On the trail of the First Minister

THE night was wearing on and Scotland’s most powerful politicians and their supporters were chewing on cigars, sipping brandy and enjoying Andy Cameron’s stream of couthy jokes.

Cameron probably didn’t know the one about the ministers, the millionaires and the soon-to-be-murdered. But this was a reasonable description of the latest Lanarkshire Labour powerplay taking place before his eyes.

The guests had gathered at the tranquil setting of Motherwell’s Dalziel Park Country Club on a Friday night seven months ago to drink, dine and sign cheques for the Labour party and other charitable causes.

The annual Red Rose dinner in Jack McConnell’s constituency, which typically raises around 7,000, was a chance for players in business and politics to rub shoulders with the First Minister and Northern Ireland Secretary John Reid.

That night they also mingled with MI5 minders, a retired police chief and a drug dealer by the name of Justin McAlroy.

As millionaires such as James Mortimer, boss of Glasgow’s Victoria’s nightclub, bid around 2,000 for signed football strips, McAlroy’s champagne lifestyle was entering its final days. Six days later a hooded man would shoot the Porsche driver five times outside his luxury home in Cambuslang, in a killing which bore the hallmarks of a gangland hit. Police later linked the murder to the Ulster Freedom Fighters.

McAlroy - whose Labour-supporting father Thomas owned a stake in the country club and had been presented that evening with a commemorative plaque by McConnell’s close colleague, MP Frank Roy - had been a well-known convicted drug dealer.

If senior Labour figures were later mortified by the criminal’s attendance they should not have been surprised. From ‘Monklands’ to ‘Lobbygate’, in recent years Lanarkshire has been a byword for Labour sleaze, for sectarianism, cronyism, nepotism and vicious party in-fighting.

This murky political culture is McConnell’s backyard. It is the poisonous backdrop against which reports last week of an 11,000 black hole in the three bank accounts run by the First Minister’s local party must be assessed. It is also why opposition politicians have seized on what might elsewhere have been written off as a little local difficulty and it is why McConnell’s aides, who held crisis talks on Friday, remain highly nervous.

One of the few things everyone who has seen the accounts can agree on is that they are in a state of chaos. One local party insider said: "There is a disturbing paucity of information. We are not talking in terms of a fiver or a tenner here or there. We are talking about gaps amounting to considerable amounts of money, into the hundreds and thousands."

A source close to McConnell added: "The accounts are an absolute bloody shambles." McConnell’s people believe details of the missing cash were leaked by hostile elements within Lanarkshire Labour circles.

The latest embarrassment for Scotland’s third First Minister is, however, about more than just Lanarkshire in-fighting. Having claimed the scalp of Henry McLeish after his "muddle" over office allowances, Tory and Nationalist strategists would lose little sleep over the downfall of a man who promised stability and transparency after three years of trauma for the Scottish parliament. For them this is the hunting season, and Lanarkshire has always proved good hunting ground.

McConnell, an Arran lad with a political background in Stirling, entered Lanarkshire, a land of massive Labour majorities, with his eyes open.

He was fully aware that Helen Liddell, now Scottish Secretary, had only managed to win through as a by-election candidate in Monklands in 1994 after turning on the Labour council which had been accused of a "jobs for the boys" policy.

McConnell was at his best as a machine politician three years after Monklands when he was Scottish Labour’s general secretary and worked with Liddell to secure the Motherwell and Wishaw seat for Frank Roy, despite strong local competition from frontrunner Hugh Mulholland.

Then McConnell himself managed to win by the narrowest of votes the Motherwell and Wishaw nomination for the first Scottish parliament election, snatching it in a bitter contest from Mulholland’s close ally Bill Tynan, now a Lanarkshire MP.

Allies of the First Minister believe neither Tynan nor Mulholland ever forgave him and have suggested they could be behind last week’s tabloid newspaper leaks.

One source close to McConnell said: "Mulholland is the local auditor who has been kicking up all the fuss about these accounts. Is it a coincidence that he told us about the problem on Monday then we read about it in the Sun on Wednesday?"

Another ally said: "It is a matter of fact that Tynan and McConnell do not get on. The same goes for Mulholland and Frank Roy. This was not the work of someone acting alone."

Mulholland denies he is involved in a smear campaign, and a source close to Tynan insisted he, too, had played no role.

It is not the first time McConnell’s character has been called into question as a result of his Lanarkshire connections.

It was there that he was accused last year of trying to gag a local newspaper which was reporting on his office allowances. And it was his links with a Lanarkshire lobbying firm owned by Beattie Media that thrust McConnell into a "cash for access" row in 1999, in which he was ultimately cleared, and which led to former Beattie employee Christina Marshall joining his local office as a constituency secretary. Marshall, the daughter of Glasgow Labour MP David Marshall, gave evidence in the cash for access investigation which clashed with another Beattie witness. She is also the centre of the latest allegations which have been laced with innuendo.

McConnell has had to account for the fact that one of three local accounts under investigation paid for a five-star room for Marshall at Edinburgh’s Caledonian Hotel during a Scottish Labour conference in March 2000. McConnell, then finance minister with ambitions for the top job, was staying at the hotel with his wife Bridget.

The scale of the sums involved in Labour politics in Lanarkshire has astonished activists in other parts of the country. One who was stunned by the money changing hands at Motherwell’s Red Rose dinner was "gobsmacked" by the latest irregularity.

"Most local parties are lucky to have about three or four hundred pounds swilling around at a time, let alone 11,000."

But the presence of Scotland’s most powerful politicians has long made Lanarkshire a honeypot for business and union donations on a scale that have raised questions and rumours.

Scotland on Sunday has obtained documents which reveal that Frank Roy’s general election campaign last year was funded almost entirely by Ian Skelly, famous for his successful car business. Skelly put up 5,000 of the 5,637 campaign fund.

Helen Liddell received a 5,000 election fund donation, courtesy of millionairess Vera Weisfield, the former owner of What Every Woman Wants. In 1999 McConnell’s Motherwell and Wishaw party received 5,000 from the Iron and Steel Trades Confederation - whose donations are also now being examined - while former cabinet minister Tom McCabe accepted a 1,000 campaign donation from the locally-based Doonin Plant Ltd.

Labour is determined to close down the latest controversy before it blows up into something it cannot control. It may be too late for that. While party insiders say the missing money is about nothing more than a woman who borrowed money to pay off crippling credit card debts, and that McConnell was not a signatory to the accounts, the episode has led to unprecedented scrutiny of Labour’s secretive financial practices in Lanarkshire.

McConnell will remain under tremendous pressure until the discrepancies are adequately explained. Allies are conscious that the downfall of Henry McLeish owed more to his subsequent explanation of the so-called ‘Officegate’ sub-letting affair than the act itself. They are smarting at SNP claims that McConnell misled parliament by claiming he became aware of local concerns only three months ago and reported them to Labour general secretary Lesley Quinn.

Nationalists believe McConnell was part of an initial investigation into the financial problems seven months ago and should have admitted this to parliament.

"You couldn’t make up this s**t if you tried," chuckled one SNP insider. "And the great thing is the info isn’t coming from us. It’s coming from Labour’s own side."

Senior Labour figures are appealing for calm, concerned about whether devolution could survive the downfall of a third First Minister in three years.

Last night Alex Rowley, Labour’s former Scottish general secretary, said: "There is a real danger that people are starting to disengage with an institution we fought so hard to get. People are asking: ‘What are we paying these people for?’ We need real leadership not just for the Labour party but all the other parties as well."

But there was little sign last night that McConnell’s problems were likely to go away. "The whole area is bubbling like a cauldron," said one Lanarkshire council source. "If Labour cannot deal with sleaze in Lanarkshire why should we expect them to be able to run the country?"