Watchdog investigates £2.4 million donation to Lib Dems

Lib Dem donation under scrutiny

Lib Dem donation under scrutiny

A donation of £2.4 million made to the Liberal Democrats is under investigation by the Electoral Commission.

There is a question whether the donation, one of the largest ever to the party, is admissible under UK laws that require donors to be registered in Britain.

The donor firm, 5th Avenue Partners, which gave the money in four parts during February and March this year, is based in Britain but its parent company is registered in Switzerland.

The Liberal Democrats have insisted they acted in good faith in receiving the donation from 5th Avenue, which is owned by Scottish businessman Michael Brown.

A spokeswoman for the Electoral Commission told politics.co.uk: “The Political Parties, Elections and Referendums Act 2000 states that in order to be a permissible donor, a company must be registered under the Companies Act 1985 and incorporated within the UK or another member state, carrying on business in the UK.

“The Electoral Commission will seek to clarify with the Liberal Democrats whether the company was, at the time the donations were made, a permissible donor under Section 54 of the act.”

If the commission ruled the donation – which made up about half the party’s campaign funds – was not permissible, the Lib Dems would have to pay it back.

In a statement, Lib Dem chief executive Lord Rennard said: “We believe that we have acted in good faith and properly in relation to all donations received by the Liberal Democrats and that all donations we have received are from individuals entitled to donate to British political parties or from companies based and trading in the UK”.

Mr Brown, the financier who owns the firm, told The Times he felt “totally let down” by the way the Lib Dems had managed his donation.

“If the people who handled my donation were elected to run the economy, I would not be happy – it would be disastrous,” he said.

“As a donor, I rely on the party to verify that the donation is proper. In the case of the donation made by my company, very little due diligence was undertaken.”