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