Thursday, May 25, 2006

LibDems May Have to Repay £2.4 Million Donation


The Electoral Commission has just released the following statement, which will send a shudder down the backs of many a Liberal Democrat...

25 May 2006 - For immediate use
Statement about donations to Liberal Democrats from 5th Avenue Partners Ltd

Following discussions with the City of London Police, the Electoral Commission has decided to await the outcome of the police investigation of the financial affairs of 5th Avenue Partners Limited and its director before considering further whether 5th Avenue Partners Limited’s donations to the Liberal Democrats last year met the tests for donations to political parties by companies. Between February and May 2005, 5th Avenue Partners Limited made donations totalling around £2.4million to the Liberal Democrats. In October 2005 the Commission took the view that, based on all the evidence which the party had, and subject to any further information becoming available, it was reasonable for the party to regard the donations as having been permissible (See Note 2). There is currently an investigation by the City of London Police and separate legal proceedings concerning the financial affairs of 5th Avenue Partners Ltd and its director. It is possible that further information will become available that may be relevant to the issue of whether these donations were permissible. The Commission has therefore decided to await the outcome of the police investigation before considering this matter further, and will be liaising closely with the City of London Police over the coming weeks.

As I understand it, legally, the LibDem members are jointly and severally responsible for paying the money back - which would cost them about £35 each. If I were them I'd be investing in a few begging bowls just in case...

Now, to all those LibDems who accused me of hyping this up and thought it was a 'non story' when I first raised it back in January and February (see HERE, HERE, HERE, HERE) I think you'll have the good grace to accept that this is a serious matter which the Party must now address. Of course, if proper due diligance had been carried out by Lord Razzall on Michael Brown (pic), this sorry state of affairs might have been avoided.

22 comments:

Anonymous said...

O/T, but same source.

Network Rail gave Labour £5k in February 2006…
On the same day it was announced they made an annual pre-tax loss of £232m

Can someone please explain why this might be appropriate?

Andrew Woodman said...

Will the rats desert the sinking ship of unlimited liabilty??

Anonymous said...

Presumably Network Rail were represented at Labour Spring Conference. Not particularly inappropriate.

G Eagle said...

Why do you suspect that individual members of the lib-dems might be personally liable (for ?£35) if the £2.4m donation has to be repaid

If the LibDems are a limited company, surely the members would be protected by limited liability

If the LibDems are an unincorprated association, surely the liability might bite the LibDem Committee, but not the Members

?? Has Iain discovered yet another area of Mr Eagle's legal ignorance

Iain Dale said...

G Eagle, There was a big article on this in The Times some weeks ago. I know nothing about the law in this area.

Anonymous said...

You are wrong on the law of unincorporated associations. Almost all will have constitutions drafted such that the members do not bear responsibility in contract or tort. It is an issue that has come up with Tory associations going bankrupt in parts of the country (the Conservative Party is technically a union of affiliated unincorporated associations whereas Labour and the Lib Dems are each single organisations).

You are also wrong in thinking this is now a serious issue. If you read the press release, you will see that all the Commission has said is that if anything relevant comes up they will look at it. Rightly so. But there is no indication in the release that relevant new information has been received so it remains a non story (and any sign of the David Laws defection yet by the way?)

G Eagle said...

Nor, it seems, does Mr Eagle !!!

kingbongo said...

Network Rail is basically a nationalised industry so shouldn't be making donations to any political party.

G Eagle said...

Nor, it seems, does Mr Eagle !!!

Jamesw said...

Will they have to pay back interest on the sum as well?

Interest on £2.4m is not insignificant.

ContraTory said...

The Lib Dems in here are whistling in the dark. The mere threat of £2.4 million having to be repaid must have a deeply demoralising effect. Actual repayment would have a disastrous effect on the party's finances and electoral prospects. A "non-story"? I don't think so. Anyway, I'm just going to sit back and enjoy...

Sea Lawyer said...

It is alleged by HSBC and others that Brown/5th Avenue have committed fraud. A group of four investors in 5th Ave want their money back and it seems that they believe Brown's contribution to LibDems was stolen and not his to give away. HSBC are owed, I believe, $45m that has gone AWOL. Whatever the legal niceties, LibDems have probably received stolen goods whether in good faith or not. I wonder what record there is of the due diligence supposedly carried out. "Show us the money"
er thats it. If I was a Lib Dem member I would take the precaution of cancelling my membership. You know it makes sense.

Anonymous said...

I agree with kingbongo. Negligible compensation was paid to shareholders of Railtrack when it was nationalized, for them now to be making party political contributions simply reinforces the fact that the nationalization had little to do with Railtrack’s inability to perform , and more to with the Labour Party's resentment and longstanding grudge against its privatisation.

Poverty Is Thrift said...

£2.4 million??
Chicken feed! our prime minister has morgages bigger than that.
Tthank god his uncle Rupert will pay that off in the form of a nice big book advance sometime in the near future, then its a lifetime of Bbill Clinton type antics, flogging yourself at £100 grand a time appearing at parties with ambulance chasing lawyers(the accident group)or turning up at parties for rag trade billionaires (oops mr caring)all in the name of charity, Good thing Cherie has been getting some practice in.
They make me puke.

Anonymous said...

Surely it is inconceivable that Network Rail paid money, that is to say taxpayers' money, to Labour?

Can someone provide chapter and verse please - since if true it would represent a major scandal

Rigger Mortice said...

This story has legs.

Sea lawyer is right.If that money wasn't theirs to give to the LDs then the creditors are more than entitled to chase it.If someone nicks your video and the police find it,you get it back.Ignorance is no defence to receiving stolen goods/money


I fail to see why the LD's should not be seriously worried,although liability is yet to be established.

Anonymous said...

Rigger - the analogy with the stolen video does not apply to cash in relation to tracing. It would only apply if people could physically identify the serial numbers of individual notes and they were kept under the floorboards in Cowley Street. I am not saying whether that is right or wrong (although there are sound practical reasons why any other rule would be totally unworkable) just that you are wrong in law - ignorance is generally a defence in relation to cash once that cash has been put on deposit or spent.

Anonymous said...

The LibDums...Losing Here !!

LOL

Anonymous said...

Anon at 1:16pm is spot on.

Another lawyer writes...

If stolen goods are received in good faith as a gift by a third party who did not know they were stolen and had no reason to know they were stolen then that third party did not reset or handle those stolen goods. Such a gift acquired in good faith is not returnable to the person from whom it was stolen. So where is the evidence of bad faith...

Sea Lawyer said...

I accept Anon/Another lawyer's assertion that if LibDems accepted the money 'in good faith' then legally they have a defence against action to recover. I am not saying that they acted in bad faith. Yet I wonder if their due diligence extended beyond sending bank account details. If needs must seems to be the policy of all the parties.

cymrumark said...

Forgive me for stating the blindingly obvious. If the money was indeed stolen then it is not a permissable donation. If the sole activity of the company concerned was handling these funds it is not a permissable donation. if the money was transferred from the donors swiss bank account through the company account and the company was doing no legal trading it is not a permissable donation.

The Lib dems will claim they have acted in good faith and there is no evidence that they have not. this means they will not be going to prison or be landed with a fine. They will however have to pay the money back. Oh dear how sad never mind.

Neil Craig said...

What could you have expected the Electoral commission to say? They actually go out of their way to mention that they have already accepted this which is not what you would expect if preparing for a U-turn. Admittedly they do say "liasing closely" with the police when they could have said "liasing" or even "noting" but we are still a very long way from establishing his guilt,let alone his bankruptcy let alone he LD's liability.

I think the Rail case is considerably worse, certainly morally so since Labour ministers were setting the subsidy & regulations on Network rail emails siad they were trying to bankrupt it (though a judge decided the emailers didn't really mean it).