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Last Updated: Thursday, 13 December 2007, 16:09 GMT
Abrahams cash placed out of reach
David Abrahams
Mr Abrahams used four people to donate during a four-year period
Illegal donations of 663,975 are to be put in an "untouchable" account while detectives look into the circumstances under which Labour accepted them.

The money came from property developer David Abrahams but was given to the party in the names of other people, which was against electoral law.

It will still be repaid at some point, Labour has again promised.

There was "no scenario whereby Labour will end up keeping this money", a party spokesman said.

He said the donations would be place in what was known as an "escrow", or third-party, account for two reasons.

"Firstly this puts the money entirely beyond the control of the Labour Party while these proceedings are continuing.

"Secondly it removes the possibility of the Labour Party having to 'repay' the money twice."

This could happen if the Electoral Commission decided the sum should be forfeited but then a court ruled it should be repaid to an individual, he added.

Resignation

Mr Abrahams' donations were unlawful because people must use their own names when giving more than 5,000 to political parties.

Prime Minister Gordon Brown, who said the money would be repaid, has insisted he knew nothing about the arrangement involving Mr Abrahams.

But Opposition parties have said they do not believe he was unaware of the process.

The affair has led to the resignation of Labour's general secretary, Peter Watt, who said he had known the money belonged to Mr Abrahams but did not know that rules had been broken.

Scotland Yard is investigating the matter, at the request of the Electoral Commission.

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