Labour defends Desmond donation

Richard Desmond denied the donation was underhand

Labour has denied accusations it acted improperly by accepting a donation of £100,000 from Daily Express publisher Richard Desmond.

The Conservatives are calling for a full explanation after claiming the contribution was made just before a change in the law forcing such donations to be made public.

The party has also raised questions about the timing of the donation and Mr Desmond's Northern and Shell group's takeover of the Express.

But Mr Desmond says the donation in 2001 was made entirely "transparently", while Labour insists it was not trying to hide the gift and was to declare it in party accounts later this year.

The timing of this huge donation, and its non-declaration, is extraordinarily hypocritical

David Davis MP
Chairman
Conservative Party

Around the time of the donation, the then Trade and Industry Secretary Stephen Byers decided not to refer the company's takeover of the Express to the Competition Commission.

But Mr Byers told BBC's Breakfast with Frost programme that he was acting in line with a previously announced policy on such cases.

He said that in 2000 he had made clear that in future he would accept the advice of the director general of fair trading on whether to refer merger cases to the Competition Commission.

Referring to Mr Desmond's bid for the Express group, Mr Byers said: "The director general, after my announcement, recommended to me that this should not be referred to the Competition Commission.

"So in line with the policy which I had announced long before....I fell in line with that advice."

Election ads

Mr Byers said he was now being criticised "for actually working in line with the policy I announced previously".

Byers says he acted in line with policy

"If I had not done that then there would have been a real scandal," he added.

But Shadow Cabinet Office minister Tim Collins claimed Mr Byers could have intervened on the Express deal.

He told the BBC's On the Record programme: "There were circumstances in which he retained a power to intervene.

"One would have thought that the takeover of a national newspaper group is certainly a circumstance in which he should have considered it.

"Once again we find Stephen Byers being less than wholly truthful."

Labour spent the money on advertisements taken out in the Express titles in the run-up to last year's general election. And Conservative Party chairman David Davis said: "The prime minister has a lot of explaining to do.

"The timing of this huge donation, and its non-declaration, is extraordinarily hypocritical, in that it was designed to avoid Labour's own Electoral Commission legislation, which would have forced this into the public domain."

'No secrecy'

Mr Davis called for a full record of Labour meetings with Mr Desmond.

Davis says the donation timing was 'hypocritical'

Any party donation made after 15 February 2001 would have to be declared to the Electoral Commission immediately.

A Labour spokeswoman said the party had promoted "greater openness and transparency in party funding, after 18 years of secrecy under the Tories".

She added the donation was to appear in the party's annual report later this year.

Dr John Reid, Northern Ireland Secretary, told BBC News the allegation questioned the integrity of the director general of fair trading.

'Distasteful'

He added: "It's a pathetic example again of a Tory party which will not and cannot discuss the important policies and issues affecting people's lives and prefer to concentrate on personality and smears."

"Here is a smear without any substance whatever," Foreign Secretary Jack Straw told the BBC Radio 4 programme The World This Weekend.

But Liberal Democrat chairman Mark Oaten said: "Labour is in danger of drifting into a sea of sleaze.

"The government now needs urgently to look into the introduction of state funding of political parties."

A spokesman for Northern and Shell said: "The donation of the money to support the party's advertising spend was done in a fully transparent manner and will appear in Northern and Shell's annual accounts later this year."

Labour have been dogged by Tory accusations over "cash for favour" donations.

Last month, there was controversy over a £32m smallpox vaccine contract awarded to a company owned by a £50,000 Labour donor.