Lib Dems can keep fraudster's £2½m

Published on 20/11/2009 21:46

THE Liberal Democrats have been told they can keep a donation of £2.4 million from a convicted fraudster.

The Electoral Commission ruled the party had taken the money in good faith from a third party, 5th Avenue Partners. This was the trading name of a company owned by the Lib Dems' biggest donor to date, Scots-born Michael Brown.

Brown was convicted of fraud at Southwark Crown Court in London last year, after he was accused of stealing 30m from clients. The court found him guilty in his absence, after he skipped bail.

The commission's decision was welcomed by the Lib Dems, whose fighting fund ahead of the general election is considerably smaller than their rivals.

Nick Clegg's party is also fighting to hold on to marginal seats that are being targeted aggressively by the Tories.

Investigations into the donations began in May 2005, after it emerged Brown was not on the electoral register – a precondition for any donor.

As a resident of Majorca, he was not allowed to make political donations and there were claims that 5th Avenue Partners was not trading.

Brown donated about 2.4m to the party ahead of the 2005 general election, when Charles Kennedy was leader.

Electoral Commission chairman Jenny Watson said the inquiry had considered material from the legal proceedings and documents obtained by the City of London Police. "Having considered all the evidence in this case, we have concluded that 5th Avenue Partners Limited met the requirements to be a permissible donor," she said.

"The Electoral Commission will be taking no further action in this case."

She said the watchdog had decided that 5th Avenue Partners – rather than Mr Brown – was "the true donor".

Under the Political Parties, Elections and Referendums Act 2000 (PPERA), only UK companies which are carrying on business can donate.

The Electoral Commission put its investigation on hold in March 2007, pending legal proceedings, but resumed its inquiries after the conclusion of the criminal case.

It said it had been looking at whether the company was a permissible donor under PPERA and whether it was, in fact, the true donor.

If the donations had been deemed impermissible, the commission could have applied to a court for the forfeiture of the cash.

But it ruled the donation was above board.

Ms Watson said: "The law sets out who can make donations to political parties and makes sure that information about where parties get their money from is in the public domain, so voters can see for themselves how politics is funded.

"Our job is to make sure those rules are followed.

"Parliament considered carefully the rules on company donations in 2000, and set out specific requirements, including that a company must be carrying on business in the UK in order for it to be a permissible donor."

A Lib Dem spokesman said: "We welcome the Electoral Commission's ruling on this matter.

"At all times, the party acted in good faith in relation to the receipt and the expenditure of these donations in the 2005 general election campaign.

"All our donations and loans were properly declared to the Electoral Commission."