THE Scottish Labour Party is under intense pressure to return a £2,000 donation from a quango created by former Glasgow council leader Steven Purcell.
• Steven Purcell helped set up City Building in his council role.
The party accepted the cash last year from City Building, a construction firm wholly owned by the Glasgow local authority and under fire because of its close links to Labour figures.
The SNP yesterday officially called on the chief executive of Glasgow City Council to ask for the money back. They were, in turn, accused of hypocrisy by Labour, which claimed Nationalists had also benefited from the company's largesse in recent years.
Labour officially declared the donation after City Building took a 2,000 table at its annual fundraising dinner in January 2009. As revealed this week by The Scotsman's sister paper Scotland on Sunday, City Building entertained some of Labour's biggest names at the event, including Scottish leader Iain Gray and his wife Gill.
The spending on the dinner was part of a splurge of nearly 20,000 on 18 corporate hospitality functions by City Building in the 2008-9 financial year. Labour councillors were entertained at 11 of the events.
Officials from political parties can be jailed for up to a year if they accept donations from local authorities. All such donations are deemed to be "impermissible" by the Electoral Commission. Parties can, however, accept money from companies and City Building, although owned by the council, was formally incorporated as a limited liability partnership.
Graeme Hendry, an SNP Glasgow councillor, said he thought Labour was hiding behind the distinction. He said: "It is unacceptable that any money from Glasgow City Council has been donated to the Labour Party.
"The Electoral Commission rules explicitly prohibit a local authority from donating money to a political party and, as far as I am concerned, this should apply to companies wholly owned by a local authority as well."
City Building, when first contacted by The Scotsman, denied that hosting a table at the Labour event amounted to a contribution to the party. Labour itself, however, has formally registered the donation with the Electoral Commission.
City Building has vigorously defended its spending on hospitality for politicians, saying it did so to lobby on behalf of its manufacturing wing, which employs hundreds of disabled people.
The company – and Labour insiders – sought to equate the donation to spending by City Building and other public bodies at party conferences. Such expenditure is not considered by the Electoral Commission to amount to donations.
Yesterday, a spokesman for the company said: "We engage with all political parties on issues affecting our business, in particular our supported workshop, Blindcraft, which employs some of the most vulnerable people in our community.
"That is why we take part in events like the Labour dinner in question, and why we will attend the SNP conference this weekend and have been at recent Conservative and Lib Dem conferences."
There were no SNP councillors at any of the 18 dinners and other hospitality events hosted by City Building in 2008-9. However, five SNP members and one Tory have registered meals paid for by City Building in the past three years.
Labour reacted angrily to what it called Mr Hendry's attempts to smear the party. A spokesman said: "This is extreme hypocrisy from SNP members who are trying to throw mud when they are in the same position themselves."
Council chief executive George Black said he would consider Mr Hendry's request when he received it.