2. Guardian Article, 8 January 2008
Inquiry launched as Labour caught in new donations
row: Hain failed to declare tens of thousands of pounds for his
deputy leader bid
David Hencke and Patrick Wintour
Publication date: 8 January 2008
Source: The Guardian
Page: 1
© Copyright 2008. The Guardian. All rights
reserved.
Peter Hain will be forced to admit that he failed
to declare tens of thousands of pounds worth of donations from
businesses and unions when he stood for the Deputy Leadership
of the Labour party, the Guardian has learned.
The disclosure will reopen the controversy over Labour
party funding and is likely to anger Gordon Brown, who has begun
the new year hoping to reinvigorate his government and draw a
line under the donors issue, which is currently been investigated
by Scotland Yard.
It is understood the prime minister has not yet been
informed of the failures by Hain's team to keep proper records
over who was pledging cash to back his campaign.
The Electoral Commission is expecting to receive
a comprehensive list of donors from the Work and Pensions Secretary
on Monday.
Hain personally decided to audit the accounts after
discovering that no donations had been declared after May 4 last
year - six weeks before the result was announced. The resubmission
of his accounts, more than six months after the deadline for reporting
donations, is extremely embarrassing for the cabinet minister
and he is expected to make a full apology.
Such is the scale of the under-reporting that some
political sources believe Hain's political future rests on his
being able to show that he is the innocent victim of chaos within
his election organisation, and that there has been no deliberate
attempt to conceal the sources of the donations.
He had been urged by close colleagues to make a full
disclosure before Christmas, reflecting tensions within the team
over the conduct of the campaign.
The commission has told the Guardian that it intends
to investigate the failure to declare the money and could impose
a fine on Hain for making an inaccurate declaration of the donations
at the end of July, or for late reporting of the money. Under
electoral law he is personally responsible for submitting correct
accounts - unlike in parliamentary elections, where the agent
is the responsible figure.
Hain volunteered that he had made omissions in his
declared donations to the Electoral Commission in the wake of
the David Abrahams donor scandal last month. Although he did not
take any money from any of the proxies for Abrahams, he discovered
that he had not declared one £5,000 donation from Jon Mendelson,
now Gordon Brown's chief fundraiser.
On December 3 he reported a wider failure to the
commission, but did not disclose either the names of all the donors
or the sums involved.
However, the Guardian understands that the scale
of undisclosed donations runs to tens of thousands of pounds,
and that Hain far outspent his rivals during the course of the
Deputy Leadership contest.
His published donations already show that he spent
£82,000 on his campaign, but it is likely that the total
is well in excess of £100,000—more than double the
amount raised by the successful candidate, Harriet Harman.
It is understood that most of the undeclared donations
are from City or business people but last night it was revealed
that a £10,000 donation in cash and kind from the GMB union,
whose members voted to support his campaign, was also not made
public. This is in addition to a £5,000 undeclared donation
from Mendelson, and £1,300 from a fundraising dinner in Cardiff.
These alone take his total donations to £98,300.
Sources say that donations from City and business will take the
figure much higher.
Midway through his campaign, Hain brought in Steve
Morgan, a political lobbyist, to head operations, and also sought
advice from John Underwood, a former Labour communications director
and now a campaigns specialist.
Morgan, currently in America, did not respond to
inquiries yesterday from the Guardian.
Last night the Electoral Commission confirmed that
it was looking into the circumstances around the late reporting
of the accounts but did not want to comment in detail on the case.
It is not known at what point the work and pensions
secretary became aware of the failure to disclose all the donations
to his campaign.
Last night, his staff would not be drawn on the issue.
A spokesman refused to say why the money had not been declared
in time.
8 January 2008
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