Inquiry launched into Tory donor

Published on Saturday 21 February 2009 22:37

THE official elections watchdog has launched an inquiry into donations made to the Conservatives by the company of one of the party's wealthiest backers, Lord Ashcroft.

It emerged last night the Electoral Commission was mounting a formal investigation into funds donated by Lord Ashcroft's firm Bearwood Corporate Services, which has poured millions of pounds into the party.

The investigation follows allegations that Bearwood, which is UK-registered, received cash transferred from a Belize-based firm, Stargate Holdings. Labour MPs have long questioned whether the Bearwood donations complied with strict laws banning overseas funding.

Bearwood is the single biggest Conservative donor, having poured in 3.1m since David Cameron secured the party leadership in 2005.

The Tories last night remained defiant, saying they were satisfied the donations were "legal and permissible". A spokesman said: "The Conservative party compliance unit applies two strict tests to all company donations in accordance with Electoral Commission guidance.

"They are: is the company UK registered and is the company trading? The donations from Bearwood Corporate Services Ltd met those tests."

However, John Mann, one of the Labour MPs pressing for an inquiry into the Bearwood donations, welcomed the confirmation that there would be a full investigation.

He said: "Tax exiles should not be allowed to give money to influence the results in British elections. I'm very pleased this investigation has been launched. It's a significant first step to getting to the bottom of what is going on."

Liberal Democrat Treasury spokesman Lord Oakeshott of Seagrove Bay, who has introduced a bill outlawing so-called non-domiciled peers, also piled pressure on the Tories, saying: "Cameron believes in transparency on tax havens for everyone except his own deputy chairman.

"The net is now closing in on Lord Ashcroft from both ends, the Electoral Commission on his conduit from the Caribbean, and my bill in the Lords to make peers pay full British taxes on all their worldwide income."

Deputy party chairman Lord Ashcroft, who was partly brought up in Belize, has consistently refused to say whether he is resident or pays taxes in the UK. The Electoral Commission began initial inquiries into the donations last year, after its attention was drawn to the claims by Mann, but the decision to stage a formal investigation was only made on January 30.

Any finding that donations were made improperly would be a huge political embarrassment for Cameron – and a heavy financial blow for the party.