A PUBLICLY-OWNED construction quango set up by former Glasgow council leader Steven Purcell has donated a total of £4,000 to Labour, Scotland on Sunday has learned.
Last week we revealed City Building treated Labour grandees, including Scottish leader Iain Gray and his wife, to a 2,000 dinner at a party fund-raiser last year.
Now it has emerged the Glasgow City Council-owned firm also took a 2,000 table at a similar event last month.
Council chiefs last night moved to ban City Building – and other arm's-length businesses it owns – from making further donations.
They did so as furious SNP leaders, led by Glasgow councillor Graeme Hendry, demanded to know how much public money had reached Labour's coffers in this way.
Council chief executive George Black told Hendry in a letter that City Building executives – at least two of whom have intimate Labour links – had not realised taking tables at party fundraisers amounted to a political contribution.
Black said: "City Building had not understood the connection between taking a table at this political party event and making a donation. City Building have agreed that in hindsight they ought to have realised the nature of the event."
Black stressed the council firm had not broken any law. Party officials face up to a year in jail for taking council money but can declare donations from council-owned firms.
Labour has argued the donations are "perfectly permissible" and accused the SNP of "smear tactics".
Hendry yesterday said he welcomed Black's acknowledgement City Building was wrong to have given money to Labour. But he said he was stunned it should have made a second donation – months after he raised concerns it was turning into a "Labour social club".
He said: "Having first raised my concerns with City Building nine months ago about how they use their hospitality it amazes me to find that only last month they attended a Labour Party fundraiser.
"Labour must clean up its act in Glasgow, repay all donations received from council-owned companies and guarantee they will no longer use council resource for their own party political campaigns."
A council spokesman signalled it would not be asking Labour to return the 4,000. It has, however, ordered City Building and other arm's-length bodies to stop spending on stalls or events at party conferences. City Building has a stand at this weekend's SNP conference and has taken its roadshow to big Labour events. The Electoral Commission has said such spending does not amount to a donation.
However, Black told Hendry that he believed such expenditure would be criticised in the "current climate of public opinion". It is understood that City Building – which has a 79,000 annual PR budget – has spent tens of thousands of pounds on political lobbying. Scotland on Sunday last week revealed City Building spent nearly 20,000 in 2008-2009 on corporate hospitality at 18 dinners. Labour politicians were guests at 11 of them. No other parties were represented, although five SNP councillors have declared meals provided by City Building since 2007.
Yesterday, it emerged such spending by arm's-length external organisations – or aleos – will be investigated by a cross-party scrutiny committee of the council. Chairman, Liberal Democrat Christopher Mason, said he was "in the business of worm-can opening". Another council firm set up by Purcell – City Parking – spent 6,340 on hospitality in 2008-2009, Scotland on Sunday can reveal.
City Building defended its wining and dining of Labour politicians. A spokesman said: "City Building has engaged 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 have taken part in events like the Labour dinner in Glasgow earlier this year, and why we will attend the SNP conference in Aviemore this weekend and have been at recent Conservative and Lib Dem conferences."
Its latest donation was made at a fundraising dinner at Glasgow's Hilton Hotel on 25 February.
Within days of the Hilton dinner, 37-year-old Purcell had stepped down as council leader and councillor amid concerns over his personal life and revelations that he had been interviewed by detectives who feared he had left himself open to blackmail. He had once been feted as a future First Minister for his modernising work in Glasgow, including the creation of arm's-length bodies.