Show Me The Money

This may get a little weird as I’m just about to fisk someone else’s fisk, but bear with me – it’ll be worth it.

The fisk in question is Iain’s Dale’s rather piss-poor attempt at generating a bit synthetic outrage over an article by Dominic Ponsford in the Press Gazette defending Channel 4’s use of a undercover reporter in its recent Dispatches documentary ‘Cameron’s Money Men‘, over which Iain has already managed one hissy fit.

Dale: The editor of the Press Gazette, Dominic Ponsford, may wish to reconsider his ARTICLE on the dispute between the Conservatives and Channel 4 over a Dispatches Journalist joining one of their donor clubs. It is so ill informed and full of holes that it deserves a fisk.

Ooh, that there’s fighting talk – this had better be good…

Ponsford: An undercover reporter from Channel 4 has come under fire from the Conservatives after she joined a club for Tory donors as part of a Dispatches this week into party funding. She made two monthly payments of £167 to Team 2000, a club for Tory backers contributing £2,000 a year, as part of her investigations for Cameron’s Money Men – which revealed that hedge fund traders involved in the now-banned practice of short-selling were Tory backers.

Dale: It wasn’t banned at the time and why didn’t the programme also look at Labour donors who undertook the same legal activity?

Okay, short-selling wasn’t illegal at the time of the investigation and it’s only prohibited at the moment as a temporary measure to help stabilise the markets, but then the Tories links to hedge fund traders is a side-issue and one that’s only become relevant/newsworthy in itself due the recent financial crisis.

What Channel 4 were looking into, quite justifiably, was the extent to which the Tories have been exploiting loopholes and deficiencies in the current regulations to effectively conceal the identities of those picking up the tab for the party’s activities plus there’s also the question of whether anything in the operation of these donors ‘clubs’ could be construed as ‘Cash for Access’, and lets be honest here, if Channel 4 is poking around in such questions its only because the Tory’s actions over the last three years or so have served as clear invitation to go looking.

If we stick just to questions of party funding, in the last three years the Tories have…

1. Stalled on disclosing, to the Electoral Commission, the details of £5 million worth of loans made to the party in the run up to the 2005 general election, until these could be refinanced in such a way as to conceal the identity of those making the loans by repaying them money loaned from other donors.

2. Made of the facilities of the Houses of Parliament in order to raise funds for the party. Part of the original package promoted to donors buying into the Tory’s £50,000 a year ‘Leader’s Group’ included meetings/lunches with David Cameronin he House following PMQs, a practice that the Parliamentary Standards Commissioner found to be in breach of the rule of the House, necessitating an apology from Cameron. A second investigation, at the same, in the use of House dining facilities by Tory MPs and their constituency ‘Patrons’ Clubs’ ended by clearing 23 MPs of any specific wrongdoing – on the grounds this had all been going on for a long time and had become the custom and practice of the House, even if it sailed rather close to the wind when it came to written rules and regulation – but recommended that a number of changes be made to the guidance issued to MPs in relation to the use of the House dining facilities to ensure that there could be no question of them being used, in future, for fundraising purposes.

3. Had to hastily disclose large sums of money donated through the party to fund Shadow Ministers’ private offices, as its was found that this had not been correctly registered in the Members’ Register of Interests.

And that’s before we get in questions such as…

– Lord Ashcroft’s ongoing refusal to confirm, fully, whether he has lived up to the undertakings on his tax affairs he gave in 2000-1 in order to be able to become a member of the House of Lords,

– the massive under-reporting of the true value of private jet flights donated to the Tories by Lord Ashcroft,

– the questions raised by a Lib Dem peer, Lord Oakeshott, in regards to the sale of their former HQ in Smith Square, into which the Electoral Commission was reported to have ‘launched a probe’ in 2006, a probe that appears never have publicly reported its findings and, of course,

– the case of Lord Laidlaw, who gave similar undertakings to those given earlier by Lord Ashcroft, so far as his residency and tax affairs are concerned – again, in order to be permitted to be elevated to the peerage – only to fail to honour those undertakings after the peerage was granted. Laidlaw is currently on a leave of absence from the House of Lords, but continues to donate money to the Tories from his tax-exiled home in Monaco.

Now what journalist would be interested in any of that?

As for Iain’s ‘why didn’t they investigate Labour?’ whinge, that’s just the Kevin and Perry defence, isn’t it?

“IT’S NOT FAIIIIIIRRRR!”

Ponsford: The Tories claimed to the Mail on Sunday that Jenny Williams’ investigation breached election law saying: “Electoral law is a highly sensitive matter, and agents provocateurs should not be used in this way to flout the regulations.” But as we are not currently in an election – it is difficult to see what they are driving at.

Dale: Oh dear. Electoral law governs all electoral matters and donations whether there is an election on or not.

Iain’s right, electoral law does operate outside election periods…

…but that doesn’t mean that the journalist in this case actually breached electoral law in carrying out her investigations.

The key passage of PPERA 2000 here is section 54, paragraph 6, which reads as follows:

(6) Where-

(a) any person ( “the agent”) causes an amount to be received by a registered party by way of a donation on behalf of another person ( “the donor”), and

(b) the amount of that donation is more than £200,

the agent must ensure that, at the time when the donation is received by the party, the party is given all such details in respect of the donor as are required by virtue of paragraph 2 of Schedule 6 to be given in respect of the donor of a recordable donation.

The membership fee for the club joined by the journalist who worked this story was £167 per month, and if each payment is treated by the Tories as a separate donation (as I expect it is) then the journalist was under no legal obligation to disclose the source of the donation, although the Tories are obliged to take reasonable steps to ascertain that the donation is permissible.

It doesn’t appear that the journalist ‘flouted the regulations’ at all – she (and Channel 4) just made use of a loophole, and a pretty small one by Tory standards, to avoid disclosing that she working on an investigatory documentary.

Ponsford: And it is not clear whether Ms Williams used subterfuge, as she joined the Tory donor’s club under her own name.

Dale: Clearly she did, as she was using other people’s money.

If using someone else’s money amounts to subterfuge, where does that leave the likes of the Midland Industrial Council, which has been bank-rolling the Tory Party with other’s people’s money for years.

Why is it subterfuge when in individual donates someone else’s money to the Tories, but not when an unincorporated association or a front company that is often little more than a cash shell does it?

Ponsford: In any case the Ofcom Broadcasting Code allows journalists to go under cover where there is a public interest justification.

Dale: Not when it means breaking the law yourself.

Except that it doesn’t appear that Channel 4 or the journalist who carried out the investigation actually broke the law because the donations made to the Tories were below the £200 limit where they would have been legally obliged to declare their source to the Tories.

Ponsford: Investigating the funding of political parties would seem to provide ample public interest.

Dale: Perhaps, if she had used her own money.

Whether or not she used her own money is of no relevance to the question of whether there may be a legitimate public interest in carrying out an investigation into the funding of political parties.

Ponsford: The code also says that broadcast journalists should act with “Due Impartiality” – but in the case if Dispatches, that means fairness over the course of a series – not in one episode.

Dale: We look forward to similar programmes on Labour and the LibDems then.

And we’re back to the Kevin and Perry defence, again.

Channel 4 could conceivably commission similar programmes on Labour and the Lib Dems, although its not at all clear whether it might or might not be worth it, especially in the Lib Dems’ case where its difficult to see quite what advantages could be gained from paying for access to their parliamentary spokespersons

But whether they do or not has no bearing on the question of whether there may be a legitimate interest in carrying out an investigation into the financial affairs of the Tory Party, an investigation that would be unnecessary if the Tories were rather more open and transparent in their financial affairs and not quite so keen on making full us of every loophole the can identify in electoral law.

Ponsford: The Tories’ key gripe appears to be that they were misled because Channel 4 was the real source of the donation – not Ms Williams. This does sound rather like nitpicking.

Dale: To an ill informed journalist maybe. But it also sounds like law breaking, as Channel 4 may find to their cost.

Nope, it does sound like nitpicking, not to mention a bit of carefully contrived synthetic outrage the purpose of which is to shift attention away from the content of the programme.

And, of course, it doesn’t appear that nay law has been broken here…

Ponsford: And if the Conservatives have nothing to hide – why aren’t they just happy to take C4’s cash?

Dale: Had it been open and up front, and transparently their cash, there would have been no problem.

Had it been open and up front then the Tories would have battened down the hatches and made sure that they were on their best behaviour and there would be no investigation. What’s pissing the Tories off here is not where the money came from but the fact that Channel 4 went poking around in matters they’d much prefer to kept out of the public spotlight for fear that it might damage public perceptions of the party and, ultimately, their standing in the polls.

Ponsford: In the context of a documentary’s budget – £334 is very little money, and cash well spent if it sheds more light on a system of party funding which politicians of all colours agree is flawed.

Dale: I wonder if a journalist like Mr Ponsford will have sympathy with a politician who is found to have misdeclared £334? I doubt it very much.

I dare says Ponsford’s capacity for sympathy may be of the same order as Iain’s when Harriet Harman and Peter Hain were on the rack after being mislead over the source of donations to their deputy leadership campaigns, last November.

Pot meet Kettle, Kettle say hello to Pot.

But, the fact remains that, provided that the two subscription fees paid to the ‘Team 2000′ donors’ club are treated as separate donations of £167 each, then no law has been broken and Iain can whistle, but…

What this does all point to is yet another grey area in terms of party funding.

According to the Conservative Party website, the Tories currently operates 10 different donors’ club with subscription fee ranging from £50 per month right up £50,000 per year for membership of the ‘Leader’s Group’.

Exactly how much each of these clubs brings in a year, it’s impossible to say as these fees appear to be registered individually on a per donor basis and, in the case of all but three of these clubs, the subscription fee (if collected monthly) is low enough for these donations not to have to be registered with the Electoral Commission, and there is nothing in the Party’s last set of filed accounts to distinguish between donations solicited by these clubs and other donations to the party.

Equally, no information is given on the Tories website as to the nature of the perks on offer to those who join these clubs although, thanks to the complaint about the use of parliamentary facilities by the Leader’s Group, what we do know is that at least some of these clubs offer their member’s privileged access to senior figures within the Tory Party – it seems reasonable to infer that if members of the Leader’s Group get access to Cameron, then members of the ‘Front Bench Club’ will get some access to Shadow Ministers.

This being the case, we (meaning the electorate) have no way of knowing exactly who is funnelling money into the coffers of the Tory Party by this route, nor the extent to which they may or may not have access to Tory ministers.

The problem with this should be obvious – quid pro quo.

When Cameron was put under pressure over the Party’s stalling on revealing the identities of those lenders who had supplied the party with millions of pounds worth of funding going into the 2005 general election and its hasty refinancing of £5 million in loans to conceal the identity of a number of those who’d loaned money to the party when the disclosure was finally made, the excuse he threw in was that some of those who’d insisted that their anonymity be preserved did so for fear that it would have an [adverse] effect on their business(es) when bidding for, or carrying out, government contracts.

Now if that’s how Cameron wants to play the game then, in regards to these donor’s club the question has to be asked as to how the electorate can be sure, at the next election, that its not being asked to vote for a putative Tory government that’s already bought and paid for by a range of undeclared vested interests?

We can’t because the this system of donor’s clubs is anything but open and transparent. There are no published membership lists, no means of clearly identifying who’s making donations via this route and no information on exactly what access members’ of these clubs get to whom and in what circumstances – yet again, a political party has managed to find a way to bypass rules and regulations intended to promote transparency in party funding…

…and then they whine like crazy when journalists start poking around in order to try and shed some light on their activities.

And to finish up… well, you can’t talk about the murky world of Tory Party finances without mentioning Lord Ashcroft, the man who – so the joke goes – liked the Tory Party so much that he bought it.

Ashcroft, of course, found himself in the news and under scrutiny on the same day that Channel 4’s Dispatches documentary aired and appears to have the lawyers out on the Daily Mail, whose efforts to get away with alleging that his donations had been made ‘illegally’ (allegedly) by way of judicious use of quotation marks in their headline now return only a 404 error. Still, not to worry, the coverage given to Ashcroft by both the Daily Mirror and The Times remains firmly in place for the time being and both articles raise the same interesting questions about the last two links in Ashcroft’s financial chain, Bearwood Corporate Services Ltd, through which his donations to the Tory Party are funnelled, and Bearwood Holdings Ltd, which owns BCS.

These questions arise because of what may be yet another example of a loophole in Electoral Law.

Bearwood Holdings Ltd, which owns Bearwood Corporate Services Ltd, is listed at Companies House as a non trading company and appears, from its most recently filed set of accounts to have only one significant asset – Bearwood Corporate Services Ltd.

Now when we come to Bearwood Corporate Services Ltd, thing start to get a little interesting. According to its most recently filed set of accounts (for 2006-7) it made a loss on the year of £629,828 – so there’s very little chance that Ashcroft pays any tax via Bearwood, but where the interest really starts is when you match up Bearwood’s accounts with its donations to the Conservative Party, which for the same financial year, amounted to £59,136.75 in cash and £551,487.67 in non-cash donations, much of which was booked under research, polling and miscellaneous consultancy services. In total, that comes to £610,624.42, leaving a balance of £19,203.58 still to be accounted for in its losses.

Now, if you chuck in the rental costs of BCS’s office space, business rates, heating, lighting, accountancy fees and a bit of miscellaneous expenditure then it does take long to come up with and extra £19,000 or so to make up the numbers.

And poses an interesting question in terms of electoral law.

In order to donate money or services to a political party a company has to be trading in the UK, but can a company actually be said to be trading if the only organisation is ‘trades’ with is a political party and only then by donating services in kind to that party?

That’s one for the laywers and the electoral commission to unpick, I honestly couldn’t say for sure one way or another, but it looks like a loophole in the law to me and one that should really be closed, if what’s happening here is as it appears. If a company can ‘trade’, for the purposes of electoral law, solely on the basis that it provides services in kind to a political party then the whole purpose of restricting the right to make donations to companies trading in the UK becomes meaningless – a foreign doner could, hypothetically, set up a company, sell a political party a couple of packets of paper clips and then funnel millions into its coffers in donations. It might be legal, technically speaking, but its far from being consistent with the principles of electoral law or a course of action that could be regarded as having been taken in good faith.

It’s look as if there’s a problem here and the question is how best to fix it, and it just so happens that I have an idea.

There’s been all manner of talk about capping donations to political parties, which the Tories suggesting a maximum of £50,000 a year – which, conveniently, is exactly what they screw out of people when they join their leader’s group. Now I’m no fan of fixed donation caps, as far as I’m concerned its better not to cap donations but rather insist on greater transparency. Let the electorate see for themselves who’s funding political parties and make up their own minds as to whether that affects their voting intentions, but there’s also something to said for the idea of ‘no representation without taxation’ – if you don’t put money into the nation’s coffers, give or take a bit of latitude for genuine ex-pats, then why should you be able to fund political parties operating in the UK.

So, my idea is…

…a flexible cap on donations for individuals,  companies and incorporated associations, which is based on their annual tax liabilities. No one gets to donate more to a political party in any given year than they pay into the Exchequer in income, corporation or capital gains tax. In the case of some permissible donors, trade unions, industrial and provident societies, housing associations and some co-operative associations there may need to be a bit of jigging around to take into that these receive some forms of tax relief and additional allowances but otherwise this would only rule out charities as potential political donors, and they’re not allowed to make donations anyway under charity law, and this would solve the problem of Ashcroft’s still undisclosed tax status without him needing to disclose anything to anyone other than HMRC and the Electoral Commission, not to mention that it would force is the issue in regards to Lord Laidlaw.

But I digress, because the real point here is that if political parties are going to continually game the system and exploit loopholes in the regulations to conceal their sources of funding then its only to be expected that journalists will try to worm their way onto the inside to try to find out what’s really going on – that’s why we have a free press and why a free press plays an important role in a healthy democracy.

Whining about not being account for £334 from Channel 4 when they’ve been concealing both the source and destination of millions of pounds worth of funding for years is just rank hypocrisy on the part of the Tory Party and a clear sign of the contempt in which they hold efforts to clean up the already rickety system of regulations governing party funding in the UK.

  • Dale’s posted twice on this so sees some mileage in it but really this is copper-bottomed cobblers.
    It does make you wonder what they’ll be like once they’re in No10 and get subjected some serious scrutinty 24/7.
    Anyhow: the complaint that Dispatches isn’t doing it to the other parties isn’t quite true.
    See: http://www.guardian.co.uk/politics/2005/may/22/uk.election2005 and I think the Lib Dems have escaped is because they’re not likely to form a government.

  • Good try, but I am afraid your whole thesis is flawed. You wrote…

    “But, the fact remains that, provided that the two subscription fees paid to the

  • No Iain, a donation of

  • Game set and match to the Ministry, inventor of blogging and blagging rebuffed.

  • Unity, I really don’t think you are right. Can you point to the legislation that says what you are alleging? I am sure that

  • Page 22 of the Commission’s guidance for political parties…

    5.2 Parties are required to report details of any of the following relevant donations:

  • Passing Leftie

    There are some interesting shennangins going on at BCS – via Companies House:

    288a 07/10/2008 DIRECTOR APPOINTED MR IAN GEORGE ROBINSON

    288b 29/09/2008 DIRECTOR RESIGNED LLEWELLYN AUSTEN