Donorgate

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Donorgate is the colloquial name for the political scandal involving the British Labour Party in November and December 2007, when it was discovered that, contrary to legislation passed during the Blair Government, the Party had been receiving significant financial donations made anonymously via third parties.

1 Background
2 References

[edit] Background

On November 25, 2007, The Mail on Sunday carried a front page headline: 'How big Labour backer is a jobbing builder who knows NOTHING about his £200,000 donation'. It was revealed that Tyneside lawyer David Abrahams has donated to the Labour Party at least £548,850 since 2003, via two work colleagues, his solicitor and the wife of an employee, which breaks electoral law that forbids the use of proxy donors. Abrahams has had a colorful political involvement with the Labour party over many years.

After being honoured with a front row seat in Sedgefield at Tony Blair's announcement that he was leaving office, in November 2007 it emerged that since Prime Minister Gordon Brown had come to power, Abrahams was now Labour's third largest donor behind Lord Sainsbury of Turville (£2million) and Iranian businessman Mahmoud Khayami (£320,000 in September 2007). ^[1] (Mr. Khayami's donations have since come under some scrutiny in the press, though there is no indication that they were in any way illegal)^[2]Abrahams has donated at least £548,850 since 2003, via two work colleagues, his solicitor and the wife of an employee.^[3]

Abrahams's secretary Janet Kidd 'gave' £80,000, while builder Ray Ruddick - who has 'given' a total of £196,000 according to a political donors list - had contributed £104,000 of the £222,000 donated by Abrahams in the five months since Mr Brown became PM.^[4] Mrs Kidd has 'donated' £185,000 since 2003,^[5] and is also listed as a £5,000 donor to Harriet Harman's successful Labour deputy leadership bid in 2007;^[1]

The Mail on Sunday which broke the story investigated the donations after it emerged that builder Ray Ruddick lived in a former council house he had bought for £12,000, and drove a second-hand blue Ford Transit;^[5] while Mrs Kidd was a secretary living in Whickham near Gateshead.^[6] It also emerged that £167,000 had been given previously through another intermediary, solicitor John McCarthy;^[7].

Another go-between used by Abrahams, Janet Dunn, who is a life-long Conservative Party supporter, and a lollipop lady by profession, has subsequently claimed that she never knowingly paid any money to the Labour Party; she had only on one occasion signed a blank cheque for Mr. Abrahams for £25,000 after he had paid a similar amount into her own bank account. "I thought it was just a bit of business", her husband has said. However a donation of £25,000 in her name was received by the Labour Party in 2003, although Mrs Dunn says the first she knew of this was on 26 November 2007.^[8]^[9]

After the news broke of Mrs. Kidd's 'donation' to her campaign, Harriet Harman made a statement saying she accepted a donation to her campaign for the Labour Party deputy leadership (which she eventually won) on 4 July "in good faith," had registered the monies with the Electoral Commission and the Register of Members Interests, and that she "was not aware of any funding arrangements... between David Abrahams and Janet Kidd".^[10] Baroness Jay of Paddington, who was working on the deputy leadership team of Hilary Benn, questioned and turned down a donation of £5,000 offered by Mrs Kidd; but it was subsequently accepted by Benn's team when made under the name of Mr Abrahams.^[10] Kidd offered a similar 'donation' to the leadership campaign of Gordon Brown, but was turned down as she was not a known donor.^[11]

On 3 December 2007 Peter Hain, on BBC Radio, admitted that some donations to his own Labour deputy leadership campaign "were not registered as they should have been".^[12]

At the time of Abraham's attempted offer of £5000 towards Hilary Benn's campaign for the office of Deputy Prime Minister, and his successful donation of £5,000 to Harriet Harman who was campaigning for the same position, Abrahams was in the midst of protracted negotiations concerning a development he was proposing close to the A1.

After initial proposals had been rejected by the Highways Agency, Abrahams made his donations, and resubmitted plans which were duly accepted the second time round. The Highways Agency was overseen by the Department for Transport which at that time was headed by the Office of the Deputy Prime Minister.

According to the BBC, Mr Abrahams said he donated cash secretly to avoid accusations of being part of a "Jewish conspiracy". ^[13] Mr Abrahams, a practising Jew, has strong links with Israel. He is provincial vice-chairman of the Jewish Labour Movement, serves on the executive of the Trade Union Friends of Israel, and supports organisations including the Community Security Trust (a British charity set up to protect Jews living in the UK), Labour Friends of Israel, and Academic Friends of Israel. Earlier this year, he provided £250,00 to found a chair in International Politics of the Middle East at Warwick University. For many years, he has made regular trips to Israel with Trade Union Friends of Israel and earlier this year, in Britain, he met Ehud Olmert, the Israeli prime minister, whom he has also seen in Israel. His neighbours in Newcastle recall years ago that their road had to be closed for "security reasons" when the Israeli ambassador visited Mr Abrahams at his home. Mr Abrahams, however, insists that his charity and political donations are from his own pocket -and that he is not the conduit of another mystery benefactor.^[14]

Coincidentally, at the same time Wendy Alexander, Labour leader in the Scottish Parliament and sister of British cabinet minister Douglas Alexander, also became involved in a funding scandal after it emerged that she had accepted an illegal donation from Paul Green, a property magnate,^[15] a matter which is being investigated by the Electoral Commission and Strathclyde Police.^[16] Further newspaper reports on 30 November indicated Alexander was aware of the identity of the donor, after having sent a personal letter of gratitude to Mr Green (at his home in the tax haven island of Jersey) concerning the donation.^[17] Accepting a donation from someone who is not registered on the UK electoral roll is illegal under electoral law, and is subject to criminal prosecution. As Mr Green was not registered as an elector on any electoral register in the United Kingdom this barred him from donating to a UK-based party.

Mr. Green has stated that he in fact gave two donations to Labour, both at the suggestion of Charlie Gordon, MSP. He said: "This has to be gross mismanagement... I am angry that I have been innocently embroiled in a national controversy, that's what's really upsetting me. When you have done nothing wrong, to find yourself banner headlines is not very pleasant." ^[18]

[edit] Resignation of Peter Watt

The General Secretary of the Labour Party, Peter Watt, resigned on the 26 November, after saying he took full responsibility. In his monthly press conference on 27 November, Prime Minister Gordon Brown said donations to the Labour Party by Abrahams through intermediaries were "completely unacceptable" and would be repaid.^[11] The Electoral Commission is seeking to investigate under the Political Parties, Elections and Referendums Act 2000 why they were given wrong names and what checks Labour made into its “donors”,^[4] and has since called in the Crown Prosecution Service for briefings and advice.

In December 2007, the Metropolitan Police wrote to the Labour Party saying that "the donated money was no longer an issue for the police". Mr Abrahams and his middlemen were also cleared of any wrongdoing. It was also discovered that the £630,000 donated had not been returned to Mr Abrahams, although Harriet Harman had returned the £5,000 donated to her.^[19]

[edit] Chief Fundraiser involvement

Jon Mendelsohn, Brown's chief fund raiser, admitted that he had known since September about the arrangement, but claimed that he disapproved. Abrahams contends that Mendelsohn had known since April, and had encouraged the process. Mendlesohn denies this.^[20] Abrahams and Mendelsohn have known each other for many years, having both been involved in the Labour Friends of Israel movement.

[edit] Political repercussions

Donorgate meant that Gordon's Browns administration was involved in an early scandal, and only a few months after the Cash for Peerages imbroglio which had beset Blair. There has been heavy criticism from opposition parties, which includes calls for Harman's resignation. Conservative leader David Cameron questioned Brown's integrity during Prime Minister's Question Time and Liberal Democrat leadership contender Chris Huhne asked police to get involved, in particular as regards the planning permissions granted to Mr. Abrahams.