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Will such associations question the very probity of Tony Blair – which in turn may lead to a Labour Party meltdown? In April 2006 Scottish Nationalist Party MP Angus MacNeil asked the Metropolitan Police to investigate whether any law had been broken in the Cash for Peerages scandal. Martin Bell, who formerly was a critic of the 1990s ‘Cash for Questions scandal’, wrote jointly with MacNeil to Prime Minister Tony Blair calling for all appointments to the House of Lords to be suspended. Martin Frost
2006-05-04 Cash for Peerages: A SummaryCash
for Peerages describes a political scandal in the United Kingdom.
In March 2006 several men nominated for Life Peerages by Prime Minister Tony Blair were rejected by the House of Lords Appointments Commission. It was later revealed they had loaned large amounts of money to the governing Labour Party, apparently at the suggestion of Labour fundraiser Lord Levy. Suspicion was aroused that the peerages were a quid pro quo for the loans, and the incident was referred to the Police as a breach of the law against selling honours. It is possible that the affair will come to affect the public's perception of sleaze in public life. It coincided with "Jowellgate" in which the husband of a government minister faced indictment in Italy for corruption. He had also written a letter which appeared to seek financial gain based on his closeness to senior members of the UK Government. There has long been public concern at the connection between political donations and the award of peerages. In May 1998, the then Chairman of the Political Honours Scrutiny Committee, former Conservative Cabinet minister Francis Pym, told a House of Commons Select Committee that the committee considered a political donation a point in a nominee's favour as it indicated involvement in public life, and that the nominee had "put their money where his mouth is". In the summer of 2005, a list of 28 people nominated for working peerages was prepared. The list contained 11 Labour nominees, 8 Conservatives, 5 Liberal Democrats, 3 members of the Democratic Unionist Party and one member of the Ulster Unionist Party. The Green Party ultimately declined to nominate. The list was sent to the House of Lords Appointments Commission, which had been established in 2000 to check for the suitability of those nominated for an honour. Publication of the list was delayed and stories began to appear in the press stating that the Commission had concerns about some of those nominated on grounds of their large donations to political parties. In February 2006, stockbroker Barry Townsley, who had donated £6,000 (and loaned £1m on commercial terms) to the Labour Party and contributed £1.5m to a City Academy under a government scheme, withdrew his acceptance on the grounds of press intrusion into his private life. Townsley, who is currently the subject of an investigation by the Serious Fraud Office, was followed by property millionaire Sir David Garrard, who withdrew his name in March 2006. Sir Gulam Noon MBE, the British-Indian food company millionaire, was also nominated by the Labour Party after having made donations and loaned money (he also had his nomination rejected by the Appointments Commission). Sir Gulam told the Times newspaper a "senior party man" told him "there was no reason why I should declare this loan because it was refundable". "I was told by this same person that because there was interest on the loan it was a commercial matter and would not come under the same party funding rules as a donation." The list of working Peers, minus the withdrawn and queried names, was published on April 10. On March 8 2006, Dr Chai Patel (Director of the Priory healthcare group) who had donated £10,000 to the Labour Party complained that he was being rejected by the Commission. He said "It is a fact that I have donated, but what is being implicated is that I would be rewarded with a peerage. I have never asked for any favour for the money that I have donated. My children suggested that if I had not given this money, I would not be seen in this light. But I happen to support this Government. I gave money to the party because I happen to believe in what it stands for. I can't change what has happened." Patel stated that he had asked a QC for advice on whether his human rights were being abused by the Commission. On March 29 Chai Patel withdrew his name from the list of nominees for a peerage. He said that at no time did he have any expectation of a reward nor had he been offered anything in return, yet on a BBC 'Today' programme he expressed the view that he wanted to serve in the upper house (The Lords) as he felt that his life experience ensured that he could make a valuable contribution there. He has also stated in a letter to the House of Lords Appointments Commission that "I feel that, given my accumulated experience and deep sense of public service, as well as being able to devote the time to undertake the responsibility effectively, I would be able to make a contribution to the parliamentary process." The 1997 General Election Labour Party manifesto was entitled “new Labour because Britain deserves better”. In the section headed “We will clean up politics”, the text pointed to the debasing of democracy through Conservative MPs who had taken cash for asking questions in the House of Commons. A pledge was made to the “reform of party funding to end sleaze” with the commitment to a law to require all parties to declare the source of all donations above a minimum figure, which Labour already did voluntarily. Foreign funding would be banned. These commitments were delivered in 2000 with the Political Parties, Elections and Referendums Act 2000. It also described the need to reform the House of Lords which would end the right by law of hereditary peers to sit and vote in the House of Lords. This commitment was delivered in 1999 with the House of Lords Act 1999. In relation to the system of appointment of life peers Labour’s stated objective was to ensure that over time party appointees as life peers would more accurately reflect the proportion of votes cast at the previous general election, a commitment that has since been altered so that the two main parties in the House of Lords should instead have approximately equal strength. On March 12, the Sunday Times reported that shortly before being told that he would receive a peerage, Patel had been asked to change a donation to the Labour Party he was planning to make into an unsecured loan. On March 26, The Independent confirmed that it was Lord Levy that asked Patel to switch using this unsecured loan approach. He agreed and loaned £1.5m to the party, telling them that he would be prepared to change the loan into a donation at some point in the future. Over the next few days stories were printed which stated that the Labour Party had borrowed £3.5 million from private individuals during 2005, the year of a general election. It was subsequently revealed that a total of £13.95 million had been loaned by wealthy individuals to support Labour's election campaign.The figures released mean the bulk of the £17.94m the party spent on its general election campaign was paid for by loans from individuals on the understanding their names would not be made public. Loans made on commercial terms, at between 1% and 3% above the banking base rate as was the case here, are not subject to reporting requirements to the Electoral Commission. However the Treasurer of the Party, Jack Dromey stated publicly that neither he nor Labour's elected National Executive Committee chairman Sir Jeremy Beecham had knowledge of or involvement in the loans and had only become aware when he read about it in the newspapers. Dromey stated that he was regularly consulted about conventional bank loans. As well as announcing his own investigation he called on the Electoral Commission to investigate the issue of political parties taking out loans from non-commercial sources. Tribune magazine reported that Dromey had intended to reveal his inquiry exclusively in the Labour-oriented magazine later that week, but having heard that Prime Minister Tony Blair intended to announce an inquiry the following day, toured television studios on the evening of March 15, 2006 announcing his inquiry (video). Dromey feared he would be blamed for the debts by an inquiry organised by 10 Downing Street (Tribune 2006/3/24 p5). Dromey's announcement created much media interest to which Tony Blair had to respond to at his monthly press conference the next day. Blair said he wanted to shake up of the honours system and improve the rules covering party funding. The affair centred on two aspects of Labour's political fund raising activities. First, to what degree was there a tacit or implied relationship between the large scale donors and their subsequent recognition via the honours system? Second, the rules on party funding (applicable to all political parties in the UK) require that anyone donating £5,000 or more must be named - but loans of any amount do not have to be declared provided they are made on commercial terms. This loophole raises accusations of undue secrecy and potentially calls into question the probity of those involved in procurement and handling of such large and anonymous sums, particularly when the elected party treasurer was unaware of the existence of the loans. Lord Levy, a close friend of Tony Blair (who is the Prime Minister's personal envoy to the Middle East, as well as occasional tennis partner), has raised funds for Labour and was identified in the press as a key figure in arranging the loans and on 17 March 2006 it was announced that the Public Administration Select Committee of the House of Commons had invited him to give evidence on political financing. Committee Chairman Tony Wright said: “With continuing speculation about whether the system of scrutiny is sufficiently robust and as part of our wider inquiry into current standards of probity in public life, we will be hearing from those charged with scrutinising nominations to ensure that there are robust safeguards against honours for sale.” Another issue is repayment: the Labour Party owed about £14m before the election. The interest on the loans amounts to £900,000 a year and some of the loans have to be repaid within months, either through further borrowing or gifts. In these circumstances, one unanswered question concerns why Lord Levy asked for loans rather than gifts. It was revealed on 25 March 2006 that the only persons privy to details of the loans were Tony Blair, Lord Levy and Matt Carter. On 20 March 2006 the Labour Party issued the full list of 12 lenders together with the sums involved:
One of the lenders, Lord David Sainsbury, is a current government minister. Initially Lord Sainsbury incorrectly announced that he had reported the loan to the Department of Trade and Industry's Permanent Secretary. He later apologised for unintentionally misleading the public by confusing disclosures about a donation of £2m with the loan for the same amount which in fact he had not reported. He faces an investigation by Sir John Bourn, head of the National Audit Office, for a possible breach of the ministerial code. On 31 March 2006 the Conservative Party published a list of 13 wealthy individuals and companies to whom it owed a total of £15.95 million:
The identity of 10 backers it had repaid - including a number of foreign nationals - was not revealed. These loans had totalled £5 million. Some of these lenders were concerned not to reveal their identity fearing that it might compromise their existing business arrangements with the government. Their details, including one foreign backer, will be provided "in confidence" to the Electoral Commission. Initially the party had sought to not disclose to anyone the names of two lenders who requested confidentiality. The party had an outstanding £16 million bank loan and £4.7 million was owed to local Conservative Party associations. The Electoral Commission welcomed the decision to publish the list - but said it had written to the party asking for more details on the loan terms. Corrupt procurement and award of honours is legislated against by the Honours (Prevention of Abuses) Act 1925 and the Public Bodies Corrupt Practices Act 1889 and the Metropolitan Police investigated three complaints they received under this Act. On 27 March they gave MPs more details of its inquiry into the complaints and the Public Administration Select Committee agreed to postpone its hearing on this issue in order not to prejudice possible police action. On 6 April the Electoral Commission announced that its own investigation was to be suspended until the police completed their inquiries. The Electoral Commission was not satisfied that election funding laws had not been breached. On 13 April the Metropolitan Police arrested of former government adviser Desmond Smith under the Honours (Prevention of Abuses) Act 1925. Smith, headteacher of All Saints Catholic School and Technology College, was a council member of the Specialist Schools and Academies Trust, which helped the government recruit sponsors for the City Academy programme. Lord Levy is the President of The Council of the Specialist Schools and Academies Trust. The criminal enquiry and the Electoral Commission investigation will stetch back to 2001. Desmond Smith was the subject of a Sunday Times investigation, which led to his resignation from the Specialist Schools and Academies Trust. At that time a Downing Street spokesman said "It's nonsense to suggest that honours are awarded for giving money to an academy.". This was later contradicted when it was confirmed that the 'citations' explaining the case for putting Sir David Garrard and Barry Townsley in the House of Lords 'prominently' featured their role in helping academy schools. Downing Street sources said the Prime Minister wanted their political support in the Lords for the controversial policy, adding that the Prime Minister felt that anyone who gave their time, commitment and money to establish an academy - to help children in previously failing schools - 'had a strong claim to be considered for an honour'. 'What we wanted was people with expertise in academies as working peers, taking the Labour whip, who could actively contribute with a massive amount of knowledge to the debate on education in the House of Lords.' Garrard gave £2.4m for an academy in Bexley, south London. Townsley gave £1.5m for another in west London. There was widespread support for an enquiry and some calls to revise the process of party political funding. Tony Blair Speaking at his monthly news briefing on 16 March, Prime Minister Tony Blair confirmed his knowledge of the loans but denied any connection between the large loans from three private individuals and whether they were subsquently nominated for honours. Blair said all three men were known party donors and would have made excellent Labour "working peers". He suggested that further changes to the honours system might be needed. When questioned, the PM commented that he did not think that Dromey had revealed details of his lack of involvement in the handling of the private loans in order to undermine or implicate either him or 10 Downing Street. Dromey's very public expression of concern (he toured various television channels to interview on the matter) raised suspicion among some supporters of Tony Blair that his actions were deliberately designed to embarrass the Prime Minister and consequently benefit Prime Minister in-waiting Chancellor Gordon Brown. Dromey denied this, saying he had been forced to go public when his persistent questioning failed to satisfactorily resolve the matter. Charles Clarke On 16 March the Home Secretary stated "The treasurer should know about all the fundraising issues that arise." However, he later called into question Dromey's competance, saying he had "serious questions about Jack Dromey's capacity" as Labour treasurer and the fact Dromey did not know about the loans meant "you have to wonder how well he was doing his work" finally adding, "I don't know why Jack behaved as he did." He rejected as "nonsense" a suggestion that the treasurer had spoken publicly about the loans to speed up the transition of power from Blair to Chancellor Gordon Brown. Sir Jeremy Beecham Sir Jeremy Beecham, chairman of Labour's governing body, the NEC, accused Charles Clarke of speaking out of turn and defended party treasurer Jack Dromey. He said the treasurer "shouldn't be criticised" and had "acted perfectly properly". It was "absolutely clear that the reasons that NEC officers, including the elected party treasurer, did not know about the loans had nothing to do with any failings on their part". He added: "Jack Dromey has always carried out his responsibilities with great diligence and retained the absolute confidence of the NEC in ensuring that this issue is dealt with." In an interview on BBC2's Newsnight he said Clarke had not read the situation correctly. "I don't know how closely Charles has been involved in all this. He's not been on the National Executive for a number of years. I wouldn't have said it in Charles Clarke's position." Harriet Harman In a measure aimed to avoid any conflict of interest, Dromey's wife Harriet Harman—a minister in the Department for Constitutional Affairs—relinquished her responsibilities for overseeing electoral reform and House of Lords reform. Diane Abbott Writing of Dromey's reaction in The Times of March 17, 2006, left-wing Labour MP Diane Abbott said: "But perhaps Mr Dromey is furious because he has seen things that have not yet been made public. Perhaps facts have finally been revealed to him about new Labour’s inner circle and their adventures in influence-peddling and in the world of the super-rich that he really did not know before. And the enormity of what he has discovered may have made him determined that whoever else may be swept away in the ensuing scandal, it will not be him." Clare Short Former cabinet minister and Blair critic Clare Short described the issue with characteristic bluntness: "What we're getting is a bubble of these clever people who've captured the state, don't need a party, don't need any members, don't have turbulent people having opinions, who then get money from rich people and run our state without consulting anyone else." Ian McCartney The Labour Party chairman Ian McCartney defended the loans with the BBC quoting him as saying: "Bear in mind too that we fought the 2005 election in the face of a very heavily funded Conservative campaign - a large part of which was reportedly funded by loans, and targeted at individual Labour MPs." On 31 March 2006 Mr McCartney said the Conservative Party still looked like they had "something to hide" by not revealing the identity of their foreign lenders. "We need to know who these people are, where they reside, where they pay tax, how much they lent and on what terms. "It is not up to the Tories to claim that they did not breach the law. That's the job of the Electoral Commission. "By failing to provide these details the Conservatives and David Cameron are fuelling suspicion that they have even more to hide." John Prescott Deputy Prime Minister John Prescott told the BBC that he was "not happy" he found out about the millions loaned to the Labour Party by reading it in the papers but insisted the loans would later appear in the party's audited accounts. He refused to give a guarantee that Labour had not given peerages for loans, saying "I am bound to say not all the information possibly is out yet and we are still looking at it." Mr Prescott said he favoured a change to state funding but also said he would not rule out the suggestion that private loans should be capped: "There's a kind of unhealthy approach to political financing in this country. What we need to do is have a healthy debate." Prescott himself became involved in accusations of influence peddling when newspapers suggested he had made planning decisions in favour of Minerva plc, a company chaired at various times by two of the lenders involved, Sir David Garrard and Andrew Rosenfeld. He told BBC One's The Politics Show he did not "know anything" about the firm or secret loans to the party. He said he had received the planning requirements for a skyscraper in London and the Park Place shopping centre in Croydon but felt the decision could be made locally. "I passed it over to Croydon and City of London Corporation. They made the decision, not me. It's quite untrue to say there was a deal or I made the decision." Of Garrard and Rosenfeld he said, "I don't think I have ever met them. I don't know who the companies are and I certainly don't know if they were giving money to the Labour Party. I am not a great one for circulating among businessmen. I just do my damn job and therefore I resent it when these implications are made. I have not made any money from politics for God's sake. But I am here doing what I can best in public service. My reputation is important to me. My politics is important to me." "I make my mistakes from time to time and we have to be answerable to you guys but not when it's a lie," Mr Prescott added. Lord Falconer Amendments to the Electoral Administration Bill to make it a legal requirement that loans to political parties are made public in a similar way to donations will be urgently considered by Lord Chancellor Lord Falconer. David Cameron "We've got to stop this perception that parties can somehow be bought by big donations either from very rich people, or trade unions, or businesses." The Conservative Party admitted that it has engaged in similar borrrowing (but did not reveal any links to nominations for peerages). Such loans have been reported in party accounts though the annual accounts are not yet published for the period covering the 2005 general election. David Cameron's proposals are: • Ban on all loans unless from
financial institutions on fully commercial terms
• £50,000 cap on donations • Tax relief on donations up to £3,000 • State funding of £1.20 per vote won at general elections for parties with MPs, plus annual payment equal to 60p per vote • New commission to handle honours • General election party funds limited to £15m • These proposals would also reduce the number of MPs from 646 to les than 600. Francis Maude Conservative Party chairman Francis Maude said he "regretted" accepting loans from abroad but insisted it had not broken the law. He said it had to pay back £5m to lenders who wanted to remain anonymous including a number of foreign nationals. "These loans represent a very small part of our financial backing - I wish we hadn't done so but we have and we have now set the record clear we have repaid those loans and the matter is perfectly clear," Mr Maude told BBC Radio Five Live. "It would clearly have been better if we hadn't as things turn out but that's the way it is." He insisted the Tories had done nothing wrong and that Labour had been "much less transparent about this whole process than we have." He said he was "very proud" of the people who lent money to the Tories and insisted they had not supported the party out of "self-interest" because, he argued, it had not stood much of a chance of gaining power in recent years. Sir Menzies Campbell Liberal Democrat leader Sir Menzies Campbell said that his party had not nominated anyone for a peerage who had loaned it large sums. He said the Lib Dems received loans from three people in the period before the General Election and have declared their names and the sums lent. He urged transparency on funding, and suggested a £50,000 cap on donations by individuals and a reduction in maximum permitted party election spending from £20m to £15m: "There should be no secret loans of any kind, and if the lord chancellor is proposing that in legislation currently before Parliament, that's something we will most certainly support." The expression "cash for peerages" has a long history. In the 1960s, Roy Thomson, 1st Baron Thomson of Fleet, had some justifiable claim to a peerage as a Canadian and later British publisher. As even his company history observes, "Roy had noted that all proprietors of newspapers seemed to become members of the House of Lords. He had also noted this was emphatically ‘a good thing’" and he showed himself ready to do whatever was required to achieve this goal, believing at first that it could be a simple open purchase but moving on to explicit lobbying of prime ministers. He contributed money to charitable bodies which were deemed to improve his chances. Eventually, having bought The Scotsman, The Sunday Times and later The Times, he became sufficiently important to Harold Wilson that he was "raised to the peerage" as Lord Thomson of Fleet. King James I was more overt; he created the title of baronet and sold them for £1,500 each to raise money for his war in Ireland. In the 1920s Prime Minister Lloyd George was involved in a barely concealed "cash for patronage" scandal managed by Maundy Gregory, which resulted in the 1925 Act which barred it (purchase of peerages had not previously been illegal), and in 1976 Harold Wilson's resignation honours list was similarly embroiled in what became infamously known as The Lavender List (hand-written on lavender paper by Marcia Williams). This, though widely deemed to include some unsuitable and unsalubrious nominees, rewarded Wilson's friends and carried no suggestion of overt reward for money — given or loaned. Joseph Kagan, Baron Kagan, ennobled in the Lavender List, was convicted of fraud in 1980 — for some years he had been funding Harold Wilson's Leader's office. As recently as 2004 the issue of large donations to a political party being linked to the award of a peerage arose when Paul Drayson donated £555,000 to the Labour Party. His company, Powderject, had also received a valuable government contract to make vaccines. The Lavender List was a docudrama broadcast on BBC Four in March 2006. It was a dramatisation of the events of Harold Wilson's second term as Prime Minister of the United Kingdom which lead to the drafting of the "Lavender List" of honours. The "Lavender List" refers to Wilson's resignation honours in 1976, which caused controversy as a number of recipients were wealthy businessmen whose principles were considered totally anathema to those held by the Labour party at the time. It was later speculated upon that Wilson's head of political office, Marcia Williams, had written the original draft, although no documentary evidence exists to support this claim. Williams, later Lady Falkender, has always denied this, as did Harold Wilson himself. The docudrama was written by Francis Wheen, who said it was based on the political diaries of two members of Wilson's kitchen cabinet, his press secretary Joe Haines and director of policy Bernard Donoughue. It starred Kenneth Cranham as Wilson and Gina McKee as Williams. It received a very positive review by Victor Lewis-Smith of the London Evening Standard. However, most of the reviews were negative and it even received some criticism from one of the protagonists with regards its handling of historical events. In particular, Haines noted what he considered 54 inaccuracies in the production. Joseph Kagan, Baron Kagan (June 6, 1915 – January 17, 1995) was a British industrialist and the founder of Kagan Textiles, of Elland, who made raincoats from the waterproof Gannex fabric which Kagan had invented. Gannex raincoats were most famously worn by Harold Wilson. He was sent to prison for ten months in 1980 for stealing from his own companies. Early life He was born Joseph Kaganas into the ancient Jewish community in Lithuania. He first came to Britain in 1934 to study at Leeds University but returned to Lithuania where he was trapped on the outbreak of World War II in Kovno. He married Margarita Shtromaite (later Dame Margaret Kagan) in the Kovno Ghetto. The newlyweds and Joseph's mother, Mira managed to survive over three years in the Kovno ghetto hiding in a factory, and then sold radios in Bucharest. From 1946 he settled in Huddersfield and began work as a blanket weaver. He founded his firm at a small factory opposite Elland Town Hall. His father Benjamin also emigrated: he was the second oldest man in Britain when he died at the age of 109. Rise to wealth and fame In 1951 Kagan invented Gannex and his firm began to grow in size, moving to a larger mill in Dewsbury Road. The raincoats became fashion icons, with several people in the public eye wearing them, including Royalty. Huddersfield was the home town of Harold Wilson who became Leader of the Opposition in 1963, and Kagan became close to Wilson and provided funding for his private office. In 1967, he bought Barkisland Hall, Barkisland as accommodation for visitors to his company, and on Wilson's resignation honours list in 1970 he was given a knighthood. Fall from grace When Wilson finally resigned as Prime Minister, Kagan was made a life peer on the "Lavender List" in 1976, taking the Labour Party whip. However, police investigation into irregularities in his companies found criminal behaviour and Kagan was prosecuted; he tried to flee the country to either Israel or Spain but was stopped in Paris. On December 12, 1980, he was convicted of four counts of theft and sentenced to ten months' imprisonment and a fine of £105,000. He was stripped of his knighthood but could not lose the peerage, and on his release he campaigned in the House of Lords for prison reform. In 1994, he suffered a heart attack in the House of Lords chamber. Barry Stephen Townsley CBE (born October 14, 1946) is a British stockbroker and charity-worker. He is chairman of City stockbrokers Insinger Townsley. "Cash for peerages" Described as "colourful" and "a social climber" by The Times, Townsley was involved in the "cash for peerages" scandal of March 2006, in which it was revealed he had lent £1m to the Labour Party at the solicitation of Lord Levy and contributed £1.5m to a City Academy. He was nominated for a peerage shortly after making the loan, but in February 2006 he withdrew from the nomination on the grounds of press intrusion into his private life. Previous controversies One of his clients was Sir Trevor Dawson, among the City’s most colourful characters. In 1981, as the Thatcher era was hitting its stride, Sir Trevor was an investment banker with legendary spending habits. He was chauffeured around London in a Cadillac — number plate TD 1 — often with an attractive young woman at his side. He adored horse racing and revelled in his soubriquet, the Galloping Major. Behind the glamorous screen of his private life, however, Sir Trevor was running a sleazy scam. He was buying shares for clients, then, if their value rose quickly, he would secretly move the short- term profits into accounts controlled by himself. One of the stockbroking firms he used was Jacobson Townsley and when he was eventually found out, Barry Townsley and Ronnie Jacobson were barred from the floor of the exchange for six months for “gross misconduct”. Three years ago, he found himself again enmeshed in a City controversy. The Financial Services Authority launched an investigation after a mystery buyer bought 500,000 Railtrack shares just days before the then Transport Secretary Stephen Byers announced, in March 2002, that the Government had decided, after all, to bail out the firm. There was no suggestion he was involved in any irregularity or illegal activity and the FSA told the London Evening Standard that no action was taken following its inquiries. Mr Townsley said his firm simply acted for a client. Townsley is also subject to an investigation by the Serious Fraud Office into the disappearance of £365m in an alleged fraud organized by Abraham Arad, a former adviser to the Israeli government who claimed to be investing money from 2,000 Israeli pensioners living principally in South America. In the 1980s, Townsley had been found guilty of "gross misconduct" and banned from trading for six months for his part in the "Galloping Major" share-dealing fraud. Daily Telegraph:
04/05/2006
Peter Hain, the Welsh Secretary, has furiously denied allegations that
he offered a rebel Labour politician a peerage not to stand against the
party. Peter Law, who died last week, stood as an independent candidate in the south Wales seat of Blaenau Gwent at the general election after a row over all-women shortlists. Plaid Cymru today claimed that Mr Hain offered the former Labour Welsh Assembly member a peerage not to stand - and Tony Blair approved the move. But Mr Hain dismissed the claim and accused Elfyn Llwyd, Plaid's parliamentary leader, of cowardice. "Elfyn Llwyd had the opportunity to put this lie to me directly in the House of Commons yesterday, [and] instead raised it when I was absent at a family funeral and unable to rebut this false accusation," he said. "I am at a loss to understand why it is now being alleged that Peter Law would have made such an accusation about me, when he himself never made that allegation public, even when he was standing in the general election. "The suggestion that I offered a peerage to Peter Law is utterly without substance. And indeed the Labour Party have made it absolutely clear that no such offer was made." Scotland Yard had previously confirmed that it was looking into allegations that a senior Labour figure offered a peerage to Mr Law, but the name of the MP was not released at the time. But speaking in the House of Commons today, the day of Mr Law's funeral, Mr Llwyd said: "New Labour, in an effort to prevent him from standing for Parliament, offered him a peerage. "The man named as being responsible is the Secretary of State for Wales, who made the offer on the specific authority of the Prime Minister." The Prime Minister's official spokesman, when asked if Mr Blair had authorised the move, said that is was a party matter and refused to discuss it further. According to Angus MacNeil, Scottish National MP for the Western Isles, if Labour did use the promise of honours to induce an election candidate not to stand, the move would be doubly illegal. He quoted the Prevention of Corruption Act, 1906: "If any person corruptly gives or agrees to give or offers any gift or consideration to any agent as an inducement or reward for doing or forbearing to do… any act in relation to his principal's affairs or business, or for showing or forbearing to show favour or disfavour to any person in relation to his principal's affairs or business… he shall be guilty of a misdemeanour." Mr MacNeil said the key words in this passage were "or forbearing to do", adding: "That alone would have made any such offer to Mr Law an offence, in that it was an inducement not to stand as an MP." He also said that such an offer would fall foul of the 1925 Honours (Prevention of Abuses) Act, in that "getting someone out of the way would allow somebody else to stand for Parliament and receive a Parliamentary salary". The person who received a peerage would also receive parliamentary emoluments. This would be covered by the reference in the Act outlawing "valuable consideration" as an inducement. Scotland Yard has been looking into the allegations, which come soon after Labour was at the centre of a scandal over so-called "loans for peerages". See also Cash for questions affair Cash for peerages – crisis deepens Ethos of Corruption Arthur Maundy Gregory: A Summary Victor Grayson Sidney Reilly Vernon Kell Basil Thompson Zinoviev Letter Crime Pays Lords Kaput Reforming the Lords Lord Levy - schmoozing Labour into trouble Sleaze and political corruption Bankrolling New Labour David Mills Berlusconi & Blair |
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