Page last updated at 16:15 GMT, Friday, 5 December 2008

Hain not charged over donations

Peter Hain says he is 'hugely relieved'

Former cabinet minister Peter Hain will not face charges for the late declaration of 103,000 of donations to his Labour deputy leadership bid.

Mr Hain, who resigned in January to clear his name, came fifth in the contest in June 2007. Five months later he said some donations went undeclared.

Following a police inquiry prosecutors said on Friday there was insufficient evidence to charge him with anything.

The Neath MP said after "ten months in limbo" he was happy to clear his name.

The prime minister's official spokesman declined to comment when asked if Mr Hain would now be returned to the Cabinet.

'Media frenzy'

The Commission has said it will review the implications of the CPS decision and said it was important for public confidence that donations were declared "in full and on time".

It all went wrong a lot later and obviously I paid a heavy price for that
Peter Hain

It said it had to ensure "certainty about where responsibility for reporting donations lies in such circumstances" and said it would consider "possible changes to the law".

A Ministry of Justice spokesman said a bill currently before Parliament would strengthen and improve the regulation of political finance and expenditure and provided "an opportunity for all parties to work together and agree reforms on a consensual basis".

But in an article for the Guardian, former Welsh and work and pensions secretary Mr Hain said that legislation offered only "piecemeal changes" and was "unsatisfactory".

He said the police should never have been brought in and called for a review of the Political Parties, Elections and Referendums Act 2000 and of the Electoral Commission itself. He told the BBC later "very few" MPs had confidence in the Commission.

'Name cleared'

Mr Hain told BBC Radio 5 Live: "I stepped down from the government to clear my name and now I'm pleased I have done so.

Mr Hain was not a signatory to that account and did not direct where funds should be spent
Stephen O'Doherty

"It is for the prime minister to decide whether he wants me to assist in the way that I have done in the past."

He told the programme that, long after the campaign had finished, "debts suddenly started appearing, bills started arriving that I knew nothing about".

"Instead of focussing on reporting the donations within the 30 days, I focused on trying to clear the debts. Then when I realised.. to my horror that we hadn't met the 30-day deadline, I immediately went to the Electoral Commission."

He said he had been "completely open" about what had happened and during four months of the campaign 80,000 had been declared in time.

"It all went wrong a lot later and obviously I paid a heavy price for that."

He said he took responsibility but it had been an honest mistake.

Parliamentary inquiry

Prime Minister Gordon Brown's political spokesman hinted at a return to the frontline politics for Mr Hain, saying he still had "much to offer" the Labour Party.

"We obviously welcome the fact that Peter Hain has been cleared in this matter," the spokesman added.

On Friday Stephen O'Doherty of the Crown Prosecution Service said they could not prove Mr Hain handled the unreported donations.

Gordon Brown and Harriet Harman at the Labour leadership conference
Harriet Harman was the eventual winner of the deputy leadership contest

The CPS confirmed that no one else would be charged in connection with the investigation, which it said was now closed.

But an inquiry by the Parliamentary Standards Commissioner John Lyon, which was postponed during the police inquiry, may now resume. Mr Lyon said at the time he would "review the position" after the police inquiry.

The CPS said Mr Hain's campaign was run by a group called for "Hain4Labour", made up of Labour Party members, which had its own bank account.

The organisation did not report all donations within the 30 days stipulated by the Political Parties and Referendums Act 2000.

But in order to prove a criminal breach of the Act, the CPS had to prove Mr Hain was a "regulated donee", responsible for reporting political donations.

Think tank

Under the rules, regulated donees do not have to be named individuals. Donations can be registered under the name of a "members' association," as was the case with Hain4Labour.

But the CPS was unable to prove that Mr Hain was the "person responsible for dealing with donations to the association" . It said: "Mr Hain was not a signatory to that account and did not direct where funds should be spent."

Harriet Harman: 46,851
Alan Johnson: 62,994
Jon Cruddas: 144,272
Hilary Benn: 33,925
Peter Hain: 185,156
Hazel Blears: 73,050

Mr Hain ran to be Labour's deputy leader but came fifth out of six in the contest in the summer of 2007 and initially declared 77,000 in donations to the Electoral Commission.

But donations to the Labour Party came under the spotlight in November, when it emerged property developer David Abrahams had donated more than 650,000 over several years using other people's names and police launched an investigation.

Mr Hain's rival in the deputy leadership contest - and eventual winner - Harriet Harman had to pay back a 5,000 donation to her own campaign after discovering it had come from one of Mr Abrahams' associates.

Days later Mr Hain admitted donations to his own campaign were "not registered as they should have been" - in January he admitted 103,000 had not been declared, although none of them were from Mr Abrahams.

Concern centred around the role of a little known think tank, the Progressive Policies Forum, which was used to channel more than 50,000 to his campaign.

A police investigation began and Mr Hain resigned from his cabinet post in January saying he had made "an innocent mistake".

Another deputy leadership hopeful, Alan Johnson, had to hand back a 1,675 donation after it emerged the donor was not registered to vote. Ms Harman was also reminded of the rules in April because she declared 6,001 in donations and 58,000 in loans late.

Mr Hain's campaign spent far more than that of his rivals, and the MP said he had been "pretty amazed" when he learned what it had cost, but he told BBC News: "many other candidates spent a lot of money as well".

He called for the Labour Party to set caps on expenditure for its own internal campaigns to avoid a "competitive spending spiral" among candidates.

His 185,156 total declared donations was the highest of any candidate, Jon Cruddas, who came third in the race, raised the second highest amount with 144, 272 - much of which came from trade unions.

Mr Hain also thanked his constituents in Neath and his family for their "wonderful support".

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