Labour general secretary quits over new donor row

The general secretary of the Labour party has resigned after the party faced a fresh row over donations.

Previously, the lord chancellor said a wealthy businessman’s decision to donate to Labour through a third party who “doesn’t like” Labour was “concerning” and ordered an internal investigation.

David Abrahams “gifted” £400,000 to two acquaintances to donate to Labour. Under electoral law, donations can only be made through a third party if the source of the money is made clear.

The Electoral Commission demanded an explanation today and justice secretary Jack Straw launched an investigation within the party.

This afternoon, Labour general secretary Peter Watt confirmed he had been aware of Mr Abrahams gifting money which was in turn passed on to the Labour party.

In a statement today he said he had believed his reporting obligations had been appropriately complied with.

However, Mr Watt acknowledged there were further obligations for which he was not aware.

Mr Abrahams said he made the donations in secret to avoid being exposed in the press, explaining he is a “very private person”.

According to the Electoral Commission, Labour’s third largest donor is Newcastle builder Ray Ruddick.

Figures show he has donated £196,850 to Labour, including £80,000 on a single day in July after Gordon Brown took office as prime minister.

Over the weekend it emerged Mr Ruddick had been given the money by Mr Abrahams. The builder told reporters from the Mail on Sunday: “I can’t stand Labour, I can’t stand any politicians.”

Mr Abraham has donated a further £185,000 since 2003 through Janet Kidd, reported to be his secretary.

Ms Kidd also donated £80,000 on the same day in July.

In a statement today, Mr Watt said: “As a result of press coverage over the weekend, I sought legal advice on behalf of the Labour party.

“I was advised that, unbeknown to me, there were additional reporting requirements.

“Once I discovered this error, I immediately notified the officers of the National Executive Committee. I take full responsibility for the Labour party’s reporting obligations.

“Consistent with my own and the party’s commitment to the highest standards in public life, it is with great sadness I have decided to resign my position as general secretary with immediate effect.”

Mr Abraham said he “gifted” the money to his two acquaintances because he did not want to be “hounded” over donations made in his name.”

He said: “I am a member of the Labour party and have been for 40 years since I was 15 years old.

“I have always been fortunate enough to be able to make substantial donations to several charitable organisations as well as to the Labour party for a number of years.

“But I am a private person and I didn’t want to seek publicity.”

Mr Straw said: “Whether these arrangements are within the letter of the law they are plainly not transparent. I am concerned about them. I shall ask both the Electoral Commission and my officials for immediate advice on what action should be taken.”

Mr Watt confirmed he will meet with the Electoral Commission and will “cooperate fully” with any further enquiries.

He said: “I have worked for the Labour party for over 11 years and throughout my entire career have prided myself on having complete integrity.”

Dianne Hayter, chair of Labour’s national executive committee, said Labour was committed to the “highest standards of openness and transparency.”

She continued: “The national executive committee officers of the Labour party were shocked and disappointed to learn of the circumstances surrounding these donations which we became aware of when a newspaper contacted the party.

“Peter Watt has taken full responsibility and offered his resignation, which we have accepted.”

The cash-strapped Labour party could be forced to hand back the donations if the Electoral Commission rules Mr Abraham breached electoral rules.

Potentially more damagingly, the latest scandal closely follows the 19-month cash-for-honours inquiry.