Labour proxy donor investigation continues

The Labour party has launched its own investigation into the Abrahams donor scandal as the Electoral Commission and commentators look for the smoking gun.

The number of people within the Labour party who were aware property developer David Abrahams was channelling donations through intermediaries remains unclear, increasing pressure on the party.

The latest reports suggest Peter Watt, who resigned as general secretary on Monday, was not the only official aware more than £600,000 of donations came through proxies.

Gordon Brown and Hilary Benn have both confirmed people within their campaign team for the summer leadership contests were aware Mr Abrahams was laundering donations, prompting them to refuse his donation.

Mr Benn went on to accept funds from Mr Abrahams for his deputy leadership campaign, but only after the property developer personally handed him a cheque, Mr Abrahams told BBC’s Newsnight on Tuesday evening.

Harriet Harman yesterday became fatally embroiled in the scandal after it emerged she had accepted money from Janet Kidd, one of the intermediaries used by Mr Abrahams.

It remains unclear why Ms Harman was unaware of the true source of the money.

It has also been asked why Mr Abrahams was funding Ms Harman when he backed Mr Benn, now environment secretary, for the deputy leadership. This has prompted speculation Ms Harman’s team directly approached Ms Kidd.

Mr Abrahams said last night he was unable to remember the circumstances that saw Ms Harman accept £5,000 of his money in July.

Furthermore, the millionaire has confirmed he was identified as one of Labour’s strongest donors, despite never officially being declared as a donor.

Jon Mendelsohn, Labour’s chief fundraiser, wrote to Mr Abrahams, describing him as one of the party’s “strongest supporters”.

Mr Brown has condemned the use of conduits as “completely unacceptable” and said the donations will be repaid.

Ms Harman yesterday also confirmed she will hand back the £5,000 donated through Ms Kidd.

Shadow leader of the House of Commons Theresa May has published a list of 19 questions for Ms Harman, insisting many facts remain unclear.

The prime minister yesterday expressed measured support in his deputy leader, telling reporters after much prompting that he had “confidence” in the version of events set out by Ms Harman.

Further allegations could yet upset the Labour party. The woman identified as the fourth proxy used by Mr Abrahams insists she never knowingly made a transaction to the Labour party and votes Conservative.

Janet Dunn, the wife of one of Mr Abrahams’ employees, said she had no knowledge of a £25,000 donation made in her name in January 2003.

The Electoral Commission has begun its investigation into the suspected breach of the Political Parties and Referendums Act 2000. It confirmed it has been “in touch” with the Crown Prosecution Service, which will decide whether anyone faces criminal charges.

Labour has also launched its own inquiry headed by Lord Whitty.