Page last updated at 17:39 GMT, Thursday, 4 March 2010

Ashcroft cleared over 5.1m Tory donation probe

Lord Ashcroft
Lord Ashcroft is one of the Conservatives' main donors

The Electoral Commission has said £5.1m of donations to the Tories from a firm belonging to Lord Ashcroft were legal.

The commission has ruled that the donations by Bearwood Corporate Services were "legal and permissible", after a 14-month investigation.

Firms must be "carrying on business in the UK" to be allowed to donate money to British political parties.

Meanwhile the Conservatives say party leader David Cameron was only told last month about Lord Ashcroft's tax status.

The peer admitted on Monday that he does not pay UK tax on his overseas earnings.

£5.1m donations

His status as a "non dom" has been at the centre of a separate political row, because it had been thought he had agreed to pay full UK tax in order to become a peer, ten years ago.

The Electoral Commission investigation is a separate matter, prompted by a complaint by the Labour MP John Mann.

A businessman once described as the 'boss' of Caribbean tax haven Belize, Michael Ashcroft has pumped millions into the Tory Party since becoming its Treasurer in 1998. Has become deputy party chairman and runs crucial unit targeting marginal seats.
It had been thought he pledged to become full UK taxpayer when he became a Lord in 2000, but he and Tory politicians have always refused to clarify whether he had done so.
On Monday Lord Ashcroft admitted he did not pay tax in the UK on most of his non-UK earnings, but said the undertaking agreed at the time of becoming a Lord was to be a "long term resident", and he had complied with that.
A separate 14-month inquiry by the Electoral Commission has now concluded by saying that the donations to the Conservatives from a UK firm he owns were legal.

Bearwood Corporate Services made a total of 173 donations to the Conservatives totalling £5.1m between February 2003 and December 2009, according to Electoral Commission figures.

This is in addition to £111,726 in personal donations made by Lord Ashcroft and £569,439 from his wife, Susan Anstey, over the same period.

Much of the money has been spent in marginal seats which are seen as being key to the result of the forthcoming general election.

The Electoral Commission said it had carried out a thorough investigation within the "limited" powers available to it - and had found BCS was a permissible donor and the money had been reported correctly.

But it said Tory officials had "not agreed to" requests to be interviewed by investigators, and it had no powers to compel them.

Liberal Democrat frontbencher Chris Huhne said it was "extraordinary" that Conservative officials "should refuse a meeting to answer questions from the regulator designed to ensure funding is open and honest".

But the Conservatives denied turning down requests, saying they received the request in January and wrote back to the commission asking if interviews were really necessary. They say they then did not hear back from the commission.

The commission said it was satisfied that, despite the fact some of the funds used for donations appeared to have come originally from share purchases by companies based in Belize, BCS was not acting "as an agent for anyone else when making the donations".

Electoral Commission chairwoman Jenny Watson said: "Based on the evidence before us, the commission considered that there was not sufficient evidence to conclude that the party was uncertain about the identity of the donor when they accepted the donations.

Shadow defence secretary Liam Fox: "A line now needs to be drawn under this"

"We have asked to meet party officials to ensure that they are clear about their responsibilities for complying with this aspect of the law."

According to the commission's report, a UK-based company, Astraporta Ltd, had bought shares in BCS on two occasions using funds passed to it by a third company, Stargate Holdings Ltd. Stargate had bought shares in BCS directly on a third occasion.

"Stargate is registered in Belize and the Commission was unable to obtain any meaningful information about the source of its funding," says the report.

But it adds that there is nothing illegal about parent companies donating money to parties through UK registered subsidiaries.

'Westminster village'

Lord Ashcroft has extensive business interests in the former British colony of Belize.

A Conservative Party spokesman said: "It has now been put beyond doubt that donations from Bearwood were entirely legitimate.

"Separately, we also know that Lord Ashcroft is non-domiciled, putting him in exactly the same position as Labour and Lib Dem donors such as Lord Paul.

On whose authority was this request refused?
Chris Huhne
Liberal Democrats

"This means the Conservative Party's clean bill of health with the Electoral Commission remains fully intact.

"It is now clear that the continuing attacks on Michael Ashcroft are part of a politically motivated campaign orchestrated by the Labour Party in advance of the general election in order to distract attention from the real issues facing this country."

But Labour MP Gordon Prentice said the public administration select committee had decided to hold a "special one-off inquiry" into Lord Ashcroft's peerage and his tax affairs on 18 March.

However the committee's three Conservative MPs say they will not take part in the inquiry which they said was "clearly a political tactic".

The peer revealed this week that he did not pay UK tax on his overseas earnings, apparently at odds with assurances given to ex-Tory leader William Hague when he was given a seat in the Lords.

Commons Leader Harriet Harman told MPs: "I welcome the decision this morning by the Public Administration Committee that they are going to do an inquiry into this matter, but I'm afraid I can't offer to tone down my views on this. The truth is that this is sleaze on a multi-million pound scale."

She refused to withdraw her comments when asked to do so by backbenchers.

Shadow business secretary Ken Clarke, speaking on BBC Two's The Daily Politics, dismissed the controversy over Lord Ashcroft as "Westminster village stuff" and claimed "most people will be bewildered by it".

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Mail Online UK DAILY MAIL COMMENT: Lord Ashcroft and the politics of envy - 1 hr ago
Press Association Tories under attack over Ashcroft - 7 hrs ago
The Independent New blow for Tories as lead slips in marginals - 10 hrs ago
The EconomistAshcroft and the Tories: Friends like these - 14 hrs ago
Reuters UK Cameron learned Ashcroft tax status "last month" - 18 hrs ago
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