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Last Updated: Friday, 27 October 2006, 13:36 GMT 14:36 UK
Lib Dems may have to return 2.4m
Michael Brown
Businessman Michael Brown was based in Spain (Photo: The Times)
The Electoral Commission could still seize 2.4m donated to the Liberal Democrats by a man later jailed for perjury, the watchdog has said.

Previously it had said the party could keep the cash donated by Michael Brown's company 5th Avenue Partners ahead of the last election.

But new information has come to light about the firm which may make the donation "impermissible", it said.

It is due to reach a final decision "in the next few weeks".

The money would be returned to the Consolidated Fund - the government's account at the Bank of England - rather than being handed back to Brown.

We remain convinced that the company was carrying on business in the UK at the time it made the donations
Liberal Democrat spokesman

The Electoral Commission decided to re-examine the donation after a High Court judge's ruling that 5th Avenue Partners was fraudulent and had never traded.

A Liberal Democrat spokesman said the party remained convinced it would not be forced to forfeit the cash, which was spent on last year's election campaign.

Brown, 40, was jailed for two years last month after he admitted committing perjury and making a false declaration to obtain a passport.

Brown, who is based in Spain, became the Lib Dems' biggest donor before the general election.

There is no suggestion the court case has anything to do with the party.


In a statement, the Electoral Commission said it had "previously made clear its view that it was reasonable for the Liberal Democrats - based on the information available to them at the time - to regard the donations they received from 5th Avenue Partners Ltd in 2005, totalling just over 2.4m, as permissible".

The watchdog added: "It remains the commission's view that the Liberal Democrats acted in good faith at that time, and the commission is not re-opening the question of whether the party or its officers failed to carry out sufficient checks into the permissibility of the donations.

"Nevertheless, we have always said that if any additional information that has a bearing on the permissibility of the donations comes to light, for example as a result of the ongoing police investigation or legal proceedings relating to the affairs of 5th Avenue, we would consider the matter further."


The commission said it was not clear whether 5th Avenue Partners Ltd was carrying on business in the UK at the time the donations were made.

If not, then the donations were impermissible, the commission said.

It added: "Under Section 58 of the Political Parties, Elections and Referendums Act 2000, the commission has the power to apply to a court for an order that the party must forfeit to the Consolidated Fund an amount equal to the value of any impermissible donation.

"We are considering the available evidence and expect to reach a decision on whether to apply for such an order in the next few weeks."

'Appropriate checks'

A Lib Dem spokesman said: "We remain convinced that the company was carrying on business in the UK at the time it made the donations.

"Our independent auditors, having seen legal advice, have been satisfied that we do not need to make any provision for repayment of these funds."

The party carried out "appropriate checks" into the firm before accepting the money and "at all times acted in good faith", he added.

"All our donations and loans were properly declared to the Electoral Commission. We welcome the fact that the Electoral Commission is not challenging this.

"The Electoral Commission has previously confirmed that it was reasonable for the party to regard the donations from 5th Avenue Partners as permissible on the basis of the evidence available."

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