law irrespective of the behaviour of those policing their activities. The Electoral Commission have done a very poor job on this and they know it. They were asked to investigate in May 2005 by a Privy Councillor and senior MP, but did nothing until the same Privy Councillor buttonholed Sam Younger at his party conference later that year. Despite their initial findings, which they have admitted is open to review, the Electoral Commission have refused to answer the simple question as to the nature of the business carried on by 5th Avenue Partners when put to them by journalist from a national newspaper. This isn’t just the Lib Dems hanging onto cash, this is also a regulator trying to avoid embarrassment.
“Sadly the Lib Dems don’t do financial malpractice quite as well as Labour or Cons.”
Curious position to take. ‘My crime isn’t as bad as his/hers, so I should be let off’. The courts tend to look at crimes one at a time.
A very bored Liberal Democrat member Says:
“20th August 2008 at 9:26 pm
Mark Williams @ 2:56 – sorry, wrong again. The offices were inspected.”
How so? The offices weren’t even acquired before the first donations were made, so that cannot have been used to demonstrate the company’s bona fides. When the first donations were made 5th Avenue Partners had its registered offices at the address of its solicitors in the city.
So now you’re the regulator are you?
Unless they agree with you they’ve not done their job properly, is that it?
My point is, it’s obviously not as clear cut as you would like it to be, Mark. This is why the Electoral Commission have held the donation lawful. Also, if they were that “embarrassed” then presumably they wouldn’t have wanted it left open to review.
As for my glib comments on Tory and Labour financial dodgy dealing (cash for questions, cash for honours anyone?), it was not intended to be serious and didn’t really require such a po-faced response as it received. I know plenty about the courts and the law, thanks.
My advice is to ignore Mr Williams – he’s successfully hijacked a thread about Goldsmith Junior to talk about someone irrelevant to this thread – just as Tory Central Office would have wished.
So… we should be pushing for additional powers and resources to be provided to the Electoral Commission to ensure greater compliance with the regulations and the spirit of fair play. Perhaps all donations above, say, £1,000 should be funnelled through the EC’s hands so they can be sized proportionately.
A complete list of infringements (not just those discovered) would make interesting and informative reading – it would also resolve the issue of partisan bashing by enabling the public to take a fully-informed view.
I wonder… which party would finish bottom of a sleaze league?