'Secret' donors give Tories £500,000

THE Conservatives were facing questions about their finances last night after it emerged that the party had taken £500,000 from a Scottish "front company" that allows donors to remain anonymous.

The money was raised last September at a gala dinner in Glasgow, organised by the building tycoon Sir Jack Harvie. David Cameron, the party leader, was the guest of honour at the 2,500-a-table event.

After the dinner, an organisation called Scottish Business Groups Focus on Scotland paid 500,000 to Conservative Central Office in London. The payment was recorded with the Electoral Commission on 5 October and declared yesterday.

But because of Focus on Scotland's unusual legal status, the details of the individuals who contributed to the 500,000 payment do not have to be made public.

Focus on Scotland is an "unincorporated association", a legal entity that, unlike a traditional company, is not required to make public its membership, nor its sources of finance.

Under electoral law, any individual payment of 5,000 or more direct to a political party must be publicly declared. But when such a payment is made first to an unincorporated association and then by the association to the party, it does not need to be declared.

There is no suggestion that Sir Jack or the Tories have broken electoral law, but Labour ministers have described the practice as exploiting a loophole in the law and have pledged to ban it.

Sir Jack confirmed to The Scotsman yesterday that some people attending the dinner had paid 5,000 or more to Focus on Scotland. The money had then been passed to the Conservative Party, along with a breakdown of those attending and the payments they made. "They have a complete list," Sir Jack said. "I give them a return of everyone who takes a table."

He said that all the people who had donated at the dinner were UK citizens of good standing - "all well-known people, well-known companies".

Both Sir Jack and the Conservative Party declined The Scotsman's request to publish the list of contributors at the dinner.

Peter Facey, the director of Unlock Democracy, a charity organisation campaigning for greater transparency in political funding, said he was concerned at the rise in "entirely unregulated" donations from unincorporated associations.

"The potential for abuse of this system is immense, and the fact that funding by this route has increased exponentially suggests that people may be deliberately hiding behind this loophole to protect their anonymity," he said.

Jacqui Smith, Labour's chief whip, also attacked the Tories' funding arrangements, describing Focus on Scotland as a "shadowy organisation".

"The Tory party's finances are still shrouded in secrecy," she said.

"The Tories have some serious questions to answer today. When will David Cameron come clean about the true sources of the Tories' funding?"

But a Conservative spokesman insisted that the party had complied fully with the electoral rules. "We abide by the law at all times," he said.

In all, the Glasgow dinner has raised 700,000 for the Conservatives. A payment of 200,000 was made and declared last August based on advance ticket sales.

• BIG donors have almost entirely abandoned Labour, official figures show.

The Electoral Commission reported that in the last quarter of last year, Labour raised 2.6 million. Only three significant payments came from wealthy individuals, with the lion's share given by trade unions.

By contrast, the Tories brought in 5.3 million in donations. And the Liberal Democrats came close to equalling Labour, raising 2.3 million.

The Scottish National Party, meanwhile, claimed it is now the best-funded party contesting the Holyrood elections. It raised 444,000 from private donors.