Political Parties (Funding and Expenditure) Bill [HL]

Lord True Excerpts

2nd reading (Hansard): House of Lords
Friday 10th March 2017 Lords Chamber

[Lord True (Con)]

My Lords, I congratulate the noble Lord, Lord Tyler, on bringing forward this Bill. I congratulate him particularly on talking about the need to control big money donations in the week that his party leader has been exalting in press releases a £1 million donation and surpassing the money received by the Labour Party. Anyone who heard the brilliant speech by the noble Baroness the Leader of the Opposition on the notification of withdrawal Bill will not be surprised to learn that it is possible for the Liberal party leadership to be exalting a £1 million donation at one end of Parliament while here they are being attacked. Despite all that, I compliment the noble Lord, Lord Tyler, because he is always very assiduous on these matters and important to listen to, and a number of the ideas in the Bill—he did not speak about it very much—deserve careful consideration. In particular, there is a good case for extending gift aid to personal political donations, particularly at the local level, where political service in local communities is objectively little different from other forms of voluntary service for the public good.

Before I go any further, I must restrain myself. The cynic in me, which sadly occasionally gnaws its way through my customary civility to the Liberal Democrats, tempts me to say that some might see Part 1 of Schedule 2, entitled “Limits on campaign expenditure”, and the noble Lord’s condemnation of busloads of activists being taken to elections as perhaps a little rich in a Bill that is commended by the party opposite. However, this being Lent, I will restrain myself. As the Bishops’ Benches are empty, I say that I think we should all reflect on verse 7, chapter 8 of the gospel according to St John. To paraphrase, let the party that is without sin cast the first stone.

The noble Lord referred to things that are not in the Bill, and I would like to refer to two potential lacunae in the law that I think are important: first, the reception of donations that are later found to be the direct proceeds of crime; and secondly, the risk of corrupt attempts to induce a political party not to put up a candidate in an election. On the first point, I take as my test case that of Michael Brown, convicted in 2008 for theft, furnishing false information and seeking to pervert the course of justice. As is well known, he later broke bail as a fugitive from justice.

In 2005, Brown donated £2.4 million to the Liberal Democrats in just seven weeks. Before anyone says that I have just forgotten John chapter 8 verse 7, I would point out that the Maxwell and the Asil Nadir cases show that all parties have encountered this problem, so let the party that is without sin cast the first stone. But three wrongs do not make a right, and I am focusing on the Brown case because it took place after the establishment of the Electoral Commission and it clearly shows the inability of the commission to secure the return of donations that are the proceeds of criminal enterprise. An impermissible donation may be required to be returned, with a sanction in some cases, while a donation made that is later found to be from the proceeds of crime may not.

The only issue in law that the Electoral Commission can pursue is whether the donation appeared reasonably to be permissible at the time it was given, and that broadly, in the case of a company—in this case Brown’s company, 5th Avenue Partners—is whether it is incorporated in the UK and trading. That is something we are told in the entertaining memoirs of the noble Lord, Lord Razzall. I am always pleased to plug the works of a former fellow Richmond councillor. He says that the Metropolitan Police Special Branch told the Liberal Democrats at the time that 5th Avenue Partners was trading legitimately. It is therefore immaterial that it was later proved in the courts that the donating company was operating as the front for a massive fraud. Paragraph 3.7 of the Electoral Commission’s later report on the case implied that three donations to the Liberal Democrats, one of £100,000, another of £151,000 and a third of £632,000, were made up of money put into the company by defrauded would-be investors which was flipped by Brown into political donations.

The court found that Brown had fleeced at least £36 million from people who thought they were investing in a successful hedge fund that was being run by the son of a Peer. I never understand why people find it so beguiling, when they are approached by someone who claims to be the son of a Peer, that they hand over their money. One person gave more than £8 million, a very unfortunate individual whose name is well known. But no action could be taken to recover the funds that later were found to be the proceeds of criminal enterprise.

One of Brown’s victims, Mr. P., took the case to the parliamentary ombudsman, who found against the Electoral Commission on certain grounds of negligence, as he saw it, but the commission did not accept all those findings and the matter was effectively closed. The party kept the money, as in the past the Maxwell and the Nadir had been kept, and the victims lived with the loss. There is a clear inequity here and a divergence between the treatment of what is found, albeit in good faith on the part of a party, to be an impermissible donation at the time and one which is later found to come from criminal fraud. If this Bill goes forward to Committee the issue should be addressed.

The second matter I wish to raise relates to the murky affair of a £250,000 donation offered by a still anonymous individual or company to the Green Party in the context of a discussion about whether the Greens should put up a candidate in the Richmond Park by-election and give a free run to the Liberal Democrats. That this attempted donation was made is not denied; quite the reverse. A report from the Kingston Green Party declares that:

“Party staff added pressure to—


Kingston Green Party—

“activists, saying in confidence, that the party staff were keen for us to agree to stand down. This was because there would be serious, but confidential, implications for the national party—so serious that they could even affect the jobs of party staff—in the event that we did not do so. Later ... it was clarified by Party staff (ostensibly on the instructions of the Chief Executive) that this related to a donation of some £250,000 that was conditional on the party showing its seriousness about the ‘progressive alliance’ initiative”—

between the Greens and the Liberal Democrats.

Prima facie, on the evidence of those most actively involved, there was an inducement of around a quarter of a million pounds on offer for the Greens not to oppose the Liberal Democrats, either here or more widely. This was not denied by the Green Party. Indeed it has been reported, first, that a central staff member did discuss the proposed donation with local Green Party members, but that that was “an error”. That is the usual excuse of overzealous officials that comes up in so many cover-ups. Furthermore, the Green Party has subsequently said that the donation was considered but rejected by the party’s own ethics committee, which we are told ensures that no donations are accepted, inter alia, from foreign sources, tobacco companies or other industries such as aviation. In other words, the offer was made and considered by the Green Party. It was used in argument within the party to seek to induce people not to come forward or wish to come forward to be candidates, but was eventually rejected.

It is true that the Green Party has denied that the attempted donation was contingent on this one specific seat being vacated for the Liberal Democrats, but that does not rule out its being part of an inducement to a wider “progressive alliance” in which the two parties involved would agree not to contest a number of agreed seats. Emails are available in which the leader of the Liberal party on Kingston Council, Councillor Liz Green, is seeking to reach such arrangements with local Greens, and it is noteworthy that Caroline Lucas, the Green MP who is facing boundary changes, showed an uncommon interest in this matter.

I asked the Electoral Commission if it was minded to investigate this attempted donation, but it said that “corrupt withdrawal from candidacy” was a matter not for the commission but for the police. It was the commission’s understanding that the matter might have been reported to the police, but a police spokesman, who I cordially thank and who was perhaps unable to establish the position in the time available, said after making inquiries that he was unaware of such an investigation. I think there should be an investigation, and if no one else has done so, I would consider writing to the Metropolitan Police Commissioner myself.

Section 107 of the Representation of the People Act reads as follows, after the side heading, “Corrupt Withdrawal from candidature”:

“Any person who corruptly induces or procures any other person to withdraw from being a candidate at an election, in consideration of any payment or promise of payment, and any person withdrawing in pursuance of the inducement or procurement, shall be guilty of an illegal payment”.


What is not clear to me from this is that if a corrupt inducement to a party not to put forward a candidate, which can result as in this case in subsequent pressure on activists not to stand, is equally a criminal offence under the Act. Of course, in the circumstances in which parties have absolute control of the party badge—and rightly so—at elections, if the party does not lend its support, no one can stand as a candidate using the Green Party name.

In my judgment it should be a criminal offence to seek to induce a party not to put up a candidate by the offer of money. A police investigation in this case could readily establish the identity of the persons involved, including the would-be offerer of the donation, something on which the Green Party should come clean. I challenge the party to do so. What possible reason can there be for a political party to hide the identity of a would-be donor which the party itself has now admitted is unethical? The party could release that information at a stroke and we might then be better able to establish the real truth behind this murky affair.

I submit that if Section 107 does not cover inducements to parties not to permit candidates to go forward in certain seats, it should be revised to do so. I hope that some of the other matters raised in the Bill will be proceeded with and that the two issues I have highlighted in my remarks will also be considered.