| Return to
opening page |
. |
|||||||||||||||||||||
Sleaze: Political corruptionIn broad terms, political corruption is the misuse of public (governmental) power for illegitimate, usually secret, private advantage.All forms of government are susceptible to political corruption. Forms of corruption vary, but the most common are patronage, bribery, extortion, influence peddling, fraud, embezzlement, and nepotism. While corruption often facilitates criminal enterprise such as drug trafficking, money laundering, and criminal prostitution, it is not restricted to these organized crime activities, and it does not always support or shield other crimes. What constitutes corruption differs depending on the country or jurisdiction. Certain political funding practices that are legal in one place may be illegal in another. In some countries, police and prosecutors have broad discretion over who to arrest and charge, and the line between discretion and corruption can be difficult to draw, as in racial profiling. In countries with strong interest group politics, practices that could easily constitute corruption elsewhere are sometimes sanctified as official group preferences. Effects Effects on politics, administration, and institutions Economic effects Types of abuse Bribery: Bribe-takers and bribe-givers Graft Campaign contributions and soft money Conditions favourable for corruption Measuring corruption Sleaze in the UK 1.Blair stands firm over sleaze inquiries 2.Brown signals that he will not tolerate sleaze 3.Brown won't rest until the state has replaced the family 4.Jowell case plea is rejected 5.Berlusconi has his faults, but dullness isn't one of them 6.Blair gave 'honours for loans' 7.See also Corruption poses a serious development challenge. In the political realm, it undermines democracy and good governance by flouting or even subverting formal processes. Corruption in elections and in legislative bodies reduces accountability and distorts representation in policymaking; corruption in the judiciary compromises the rule of law; and corruption in public administration results in the unfair provision of services. More generally, corruption erodes the institutional capacity of government as procedures are disregarded, resources are siphoned off, and public offices are bought and sold. At the same time, corruption undermines the legitimacy of government and such democratic values as trust and tolerance. Economic effects Corruption also undermines economic development by generating considerable distortions and inefficiency. In the private sector, corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with officials, and the risk of breached agreements or detection. Although some claim corruption reduces costs by cutting red tape, the availability of bribes can also induce officials to contrive new rules and delays. Where corruption inflates the cost of business, it also distorts the playing field, shielding firms with connections from competition and thereby sustaining inefficient firms. Corruption also generates economic distortions in the public sector by diverting public investment into capital projects where bribes and kickbacks are more plentiful. Officials may increase the technical complexity of public sector projects to conceal or pave way for such dealings, thus further distorting investment. Corruption also lowers compliance with construction, environmental, or other regulations, reduces the quality of government services and infrastructure, and increases budgetary pressures on government. Economists argue that one of the factors behind the differing economic development in Africa and Asia is that in the former, corruption has primarily taken the form of rent extraction with the resulting financial capital moved overseas rather invested at home (hence the stereotypical, but sadly often accurate, image of African dictators having Swiss bank accounts). Corrupt administrations in Asia like Suharto's have often taken a cut on everything (requiring bribes), but otherwise provided more of the conditions for development, through infrastructure investment, law and order, etc. University of Massachusetts researchers estimated that from 1970 to 1996, capital flight from 30 sub-Saharan countries totalled $187bn, exceeding those nations' external debts. (The results, expressed in retarded or suppressed development, have been modelled in theory by economist Mancur Olson.) In the case of Africa, one of the factors for this behaviour was political instability, and the fact that new governments often confiscated previous government's corruptly-obtained assets. This encouraged officials to stash their wealth abroad, out of reach of any future expropriation. Bribery: Bribe-takers and bribe-givers It takes two to create corruption: giving and taking bribes. In some countries the culture of corruption extends to every aspect of public life, making it extremely difficult to stay in business without resorting to bribes. Graft Graft is the act of a politician personally benefitting from public funds in a way other than prescribed by law. Graft is comparable to insider trading in business. New York's Senator George Washington Plunkitt once famously claimed that there was a difference between "honest" and "dishonest" graft. The classical example of graft is a politician using his knowledge of zoning and decision making to purchase land which he knows his political organization is interested in developing on, and then selling it at a significant profit to that organization. Large gifts from parties within the government also qualify as graft, and most countries have laws against it. (For example, any gift over $200 value made to the President of the United States is considered to be a gift to the Office of the Presidency and not to the President himself. The outgoing President must buy it if he wants to take it with him.) Campaign contributions and soft money In the political arena, it is difficult to prove corruption, but impossible to prove its absence. For this reason, there are often rumors about many politicians. Politicians are placed in apparently compromising positions because of their need to solicit financial contributions for their campaigns. Often, they then appear to be acting in the interests of those parties that fund them, giving rise to talk of political corruption. Supporters of politicians assert that it is entirely coincidental that many politicians appear to be acting in the interests of those who fund them. Cynics wonder why these organizations fund politicians at all, if they get nothing for their money. In the United States many companies, especially larger ones, fund both the Democratic and Republican parties. Because of the implications of corporations funding politicians, such as the perceived threat that these corporations are simply buying the votes of elected officials, certain countries, such as France, ban altogether the corporate funding of political parties. Because of the possible circumvention of this ban with respect to the funding of political campaigns, France also imposes maximum spending caps on campaigning; candidates that have exceeded those limits, or that have handed misleading accounting reports, risk having their candidacy ruled invalid, or even be prevented from running in future elections. In addition, the government funds political parties according to their successes in elections. In some countries, political parties are run solely off subscriptions (membership fees). Even legal measures such as these have been argued to be legalised corruption, in that they often favor the political status quo. Minor parties and independents often argue that efforts to rein in the influence of contributions do little more than protect the major parties with guaranteed public funding while constraining the possibility of private funding by outsiders. In these instances, officials are legally taking money from the public coffers for their election campaigns to guarantee that they will continue to hold their well-paid and influenctial positions. Conditions favourable for corruption
Measuring corruption Measuring corruption - in the statistical sense - is naturally not a straight-forward matter, since the participants are generally not forthcoming about it. Transparency International, the leading anti-corruption NGO, provides three measures, updated annually: a Corruption Perceptions Index (based on experts' opinions of how corrupt different countries are); a Global Corruption Barometer (based on a survey of general public attitudes toward and experience of corruption); and a Bribe Payers Survey, looking at the willingness of foreign firms to pay bribes. Transparency International also publishes the Global Corruption Report. The World Bank collects a range of data on corruption, including a set of Governance Indicators. Transparency International has performed perception surveys from time to time. The 10 least corrupt countries, according to one conducted in 2005, are (in alphabetical order): Australia, Austria, Denmark, Finland, Iceland, New Zealand, Norway, Singapore, Sweden, and Switzerland According to the same survey, the 9 most corrupt countries are (in alphabetical order): Angola, Bangladesh, Chad, Côte d'Ivoire, Equatorial Guinea, Haiti, Myanmar, Nigeria, and Turkmenistan However, the value of that survey is disputed, as it is based on subjective perceptions. Sophisticated technology may be available to those countries considered by the public as "least corrupt" to conceal corruption from public view or disguise it as legitimate dealings. According to the perception survey Mississippi, North Dakota and Louisiana are the three most corrupt states. New Hampshire, Oregon and Nebraska have the least amount of corruption. The largest states, California and Texas, are ranked in the middle, California ranking 25th and Texas in 29th. Tony Blair was accused yesterday of damaging public confidence in the way alleged misconduct by ministers is policed after No 10 rejected a call for the appointment of an independent investigator. Sir Alistair Graham, the chairman of the committee on standards in public life, had renewed his call for such matters to be looked into by an independent figure, not the Cabinet Secretary and the Prime Minister. He claimed that Peter Mandelson would not have been forced to resign from the Cabinet for a second time if there had been a "proper investigation" into the allegations that he had played a role in giving passports to the millionaire Hinduja brothers. A later inquiry cleared him of impropriety. Sir Alistair said parish councillors could be subject to more stringent checks than Cabinet ministers, as they faced sanctions for failing to declare even a minor gift. Downing Street made clear there would be no change to the rules, which were used to clear Tessa Jowell, the Culture Secretary, of breaching the ministerial code after she failed to declare her husband's financial interests. Officials said Mr Blair believed that it was better that the Prime Minister, who was constitutionally responsible for selecting ministers, decided whether they had abided by the code. "The key word here is accountability and whether you have someone in the end making these decisions who is accountable not just to Parliament but also to the wider electorate," Mr Blair's official spokesman said. He said an independent figure's adjudication would be no less controversial. However, Gordon Brown, the Chancellor, is understood to be more sympathetic to Sir Alistair's proposals. Oliver Heald, the Tory constitutional affairs spokesman, said Mr Blair's refusal to establish an independent system was "deeply damaging to public confidence". By George Jones
(10/03/2006)
Gordon Brown signalled yesterday his ambition to be Prime Minister for at least 10 years, promising that Labour's reform programme would continue into the next Parliament and the one after that. He indicated that preparations for a handover of power, probably next year, were under way, making clear that he would prefer the party to elect him, rather than to select him unopposed. Mr Brown also sent out a strong signal that he would not tolerate financial scandal or tax evasion among his ministers. The Chancellor made it clear that neither he nor his wife, Sarah, had any money in offshore accounts. He and his deputy, Des Browne, the Treasury chief secretary, were the only members of the Cabinet to answer directly a question put by The Sunday Telegraph that asked whether they or their spouses held money offshore. The question followed the disclosure that David Mills, the husband of Tessa Jowell, the Culture Secretary, had placed £350,000 into a series of offshore funds before bringing it into Britain. Both Mr Brown and his deputy said their families had no offshore accounts. Every other member of the Cabinet either refused to comment or did not respond. Downing Street had advised all Whitehall departments not to comment on the private finances of their ministers. Treasury officials said direct denials by Mr Brown and his deputy were not intended as a snub to No 10 but were more an accident of timing. But the Chancellor is known to fear that the damaging publicity surrounding Miss Jowell could damage Labour's standing as he prepares to take over from Mr Blair - and he is keen to send out a strong signal that he will not tolerate sleaze or financial scandals. Interviewed on BBC1's Politics Show yesterday, Mr Brown promised there would be no let-up in the pace of public sector reform if he became Prime Minister: "Reform continues," he said. "This parliament, next parliament, the parliament after that." David Cameron, the Conservative leader, has tried to paint the Chancellor as a "roadblock to reform" while many Labour MPs hope that he will abandon Mr Blair's commitment to greater private sector involvement in the provision of public services. However, Mr Brown insisted that he was fully signed up to the Government's programme to reform health and education. "If you look at the reforms under this Government - almost all the major economic and public sector reforms - the Treasury has either been directly leading these reforms or been intricately involved," he said. Questioned about his leadership ambitions, Mr Brown said it was a decision for the Labour Party, and then the voters, who should succeed Mr Blair. "If there was a leadership election, anybody who is a candidate would be happy to be elected, rather than selected," he said. The Chancellor hinted that he would be prepared to consider changing the way that members of the Bank of England's monetary policy committee - responsible for setting interest rates - were appointed. Currently members are either chosen by the Government or are appointed from within the Bank. Mr Brown suggested that there could be a role for the Commons Treasury select committee. Mr Brown played down the prospects of any early move to lower the voting age from 18 to 16. "I'm open to this but you've got to look at it," he said. "Is citizenship education in the curriculum going to be good enough? Do we have community service programmes for young people so that citizenship actually means something? If we can do better in these areas, then I think you could make a decision about voting." George Jones (06/03/2006)
All parents know how maddening it is when they have told their children that no, they can't have another ice cream - and then some indulgent uncle or granny sneaks off and buys them one. How dare other adults undermine our parental authority, in the hope of winning a little cheap popularity with our young? Those were my first thoughts when I read that Gordon Brown is planning to give all teenagers a special card, entitling them to spend between £12 and £25 a month on local sporting and leisure facilities. What makes Uncle Gordon's behaviour so much more disgraceful than a real uncle's, of course, is that the money he wants to lavish on our children is not his, but ours. He intends to confiscate untold millions from taxpayers - money that parents might have preferred to spend on books or shoes for their children - and to give it with an ingratiating smile to the nation's teenagers, on the strict conditions that they keep out of trouble and spend it only on activities approved by Mr Brown. You can be sure that, somewhere between the taxpayer's wallet and the teenager's sweaty paw, great dollops of the money raised to finance the scheme will stick to the fingers of the bureaucrats employed to administer it. That always happens with grandiose, state-sponsored policies of this sort. The time-honoured method of transferring money from grown-ups to teenagers is much more cost-effective: "All right, my boy, I'll pay for you to go to the West Ham match - but only if you finish your homework first." All this went through my mind when I first read the news, and I was inclined to agree with Nick Gibb, the Conservatives' spokesman on schools, who dismissed the Chancellor's scheme as nothing more than "an expensive gimmick". That was before I read a brilliant pamphlet* by Jill Kirby, chairman of the CPS/Civitas Family Policy Project, published this week by the Centre for Policy Studies. This has convinced me that Mr Brown's idea is much more sinister than a mere gimmick, and that it ought to alarm all Britons who worry about freedom and the country's future. Far from being just a half-witted attempt to secure a few teenagers' votes, the reward-card scheme is part of a coherent policy, single-mindedly pursued by the Chancellor since the day Labour came to power in 1997. A great part of New Labour's success at the polls was founded on the electorate's belief that when Tony Blair tore up Clause 4 of his party's constitution, he and his fellow members of the shadow cabinet turned their backs on socialism, once and for all. Mr Blair had latched on to the great truth that a party that remained committed to the "common ownership of the means of production", and to "popular administration and control of each industry and service", would be forever unelectable. For more than 20 years, we had all seen for ourselves that most state-owned enterprises simply didn't work. Nothing that Mr Blair has said or done since he moved into Downing Street has persuaded me that he was ever a proper socialist - or, indeed, an ideologue of any sort. That was and remains his appeal. He would have sat perfectly happily on the Tory or Liberal Democrat benches, and nobody would have thought him out of place. For him, the premiership was just a jolly good job - and membership of the Labour Party, after all those years of Conservative rule, was a jolly good way of getting it. Mr Brown was also happy to abandon Clause 4. He is not thick, either - and he could see, quite as clearly as Mr Blair, that not nearly enough voters would be prepared to support a party committed to the nationalisation of all British industries and services. But the great difference between Mr Blair and Mr Brown is that the Chancellor really was, and remains, a socialist. He gave up on Clause 4 because he knew that Labour had no hope of power for as long as it remained burdened with this great leaden lump on its constitution. But he has never given up on the far more ambitious socialist project identified by Mrs Kirby in the title of her pamphlet: The Nationalisation of Childhood [*]. At £7.50, and running to only 52 pages, the pamphlet is monstrously expensive. But anybody who wishes to understand the workings of the mind of the Prime Minister-in-Waiting really ought to read it. Quoting chapter and verse from a long series of government initiatives, guidelines, Green Papers, Bills and Acts, Mrs Kirby puts up an unanswerable case that the Chancellor is determined to undermine the institution of the family and to replace parental authority with that of the state. There is a very respectable reason why a proper socialist, committed not only to equality of opportunity (as proper Tories are), but also to equality of "outcome", should wish to do this: no institution stands more impassably in the goalmouth of equality than the family. Both Gordon and I know that it is not because we are intrinsically superior people that he presides over the Treasury, and I opinionate away in the columns of The Daily Telegraph, while other people sweep our offices and serve us beans and chips in the canteen. He and I both had the best head-start that life has to offer: our parents were married and literate, and they stayed together. We had many other advantages, too. We both went to selective schools, and we were both brought up in an age when fiscal policy favoured married couples with children. The difference between Gordon and me is that he wishes to level off the playing-field by denying children the advantages that he and I enjoyed - whereas I believe that those advantages should be extended to as many children as possible. In dozens of different ways, itemised by Mrs Kirby in her pamphlet - state-approved reading lists for the under-fives, state-provided childcare before and after school, state-sponsored monitoring of children's intake of fruit and vegetables - the Chancellor has sought to wrest children from the arms of their families and clasp them to the starched bosom of the nanny state, where they can be properly monitored, regulated and equalised, and taught to think thoughts approved by Mr Brown. The Tories really ought to think twice - and to read Mrs Kirby's pamphlet - before they dismiss the Chancellor's reward-card scheme as an "expensive gimmick". In fact, it is part of an elaborate and frightening plan to subvert the family and to plant the Red Flag on British soil. [*]The Nationalisation of Childhood, by Jill Kirby (CPS, £7.50) Italian prosecutors yesterday rejected a request by defence lawyers to bring forward more evidence in a corruption case involving Silvio Berlusconi, the Italian prime minister, and David Mills, the husband of Tessa Jowell, the Culture Secretary. The decision could clear the way for prosecutors to ask a judge within the next few days to order both Mr Berlusconi and Mr Mills to stand trial in the criminal case. Magistrates have been investigating whether the Italian premier paid money to Mr Mills to ensure he did not reveal details of his dealings with Mr Berlusconi's media empire. Both Mr Berlusconi and Mr Mills have denied wrongdoing. Last night Sir Gus O'Donnell, the Cabinet Secretary, said he saw no reason to reopen his inquiry into Miss Jowell's financial affairs. Hilary Clarke in Milan and
George Jones (10/03/2006)
Before we go any further, I want to make it absolutely clear that I have not received a penny from Silvio Berlusconi. Yes, I have been to his socking great villa, strewn with helicopter pads, amphitheatres and thalassotherapy baths, on a Sardinian promontory. In common with other world leaders, I have been driven by Mr B around the estate, and admired his demented Dr No-style cactus collection, including a spiny mutant which he likened to "the brain of my finance minister". It is true that I have eaten a large quantity of the Italian prime minister's pistachio ice cream - which he personally rustled up from the kitchen - and drunk about a quart of iced tea. It is true that our conversation became extremely animated, though when he says that I "took advantage of him" in the cicada-chirping dusk, having plied him with "several bottles of champagne", I fear his memory is playing him false. I reported some of the more exciting things he said, and ever since then he has shown a stony refusal to pay off my mortgage or even to help me invest in a hedge fund. So I hope you will agree that I still have a faint trace of impartiality in declaring there is something about the Italian leader that makes me warm to him; and it would be sad if he were to lose next month in the Italian elections to one as spine-crackingly worthy as Romano Prodi. Silvio Berlusconi is a landmark of modern politics. There is no one to touch him for sheer exuberant outrageousness. In his speech, in his dress, his bandanas, his face-lifts, his ludicrous 1950s cruise-ship sexism, he is a standing reproach to the parade of platitudinous Pooters that pass across the stage of international diplomacy. He once called an important press conference with one of the Continent's leading Euro-bores, Anders Fogh Rassmussen, the Danish prime minister, and announced that he was going to introduce Mr Rassmussen to his wife, because the Dane was so good-looking that he might divert her from the man with whom she was then romantically entangled, a chemistry professor called Cacciari. Dio mio! said the journalists. Has any Italian prime minister ever behaved like that before? Has any politician ever cracked a joke about his wife's boyfriend? Let alone in the presence of some po-faced, bearded and deeply mystified Dane? Only Berlusconi could get away with it, and - as he doubtless calculated - the remark does not seem to have hurt him in the polls, earning him as it did the sympathy of every cuckold and straying wife in Italy, a significant chunk of the electorate. Of course there are aspects of his premiership that are sinister, and troubling. How can the Italians vote for a man who owns 90 per cent of Italy's independent television sector, as well as all sorts of newspapers, supermarkets, football clubs and heaven knows what else? This is a man so ruthless and so powerful that he has actually changed the law so that he cannot be prosecuted for his alleged corruption, as long as he is in office. How can the Italian electorate tolerate these epic conflicts of interest? It is not as though he has lived up to his original billing as a man who was going to reform Italy with Thatcherite zeal. The euro experiment is proving particularly tough on the Italians (as this column has been predicting for about 15 years), since they cannot devalue as they used to, and, while Germany's share of world exports has remained steady at about 11 per cent, Italy's has declined from 4.5 per cent to 2.6 per cent. The Italians never emulated the British, in switching from manufacturing to service industries, and now all their beautiful leather and textile firms are being pounded by the Chinese. The poor Italians are so nervous about their financial position that the birth rate has fallen to 1.3 per mother, and 40 per cent of 30- to 34-year-olds are still so strapped for cash that they are living with their parents. Berlusconi could have done far more, in his first term, to tame the unions and reform the labour markets and generally get Anglo-Saxon on the economy; and everyone agrees that he has been a disappointment, and that his attacks on the size of the state have had all the incisiveness of limp fettucine. How can they still like him, then, this former member of the P2 Masonic lodge, this buddy of Bettino Craxi, this man over whom there will always be a Vesuvian cloud of suspicion? How can they continue, in such large numbers, to give their affection to a man who is so often the object of international hilarity? The answer is that they like him not in spite of the gaffes, but because of the gaffes. It is Berlusconi's genius that he has become the only world leader in the great queue of grey-suited line-toers who can be consistently relied on to say something eye-popping, and then, rather than apologise, he defends his remarks with all the confidence and insouciance of one who has a personal fortune estimated at $12 billion, making him the richest man in Europe. Did you hear the Berlusconi joke about the man with Aids, whose doctor told him to take a mud-bath? "It won't cure you," said the doctor, "but you'll get used to being buried." Now, if a British MP had used that joke, publicly or privately, it would, without question, have been the end of his or her career. It is tasteless in the extreme and politically incorrect to the point of insanity. I can imagine that sensitive readers will be shuddering with amazement. But Berlusconi not only said it: he repeated it, and then said that his critics deserved to be buried themselves for their sense of humour failure. He said that he had used his "playboy skills" to persuade the Finnish president, Tarja Halonen, to allow the European Food Standards Agency to be located in Italy, an analysis that so offended the feminist Finns that there was a diplomatic crisis. And there is more. I do not defend his jokes, but they help to make him fallible and human, and to explain his popularity. I cannot help hoping that this peacock will be given one last chance to convert his outrageousness into real political bravery, and reform the Italian economy; and, if he fails, then by all means put him on trial. Boris Johnson (09/03/2006)
A millionaire businessman has lifted the lid on how Labour is concealing money given by wealthy backers who are then nominated for peerages. Labour has raised up to £10m from donors but has hidden the payments because they were made as loans, which do not have to be declared. Three of the donors were put forward for peerages by Tony Blair last autumn. The confidential loan arrangements have been revealed by Chai Patel, chief executive of the Priory healthcare group and a party supporter who has donated £100,000 to Labour. He discloses today that he was asked by a senior Labour fundraiser to provide an unsecured loan even though he was prepared to give a donation. Within weeks of agreeing to the £1.5m loan, he was told he had been nominated by Blair for a peerage. He was advised by Labour officials that he did not have to disclose the loan. If he had given the money as a donation, it would have had to be declared to the Electoral Commission and published, so exposing Labour to a potential cash-for-honours controversy. In an interview with The Sunday Times, Patel said “there is clearly a history here and a reality of peerages for fundraising. The public has a right to be sceptical.” Patel, 51, said he might have been prepared to convert the loan into a donation at a later date, which means it would not be publicised until long after he had been awarded an honour. Labour introduced the loans scheme last year amid mounting criticism of party supporters being handed honours, including knighthoods and peerages, after giving donations. Two other wealthy Labour backers who were nominated last autumn for peerages in the same honours list as Patel were also approached to provide loans. Barry Townsley, 59, a stockbroker, agreed to a loan of about £1m. His spokesman said: “There is no secrecy about this — all disclosures have been made in compliance with the rules.” Townsley has subsequently dropped out of the nomination process. Sir David Garrard, 67, a property developer who had previously donated more than £200,000 to Labour, is believed to have loaned up to £2m. Yesterday Garrard refused “to be drawn” but a party source said that he had given a loan. Despite their being nominated by Blair, the Appointments Commission, an independent body which vets potential peerages, has refused to ratify the honours for Patel, Garrard and Townsley. It has declined to give its reasons. The disclosures will provoke calls for another shake-up of the honours system. Lord Oakeshott, a Liberal Democrat peer who favours a bar on politically appointed peers, said that loans for honours damaged the legislative process. “Loans create an even stronger dependency between a peer and a political party. The nomination process is fatally flawed and needs to be urgently reformed,” he said. Martin Bell, the former independent MP, said: “Honours are being bought and sold on a scale unknown since the days of Lloyd George. It’s utterly shameless. Lord Northcliffe once said that if he wanted a peerage, he would buy one like an honest man. This is roughly where we are now.” Patel added: “I am very sad that whatever happens from here I am linked to an event which has got nothing to do with the things I believe in, but has been reduced to a bazaar where people are saying ‘What was the price of the peerage?’ “We have honours and political nominations which get mixed up. I see this as a political nomination.” Patel declined to name the fundraiser who asked for the loan but his disclosure appears to contradict denials last week by Lord Falconer, the lord chancellor, that peerages are for sale. Falconer said that it was “absolutely not” true that Labour supporters were given honours in exchange for donations. He said: “You are not guaranteed a peerage.” Labour circumvented Electoral Commission rules on declarations because they were loans given “at commercial rates”, understood to be about 6% or more. However, it is not clear if interest is paid or simply added to the loan. The Labour party may not have been able to obtain similar loans from a bank because they were not secured against property or assets. A Labour source said: “We have never taken loans from people like this before. The situation with the bank was difficult. Basically the bank was squeezing the party and we didn’t get any more borrowing. The agreements were done directly with the general secretary.” Blair has been the biggest dispenser of political patronage in the Lords since life peerages were created in 1958. Between 1997 and 2005 he created 292 peers, compared with 216 by Margaret Thatcher during her 11 years and 171 by John Major in his seven years. Nearly all Labour donors who have given the party more than £1m since 1997 have been given a knighthood or a peerage, including Sir Christopher Ondaatje, Lord Drayson and Sir Ronald Cohen. Lakshmi Mittal, Britain’s richest man, is the only donor who has given more than £1m who has not been knighted or made a peer. In a Sunday Times investigation in January, a senior adviser to Blair’s school academy programme told how sponsors of the schools could obtain honours. He described what appeared to be a tariff system for donors where a businessman who paid £10m for five academies would be “a certainty” for a peerage. The government faces growing criticism over honours awarded to donors. Simon Jenkins, The Sunday Times columnist, today describes how the late Lord Montague of Oxford boasted to him that he had bought an honour from Blair. Montague, a businessman and a Labour donor, was made a life peer by Blair in 1997, four months after the general election. Labour membership has almost halved since Blair became prime minister and the party has increasingly relied on large donations. A Labour spokesman said: “There is nothing wrong with donating or lending money to a political party as long as the rules are strictly adhered to. The issue here, regarding the loans that they have made, is whether the strict rules set by the Electoral Commission regarding the declaration of loans that have been made at a commercial rate have been fully observed. They have. “It has been suggested that these loans were made at a preferential rate. That is absolutely not the case.” Jon Ungoed-Thomas and
Robert Winnett
7. See also: David Mills Mortgage-signing is a feminist issue Tessa Jowell - a simple explanation Propaganda Due - P2 Tessa Jowell is guilty Silvio Berlusconi Ken Livingstone |
||||||||||||||||||||||
| meditations |
top |
|||||||||||||||||||||