So the Lib Dems won’t be handing back the £2.4m donation from 5th Avenue Partners Ltd after all. Yay.
I do hope however (against all the evidence?) that this won’t now result in large numbers of Lib Dems crowing about how the party’s actions have been vindicated and that the was never any question that the legitimacy of the donation was ever in doubt. The simple fact of the matter is that we cocked up, we got lucky and the law is deeply flawed.
Reading the case summary, it would appear that the party has been saved by the fact that Michael Brown has been found guilty of fraud. The question rested on whether 5th Avenue Partners Ltd was acting as an “agent” to siphon money from Michael Brown or his German company 5th Avenue Partners Gmbh, both of which could not legally donate directly. But because it emerged that the money came from investments made by 5th Avenue Partners Ltd’s clients – i.e. Robert Mann et al – then it is legitimate. Of course, Robert Mann and the Fraud Squad might demur from the word “legitimate”.
Now, the party had no way of knowing the extent of Michael Brown’s deception. Nor can it be denied that it went out of its way to establish whether there was anything out there to suggest Brown was not a man they should be doing business with. But the fact of the matter is the world is a big place and with the benefit of hindsight it is clear the party was looking in the wrong place.
Fundamentally, it has never been clearly established who took the decision to accept the donation. Treasurer Reg Clark resigned shortly before the first donation in circumstances that have never been made clear. The party’s federal executive was not involved, nor was the finance and administration committee. And you don’t need hindsight to tell you that accepting £2.4m from a man who comes out of nowhere, who isn’t resident in the country, whose company hasn’t yet filed its first set of accounts to Companies House and whose donation has come so late you can’t properly spend in the general election anyway, is an unacceptable risk. But then I suppose Lib Dem politicians were as goggle eyed with the glamour of the hedge funder as all other politicians at the time, and had lost all perspective. Exerting caution only makes sense if you aren’t wined and dined by city wideboys on a weekly basis.
Suffice to say, a law which lets one party off on a technicality like that, while forcing another party to repay hundreds of thousands of pounds simply because a donor dropped off the electoral roll for a couple of months, is an ass. And an Electoral Commission which takes so long to establish such technicalities has deep organisational problems as well. We need a system which doesn’t potentially force political parties to go bankrupt because of the mistakes of a couple of officials by allowing parties to get the Electoral Commission to clear large donations in advance.
And so we turn to Michael Ashcroft and Bearwood Corporate Services Ltd. Here again, the Electoral Commission have been dragging their heels for months. On the one hand, things look precarious for the Tories because, on the face of it anyway, it does not appear that Ashcroft has been defrauding any UK investors. But if the Electoral Commission have managed to conclude that 5th Avenue Partners Ltd was trading legitimately then I wouldn’t hold your breath. As for what is really going on, that’s anyone’s guess.
Note: I was a member of the Lib Dems’ Federal Executive from January 2003 until I resigned in November 2005. I was a member of the Federal Finance and Administration Committee from February 2005 until my resignation from the FE.