Donation watchdog to be given new powers

Donation watchdog to be given new powers

Monday, 27, Oct 2008 10:59

The body which monitors party political donations is to receive new powers, following the fiasco over Peter Mandelson and George Osborne's meetings with Russian oligarch Oleg Deripaska.

Under legislation going through parliament, the Electoral Commission would be able to question donors, rather than just the parties themselves, to establish if rules are being broken.

The rules are designed to make it easier for the commission to establish whether UK businesses are being used as channels through which foreign individuals can fund British political parties.

The only way in which donors themselves can currently be questioned is if the commission passes the investigation over to the police.

If the legislation is passed, the Electoral Commission would be able to dispatch forensic accountants to interrogate company directors about the origin of donations.

There are also calls for a tightening up of donation rules, with officials looking to Jack Straw, justice secretary, to oversee reform in the rules governing foreign donations.

The Liberal democrats are suggesting amendments to the political parties and elections bill which would set caps on donations and the amount a party can spend over an electoral cycle.

The new powers come as questions over Mr Osborne's meetings with Russian billionaire Mr Deripaska spread to cast a harsh light on an array of Conservative donations.

The Tories are accused of accepting tens of thousands of pounds from an associate of a Ukrainian oligarch and £1 million from a company set up to disguised donations from Lady Victoria de Rothschild.

There are reports that Robert Shetler-Jones, closely associated with Ukrainian oligarch Dmitry Firtash, has been funding the office of shadow security minister Pauline Neville-Jones.

In a separate development, a £1 million loan was given to the Tories by Ironmade Ltd a company owned and controlled by Lady Rothschild. According to the Observer, the company was set up specifically to avoid her identity becoming public.

A party spokesman said: "This loan was taken out prior to the 2006 Electoral Administration Act, which has since set out new rules governing the way political parties can borrow.

"The loan is fully declared to the Electoral Commission and entirely permissible under the rules as they stood at the time, and remains fully permissible now."

But Liberal Democrat leader Nick Clegg has written to Tory leader David Cameron calling on him to clean up the system.

"The flow of big money into parties is dripping poison into our political system," Mr Celgg wrote.

"In light of the recent allegations against George Osborne, I would hope that you and your party will lend your full support to these amendments. No one who genuinely wants to clean up politics could refuse to support these changes."