By Mark Littlewood
Newsnight’s Michael Crick reports that the LibDems may face criminal action under the Proceeds of Crime Act for the £2.4m donation received from convicted fraudster Michael Brown in the run-up to the last General Election.
Brown is now a fugitive from justice and American lawyer Robert Mann – one of those defrauded – believes the Liberal Democrats should have done more to ensure that the money was legit at the outset. He claims a “modicum of checking” would have revealed that the monies paid to the party were his, not Brown’s.
However this pans out, I think there are three central issues that tend to get buried under the wider story of the LibDems’ biggest ever donor being a crook on the run.
Firstly, what constitutes reasonable checks and balances by the party? Generally speaking, if a very rich man contacts your political party offering to contribute a huge sum to the electoral war chest, your first response is NOT to tell the receptionist to kick him out onto the street.
You might raise an eyebrow (or two). You might worry that it’s an elaborate prank. You’d certainly want to know more about him and his motives. You’d want to make it very plain that he could expect nothing – such as a peerage, for example – in return. You’d then meet him a few times. Take up references. Look into his business ventures. But exactly how far can you expect a small political outfit to go down these lines? The LibDems simply don’t have the capacity to put a full time team of a dozen experts on the case round the clock. The party headquarters operates on an annual budget about equivalent to a single branch of Debenhams. Once the senior people in the party have persuaded themselves of the pertinent facts, surely you bank the cheque?
Imagine you’re only 90% certain – do you turn down the £2m with just weeks to go before an election? Or do you have to be 99% certain? Or 99.99%?
Secondly, if you have been deemed to have carried out sensible checks and balances, what punishment should you face if the money turns out to be dirty? Surely, a “good faith” and “reasonable behaviour” test is enough? My understanding is that if I bludgeon an eldery lady to death and steal her purse and then use the contents of this purse to buy myself dinner at drinks at my local restaurant, the restaurateur is not obliged to hand over my ill-gotten gains over to the deceased’s estate. He had no reason to believe the money was stolen when I ordered my fillet steak and bottle of wine, so he keeps the cash.
Thirdly, what on Earth is the Electoral Commission’s role in all of this? As LibDem Head of Media, I found their behaviour quite unfathomable. They would agree that the party had acted in good faith and reasonably with regard to the Michael Brown donation, but would (a) never close the file on the case and (b) never stipulate the grounds upon which they would ever close the file. This is unacceptable behaviour – and all too typical of badly run, undemocratic and inefficient quangos. In effect, the Commission was continuing to hold the sword of Damocles over the party’s head by not spelling out how the party could ever completely clear its name. Such behaviour risks paralysing political parties – not through decisive action but due to a wishy-washy, half-hearted, limp-wristed commitment to doing nothing at all. The Commission has had all pertinent facts relating to this case for several years now. Its judgement has merely been to “keep the file open”. That’s intolerable.
The obvious question asked is “should we pay the money back?”. This seems to be based on a very quaint idea that we could pay it back even if we should. I can tell you now that we spent all the money in the run-up to May 5th 2005. We didn’t keep it tucked away in a safe in the Cowley Street basement for a rainy day. The money isn’t there to pay back. A cheque for £2.4m from the LibDems would bounce. A legal requirement to pay back that amount would bankrupt the Federal Party.
A common misunderstanding is that party members would be liable for the debt if a court found in favour of Robert Mann and other victims of Brown. I believe this to be false. The LibDems are – I understand – an unincorportated assocation. The practical consequence of a court’s decision to fine the LibDems £2mwould be for the party apparatus to close down “The Liberal Democrats” and then immediately set up the all-new “Liberal Democratic Party”. This might have catastrophic consequences with regard to public image, but would not involve Nick Clegg – or his lawyers – writing to all 60,000 members telling them they had a legal duty to hand over £40 each. There would clearly be administrative difficulties with regard to issues like data protection, but these could be anticipated by the party. So, for example, we could invite all party members to sign up to the “Nick Clegg for Prime Minister” campaign – or something similar – and then use this separate, new database to form the basis of “The Liberal Democratic Party”.
I don’t think we are anywhere near this sort of embarrassment occuring, but it does raise questions about how robust the Federal Party’s appartus really are. The party prides itself on its democracy and checks and balances. But these internal mechanisms have hardly been shown to amount to much over the expenses scandal, with the Federal Exec taking nearly a week to issue a statement (at the very height of the Telegraph storm) and President Ros Scott then closing down her own blog (for fear she might provide a “running commentary”) and conceding the limits of her own power.
If the Liberal Democrats’ own internal democratic systems are essentially ceremonial, then they aren’t worth having at all.
Tags:
Michael Brown,
party funding