Lib Dems may have to return £2.4m donation
The Liberal Democrats could be forced to pay back a £2.4 million donation after the elections watchdog today raised doubts about its legality.
The Electoral Commission said new evidence had come to light that might make the donation from 5th Avenue Partners Ltd last year “impermissible”.
The firm is owned by Michael Brown, a 40-year-old millionaire businessman who was based in Spain and was therefore barred from giving to UK political parties.
But the commission previously ruled that because the donation was made in the name of 5th Avenue Partners, which was based in the UK, it was “permissible”.
The £2.4 million was given in several installments in the run up to last year’s general election and funded half the party’s campaign spending.
However, today the Electoral Commission said it was no longer clear whether the company was carrying out UK business at the time of the donation, saying: ” If not, then the donations were impermissible.”
Mr Brown was last month jailed for two years after admitting to committing perjury and making a false declaration to obtain a passport.
In a statement today, the Electoral Commission said it still believed the Lib Dems had “acted in good faith” in receiving the donation, and was not reviewing the question of whether the party “failed to carry out sufficient checks” into whether it was legal.
“Nevertheless, we have always said that if any additional information that has a bearing on the permissibility of the donations comes to light, for example as a result of the ongoing police investigation or legal proceedings relating to the affairs of 5th Avenue, we would consider the matter further,” the watchdog said.
If the donation is ruled impermissible, the commission has the power to apply for a court order to demand the Lib Dems pay back the money. It would be not be returned to Mr Brown, but put into a special government fund.
“We are considering the available evidence and expect to reach a decision on whether to apply for such an order in the next few weeks,” the commission said.
A Lib Dem spokesman said the party had carried out “appropriate checks” into 5th Avenue Partners before accepting the donation, had acted in good faith at all times, and had declared all its loans and donations properly to the commission.
“We welcome the fact that the Electoral Commission is not challenging this,” he said.
“We remain convinced that the company was carrying on business in the UK at the time it made the donations. Our independent auditors, having seen legal advice, have been satisfied that we do not need to make any provision for repayment of these funds.
“The Electoral Commission has previously confirmed that it was reasonable for the party to regard the donations from 5th Avenue Partners as permissible on the basis of the evidence available.”
