+++ OFFICIAL: Lib Dems cleared by Electoral Commission over Michael Brown’s £2.4m donation

by Stephen Tall on November 20, 2009

Here’s the full statement just released by the Electoral Commission:

Donations by 5th Avenue Partners Limited to the Liberal Democrats: statement

20 Nov 2009

The Electoral Commission, the independent elections and party finance watchdog, today announced the outcome of its investigation into donations made by the company 5th Avenue Partners Ltd to the Liberal Democrats. Donations totalling over £2.4m were made in 2005.

The investigation considered whether there had been breaches of the Political Parties, Elections and Referendums Act 2000 (PPERA). In particular, it looked at whether the company, reported as the donor, was a permissible donor. It also considered whether the company was in fact the true donor. If a party accepts impermissible donations, the Electoral Commission can apply to a court to seek forfeiture of an amount equivalent to the sum accepted.

To be a permissible donor, a company must be registered under the Companies Act 1985, incorporated within the UK or another EU member state, and be carrying on business in the UK. The Commission has concluded that 5th Avenue Partners Limited met these requirements at the time the donations were made, and therefore was a permissible donor.

The Commission also considered whether there was a basis for concluding that either Michael Brown, as an individual, or 5th Avenue Partners GmbH (the parent company of 5th Avenue Partners Limited) was in fact the true donor. Neither of them would have qualified as permissible donors under PPERA.

The Commission has concluded that there is no reasonable basis to conclude that the true donor was someone other than 5th Avenue Partners Limited.

Commenting on the outcome of the investigation, Electoral Commission Chair Jenny Watson said:

“The law sets out who can make donations to political parties and makes sure that information about where parties get their money from is in the public domain, so voters can see for themselves how politics is funded. Our job is to make sure those rules are followed.

“Parliament considered carefully the rules on company donations in 2000, and set out specific requirements, including that a company must be carrying on business in the UK in order for it to be a permissible donor.

“We have conducted a thorough investigation into these particular donations to the Liberal Democrats, and considered a substantial body of evidence: evidence from the criminal proceedings against Michael Brown; documents obtained from the City of London Police, including analysis by forensic accountants; and evidence provided by the party.

“Having considered all the evidence in this case, we have concluded that 5th Avenue Partners Limited met the requirements to be a permissible donor. The Electoral Commission will be taking no further action in this case.“

The full case summary is available on our website.

The saga of Michael Brown’s donation has dragged on for years – you can catch up with the archive of LDV posts (dating back to September 2006, the month LDV was launched) here.

There’s no doubt the story has done the party’s reputation a great deal of harm, not least because the Lib Dems were unable fully to capitalise on the ‘cash for peerages’ row which erupted towards the tail-end of the Blair premiership. Every time the party called for a proper clean-up – an end to the Labour/Tory practice of giving favours for donations – the words ‘Michael Brown’ were thrown back at us.

The fact that the party promised Michael Brown nothing in return for his donation – the fact that one of the party’s biggest donors, Paul Marshall, has had to scrap it out in an internal party election process to get on the list of future Lib Dem peers – has been obscured.

None of which is to say the party hasn’t lessons to learn from the Michael Brown episode. But it is undoubtedly a relief (not least from a practical financial point of view) to have confirmed that the Lib Dems did follow the necessary processes, and did act in good faith when accepting Michael Brown’s largesse.

More reaction will follow as we get it …