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Page last updated at 11:49 GMT, Sunday, 21 June 2009 12:49 UK

Lib Dem donation

Police are examining a complaint that Liberal Democrats broke money laundering laws by accepting a donation from the convicted fraudster Michael Brown.

Nick Clegg
Nick Clegg MP

The fresh complaint was triggered by an interview the LibDem leader Nick Clegg gave to Jon Sopel on BBC One's Politics Show.

An investor in Michael Brown's company Robert Mann decided call in police alleging the party broek the Proceeds of Crime Act 2002.

Robert Mann had invested in Michael Brown's 5th Avenue company, which had subsequently given £2.4million in donations to the Liberal Democrats before the 2005 General Election.

Mr Brown has subsequently been convicted of fraud and money laundering. Robert Mann, a Los Angeles lawyer, has already issued a writ demanding £683,000 from the party.

LibDems insist they took the money "in good faith".

Nick Clegg talks about the Lib Dems accepting a donation from convicted fraudster Michael Brown.

See the interview which triggered the new complaint here.

Nick Clegg on BBC One's Politics Show, 24th May 2009

JON SOPEL: Now, you've been very clear that going forward, it's not just a question of obeying the rules, as MPs, we've heard endless MPs saying, I obeyed the rules, it's about being seen to do the right thing. Is that correct?

NICK CLEGG: It's more than that. I think it's the tip of the iceberg. I think if we don't sort out other things related to money and politics, it's not just taxpayers money being misused and abused in expenses. It's the way in which parties raise money, funds. Incredibly murky dodgy we've all - all political parties, before you jump in, have had problems with dodgy donors. We've got to sort that out as well. We've got to sort out the preposterous thing of having the House of Lords, elected by nobody, determining the laws of the land. So what I am saying is, this is the tip of the iceberg, this is a moment of crisis, people have been taken for granted for too long, Westminster has acted like a closed shop, let's open it up, but change it from top to toe.

JON SOPEL: Right. I didn't jump in, now I will. How morally, can you justify keeping hold of the money, given to you some £2.4 million pounds, to your party by the convicted fraudster Michael Brown.

NICK CLEGG: We took every single step, this was acknowledged by the electoral commission, the watchdog which looks at this, to determine whether he was eligible to give the money to us. We had no idea and we've been told we could reasonably have had no idea that the guy turned out to be a crook. So this is the whole thing about retrospective justice. We took every single step, it's acknowledged we took every single step to check whether this guy could give us the money. Later, this of course is well before my time as Leader, but I've looked in to this very carefully, later we discovered that the guy was a crook. Other people have gone after him in court, quite understandably, people who he has defrauded money from.

JON SOPEL: But don't you realize Mr Clegg, that you are sounding exactly like those MPs who are saying, oh but I obeyed the rules. Why don't you take a lead now and say, well actually, we can see it - we're going to pay the money back.

NICK CLEGG: We took the money from this man having done every single check we could have that he wasn't a crook, which he turned out to be later. Right.

JON SOPEL: And we are where we are now.

NICK CLEGG: Yeah. The problem is you're saying to me, if I'd know, if I'd known now what I know about this, about Michael Brown of course we wouldn't have accepted a single penny from him. Did we take the cheques. If you'd said to me, if you could show me that the party then several years ago, hadn't taken the cheques, hadn't made the cheques, hadn't done the research necessary to check whether we were eligible to take money from him, then you're quite right. I think we would have to seek to pay the money back if we had that money to pay back. I think though it's been proven .. (interjection) …

JON SOPEL: (overlaps)

NICK CLEGG: I'm not going to start going, in delving in to the …


JON SOPEL: … let's be open and transparent, do you have the money …

NICK CLEGG: I don't think we've got two and a half million pounds waiting around to pay back to anybody. The point though is not about the money, the exact amount of money, did we take the steps necessary to check whether he was eligible to donate us the money at that time.

JON SOPEL: Okay. Well in view of his conviction, the Politics Show has learnt this week that the Electoral Commission has re-opened their inquiry in to the donation. Should you, rather than waiting to decide whether the electoral commission say it's admissible or inadmissible, because there is now a renewed investigation, make moves to repay that money.

NICK CLEGG: What we will do, is I welcome the Electoral Commission, looking at it again and I've said to people in my party, we've got to reopen all the books to show exactly what we did at the time. Did we take the checks? Did we do the research? Did we do due diligence to check whether we could take money from … That's what the Electoral Commission, quite rightly is going to ask us, we're going to be completely open and if there's any any failing with retrospect shown in what we did, then of course we'll be answerable for that … (overlaps) …

JON SOPEL: I just wonder whether I can play you a clip from the law firm representing someone who invested in one of Michael Brown's companies and has lost all his money.


JON SOPEL: What do you say.

NICK CLEGG: This is a lawyer from a client who is using the Liberal Democrats to get their own money back. They've got their own gripe with Michael Brown, let them sort it out, let them not try and invoke other people to sort out their own legal problems with Michael Brown. Can I just make a wider point though? I am not going to be able to sit here and tell you, we have sorted this or indeed any party leader has sorted this until we re-open the whole way in which party funding is presently administered. At the moment it's a very murky business. You've got the Labour Party … (overlaps)


NICK CLEGG: It's a macro point which is immensely important, you've got the party in government, bankroll by a few trade union bosses, you've got David Cameron bank rolled in large part by people who don't even pay full taxes in this country, multi-millionaires living in Belize, you're quite right in highlighting that we have our own problem with one major dodgy donor who gave money to the party in the past. Let's then at least take the opportunity to change this all together. Why did the Conservatives walk out of the talks, the all-party talks which could have solved this and solved this for good.

JON SOPEL: Okay. And you've made that point about how there needs to be root and branch reform and that's accepted I just want to come back to this point because you said it's simply not acceptable for MPs to say, I was obeying the rules and welcome some MPs paying back money. Why is your argument any different in any shape or form with regards to this donation? You said you acted with all due diligence … (interjection)

NICK CLEGG: Cos it's highly different….


NICK CLEGG: You're mixing things up spectacularly. When MPs exploit ..


NICK CLEGG: I'll tell you exactly why. When MPs, knowingly exploit the expenses system for personal profit, they knew they were doing that at the time. They have now been found - that is wrong. What we did was we took money from a donor, took every reasonable check, this has been recognized by the Electoral Commission that we took that money in good faith, completely different - you're making if I may say so, you're casting aspersions, very unfairly on the checks that we took at the time in to Michael Brown.

JON SOPEL: Okay. We must leave it there. Nick Clegg thank you very much for being with us.


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