Exclusive: Secret donors who saved Tories

Records of secret donations to the Conservative Party are revealed for the first time today. Steve Boggan discloses how the party, then close to bankruptcy, raised millions of pounds over a frenzied four-month period, largely from 'anonymous' donors.

Treasurers at Conservative Central Office banked pounds 7,129,567 during the months April, May, June and July 1996 and recorded pounds 6,794,000 of that as "anonymous", according to documents seen by The Independent.

The first records ever to leak from Smith Square show that frantic fund- raising was under way at a time when outsiders believed the party was about to go under with debts of pounds 18m. They show that 39 donors propped up the party during one of the most lucrative periods in its history. By August 1996, a bank overdraft of pounds 11.4m had been reduced to just pounds 1.9m.

But the largest donors, perhaps the most embarrassing for the Tories, are listed in the Conservative Treasurer's ledgers as anonymous, known only to a handful of senior Tories but kept from officials and ministers.

According to former staff, many of the anonymous entries, which include two donations of pounds 2m and others for pounds 750,000 and pounds 500,000, came from abroad, particularly Hong Kong. "You would go to functions for big donors and there would be Chinese people everywhere," said one former worker.

Earlier this week, The Independent disclosed that a pounds 1m donation accepted by the party in 1994 came from a Hong Kong heroin smuggler.

The scale and anonymity of the Tory donations will stun politicians in all parties, including Conservatives, because they breach the spirit, if not the letter, of a code of practice publicly accepted by John Major in Commons exchanges with Tony Blair.

On 21 May 1996 Brian Mawhinney, then chairman of the party, wrote to Labour's Robin Cook saying: "... the Conservative Party fully accepted the recommendations of the Home Affairs Select Committee on Party funding. When will Labour accept these recommendations?"

On the same day, a donation for pounds 2m was received and logged as "anonymous" at Conservative Central Office. One of the Select Committee's recommendations was that "substantial anonymous donations [should] be refused".

Dr Mawhinney (now Sir Brian) refused to comment yesterday, but a party spokesman said: "We never accept anonymous donations. We do sometimes issue receipts that say 'anonymous' to protect the identities of donors who wish to remain private."

However, in the documents seen by The Independent, all the major donors are recorded in the ledger as anonymous. Those recorded by name include the Foreign & Colonial Investment Trust (pounds 12,500), which last year made Kenneth Clarke, the former Chancellor, a part-time director, and the armaments company Hunting Plc, which gave pounds 7,500.

Sir Rocco Forte, former head of the Forte hotel group, gave pounds 50,000, and Metta Trading, a company which had links to the Serbian government, donated pounds 9,000, one of a series of payments. When The Independent disclosed that the company was the subject of UN sanctions in 1996, the Tories refused to confirm or deny they had received money from it.

Sir Norman Fowler, the Conservative chairman, told a Commons investigation into party funding in June 1993 that the party had "very strict rules", including rejection of donations from foreign governments, "or any donations the source of which we do not know".

When it was pointed out that a former chairman of the party's Board of Finance had said he was very often not aware of donors' identities, the explanation was left to Tim Smith, a joint treasurer of the party who was subsequently disgraced for accepting and concealing personal payments of up to pounds 25,000 from Mohamed al Fayed, in return for Commons lobbying.

As Prime Minister, Mr Blair has now commissioned a full-scale inquiry into party funding by Lord Neill's Committee on Standards in Public Life, which has already suggested that secrecy and anonymity can breed suspicion.

Most of the 1996 donations are believed to have been solicited by Lord Harris, the carpets entrepreneur, who was regarded by staff as a master fund-raiser. "What really worried me," said one party worker, "was recording the stuff as anonymous. It shouldn't be too much to ask to simply know whose money we were banking."