Friday, July 28, 2006

The Sting for Ming

The papers are full of reports from Southwark Crown Court yesterday, where LibDem donor Michael Brown pleaded guilty to passport forgery. The Times reckons the LibDems are in deep doodoo.

His conviction will increase pressure on the Lib Dems to repay the £2.4 million donation from Brown’s company, 5th Avenue Partners Ltd. The Times has also learnt that Lib Dem officials will be interviewed about the donation by detectives investigating suspected money-laundering. His conviction comes as a City of London police investigation widens into alleged money-laundering involving 5th Avenue. Brown gave the Lib Dems £2.4 million in February and April of last year. He was banned by law from making political donations as an individual because he is not on the British electoral roll. The Lib Dems instead received the donation as a corporate gift from his company. The Times has learnt that the gift was offered around the time the businessman flew the party leader by private jet to and from the party’s spring conference in Harrogate in the run-up to last year’s general election. A senior Lib Dem source has now disclosed that party officials learnt about Mr Brown’s gift on March 7, the day after the leader flew back with the Scotsman. Mr Kennedy’s office was “absolutely” aware of the huge gift. “The offer went to the leader’s office,” the source said. A party official said: “This has nothing to do with the Liberal Democrats.” The party’s lawyers say that it was reasonable to treat the gift as permissible. The Electoral Commission said that it was awaiting the result of the police inquiry before making a final decision on whether the Lib Dems could keep the money.

The Times also devotes a Leader to the subject under the headline STING FOR MING...

Liberal Democrats will curse the day they ever heard the name Michael Brown. The party’s rank and file should certainly be cursing the day their senior party officials accepted £2.4 million from Mr Brown without checking sufficiently who he was, where his money came from and why he was giving such a large proportion of it away. Mr Brown’s pleas of guilty at Southwark Crown Court to charges of perjury and passport fraud makes a party that enjoys lecturing others look at best woefully incompetent and at worst downright sleazy.
The immediate lessons are for the Liberal Democrats. Mr Brown’s money began arriving into party coffers from a Swiss bank account, via a company that did not have an office in the UK, and when Mr Brown was not registered to vote in this country. Some of those responsible for this highly irregular, not to say legally dubious, arrangement remain in Lib Dem HQ. They should be moved on.

Although Mr Brown’s pleas of guilty and the 30 other charges that will remain on file did not concern the origins of his wealth, the Liberal Democrats should feel under considerable moral pressure to divest themselves of the money. This is easier said than done, because the cash left Lib Dem coffers almost as soon as it arrived last year, to be blown on largely pointless campaign posters and other election fripperies. But the party will find it difficult to convince voters of its righteousness while this stain remains. The Electoral Commission could hold the money until it is decided to whom it should be returned. The party could expect time and understanding as to how it manages this process.

The wider lessons of the Brown case are for the overall “policing” of political donations, and are timely, given Labour’s cash-for-peerages travails and the review of party funding being conducted by Sir Hayden Phillips. At the moment, donations are not so much policed as observed. There is little point in the Electoral Commission taking a view on a donation after the money has been spent, which is all it can do currently. It needs “real time” authority, allowing it to veto high- value donations. And it should publish all its deliberations immediately. Voters have a right to know who is funding their preferred party before, rather than after, they cast their ballot.

Mr Brown is part of a vicious circle into which all parties have been sucked. The more that donation scandals tarnish the political process, the less ordinary voters and well-meaning business people are inclined to donate to parties, and the more the parties feel the need to turn to dodgy money. Only caps on donations, at about £50,000, and a ceiling on party spending, of about £6 million a year, will force the parties to cut their bloated budgets and reconnect with the public.

Bad though this has been for the Liberal Democrats, it could have been worse: revelations by The Times about Mr Brown’s personal and financial background could have come later, when he had been proposed for a peerage — or worse, already sitting proudly in the House of Lords.


ContraTory said...

Yep. This story is going to run and run. Absolutely delicious.

Anonymous said...

I guess in the long run this devalues all politics ("a plague on all your houses") yet I can't resist these waves of schadenfraude given how d*mn sanctimonious the Libs are at every opportunity.

It would be interesting to dig up whatever they said about us Tories when the Asil Nadir business was in the news (foreign fraudster supporting the party)....

neil craig said...

& presumably also to dig up what the Tories said about it being OK.

The dodgy bit is about them accepting money from his business rather than personally which is precisely as dodgy as getting money as loans to avoid have to admit donations. I personally also think that limited companies should not be allowed to donate to party organisations. Despite the legal fiction about a company being a person it isn't & has no business influencing politics - I have little problem with the rich individual donating personally. Another reason is that a company's duty is to maximise profits - if it gives money it is either getting nothing for it & thus defrauding its shareholders or else it is.

Where criticism of the LDs falls is that there is no suggestion that he got anything for it & no readily apparent mechanism as to how he could have .

It should also be pointed out that what he has been convicted of is getting a new passport by filling in the forms untruthfully - essentially a holding charge & says nothing about financial fraud let alone that this particular money was obtained fraudulently.

Anonymous said...

He'd have never had a seat in the Lords. That's preposterous.