Labour promises to curb political gifts: Tory majority on select committee rejects calls for reform

STATUTORY restrictions on company donations to party funds could be introduced by a Labour government in the wake of public concern over donations by Asil Nadir to the Conservative Party, Labour leaders said yesterday.

The plan was put forward by Robin Cook, spokesman for trade and industry, after the Tory majority on a Commons select committee was accused of a 'whitewash' for giving a clean bill of health to the Tory party over secret donors.

Mr Cook said companies wishing to make political donations should be able to do so only from a political fund. It would be financed by dividends but shareholders would have the right to opt out and unit trust managers would be required to contract out of party political funding.

The Tory party has refused to repay pounds 440,000 donated to it by Mr Nadir, the fugitive former head of the collapsed Polly Peck organisation, because there is no evidence that it was given illegally.

The row over party funding in the wake of this affair was reignited when the majority report by the six Tory MPs on the Home Affairs select committee rejected all calls for reform. Its findings were repudiated by the five Labour members.

The Tory majority report rejected state funding, disclosure of donors' identities, limits on individual donations, curbs on overseas donations and further checks on company donations.

It recommended that a code of practice should make clear to donors that money does not buy influence or honours; illegally obtained money would not be acceptable, and would be returned if discovered to be illegal; substantial anonymous donations would be refused; and donations from foreign governments and rulers would be refused.

Sir Norman Fowler, the Chairman of the Conservative Party, who gave evidence to the committee, described the Tory MPs' report as balanced. He said: 'Far from justifying the allegations made last year, this report shows that the Labour Party's accusations of 'sleaze' are themselves nothing more than unsupported assertions.'

Labour MPs said the Tories had failed to answer the accusations and made it clear they intended to make allegations of Tory sleaze a campaign issue at the next election. 'The Tory party has reported a profit of pounds 2m for the past year. It could only have done that from overseas donations, because the company donations have dried up,' said a leading Labour source.

John Major was criticised in a minority Labour report by the five Labour members of the committee for allowing Downing Street to be used for fund-raising for the Tory party. Their report, drafted by Chris Mullin, highlighted the disclosures in the Independent that the Tory party had set up offshore companies to handle donations to the party, including payments of pounds 150,000 by Octav Botnar, the former head of Nissan UK.

Lord McAlpine, former party treasurer, told ITN that there were 'tons' of off-shore accounts. Sir Ivan Lawrence, Tory chairman of the committee, refused to be drawn on whether the Tory majority approved of the use of off-shore companies. He said the committee had not investigated the allegations.

The Labour minority recommended limiting individual donations to pounds 5,000 a year. The committee had visited the US where members were able to use computers to study the amount donated to political parties by film stars. But the Tory MPs said that in Britain donors wished to remain anonymous. They said it was an issue of privacy, which had to be protected.

Leading article, page 17

Stay Mr Major, page 18