Labour officials helped lawyers acting for David Abrahams to draw up complex covenants that allowed the millionaire businessman to pay up to £650,000 indirectly to the party, the Guardian has learned. The arrangement, which was set up four years ago, was regarded as a "loophole" that allowed Abrahams to lawfully pay the money and remain unidentified. The Guardian understands it was drawn up in 2003 through John McCarthy, the Newcastle solicitor acting for Abrahams, and put to two middle-ranking Labour officials at the party's London headquarters.
Sources close to the party say the officials are said to have taken legal advice from Labour solicitors and sought approval from other senior party members. Lord Triesman, who was general secretary at the time, has categorically denied that he had any knowledge of the agreement. Under the arrangement, Abrahams is said to have covenanted the money to his close associates and fellow company directors Janet Kidd, Ray Ruddick and McCarthy, the solicitor. They then used the cash to donate to the Labour party in their own names. It is understood that Labour officials were well aware that the arrangement exploited what they believed was a loophole in Labour's recently passed legislation, the 2000 Political Parties Act, so as not to reveal Abrahams' identity.
In the words of a Labour insider, the two officials were then "given the job of shepherding the cash", aware that the arrangement was technically legal, even though it went against the spirit of the legislation which is to ensure transparency for all donations to political parties.
I am sure that our resident New Labour apologists, Chris Paul and David Boothroyd will find an explanation for this corruption, but I am damned if I can think how they will do it. And I don't use the C word lightly.