Labour launches donations inquiry

Labour has launched an internal investigation after it received a series of donations of almost £400,000 from a secretive supporter.

The Electoral Commission was demanding an explanation for the money which was given by property developer David Abrahams.

The wealthy businessman "gifted" the cash to friends and colleagues to pass on to Labour, in order to avoid being identified in the Commission's regular public registers of donors.

Justice Secretary Jack Straw said he was "concerned" about the arrangements for the gifts, while Labour general secretary Peter Watt has launched an internal inquiry into the party's acceptance of the money.

Mr Straw said: "Whether these arrangements are within the letter of the law they are plainly not transparent. I am concerned about them.

"I shall ask both the Electoral Commission and my officials for immediate advice on what action should be taken."

Electoral Commission records show a series of large donations from Mr Abrahams' associates Ray Ruddick and Janet Kidd, culminating in gifts of £80,000 from each of them on a single day in July this year.

Mr Ruddick is recorded as having given £196,850 to Labour and Mrs Kidd £185,000 since 2003. Between them, they are listed as having given the party £222,000 since Gordon Brown became leader in June, making them collectively his third biggest donors after Lord Sainsbury and businessman Mahmoud Khayami.

Questions were raised over the gifts after a newspaper report revealed that Mr Ruddick was a jobbing builder, living in an ex-council house in Newcastle, who said he "couldn't stand politicians".

Mr Abrahams, a prominent Labour figure in the North East, last night confirmed that the money came from him.

"I am not wishing to seek any publicity and, being a private person, I gifted funds to friends and colleagues who agreed to make perfectly legal donations to the Labour Party," he said.

"They had the money in their bank accounts, they wrote the cheques and the Labour Party checked up on them. There was nothing untoward at all."

But the Electoral Commission said: "We are contacting the Labour Party and asking them for an explanation about the circumstances of these particular donations."

Laws introduced by Tony Blair in 2000 to clean up the process of political funding require all large donors to be named in the Commission's register. The rules state that if money is passed on through a third party, the original source of the funding must be named, and not the agent acting on his behalf.

A Labour spokesman said: "It is important that the Labour Party is beyond reproach in this matter. The general secretary has therefore been asked to investigate this issue and report his findings to the Party's treasurer."

Mr Abrahams said he would be happy to co-operate with any inquiry by the party or the Electoral Commission and to "regularise" his donations if it turned out he had infringed any regulations.

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