Reform of political donations: within the gift of the Lib Dems?

by Stephen Tall on April 20, 2009

Yesterday’s Observer reported that one of the Lib Dems’ bigger donors, Sudhir Choudhrie, faces allegations of “accepting tens of millions of pounds in kickbacks from an arms deal between an Israeli company and the Indian government”:

Sudhir Choudhrie, who has personally donated £95,000 to the party and whose relatives’ companies have donated a further £475,000, was named as a key arms broker in foreign reports. … This is the second time that Choudhrie, 59, has been accused of being paid an illegal commission from a major arms deal in India. The allegations are said to be politically motivated, and to coincide with the country’s general election.

The timing of the allegations is embarrassing for Nick Clegg, the party leader, who called for a curb of the arms trade and a boycott of sales of arms to Israel earlier this year. The claims that one of their donors is an arms broker will concern senior Liberal Democrats, who are still smarting from the exposure of their biggest ever donor, Michael Brown, as a convicted serial fraudster in 2006.

As James Graham notes over at his Quaequam Blog! it’s hard to see exactly how this is embarrassing for Nick, despite the Observer’s unsubstantiated smears. After all, surely the concern about big donors is that they will influence the party’s policy in some way, that money will talk louder than principle?

That was why Labour was severely compromised by Bernie Ecclestone’s donation; and Wafic Said’s largesse is why the Tories have found themselves silenced over the disgraceful BAe Al Yammamah deal.

There is absolutely no suggestion that the Lib Dems’ policies are for sale. Nor was there when Lord Jacobs, another major donor, quit the party last year over policy disagreements.

But James goes on to suggest that Nick Clegg needs to take a stand, just as he has on MPs’ expenses, and unilaterally declare the Lib Dems will not accept gifts totalling more than £100,000 in any given year:

there is a lesson here for Clegg that he would do well to heed. Politics and money are a toxic mix. Even when nobody can be said to have done anything wrong, too often it leads to the wrong sort of headlines. And one thing the Lib Dems can’t afford to be seen as, as they creep up the polls (and I have to admit I’m relatively optimistic about how we might do in the next general election), is just another part of the shameless political class. …

With the economic climate and public mood such as it is, I think now is the perfect time for him to go one step further. He should impose a cap on the party, regardless of what the law says, and call on the other parties to do the same.

At what point that cap should be should be considered. In an ideal world, he might consider self-imposing his own £25,000-per-year cap, but given the other parties are unlikely to play ball, at least in the short term, that might be going a little too far. But what about £25,000-per-quarter? It would be simpler to administer than an annual cap and would go some way to matching the rhetoric with action while not leaving the party at a massive competitive disadvantage.

And how would it affect the party in real terms? Well, for the most part, even our large donations are in the tens of thousands rather than the hundreds of thousands (and even millions). In 2008, only two companies donated more than £100,000 – the Joseph Rowntree Reform Trust Ltd. and Marcus Evans Ltd. (a non-cash donation). So in reality we would lose very little.

What we would gain is some degree of immunisation from this sort of story – and complete immunisation from things like the Michael Brown scandal. We would also be seen to be practicing what we preach – something we aren’t seen to be doing nearly often enough. In the longer term, I suspect that will be worth far more than a couple of hundred thousand pounds.

What do LDV readers think of James’s suggestion? Would it, as he believes, knock on the head the media’s stories against the Lib Dems? Or would it simply be ignored by the media, while severely handicapping the party’s ability to compete against Labour and the Tories in the forthcoming elections?