Pressure grows over 'yacht plot' Osborne and a Russian oligarch

Published on Tuesday 21 October 2008 23:08

PRESSURE was growing on George Osborne last night as the shadow chancellor was hit by a sleaze storm.

The row came after it was confirmed potential donations to the Conservative Party from a Russian billionaire were considered after a meeting on a yacht in Corfu.

The row is related to a possible donation of 50,000 to the party from foreign national Oleg Deripaska, one of Russia's richest men. Mr Osborne denied he had solicited a donation from Mr Deripaska – an action that would have been illegal.

But his meetings on a yacht with a Russian tycoon and decision to accept a free family holiday at an island villa owned by Nathaniel Rothschild – a hedge-fund manager – raised fresh doubts about his judgment.

The shadow chancellor also did not deny there had been conversations involving donations after his summer holiday, which he has failed to declare in the MPs' register. "We didn't ask for the money and we didn't receive any," he added.

However, he admitted that "people make suggestions on behalf of other people about donations to the Conservative Party like all political parties, but we have very rigorous checks and we make it absolutely clear that donations have to be legal".

A statement from Mr Osborne's office later confirmed party leader David Cameron's chief fundraiser, Andrew Feldman, had considered then ruled out a potential donation from Leyland Daf, a UK trading company owned by Mr Deripaska.

After consulting party officials, Mr Feldman decided "it would not be appropriate to accept such a donation", a statement from the Conservative Party said.

Last night, Mr Cameron backed his shadow chancellor. He said: "It was the right judgment not to ask for any money. It was the right judgment for the Conservative Party not to take any money, and it was the right judgment to come out and explain very clearly all the meetings that took place, all the conversations that took place."

Mr Rothschild, who was a member of the exclusive Bullingdon dining club with the shadow chancellor at Oxford, alleged Mr Osborne had invited Mr Feldman, to "solicit a donation" on a yacht moored in Corfu. The two former friends' accounts have now been pitted against each other.

It is believed Mr Rothschild was motivated to publicise Mr Osborne's visit to his villa and yacht after he was incensed that the Tory had leaked details of one of his private parties in Corfu, at which Peter Mandelson had been present.

Mr Rothschild said the obsession with Lord Mandelson was "trivial in light of Mr Osborne's actions".

Since Mr Deripaska is not a British citizen, it was allegedly suggested by Mr Feldman in a subsequent conversation – at which the Russian was not present – that the donation was "channelled" through one of Mr Deripaska's British companies. However, Mr Deripaska declined to make any donation.

Mr Osborne strongly denied he had either received or asked for any money. In a written statement, the Conservative Party confirmed Mr Osborne met Mr Deripaska five times, four of them during the weekend in August in Corfu.

"At no point in any of these meetings and discussions did either Mr Osborne or Mr Feldman solicit or attempt to solicit a donation from Mr Deripaska. Nor did they at any stage suggest any way that a donation could be channelled or concealed through a British company."

A source close to Mr Deripaska later intensified the pressure on Mr Osborne by denying the billionaire initiated discussions over a donation.

Mr Rothschild has also refused to back down from his version of events. In a letter to a national newspaper, he wrote: "Perhaps in future it would be better if all involved accepted that the age-old adage that private parties are just that".

WHO'S WHO

&#149 Oleg Deripaska: The billionaire is thought to be Russia's richest man with an estimated wealth of 16 billion. He bought British car company LDV, the former Leyland Daf vehicle maker, two years ago.

&#149 Nathaniel Rothschild: Co-chairman of Atticus Capital, an investment fund. Seen as a rising star in financial world. He has been friends with George Osborne since the pair were both members of the student drinking society at Oxford.

&#149 Andrew Feldman: The Tory fundraiser took up his post this July. He is a close friend of David Cameron and was a member of the same tennis club at Oxford. He is credited with helping the party win many new donors.

&#149 George Osborne: As an heir to the Osborne & Little soft-furnishing and wallpaper company, Mr Osborne has a personal fortune of around 4 million. He became the youngest Tory MP in 2001.