Electoral Commission Reopens LibDem Donation Investigation

Remember the case of the LibDem donor, Michael Brown, who gave £2.4 million to the party and was then jailed? The Electoral Commission suspended its investigation into whether his company Fifth Avenue Partners was a permissible donor pending the legal case against brought by the Police.

The Electoral Commission has now, I have discovered, reopened its investigation and hope to complete its inquiries before very long. The LibDems have maintained they did nothing wrong in accepting money from someone who they, at the time, thought was a permissible donor, even though it was clear from the most rudimentary of checks that Fifth Avenue Partners was not carrying on any meaningful businss activity in the UK.

Creditors of Michael Brown, such as former Manchester United Chairman Martin Edwards have threatened to sue the LibDems for the return of the money, which they say was not Brown's to donate.

Watch this space.

UPDATE: Apparently there was a written PQ on this last week.

Mr. Maude: To ask the hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission what progress the Electoral Commission has made in its investigation into the permissibility of donations by 5th Avenue Partners and Mr. Michael Brown to the Liberal Democrat Party. [271948]
Sir Peter Viggers: The Electoral Commission informs me that the investigation into the permissibility of donations made to the Liberal Democrat party by 5th Avenue Partners is continuing. The Commission further informs me that its aim remains to conclude the investigation as quickly as possible, but that its priority must be to ensure that the process is fair and thorough.

LibDems Sued for £632,000

The Observer reports that the LibDems will be served with a High Court writ this week over the Michael Brown donation. Businessman Robert Mann says he invested more than £630,000 with Brown, only for Brown to donate it to the LibDems. The LibDems deny any wrongdoing and say they accepted the money in good faith and therefore have no case to answer. Mann disputes that and says they did not carry out enough checks. He says...

I am shocked that the Liberal Democrats, who run on a platform of total political accountability, would even consider not returning the funds. They have been on notice of this fact for several years. To continuously try to make excuses to avoid this responsibility is not the actions of an honourable political party. The voters in England should consider such conduct when they select their next political representatives. I am hopeful that the powers within the Liberal Democrats will decide to do the right thing both for me and the honour of Britain.

The full article is HERE.

UPDATE: I reported the above in a rather balanced way, I thought. But having read LibDem Voice's version of events, I am afraid I shall revert to type. Stephen Tall repeats the usual defence that the Electoral Commission passed the donation and therefore the LibDems have done nothing wrong. He quotes from an Electoral Commission press release, which indeed appears to give them the all clear. Sadly Stephen omits the important bit of the press release. For the sake of completeness, let me quote it here...

Nevertheless, we have always said that if any additional information that has a bearing on the permissibility of the donations comes to light, for example as a result of the ongoing police investigation or legal proceedings relating to the affairs of 5th Avenue, we would consider the matter further.

Less of the sanctimony please. No one knows how this will turn out - not me, not LibDem Voice. But the possibility that the money will have to be repaid is certainly there. The LibDem auditors have told them they do not need to make provision for any repayment in their accounts. I wonder whether that advice will come back to haunt both parties.

LibDem Donor Granted Legal Aid

LibDem conference planners will not be happy this morning. The trial of their biggest ever donor, Michael Brown, starts on 15 September, the Monday of their conference. Brown has jumped bail and was not in court yesterday when the date for the trial was set.

Astonishingly, the court granted Brown legal aid to cover the cost of his defence. Perhaps the LibDems might like to take the burden off the taxpaper and contribute to this defence via the £2.4 million they accepted from him? Is that a flying pig I spy?

Full story HERE.

LibDem Donor Is 'On the Run'

The Press Association crime desk is reporting...

An international businessman whose company gave the Liberal Democrats more than £2 million has gone on the run just weeks before going on trial for fraud. Michael Brown, 42, was due to stand trial in September accused of a string of fraud and money laundering offences. But a judge at Southwark Crown Court issued an arrest warrant today after he breached his bail conditions.

This also begs the question as to whether this puts back further the date when we will finally get a verdict by the Electoral Commission on whether Michael Brown's donation to the LibDems was permissible or not. They suspended their inquiry pending Metropolitan Police investigations into Mr Brown's activities nearly two years ago.

LibDem Donor to Appear in Court

Remember Michael Brown, the convicted fraudster who donated £2.4 million to the LibDems. According to the Evening Times he is due in court in September, just before the LibDem conference. It is now a matter for debate, now that his court date has been set and the police inquiry is presumably at an end, as to whether the Electoral Commission can now rule on whether this was an impermissible donation or not. Or they may still decide to wait until the case is over.

LibDems Face Double Whammy Brown Fine

The spectre of jailed fraudster Michael Brown has returned to haunt the LibDems, who, according to Scotland on Sunday may not only have to repay the £2.4 million they took from him, but may also face a £2.4 million fine from the Electoral Commission. It's difficult to see how on earth they would be able to find £4.8 million without going under. Surprising thought it may seem, this is not something I would welcome. These are the main bits of the Scotland on Sunday story...

The Liberal Democrats are facing a potentially ruinous bill of up to £4.8m after taking donations from a crooked Scots businessman, Scotland on Sunday can reveal. Party funding watchdogs last night confirmed that the impact of Charles Kennedy's decision to accept £2.4m from Michael Brown could be doubled if the Lib Dems have to pay back the entrepreneur's former business associates, as well as a matching "fine" imposed as a punishment for accepting the cash. The Electoral Commission is set to order the party to return the 2005 donation amid suspicions that Brown's company was not doing business in the UK at the time of the payment, making it impermissible under funding rules. But, rather than going back to Brown, the £2.4m would have to be paid as a "fine" into the Consolidated Fund, the government's Bank of England account.

To make matters worse, a group of millionaires who invested in the company, 5th
Avenue Partners Ltd, insist the money is theirs and have demanded repayment-
meaning the Lib Dems will have to find another £2.4m on top of the fine imposed
for taking the cash. A senior source at the commission last night confirmed they were considering using their full powers against the party, which is already more
than £1m in the red. The double demand could force Lib Dem chiefs to go cap-
in-hand to the party membership for extra contributions of at least £50-£60 per
person. The Electoral Commission source said: "There is a double jeopardy
element in this situation. If the commission rules that the donation must be
returned, it clearly cannot go back to the donor himself, so it must be paid into the consolidated fund. The demands of creditors or investors would be completely separate to that and up to the party to settle independently." The Brown donation, the biggest-ever received by the Liberal Democrats, has been subject to intense scrutiny since former leader Kennedy gratefully accepted it as a huge contribution to the £4.9m cost of running the party's 2005 election campaign. Although little was known about the Majorca-based tycoon, it later emerged that he was born in a run-down part of Glasgow's West End and ended up in Majorca after making a £10m fortune from property deals and City trading. But holes in Brown's story began appearing under closer inspection soon after details of his financial support were revealed. The High Court ruled that his company was fraudulent and had never traded, he was extradited from Spain and jailed for two years last September after admitting perjury and a passport offence. Lawyers for Martin Edwards, former Manchester United chairman, two Chinese tycoons and an American lawyer have since written to the party saying they believe that the money is theirs.

Last week, Brown was charged with 18 further offences including money
laundering and theft. Brown will also face allegations of perverting the course
of justice and fraud. The donation was part of an investigation by City of
London Police into allegations of a £45m high-yield fraud. He is the subject of
an international money-laundering investigation by police as well as facing
civil action by the HSBC bank. The donations have exposed the Lib Dems to
ridicule and recriminations from opponents who believe Brown's intervention gave
them an unfair advantage during the 2005 election.

A Lib Dem spokeswoman last night confirmed they had been made aware of the
"double jeopardy" threat hanging over the party's head. She added: "Our legal
advice is robust and on the basis of this our auditors advised that we need not
make provision for any repayments. "The party acted in good faith at all
times in relation to these donations, which were properly spent on the Westminster general election campaign two years ago."

I do not deny that the LibDems acted in good faith, but in issues like this, it's not enough. They clearly didn't do the requisite due diligance and that, I believe, will be at the core of the Electoral Commission's findings. I do believe they should pay the money back, but I do not believe they should face a £2.4 million fine as well.

Brown Scandal Returns to Haunt LibDems

If the LibDems thought that the Michael Brown scandal had gone away this morning's Times will have given them a jolt. A pensioner is claiming that the £155,000 he gave to Michael Brown to invest for him, actually ended up in LibDem coffers. It has also emerged that the LibDems' second biggest donor, Paul Strasburger, is funding Michael Brown's legal fees. The stories are HERE and HERE. Meanwhile the Electoral Commission investigation into the admissability of Brown's loan awaits the verdict of the City of London Police.

Not, of course, that this has anything to do with the LibDems at all. No, Sirree. Never let it be said. Whiter than white. Yellower than yellow [enough - ed].

UKIP Donation Row: Does the Punishment Fit the Crime?

Nigel Farage, the UKIP leader, has just appeared on Sky News alleging that the Electoral Commission is part of an establishment plot to close them down. If I were in his position I'd probably play the injured party to gain public sympathy. After all, for a Party with an annual income of £250,000, it could be curtains if they have to find £367,000 to hand over to Gordon Brown (under the rules the donation is not returned to the donor). Let's ignore the party political side of this for a moment and look at it dispassionately.

Farage is right when he says that the legislation was drafted to catch illicit foreign donations. He alleges it is all down to a simple clerical error. Well, up to a point. It is actually illegal not to put yourself on the electoral register, and we should not ignore the fact it was down to UKIP to ensure he was actually on it. This partly explains why UKIP's accounts are so late. It is clear that UKIP knew this was going to be an issue and have spent the last six months attempting to persuade the Electoral Commission to give them nothing more than a rap on the knuckles.

There is also the issue of fair play here. It was quite right to fine them for the late submission of their accounts, but it is certainly arguable that the punishment of losing £367,000 was far worse than the crime. Their was no attempt to deceive, the donor was British and it was fully declared, albeit late. The question for UKIP now is whether they can afford a Judicial Review. I am no lawyer, but it is certainly a case that is ripe for one I would have thought.

I'm also interested in the implications of this for the Liberal Democrats who still face the prospect of repaying the £2.4 million they received from the jailed fraudster Michael Brown. The Electoral Commission had intended to make a judgement on the permissability of the donation by the end of last year, but as the City of London Police are still conducting their own inquiry, the Commission is waiting until that comes to an end.