Galloway rapped over ministerial rules breach

George Galloway has been criticised by the parliamentary watchdog for failing to declare on the register of interests a legal fund to help him fight a libel case.

The Respect MP set up the fund when he first launched the case against the Daily Telegraph for claiming he was in the pay of former Iraqi dictator Saddam Hussein.

The newspaper finally agreed to pay Mr Galloway £150,000 in damages and cover all court costs – estimated at about £2 million for both sides – in February, which means the legal fund is no longer necessary and its contributors can be repaid.

However, today the Commons committee on standards and privileges said the MP for Bethnal Green and Bow should have declared the fund as it benefited him financially up until he won his case, and said the donations should be seen as gifts.

It has ordered him to register the legal fund and four individual donations which exceeded the threshold for registration on the list of members' interests, saying it will "give further consideration to this case" if he fails to comply.

Mr Galloway, who ousted incumbent Labour MP Oona King from the east London parliamentary seat in the last general election, sued the newspaper for a story it published in April 2003 claiming he was being paid by Saddam Hussein.

The Daily Telegraph claimed the story, which was backed up with documents reportedly found in an abandoned Iraqi government building in Baghdad, was in the public interest, but the high court rejected this in December 2004.

The newspaper challenged the ruling in the court of appeal, but this was dismissed and in February it agreed to pay Mr Galloway both damages and court costs.

The legal fund set up by the former Labour MP was used to fund his costs until that time, but the money will now be returned. He had argued that had he lost the case, he would have registered the fund and the donations, but this was not necessary.

Mr Galloway also argued that the legal fund was a matter of public knowledge, and therefore there was no need to put it on the register.

But today the committee rejects this argument, saying MPs must declare anything that is of financial benefit, adding: "It is clear from Mr Galloway's own evidence that he had a pecuniary interest as the purpose of the legal fund was to help finance his legal costs.

"Indeed in his e-mail appealing for funds he said: 'I can't do it without your help and I hope you will donate what you can.'

"The material benefit included the costs paid from the legal fund, even if these are subsequently recoverable following Mr Galloway's victory in the court of appeal, he has avoided meeting these from his personal resources in the meantime."