My inquiries
18. Before I had initiated any inquiries, Mr
Hain wrote to me on 11 January enclosing a copy of what he described
as a full declaration to the Register of Members' Interests of
previously undisclosed donations to his Deputy Leadership campaign.[14]
(Mr Hain had sent a similar statement to the Registrar of Members'
Interests on the previous day, 10 January.) Mr Hain reported that
he had had a meeting with the Electoral Commission on 10 January.
He attached a copy of a press statement which he had issued and
which included a table headed "Full Declaration of Donations".[15]
Mr Hain concluded his letter to me as follows:
"I would like to apologise to you and to the
House for failing to register these donations within the required
time limit. This is deeply regrettable and the result of administrative
and organisational failures in my campaign, for which I take full
responsibility."
19. All the donations submitted by Mr Hain on
11 January 2008 were entered in the Register on the same date.
20. On the same day, 11 January 2008, I wrote
to Mr Hain about the complaint I had received from Mr Davies.[16]
I acknowledged the letter he had sent me earlier that day and
undertook to report his apologies—as I subsequently did—to
the Committee on Standards and Privileges. I invited his comments
on the complaint which was that he had failed to register in the
Register of Members' Interests, within the time limit required,
all the donations he received in respect of his campaign for election
as Deputy Leader of the Labour Party. I asked him to set out the
full sequence of events; to identify the dates for the receipt
of any donations, from whom they came and whether they were financial
or material support and the sums involved or the support given;
whether he had delegated to any member of staff tasks to assist
him in the registration; and to let me know the reasons why the
registrations in the Register of Members' Interests stopped on
18 May 2007, why they resumed again on 30 November and why the
full list was not made available until he had sent it to the Registrar
on 10 January 2008.
21. Mr Hain came to see me on 14 January 2008
to ask about my procedures and to make clear that he would co-operate
fully with my inquiry. On 24 January, before Mr Hain had responded
to my letter, the Electoral Commission announced that, following
discussions with the Metropolitan Police Service and the Crown
Prosecution Service, the Commission had referred matters to the
Metropolitan Police for them to consider whether an investigation
should commence. Shortly after receiving that statement, I confirmed
with the Metropolitan Police Service that an investigation would
now begin. Having spoken both to the Commission and to the Metropolitan
Police, I came to the conclusion that to continue with my enquiries
could prejudice the conduct of the police investigation. Having
spoken to the Chairman of the Committee, therefore, I announced
on 24 January that I was suspending my enquiries. I informed Mr
Hain and the three complainants of this decision on the same day.
I subsequently reported the matter to the Committee on Standards
and Privileges, and the Committee issued a report to which was
annexed my memorandum to the Committee.[17]
22. Mr Hain announced on 24 January 2008 that
he was resigning from the Cabinet in order to respond to the allegations
against him which the police were investigating.
23. On 2 July 2008 the Metropolitan Police Service
announced that it had passed its file to the Crown Prosecution
Service to advise on whether any further enquiries were necessary
and whether any charges should be brought.
24. On 5 December 2008, the Crown Prosecution
Service announced that there was "insufficient evidence
to charge Peter Hain MP with any offences in relation to donations
made to Mr Hain's campaign to support his bid to become Deputy
Leader of the Labour Party in mid 2007."
25. In the light of this announcement, I concluded
that it would be right for me to resume my inquiry into the separate
(but related) complaints about the reporting by Mr Hain of the
donations he received in the Register of Members' Interests. I
reported this to the Committee at its meeting on 9 December.
26. I wrote to Mr Hain and to the complainants
on 9 December to let them know that I was resuming my inquiry.
With my letter to Mr Hain, I sent him copies of the letters from
all three complainants and I invited him to let me have a response
to my letter to him of 11 January 2008.[18]
I noted that his letter of 11 January 2008 had already given most
of the details of the donations which he had not previously declared,
but I invited him to give me some further information about the
benefits in kind which he had received.
27. Mr Hain responded on 11 December 2008.[19]
Mr Hain said that he was interpreting, as he had from the very
beginning, financial support for his internal party campaign to
be Deputy Leader of the Labour Party as being donations given
in support of his role as a Member of Parliament, which therefore
should be treated as registrable. Since discovering the problem
of donations to his campaign which had not been properly registered,
he had sought to be completely open and transparent about the
position. This was not because he was under pressure from a complainant
or the press, but because he believed it was the right thing to
do, reflecting the fact that he had acted in good faith throughout.
Up to 18 May 2007, some £77,000 worth of donations had been
properly and promptly reported to the Register.
28. Mr Hain noted that as soon as he had discovered
a major problem with subsequent donations, he wrote immediately
to my predecessor in a letter of 5 December 2007,[20]
issued a statement to the media, and contacted the Electoral Commission.
The complaints did not precede but followed his disclosure to
my office.
29. Mr Hain said that the "administrative
failings which caused a problem were most emphatically not intentionally
caused by myself". There had never been any suggestion
that there was an intention not to register. That he had always
intended that all donations should be properly registered was
demonstrated by the prompt registration of all donations up until
18 May 2007.
30. Mr Hain noted that the late reporting of
donations to the Members' Register by other Members "has
regrettably been widespread". As in his case, he could
only assume "that [this] had arisen out of honest
mistakes".
31. Mr Hain said that the organisation of his
campaign had been beset by serious difficulties both before the
campaign period formally started in mid May 2007 and during the
campaign period. Between January and the third week of May 2007
he signed off, within the proper time, reports of donations as
they were provided to him by his campaign team both to the Electoral
Commission and to the Register of Members' Interests. He had also
reported a donation to clear a debt in December 2007, again within
time. (The registration was in fact made some five and a half
weeks after the date of the donation, a little over a week out
of time.)
32. On 29 November 2007, Mr Jon Mendelson, the
Labour Party's chief fund raiser, reminded Mr Hain that in the
summer of 2007 he had donated £5,000 to his campaign. Mr
Hain checked the Electoral Commission's website to confirm the
donation. He was very concerned to see that it was not registered.
He made a public statement that evening (29 November 2007) reporting
this as due to an administrative error and explaining the intention
to remedy the situation.
33. Mr Hain said that this oversight raised concerns
in his mind that there might possibly be other donations which
had not been registered in time. It soon became evident that there
were such donations, although at that stage it was not clear how
many. He visited the Electoral Commission in person "to
explain my predicament" and issued a statement to the
media. He also wrote on 5 December 2007 to my predecessor saying
that he would be making a full report and adding: "The
fact that these donations were not declared as they should have
been is extremely regrettable, and I apologise."
34. Mr Hain noted that this happened six months
after the campaign had ended. Campaign assistants had dispersed.
He said that Hain4Labour (the organisation which ran Mr Hain's
campaign) had maintained and operated a bank account "which
was quite properly independent of me" and which had since
closed. In December 2007, he was able, after some difficulty,
to obtain a full set of bank statements recording all the payments
and receipts of the campaign. It was necessary to cross check
each of these against the donor information and to eliminate receipts
into the bank account which were not registrable donations. By
10 January 2008, he felt confident that he had identified all
reportable donations. He went to see the Electoral Commission
and issued a public statement. He also provided the information
for the Register of Members' Interests on the following day, 11
January 2008.[21] Mr
Hain concluded this part of his account as follows:
"I hope you are able to accept that I tried
at the very earliest opportunity, and in the circumstances described,
to do whatever I could to remedy the highly unsatisfactory situation
which I had discovered."
35. Turning to the dates of payment, Mr Hain
said that the dates shown in the schedule of donations (which
he had sent me on 11 January 2008) were those of receipt into
the Hain4Labour bank account. It was possible that cheques may
well have been received and remained at the campaign offices for
some days before being banked, but he had no means of checking
this.
36. In response to my question about the delegation
of responsibility within his campaign, Mr Hain said that his campaign
director was the signatory to the bank account. The first campaign
director, Mr Philip Taylor, was succeeded by Mr Steve Morgan with
effect from 7 April 2007. Mr Hain said that the procedure within
the campaign had been that the necessary Electoral Commission
forms and letters for reporting to the Members' Register had been
periodically supplied to him with the appropriate details for
his signature. Until May 2007, none of the donations so registered
had been questioned in any way and he therefore had full confidence
in the system which had been set up on his express instructions
to comply with his registration obligations. Mr Hain said that
up until May 2007 he regularly signed letters prepared for him
and it was arranged for these to be sent in time to the Registrar
of Members' Interests. Then: "for some reason this pattern
of donation notification stopped in late May 2007." Mr
Hain said that letters were no longer provided to sign and "I
very much regret that I gave this no further thought".
He had never been given any explanation as to why the procedure
"which had been previously well established and followed
to the letter for five months completely broke down from late
May 2007."
37. Mr Hain referred to the pressures on him
at this time, including the six weeks of intensive additional
work on campaigning, his constituency duties and two Cabinet jobs,
followed on 28 June 2007 by being appointed as Secretary of State
for Work and Pensions in addition to his responsibilities for
Wales. He did not make these points in any way to excuse the fact
that all information was not properly reported to the House, but
to provide a sense of context.
38. Mr Hain said that after the campaign had
ended on 24 June 2007, Mr John Underwood, a co-signatory to the
account, took responsibility for winding up the affairs of Hain4Labour.
To their "mutual horror", he gradually realised
that the campaign had been left with heavy debts. New invoices
kept appearing unexpectedly. Mr Hain had previously known "absolutely
nothing" about these. The debts were eventually settled
by November 2007, but Mr Hain said that the voluntary organisation
as it existed during the six week campaign had by then "disappeared"
and the lack of any formal structure may have contributed to his
failure to consider his registration obligations. Mr Underwood
had never been involved with the process of reporting to the House
or the Electoral Commission, since it had been a matter for the
campaign directors. The "absolute priority"
for Mr Hain and Mr Underwood was to settle mounting and unexpected
debts. Mr Hain added: "I must stress that I never consciously
made the decision on proper registration, consumed as I was, by
the overhanging debts and the problem of how to clear these."
In retrospect, Mr Hain said that this was "clearly an
act of omission which I fully accept was wrong; but it was emphatically
not deliberate." Mr Hain added that he accepted fully
his personal responsibility for registration.
39. Mr Hain noted that while temporary campaign
organisations faced particular difficulties of administration,
continuity and resource, even with this in mind, he was, "of
course, very embarrassed by the shortcomings." Without
wishing to excuse the lateness of his registrations, he said that
a Member was "bound to some extent to be reliant on information
produced by others in the unusual situation of campaigning for
office within a political party". The reasons why he
believed that the arrangements in place for Hain4Labour would
be sufficient to provide the information necessary for him to
ensure compliance with the Registration requirements included
the establishment of a separate bank account and the designation
of an experienced campaign director and campaign chairman.
40. Mr Hain said that his campaign for office
within the Labour party had to be given a lower personal priority
than his public responsibilities. The two factors which he believed
were significant in Hain4Labour's administration proving to be
unable to ensure timely reports after May 2007 were the unexpected
and abrupt departure of his first campaign director and the disappearance
of the essentially volunteer organisation following the end of
the formal six week campaign.
41. In response to the request in my letter of
9 December 2008 about the benefits in kind which he had received,
Mr Hain said that the donation from HRA Limited financed a campaign
dinner in Cardiff in March 2007. He had not previously been aware
of the total cost and whether it was therefore eligible for registration.
The donation in kind from the GMB Trade Union financed leaflets
it had printed in early June 2007 for an internal union ballot
for its Members to vote in the election. Again, he had not previously
been aware of the cost and had always assumed this fell within
the Hain4Labour general printing budget.
42. Mr Hain concluded that he would "like
to express my regret for this late reporting and wish to apologise
again" to the Committee. He hoped that it would be accepted
that "I have acted in good faith voluntarily to bring
this to your notice at the first opportunity and accordingly that
the complaint warrants no further action."
43. Having considered Mr Hain's letter of 11
December and the previous evidence that he had sent me on 11 January
2008, I concluded that I had sufficient evidence upon which to
resolve this matter.
Findings of Fact
44. Mr Hain stood for election to the post of
Deputy Leader of the Labour Party in the spring of 2007. The results
of the ballot were announced on 24 June 2007. Mr Hain was not
successful in the ballot. From January 2007, Mr Hain had received
donations to support him in his election campaign. These donations
continued to be received until November 2007. Donations received
after the end of the election campaign were necessary in order
to clear the debts incurred during the course of the campaign.
45. Mr Hain registered in the Register of Members'
Interests within the required four weeks of having received them,
all 10 of the financial donations he had received until May 2007.
He registered an additional donation out of time on 30 November
and a further donation, a little out of time, on 18 December 2007.
He registered out of time on 11 January 2008 15 further financial
donations received between June and November 2007, and two donations
in kind made in April and June 2007 respectively. By 18 May 2007,
Mr Hain had registered donations together worth £77,000.
In November and December 2008, Mr Hain registered further donations
together totalling £10,000. The remaining donations which
he registered late, including monetary values he assigned to the
donations in kind, totalled £103,156.75.
46. Mr Hain had given responsibility for submitting
to him notifications of the donations which had to be registered
in the Register of Members' Interests to the organisation responsible
for his campaign (Hain4Labour) under its campaign director. Mr
Hain's campaign director was changed in April 2007.
47. Mr Hain's campaign team was disbanded after
the end of the campaign in June 2007. But the campaign faced debts
for which donations needed to be sought until the debts were
largely settled in November 2007. Mr Hain only discovered these
debts after the end of the campaign. During the period from June
to November 2007, Mr Hain did not put in place procedures for
reporting donations received during that period. Nor did he consider
his obligations to register the donations he received during that
period.
48. Mr Hain identified the need to register one
of the unregistered donations when the donor reminded him at the
end of November 2007 of the donation he had made to his campaign
in the summer. Having checked the Electoral Commission's website,
Mr Hain discovered that it had not been registered with the Commission.
He announced this oversight publicly on 29 November 2007. Mr Hain's
office asked on 30 November 2007 that this donation should be
registered in the Register of Members' Interests. The register
entry was made on the same date.
49. Mr Hain considered that there could have
been other donations which had similarly not been registered.
Having had a meeting with the Electoral Commission on 3 December,
and having issued a press statement, Mr Hain wrote to my predecessor
on 5 December to let him know that further donations to his campaign
had not been registered as they should have been and informing
him that he was preparing a full list of all such donations for
both the Register and the Electoral Commission.
50. Mr Hain's office asked to register a further
donation on 18 December 2007 and it was registered in the Register
of Members' Interests on the same date. This was a donation to
clear a campaign debt and was registered a week and a half out
of time.
51. Mr Hain sent a full list of all the remaining
donations to the Register of Members' Interests on 10 January
2008 and to me the following day. These donations were registered
in the Register on 11 January 2008.[22]
52. Mr Hain has stated in his evidence that he
did not intend that these donations should not be registered in
the Register of Members' Interests. He has accepted fully his
personal responsibility for registration. He has noted that he
made public the problems with the notification of his donations
and apologised before the matter was reported in the media or
any complaint made. Mr Hain is unable to explain why the system
for notification which operated up to late May 2007 broke down
from that date. But he suggests that the breakdown in timely reporting
of donations was caused first by the departure of his first campaign
director, and secondly by the disbandment of the campaign organisation,
after which donations continued to be sought and received.
53. Mr Hain has apologised that the donations
were not registered in time in the Register of Members' Interests
which he has described as "extremely regrettable".
Conclusions
54. Mr Hain has readily accepted that he failed
to register in time all the donations he received in respect of
his campaign for Deputy Leadership of the Labour Party. Such a
failure to register all his donations in time is a clear breach
of the rules of the House.
55. I therefore uphold the complaints against
Mr Hain that he failed to register in time all the donations he
received for his campaign for election to Deputy Leadership of
the Labour Party within four weeks of receipt of the donation,
as required by the House. I accept Mr Hain's assurances that all
the donations he received are now registered, albeit late, and
have been so registered since 11 January 2008.
56. Mr Hain has accepted personal responsibility
for his breach of the rules of the House. I believe his interpretation
of the rules is correct. Members should register in the Register
of Members Interests' under Category 4 all the donations they
receive in support of electoral contests among Members of Parliament
for the sort of party office for which Mr Hain was standing. Mr
Hain properly accepted the need to register his donations for
the campaign, as I believe did all the other candidates.
57. I accept Mr Hain's explanation of the sequence
of events which led to these errors occurring. I consider that
they arose initially from a breakdown within his campaign organisation
of the system for notifying him of his obligations to register
from May 2007. Up to that time, with the exception of one donation
in kind, all donations were properly registered. I accept also
Mr Hain's evidence that no alternative system was put in place
following the disbandment of his campaign team at the end of the
election period, and that Mr Hain did not himself identify the
need to register the donations which were being sought and received
after the end of his campaign to clear its debts.
58. It was unfortunate that Mr Hain did not notice
that he was no longer being asked to notify the Registrar of Members'
Interests (and the Electoral Commission) of donations to his campaign
from 18 May 2007 until the end of the campaign on 24 June 2007.
It was equally unfortunate that Mr Hain did not put in place any
system to meet his obligations to register the donations which
he knew continued to be solicited and received after that date.
59. Mr Hain has fairly noted the other priorities
and pressures on him as a senior government Minister at the time.
He has equally fairly not sought to avoid his own responsibility
for having failed to report all his donations. In my view, the
oversight by Mr Hain of his obligation to register all his donations
was both serious and substantial. Once he had identified the oversight,
however, the evidence shows that Mr Hain acted quickly and openly
to address it. The action he initiated was not done in response
to media reports or a particular complaint. I accept that he made
every effort to ensure that he produced a full list of the donations
he had received as soon as he reliably could do so. He has accepted
his personal responsibility for the errors. He apologised at the
first opportunity.
60. The Committee will wish to weigh the actions
Mr Hain has taken to rectify the position in considering my conclusions
on this matter.
15 January 2009 John Lyon CB
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According to the practice of deleting Register entries where the
registration date is identified, which have been in the Register
for a year and which have also appeared in one printed register,
no entries relating to Mr Hain's campaign for the Deputy Leadership
of the Labour Party appear in the current edition of the Register. Back
