Wednesday, October 22, 2008

George Osborne on the rack over new donation allegations.

George Osborne is fighting for his political life amid allegations that he sought a £50,000 donation to the Conservative Party from the Russian oligarch Oleg Deripaska.

Foreign donations to British political parties are illegal.

Hours after the Shadow Chancellor denied outright that he solicited money from Mr Deripaska, Nathaniel Rothschild, his erstwhile friend, made explosive new allegations and named a witness.

Mr Rothschild asserted that James Goodwin, one of his guests at his Corfu villa, was present when he, Mr Osborne and Andrew Feldman, the Conservative chief executive, discussed a possible donation by Leyland Daf, controlled by Mr Deripaska.

Mr Rothschild said that the discussion continued once the party arrived on the Queen K, Mr Deripaska’s yacht.

Earlier Mr Osborne gave a lengthy account of his relations with Mr Deripaska and said: “We didn’t ask for money. We didn’t receive any.”

Mr Rothschild issued his statement at 9pm in what appeared to be an escalation of hostilities between the hedge fund manager and his old friend from Oxford. In it, he directly contradicted Mr Osborne’s account that there had been no discussion of channelling donations through a British company.

One of the reasons that this spat has opened up is that Osborne has been less than discrete about conversations Peter Mandelson had regarding Gordon Brown whilst both Osborne and Mandelson were private guests at Rothschild's luxury Corfu villa in August.

This has apparently enraged Rothschild to the extent that he appears willing to destroy his relationship with Osborne.

Osborne initially issued a limited denial which he was forced to amend as the day went on. However, the issue at hand is whether or not Osborne discussed "the prospect of donation by Leyland DAF, a UK company controlled by Mr Deripaska".

Such a donation, through a UK company controlled by Deripaska, would have been illegal.

Any donation accepted by the Conservatives from Russian oligarch, Oleg Deripaska, would be illegal and forfeited. The regulations say the party must satisfy itself that any donation is legitimate. It has to return the donation if it breaks the rules. Failure to do so could lead to a fine and imprisonment for a year for the person accepting the donation. Accepting a loan from a foreigner is also a criminal offence.

The law says that it is illegal for companies to be used as a front or agent for a foreigner to channel money to a party. It is the responsibility of the party to check this. But it is difficult to prove and a law now passing through Parliament will give the commission the power to require that a company donating to political parties disclose how it obtained the cash.

However, the Tories are going to great lengths to stress the fact that no such donation was ever made and, as far as I can tell, no-one is disputing this. But, the damaging aspect of Rothschild's claim is that Osborne sought ways to bypass the law.

Osborne's claim that no money was ever handed over is secondary to whether or not Osborne sought ways to get round the law. If Rothschild can prove that he did so, then Osborne would probably have to go.

Cameron is sticking by Osborne for the moment, but the last Tory government were hounded out of office on charges of sleaze, and Cameron can't afford to have even a whiff of that associated with his supposedly reborn Tory Party.

Click title for full article.

No comments: