Mr Peter Hain - Standards and Privileges Committee Contents

11.  Letter to the Commissioner from Rt Hon Peter Hain MP, 11 December 2008

Complaint by Mr David Davies MP and Others

Thank you for your letter of 9 December 2008 informing me that you are now resuming your inquiry which you advised had been suspended in your letter of 24 January 2008.

I am fully aware of my continuing and separate obligations in respect of the Register of Members' Interests, and I am now able to respond to your letter of 11 January 2008 following my complete exoneration by the Crown Prosecution Service of the Electoral Commission's reference on the parallel subject of Mr Davies's complaint that I failed to register donations to my Deputy Labour Leader Campaign ("Hain4Labour") within the time limit required.

Thank you for helpfully setting out the relevant Rules and Guidance. I have noted in particular paragraph (b) of Category 4 relating to "any other form of financial or material support as a Member of Parliament". From the Guidance at paragraph 27 to which you have referred me, I am taking, as I have from the very beginning, financial support for my internal party campaign to be Deputy Leader of the Labour Party as being in support of my role as a Member of Parliament which therefore should be treated as registrable.

Incidentally, I attach for information, the statement from the CPS which, in the case of reporting to the Electoral Commission, states that, in respect of my Deputy Leader campaign, I was not in the end legally responsible at all for registering donations to that body and gives reasons, principally that this internal Labour Party election campaign was a Labour "membership association", and that others were therefore responsible.

Since discovering the problem of donations to the Campaign which had not been properly registered, I have sought to be completely open and transparent about the position. This was not because I was under pressure from a complainant or the press, but because this was the right thing to do, reflecting the fact that I have acted in good faith throughout. I wish to point out to you that some £77,000 worth of donations had up until 18 May 2007 been properly and promptly reported to the Register.

As soon as I discovered a major problem with subsequent donations I wrote immediately to your predecessor (letter dated 5 December 2007) in order to alert him, also issuing a statement to the media and contacting the Electoral Commission.

I wish to point out that Mr Davies' complaint and those of two others did not precede but followed my disclosure to your office.

The administrative failings which caused the problem were most emphatically not intentionally caused by myself. Evidence that I always intended that all donations should be properly registered is demonstrated by the prompt registration of all donations up until 18 May 2007. There has never been any suggestion that there was an intention not to register. Indeed, several donors—Bill Bottriell, Robert Davies and Christopher Campbell—who were initially registered properly within time, subsequently made further donations to clear debts which were not. Furthermore, a donation from one trade union (ASLEF) was properly registered, whereas those made later by two other trade unions (GMB and UCATT) were not. All of these donations would of course have been in the public domain later because trade unions are under a legal obligation to report such donations in their annual reports.

As you will also be aware, the late reporting of donations to the Members' Register by other Members has regrettably been widespread (as it has been to the Electoral Commission). As in my case, I can only assume that these have arisen out of honest mistakes.

You asked me to respond to particular matters and I am happy to do so.

The sequence of events

Although, like other candidates, I had been making preparations for some months before, the formal Deputy Leadership election took place from mid-May 2007 until 24th June 2007. However, the organisation of the campaign had been beset both before this formal campaign period and during it by serious difficulties.

Between January and the third week of May 2007, I signed-off reports as they were provided to me by my campaign team of donations both to the Electoral Commission and to the Register of Members' Interests within the proper time. I also reported a donation to clear a debt in December, again within time.

On 29 November 2007, Jon Mendelson, Labour's chief fundraiser, spoke to me to say that in the wake of media controversy concerning donations to the Labour Party he had been asked if he had supported any of the candidates in the Deputy Leadership election. He reminded me that in the summer he had donated £5,000 to my campaign, and I asked my then Special Adviser Claire McCarthy for a print-out from the Electoral Commission's website to confirm the donation. I was very concerned indeed to see that it was not registered. So I made a public statement that evening reporting this as due to an administrative error and explained my intention to remedy the situation.

Discovering this single oversight raised concerns in my mind that there might possibly be other donations which had not been registered in time. It soon became evident that indeed there were, though even at that stage it was not at all clear how many. So, at the earliest opportunity, I visited the Electoral Commission in person to explain my predicament and issued a statement to the media. I also wrote immediately on 5 December to your predecessor and stated that I would be making a full report, adding: "The fact that these donations were not declared as they should have been is extremely regrettable, and I apologise."

I was naturally anxious to ensure that the reporting was comprehensive and accurate. I should point out that this was six months after the campaign had ended. Campaign assistants had dispersed, and it was not clear whether the then available administrative details of the Hain4Labour campaign were sufficient to provide the necessary documentation to allow accurate registration.

Hain4Labour had maintained and operated a bank account which was quite properly independent of me and which had since closed. Donations had been sent to the account signatories and banked by them, not by me. I was therefore not aware of the dates donations were received. However, during December I 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 crosscheck each of these against the donor information. It was also necessary to eliminate receipts into the bank account which were not registrable donations. These, for example, related to partial refunds of expenditure and numerous small donations which happened to have been banked at the same time. So, long after the campaign had ended, I did not have access to an ongoing organisation easily able to provide the necessary factual information.

By 10 January 2008 I felt confident that I had identified all reportable donations and went to see the Electoral Commission with the necessary information and issued a public statement. I also provided the information for the Register of Members' Interests on the following day, 11 January 2008. 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.

Date of payment

You will have received a schedule of donations. The dates shown are those of receipt into the Hain4Labour bank account. It is possible that cheques may well have been received and remained at the campaign offices for some days before being banked. But, so long after the event, I had no means of checking these details. I saw it as my duty to personally check and double-check from whom they came, and the date banked and received into the campaign account and to report the full amounts, and this is what I did. This process necessarily took some weeks with Christmas holidays intervening which accounts for the time between writing to your predecessor on 5th December 2007 and making a full report on 11th January 2008. If I could have reported earlier I certainly would have done. You will appreciate the absolute need at this stage for me to have provided a full and accurate account of donations received and the corresponding dates banked.


Mr Philip Taylor was initially designated "Campaign Director" during preparations for the campaign but was succeeded by Mr Steve Morgan who replaced him as a signatory to the bank account with effect from 7 April 2007. (Mr Taylor left the campaign at this time due to a personality clash with Mr Morgan.) As signatories to the Account with overall responsibility for campaign finance and organisation, the successive Campaign Directors undertook the responsibility for receiving donations, banking these and arranging for reporting them.

The procedure within the Campaign had been that the necessary Electoral Commission forms and letters for reporting to the Members' Register had periodically been supplied to me with the appropriate details for my signature. Up until May 2007, none of the donations so registered had been questioned in any way and I therefore had full confidence in the system which had been set up to comply with my registration obligations on my express instructions. I am known amongst my staff to be meticulous about financial probity, and had instructed my Campaign Directors and their assistants accordingly.

I also wish to mention that, from when the first donation was registered, I was not only Secretary of State for Wales, but also Secretary of State for Northern Ireland, with work intensifying and time-consuming negotiations to get a final political agreement which we eventually did on 8th May. This work was compounded by the Welsh Assembly election campaign that occupied the whole of April and through to polling on May 3rd. When in London during this period I regularly signed letters prepared for me and it was arranged for these to be sent in time to the Registrar of Members' Interests. For some reason this pattern of donation notifications stopped in late-May 2007, letters were no longer provided to sign and I very much regret that I gave this no further thought. Although I had of course been aware of my duties to report all registrable donations to the House, I was used to being a candidate in parliamentary elections (having stood in seven) with my agent having the statutory duty to take care of budgets and returns to electoral officers and keeping me reliably informed.

I have never been given any explanation as to why the procedure in the campaign which had been previously well established and followed to the letter for five months completely broke down from late May 2007.

The campaign itself involved six weeks from mid-May to late June of intensive additional work: UK-wide hustings, weekdays and weekends. Throughout this period I had my constituency MP duties and two Cabinet jobs and, made more demanding in Wales at this time because of the failure of Labour to win an overall majority in May and the complex politics (which I had to help manage) of achieving a coalition government with our Party's traditional opponents, Plaid Cymru. The coalition was finally agreed in July.

Meanwhile I had been appointed on 28th June by the Prime Minister (in addition to retaining Wales), as Secretary State for Work and Pensions — a post with the largest budget and arguably most complex policy range in Whitehall.

I make these points, not in any way to excuse the fact that all the donations were not properly reported to the House, but to provide a sense of the context for you and for the Committee.

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 our mutual horror we gradually realised that the campaign had been left with heavy debts and new invoices which kept appearing unexpectedly. I had previously known absolutely nothing about these; indeed I was astonished that the re-assurances I had expressly sought and been given that we easily had sufficient funds for the new projects recommended in late May and June (including a costly newspaper advert and an even more costly direct mailing of 200,000 Labour Party members) had proved to be false.

The debts were eventually settled by November 2007, but the voluntary organisation that had existed during the six week campaign had by now disappeared and the lack of any formal structure may have contributed to my failure to consider my registration obligations unprompted.

Mr Underwood had never been involved in the process of reporting either to the House or the Electoral Commission (I had specifically entrusted this responsibility to my Campaign Directors).

The absolute priority for Mr Underwood and I was to settle mounting and totally unexpected debts. I must stress that I never consciously made a decision on proper registration, consumed as I was by the over-hanging debts and the problem of how to clear these. In retrospect, this was clearly an act of omission which I fully accept was wrong; but it was emphatically not deliberate.

The pattern of registrations

I hope I have already dealt with the reasons why the full list was not available until 10 January 2008.

I accept fully my personal responsibility for registration. I would additionally point out that temporary campaign organisations for internal Party elections, such as my own, face particular difficulties in terms of administration, continuity and resource, and do not have the same administrative capacities as, say, political parties with established procedures and paid staff. Even, however, with this in mind I am of course very embarrassed by the shortcomings. Without wishing in any way to excuse the lateness of my registrations, a Member of this House is bound to some extent to be reliant on information produced by others in the unusual situation of campaigning for office within a political party. I reasonably believed that the arrangements in place for Hain4Labour would be sufficient to provide the information necessary for me to ensure compliance with the registration requirements. These arrangements included:

a)  the establishment of a separate bank account for Hain4Labour controlled independently of me;

b)  the designation of a suitable and experienced Campaign Director;

c)  the designation of an experienced campaign Chairman — Phil Woolas MP, a Minister of State.

I think it is also right to acknowledge that my campaign for office within the Labour Party had to be given a lower personal priority than my public responsibilities. I have identified, with the benefit of hindsight, two particular factors which I believe were significant in Hain4Labour's administration proving to be unable to ensure timely reports after late May 2007. The first was the unexpected and abrupt departure of Mr. Taylor. I now believe that the resulting disruption was significant. The second was the disappearance of an essentially volunteer organisation following the end of the formal six week campaign and the result of the election becoming known on 24 June 2007. Significant further donations were made before and after this point for which reports should have been made earlier.

You asked specifically in your letter of 9 December 2008 about the two donations-in-kind. The donation from HRA Ltd financed a campaign dinner in Cardiff in March 2007; I 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 I had not previously been aware of the cost and had always assumed this fell within the Hain4Labour's general printing budget.

I stand ready, of course, to provide any further information you or the Committee may seek in line with my offer at the outset to you and to the Chairman of the Committee to co-operate in whatever way is needed. Attached is summary of key dates which you may find helpful.

I would again like to express my regret for this late reporting and wish to apologise again to both you and to the Committee. I hope it will 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.

Complaint against Peter Hain MP: Date Sequence
15 December 2006Hain4Labour bank account opened
25 January 2007First donation reported to Register of Members' Interests
7 April 2007Steve Morgan, replacement Campaign Director for Philip Taylor, also replaces him as bank account signatory
8 May 2007Devolution day in Northern Ireland
Mid-May 2007Labour Deputy Leader campaign begins
18 May 2007Donations registered within time to this date
24 June 2007Labour Deputy Leader campaign ends
28 June 2007Peter Hain moved from Secretary of State for Northern Ireland to Work and Pensions, keeping Secretary of State for Wales
19 November 2007Last bank account transaction
27 November 2007Bank account closed
29 November 2007Peter Hain discovers one donation not properly registered and soon afterwards realises the same must be true for others
5 December 2007Letter to Parliamentary Commissioner informing him of the problem and apologising
8 January 2008Complaint by David Davies MP
11 January 2008Letter to Parliamentary Commissioner registering remaining donations
14 January 2008Peter Hain arranges to meet Parliamentary Commissioner stating "anxious to co-operate fully"
24 January 2008Electoral Commission refers matter of late reporting to the Metropolitan Police and Parliamentary Commissioner suspends his inquiry
2 July 2008Police report referred to the Crown Prosecution Service
5 December 2008Crown Prosecution Service announces no action will be taken against Peter Hain

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