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Last Updated: Friday, 25 January 2008, 16:57 GMT
Martha Kearney's week
By Martha Kearney
Presenter, BBC Radio 4's The World at One

Peter Hain
Mr Hain is still MP for Neath

As soon as the Peter Hain story broke on Thursday at 20 past 12, I called his mobile but it was answered by an aide instead.

No interviews and we'd have to wait till the afternoon for his statement.

It was a mad scramble to get the story on air but we managed to get interviews with opposition politicians and Paul Flynn, a passionate Hain defender.

Later that day I picked up some voice mails on my phone.

The first was in a distinctive South African accent.

"Hello, Peter Hain, here. I was wondering whether you knew of any job offers? And also to ask whether you'd like to contribute to my retirement fund - anonymously of course."

Bizarre, I thought, but then came the punchline: it was Rory Bremner who was calling about The Ultimate News Quiz, a charity event I am organising this weekend.


It will be a while, I guess, before the real Peter Hain will be cracking jokes about his predicament.

What about the damage to the government?

I imagine the real worry for Gordon Brown is whether this is one rogue minister or if there is more trouble in store for his deputy leader Harriet Harman, who accepted a proxy donation from David Abrahams (albeit unknowingly) and the leader of the Scottish Labour party Wendy Alexander, who accepted a donation from someone who wasn't on the electoral register.

Jerome Kerviel.
Jerome Kerviel managed to defraud France's second biggest bank

They are both being investigated by the Electoral Commission.

I spoke to the commission to try to clarify what might happen in those cases.

I was told that until December last year no cases where "regulated donees" had been investigated had ever been referred to the police.

The David Abrahams case had been handed over to the Metropolitan Police but it is the Labour Party itself which is under investigation.

Peter Hain is the first individual donee to be the subject of a police inquiry.

French fraud

Under the relevant act an offence is committed when the donee has failed to take all reasonable steps and carry out due diligence to make sure that the donation is legal.

If Harriet Harman and Wendy Alexander can prove they did their best, then perhaps they can avoid the police.

A rather bigger police investigation is under way in France where Jerome Kerviel managed to defraud the country's second biggest bank of 3.7bn, a far bigger sum than the 800m which caused the collapse of Barings Bank in 1995.

On Thursday's programme I spoke to the influential publisher Steve Forbes and wondered why there weren't better safeguards in place after the Leeson affair.

His view was that no system could prevent human fraud and people would always call for more draconian measures like bringing back caning (!) to no avail.

He argued that the biggest danger facing the global markets wasn't fraud or the recent turbulence but the weakness of the dollar and blamed the Federal Reserve for failing to take action to strengthen the currency.


In fact the Fed's action on Tuesday - a surprise three-quarter point cut in interest rates - will do nothing to improve the position of the dollar.

That news brought a breathless Evan Davis running down to the studio just before we went off air.

The move did, however, seem to calm the markets after the huge falls early in the week (which many traders now blame on the Soc Gen trader's wild positions).

Share prices were improving by the end of the week but real economic problems remain there as our panel of experts pointed out on Tuesday.

Roger Bootle, Stephanie Flanders and Richard Lambert, with varying degrees of pessimism, talked about the prospects for recession in the US and to what degree Britain will suffer - despite all the talk of the UK economy decoupling from the States and forging closer relationships with China and India.

We also heard from a stock market historian that we had formally entered a bear market after the bullishness of recent years.

I am sure this is an issue we will be revisiting in the coming weeks.

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Martha Kearney's week
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