When are the LibDems going to be asked to repay £2.4m from Michael Brown?

The Electoral Commission's likely demand that UKIP forfeit £363,697 of donations may "ruin" Nigel Farage MEP's party according to Brendan Carlin in today's Telegraph.  The repayment demand is much bigger than the party's claimed annual income of approximately £250,000.  Brendan Carlin, who was first on Fleet Street with the story, notes that the donations from retired bookmaker Alan Bown were illegal because Mr Bown failed to ensure he was on the electoral register at the time of his donation and UKIP failed to check that he was registered.

Under the Political Parties, Elections and Referendums Act of 2000 all illegal donations are not returned to the original donors but go to the Treasury.  Alan Bown's money will end up in Gordon Brown's pocket. 

And that brings us on to another Brown...  If the Electoral Commission succeeds in reclaiming UKIP's money there should be new pressure on the LibDems to forfeit the £2.4m that Michael Brown gave to Charles Kennedy's 2005 election effort.  That Mr Bown, always a UK resident and taxpayer, was ineligible to give to UKIP was something of a (not insignificant) clerical error.  The vehicle that Michael Brown used to give to the LibDems was "fraudulent and never traded" (Times).  Why one rule for UKIP and another for the LibDems?

Comments

[Margaret on the Gullotine]

I thought (as with your line on cash for peerages) we didn't talk about other parties' funding scandals here because this is *Conservative*Home.

Oh no, I forgot, this article means a nice thread of 20 trolls expressing sympathy for UKIP. Different kettle of fish.

[CCHQ Spy]

Pathetic Margaret. Pathetic.

[Denis Cooper]

So you think we should only discuss Tory party funding scandals ... every party knows the rules, as they're written, and it should anticipate how the Electoral Commission may interpret those rules in its particular case. We already know that the Commission turned a blind eye to breaches of the rules on "purdah" during the north east referendum, so there should be no expectation that this supposedly independent Commission will be even-handed. Part of Blair's legacy will be that nobody now believes that any "independent" body will be independent.

[Og]

Margaret on the Gullotine (Sic)

I am no UKIP troll, but I think they do us all a service by reminding us that consensus capitulation to Brussels by the major parties is close to being reality.

On the subject of Bown: he lived, worked, employed people and paid taxes in Britain. That he was not on the electoral roll for a year when donating to UKIP seems to me to be a low-level misdemeanour, worthy of a slapped wrist but certainly not forfeiture.

Tories would be wise not to crow, lest the Ashcroft offshore empire becomes a topic of discussion.

[Editor]

This is ConservativeHome Margaret - you're right - but we can't let the Electoral Commission treat two parties so differently.

[malcolm]

The Electoral Commission has covered itself in discredit when it failed to do anything meaningful about the obvious fraud that goes on with postal voting.I don't expect it will cover itself in glory here either.
Listening to Farage on the radio this morning it was difficult to disagree with him that it does seem UKIP is being victimised. I must admit that I had forgotten about Brown and the Libdems but I would hope that if UKIP are forced to pay back the money othewr parties including our own should repay money taken from foreign backers.

[rowntree trust]

I would be interested to know more about the LD's funding from the Joseph Rowntree Trust, a company ltd by guarantee. It has assets of circa £20m which at 5% is a £1m a year therefore how can it afford to give the LD's the millions it did last year?
Have they sold investments in order to donate to the LD's? Is there any conflict of interest from the several LD MP's and party members on the board of the company?
Or has it been used as a front for donations from other sources?

I am sure there is something worth investigating there.

[George Hinton]

No doubt Ming has cut a deal for a NuLab/Lib-Dem Pact once the next election is over and he gets to be Foreign Secretary.
Charlie becomes the Scotch Whisky Trade's general ambassador at large.

[Alex Forsyth]

Margaret on the Gullotine (Sic)

Interesting that this anti-Thatcher anti-Conservative Heathite troll can't even spell the name of the instrument of execution he/she glorifies.

Jack Stone sockpuppet?

[realcon]

Quote: "but I would hope that if UKIP are forced to pay back the money othewr parties including our own should repay money taken from foreign backers."

Just to confirm that UKIP is not being told to 'pay back' the money, but the money is to be CONFISCATED BY THE TREASURY.

[Wiliam Norton]

No sympathy for either UKIP or the Lib Dems from me. PPERA is a daft law, but it's still the law, and it should have crossed someone's mind with sums of these sizes to have done a bit of due diligence. Shocking staff work.

I'm not sure, for once, that the Electoral Commission have been displaying their usual crass incompetence, although that may come into it. My guess is that there is an unholy row going on behind the scenes.

There's a hole in the law. PPERA is very clear that where Mr X gives an illegal donation to Party Y then the gift is forfeited to the Consolidated Fund. What it does not say is what happens when the money wasn't Mr X's to give but was purloined from Mr Z.

In principle, if the Treasury ever get the cash then they ought to pay it back to Mr Z on the grounds that they hold it on a deemed trust for the rightful owner - but they'll probably be saying that there is an Act of Parliament which says it belongs to us now, and we're keeping it (although they'd dress it up better on grounds of public policy: PPERA sets out the criteria for registered political parties; if they follow these they are eligible for taxpayer assistance; so if they break the rules then the taxpayer ought to get the windfall; not our fault, guv; think of the schools'n'hospitals etc etc).

Mr Z however might not want to sue the Govmt. (Who knows? They could have too much at stake in various other projects, or perhaps Mr Z doesn't want to take on the infinitely deep pockets of the taxpayer.) There is little point in sueing Mr X, because he won't have the cash and will probably be enjoying Her Majesty's hospitality: any way, he'll just join in Party Y on the grounds that he gave the money to them.

Party Y would argue that it is unjust for them to pay twice for Mr X's theft - and you can bet that they would drag in the Human Rights Act about state appropriation of private property etc etc. So they will hang on to money, admitting that it doesn't belong to them but waiting to find out who should get it. The Boy Scout defence: I can't pay the money to anyone until I'm really, really, really certain it belongs to them, because otherwise I might be doing something wrong.

If the Electoral Commission take Party Y to court, it triggers writs from everyone else: and there might even be an argument that they've deprived Mr Z unjustly of his funds by triggering the transfer under PPERA which puts the cash beyond Party Y's ability to return it to Mr Z. So Mr Z might sue them just in case PPERA does operate to confiscate his money for good. What do you think a risk-averse quangocrat thinking of the honours list and his pension will do in those circumstances?

In summary: nothing happens. Order more pizza for the lawyers in conference room 99.

[malcolm]

Yes realcon you're right. I should have expressed myself better.
PS I'm sure we should all have great confidence that the Treasury will spend their ill gotten gains wisely!

[Alex Forsyth]

I've been frequently accused of being a "UKIP Troll" (whatever that means) so I am going to agree with William Norton that I have very little sympathy with UKIP on this. The dropped themselves in it.

I do not support UKIP because I think it is inefficient (now proven with a vengeance), wasteful, and dominated by personal infighting.

These people have a golden opportunity to profit from Cameron's betrayal of the Conservative Party and they are blowing it.

That's why the serious patriots have to hang on in and wrest control of the Tory Party from the Blulabour malignants.

At a later stage we can take over the useful part of UKIP while throwing out the egotists.

[Mark Wadsworth]

"When are the LibDems going to be asked to repay £2.4m from Michael Brown?"

As soon as possible, I hope.

[Og]

I'd wager my lunch money that, if this disproportionate penalty is enforced, a rich donor will ride to the rescue. It is profoundly undemocratic to force a small political party to the wall over as petty an issue as this.

I agree with Forsyth above - UKIP are frequently their own worst enemy and all Tories of traditional principles and conscience should be prepared to indulge in hand-to-hand fighting for the soul of our party rather than join another.

[George Hinton]

That's why the serious patriots have to hang on in and wrest control of the Tory Party from the Blulabour malignants.

At a later stage we can take over the useful part of UKIP while throwing out the egotists.

Posted by: Alex Forsyth | February 23, 2007 at 10:39

Why bother with the demcratic process, just stage a coup d'etat/putsch, organise a camp for the dissidents on Orkney or Shetland, place the really dangerous blighters on Rockall, select 600 odd like mined mates and appoint them to Westminster and rule by fiat.
Once in power you can have the Treasury as your personal piggy bank and ensure that sufficient is available to establish the cult of leader.
I'm surprised that St Toni hasn't spotted this idea in its entireity.

[Angelo Basu]

William Norton- Party Y would in the circumstances of the money being illegally obtained by X from Z potentially face a money laundering charge which would see the proceeds of X's crime sitting even more securely in the Treasury.

[HF]

Mr Bown was not registered to vote for the general election.

Mr Bown is apparently one of UKIP's "top team" called the NEC.

Having a non-voter as part of a party's leadership is farcical.

Is the new slogan of the debtKIP party...

"Vote for us, even if we cannot be bothered to vote"

[William Norton]

Angelo Bassu: yes, anti-money laundering rules could come into play; that would go to the due diligence involved. Just adds another quango to the mess. I would still have thought that if Mr Z is known, and the money can be quantified and the trail traced precisely, it would give Mr Z a damn good argument for having his money back.

The Editor queried how it was possible for the Electoral Commission to move against UKIP and not the Lib Dems. My guess is that it is clear and obvious in the case of UKIP that the donation is forfeitable, and who gets the money. It is also pretty clear that the Lib Dems can't keep their donation, but where it goes creates scope for argument, hence delay.

What I haven't thought about is whether Bown could sue UKIP.....

[Peter Harrison]

I think both Angelo and William are mistaken.

To start with Angelo, the money laundering laws deal with exchanging criminally obtained assets for "clean" assets. Giving it to a third party from whom you get nothing in return is not money laundering.

William's scenario is more complex because it involves two separate breaches of the law. Mr X has purloined money from Mr Z and given it to Party Y as a donation. The fact that the money has been stolen does NOT bring the matter within the scope of the PPERA. It will only come under that if Mr X is not a permissible donor. So we have two separate issues here - the theft by Mr X and the breach of PPERA by Party Y.

Party Y had 30 days from receipt of the donation to return it if they realised Mr X was not a permissible donor. After that, they may be ordered to forfeit an equivalent sum of money by the courts.

Mr Z has a claim against Mr X for return of his money. I am not convinced he has any claim at all against Party Y unless he can show that they were aware that Mr X did not own the money he was donating. If he does have a claim against Party Y, they may end up having to pay out the money twice - once to return it to Mr Z and once for their breach of the PPERA. More fool them for accepting money they knew to be stolen.

[Gospel of Enoch]

Sue UKIP? Hmm. The NEC are liable for the party's debts, and Bown is on the NEC, so seems a bit pointless, that...

[michael mcgough]

I wonder whose fingerprints are on this event.Interestingly ElecComm only check a small proportion of donors against the copies of electoral rolls ,all of which by law ,are sent to them.They apparently use a system of STATISTical sampling based upon their own in house risk analysis.This was used to discover wide boy Michael Brown was not an eligible voter ,but they then allowed a donation from one of his non- UK trading companies.
Presumably once such sampling throws up non compliance the sample is increased and the search extended.If this much fuss is being created over a failure by a domiciled,resident and ordinarily resident UK employer and UK taxpayer I can't imagine the ructions when the police conclude their cash for honours and loanations investigations.Whatever else is wrong the donations to UKIP weren't non-commercial rate of interest bearing loanations,nothing was sold in exchange and they were onshore and on balance sheet.

[gadgie]

I would like to know how the electoral commission came to the decision of making
a conservative group (NESNO) North East Says NO to a regional assembly, when the People's No campaign had been running two years before NESNO popped up?
http://www.northeastnocampaign.co.uk/news.html
The electoral commission also failed to take Prescott to task for using his official car in the North East when he was not supposed to be campaigning for a yes vote.

[William Norton]

Gadgie:I would like to know how the electoral commission came to the decision of making a conservative group (NESNO) North East Says NO to a regional assembly, when the People's No campaign had been running two years before NESNO popped up?

Because NESNO had the better Referendum Agent. Obviously.

(In passing: after 2 yrs of the "people's campaign" there was a strong majority in the polls for a Yes vote. After less than 2 mths of NESNO campaigning there was a No vote of 78%. Go figure.)

Peter Harrison: PPERA says that Party Y cannot retain a donation from an impermissable donor (Mr X) and that if they do the donation is forfeitable to the Treasury. I don't think that requires Party Y to have knowledge of theft, just a failure to appreciate Mr X was not a permitted donor. In parallel, if Mr X did not own the money, he could not pass ownership of it to Party Y. Nemo dat quod non habet. Therefore Party Y must be holding it on trust for the rightful owner (Mr Z), and I cannot see how they could defend a request for return of that money.

It is not clear which principle has priority, or whether forfeiture to the Treasury simply carries over the trust in favour of Mr Z. It is always possible that Party Y is liable for both hits - if a "little" unjust - but it would still take some time to sort out one way or the other.

[jorgen]

Alex: That's why the serious patriots have to hang on in and wrest control of the Tory Party from the Blulabour malignants.

For the first time, I don't agree with you. If many think like you, Cameron may well become the next PM. Labour is for reasons I can't guess trying incredibly hard to make itself unelectable and will probably succeed.

[Angelo Basu]

Peter- money laundering has been expanded much more widely in definition and doesn't need actual "laundering" (ie replacing dirty money by clean) any more. You don't even need to look at the specific cleanliness of a particular sum of money, it can be enough if you suspect that the person you are getting it from has received other dirty money. The Proceeds of Crime Act (etc) is really rather draconian as anyone who has had to do money laundering checks will know.

[Lord Cashcroft]

The EU has not had its' books approved by the auditor for many years and we are talking billions of british taxpayers money being sunk into this project.
Remind me again which party thinks this is OK?

[Denis Cooper]

So let me get this straight ... a British citizen, normally resident in the country,
is not a permissible donor if he's neglected to renew his electoral registration.
But a recently arrived Polish citizen who's received the leaflet in Polish sent out by the local Labour-controlled council, and been helped to fill out the form and
put himself on the electoral register for our municipal and European elections, would be a permissible donor. Makes perfect sense. But of course the latter
may not have any spare money to give, unless somebody first gives it to him.

[Peter Harrison]

Angelo - I am aware of the money laundering regulations. However, they apply where the person "laundering" retains ownership of the money (e.g. deposits it with a bank) or exchanges it for goods or services. Giving it to a political party or charity (or anyone else) for no consideration is not laundering under the Proceeds of Crime Act.

William - I agree with you about Party Y's liability to forfeit the donation if it is from an impermissible donor. The point I was making is that they don't have to forfeit the money if it was from a permissible donor even if the money was stolen.

Where we part is on whether Party Y has any liability to Mr Z. You quote Nemo dat quod non habet to say that title for the cash remains with Mr Z. However, this rule does not apply here. Legal tender and negotiable instruments are exempt from the rule in this kind of situation.

If Mr X steals gold bars from Mr Z and gives them to Party Y, Party Y would have to return them to Mr Z. However, if Mr X steals some cash from Mr Z and gives it to Party Y, they have no liability to Mr Z.

It is exactly the same situation as if Mr X had gone to the local shops and bought goods with the money he stole from Mr Z. The shops do not have to return the money to Mr Z.

If the rule applied the way you think, the economy could not operate. Whenever I received any money (including wages from my employer) from anyone there would be the risk that it might have been stolen from someone who could then claim it back from me. I could never spend the money in case it didn't belong to me.

Thankfully, that isn't the case. When I receive money from any source, provided I have obtained it honestly, it is mine.

[Peter Harrison]

Dennis - that's pretty much right. Of course, he might be from New Zealand or Australia rather than Poland and his local council may not be Labour controlled. As long as he is on the electoral register, he is a permissible donor. Fail to register and you are not allowed to donate, whatever your background.

To be honest, I have little sympathy for someone who fails to register and then complains that they can't donate.

[William Norton]

Peter Harrison: It is exactly the same situation as if Mr X had gone to the local shops and bought goods with the money he stole from Mr Z. The shops do not have to return the money to Mr Z.

No, it's not exactly the same. Mr X has stolen cash from Mr Z and has an obligation to return that value. If he converts the cash by purchasing goods, you don't pursue the shop-owners: you pursue the goods, which would be in Mr X's hands, and if they have gone down in value (e.g. he bought several tons of rotting tomatoes) then Mr X would be obliged to make up any shortfall. The trust therefore applies to the goods, not the cash, because that is the form in which the value taken from Mr Z currently resides.

Where Mr X donates the cash to Party Y he has received nothing in return: there has been no conversion, and similarly - and this is the key point - Party Y have given nothing in exchange for the cash, either. I can't see how Party Y have acquired any title in the cash since the thief had no good title to pass on to them and they have given nothing in exchange (whereas your shop-keepers have sold goods and/or services). If Mr Z sought return of the cash from Mr X, he would join in Party Y requesting return of the donation.

[Peter Harrison]

William - I understand that you see a difference between donating the money and using it to buy something. The law does not (at least, not for the situation we are discussing). If you defraud me of some money, my claim is against you. If you buy something with the money, I do NOT get ownership of the things you have bought. The bailiffs may sell them or other of your goods in order to recover the money if required, but all that matters is that you pay me back my money.

If you have given the money to charity, a political party or whoever, my claim is still against you. Nemo dat does not alter that - it applies to chattels. It only applies to legal tender and negotiable instruments in limited circumstances.

Victims of fraud or theft rarely recover all of their money. I'm afraid that pursuing people to whom the fraudster has donated the money won't help them (which is probably why they don't do it!).

So if someone donates £100k to the NSPCC, say, they can spend it without worrying about it - it is theirs to spend (unless they were accessories to the crime).

[Yet Another Anon]

No doubt Ming has cut a deal for a NuLab/Lib-Dem Pact once the next election is over and he gets to be Foreign Secretary
The Liberal Democrat's insistence on there being a referendum on PR which Gordon Brown and many Labour backbenchers would block and disputes over things such as the Liberal Democrats zealous enthusiasm for the single currency and the Local Income Tax and their likely insistence of joint policy making means that a coalition between the Liberal Democrats and one of the 2 main parties just isn't going to happen.

[Denis Cooper]

Ah, now it's being claimed that he was on an electoral register, but he had just moved to another house in the same area and he hadn't notified the registration office of his change of address before he made the donations ... still, the law is the law, and it must be applied to the letter, at least in some cases.

[michael mcgough]

One outcome of this debacle for UKIP is the lesson to be learned by us all;check that your name is on the electoral register.I always return mine late,in the probably misguided view that those returned early are more likely to be called for jury service.I have never ever checked my name is actually on the list and my only confirmation is the polling card arriving on the mat.What if our new multilingual postal service had lost my return along with all the other letters they lose.Worse still what if the local electoral office was not the beacon of efficiency that I believe them to be.
On another point who checks that those on the electoral roll are legally entitled to be on it and are legally resident here.

[Stephen Tolkinghorne]

It's called using common sense. I'm amazed by people on this blog who seem to suspend their sense of right and wrong, just because it's the hated UKIP on the receiving end of blatant injustice.

As for the LibDems and Michael Brown, as I understand it, he's not a UK citizen, as he's registered as living in Spain. He only made the donation through a company trading in the UK, except that it was not a trading company, but a dormant one. LibDems could have checked that out with Companies House before accepting the donation. Therefore, the donation was in clear breach of the rules, should be taken away too, but of course it won't be.

Why are UKIP being treated so unfairly by the Electoral Commission ? I think, in truth, we all know the answer.

[Lucy]

This gives me an idea. I fail to get my name on the electoral register. Then I have the perfect excuse for not making donations to any political party.

[Ted]

Stephen, yes its a badly drafted law, for party political purposes, but UKIP could have made the check themselves. It's obviously been bubbling around as the Party was 6 months late with their accounts (unless that was a further display of incompetence). There have been resignations already over the South East finances which again shows something is wrong.
The thing with laws is that it isn't the intention of the legislators that matters but the words - so the LDs may well have broken the spirit, as probably both other major parties have, but if they didn't go against the letter of the law there isn't a case to answer.

[Elaib]

I am delighted that people here are so au fait with electoral law that they remember to fill in every peice of paper that comes through the door.
He was registered, he moved in the same area, when he went to vote (if he did - I have no idea) he would have been allowed to. So it probably didn't cross his mind. UKIP were at the time a deeply amatuerish party, this has changed.
Whatever, it would be a shame if a legitimate and serious, but minor party were closed down due to a clerical error. Or do people here think that bureauocracy trumps beliefs?

[Daniel VA]

"The Electoral Commission's likely demand that UKIP forfeit £363,697 of donations may "ruin" Nigel Farage MEP's party according to Brendan Carlin in today's Telegraph."

You'd have to have a heart of stone not to laugh. I assume the membership subs of the alleged mass exodus of disgruntled traditional Conservatives won't cover the deficit? What a pity.

[Peter Harrison]

Elaib/Dennis - That's an interesting rumour but it can't be right. If he was on the electoral register, he was a permitted donor. It doesn't matter whether or not he was registered at his current address. The register is only updated once a year. If you move part way through the year, your registration remains at your old address. You don't suddenly become an ineligible donor just because you've moved.

In terms of PPERA, the deciding factor is that you are on an electoral register. It does NOT specify that you have to be registered at your current address.

So, if this rumour is correct, UKIP are in the clear. Since the Electoral Commission are taking action, either they are thoroughly incompetent or the rumour is wrong. I suspect the latter.

And "remembering to fill in every piece of paper that comes through the door" is quite trivial in terms of electoral law. You complete your return once a year. In most places it will be completed for you so that, provided there are no changes, all you have to do is sign it and send it back in the prepaid envelope. Not exactly a great strain nor does it require any specialist knowledge.

It may appear silly that a British citizen who has not registered to vote can't donate to political parties. However, the definition makes it clear for the parties. All they have to do is check the Electoral Register. If the donor is there, they are in the clear. If it was altered to say that donations were permissible from anyone who was eligible to appear on the electoral register regardless of whether or not they did so, that would make it much harder for parties to check (and hence would make it easier for parties to get around dodgy donors by saying "he claimed he was eligible and we didn't find anything in our checks that said he wasn't").