Page last updated at 20:29 GMT, Thursday, 22 January 2009

Hain guilty of 'serious' failures

Peter Hain
Peter Hain was Welsh secretary and work and pensions secretary

Peter Hain was guilty of "serious and substantial" failures in not registering donations, the Commons standards watchdog has said.

The former cabinet minister was cleared last month by police over the late declaration of 103,000 of donations to his Labour deputy leadership bid.

But he has been rapped by the Commons Standards and Privileges Committee.

Mr Hain said the committee had accepted his mistakes were "honest" and he would be making an apology in the Commons.

In a statement, Mr Hain said: "The Cabinet Secretary stated that I complied fully with the Ministerial Code, the Crown Prosecution Service exonerated me and now the Parliamentary authorities have also accepted that the mistakes I made were honest mistakes.

"I have been asked to repeat my apology on the floor of the Commons which I am happy to do."

The Commons Standards and Privileges Committee said the scale of the rule breach caused "justified public concern".

'High price'

The Committee's report dismissed the idea that Mr Hain's workload as Work and Pensions Secretary and Wales Secretary was an excuse for the errors.

"This is a case of an experienced member, a cabinet minister at the time, failing in his duty as a Member of Parliament to register donations within the time required by the House," it said.

We would ordinarily have been minded to propose a heavier penalty
Standards and privileges committee

"We understand that the pressures on ministers and on frontbenchers can be onerous, but we cannot accept - and we are sure that none of them would suggest - that this excuses them from their obligations under the rules of the House."

The report indicated that usually the failures would have attracted a "heavier penalty", but Mr Hain had already lost his cabinet job.

"Because of the seriousness and scale of this breach and noting the considerable, justified public concern that it has created, we would ordinarily have been minded to propose a heavier penalty.

"However, we accept that there was no intention to deceive and Mr Hain has already paid a high price for his omissions."

In 2007, 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.

'Innocent mistake'

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".

To our mutual horror we gradually realised that the campaign had been been left with heavy debts and new invoices kept appearing unexpectedly
Peter Hain

The Crown Prosecution Service last month told him no charges would be brought as there was insufficient evidence he had broken electoral law.

Prosecutors said they could not prove Mr Hain had personally handled the unreported donations.

Standards Commissioner John Lyon identified a change of campaign manager as an "important factor" in the failures.

Mr Hain's first campaign director, Phil Taylor, was replaced by Steve Morgan in early April. All donations were properly registered until May, when there was a "breakdown within his campaign organisation of the system for notifying him of his obligations to register", according to Mr Lyon.

Mr Hain says Mr Taylor left the Hain4Labour campaign after what he describes in a letter to the committee as a "personality clash" with Mr Morgan.

The ex minister describes his campaign team as being "beset by serious difficulties".

'Mutual horror'

Another important factor in the failure were "the disbandment of the campaign team while donations were still coming in," said Mr Lyon.

In his letter, Mr Hain explains how John Underwood, who was a co-signatory of the campaign's bank account but had not been involved in the process of reporting donations, took responsibility for winding up Hain4Labour at the end of the campaign.

"To our mutual horror we gradually realised that the campaign had been been left with heavy debts and new invoices kept appearing unexpectedly," writes Mr Hain.

"I had previously known nothing about these and I was astonished that the reassurances I had expressly sought and been given that we easily had sufficient funds for the new projects recommended in late May and June (including a costly newspaper advert and an even more costly direct mailing of 200,000 Labour Party members) had proved to be false."

But Mr Morgan hit back at Mr Hain's version of events, saying he was angry at the fact that John Lyon had only spoken to the former minister in the course of his investigation.

In a statement, Mr Morgan, who has just returned to the UK after working for the Democrats in Washington, said: "I do not recognise the version of events given by Peter Hain to the Commons Standards and Privileges Committee and on which comments have been based."

He added: "I will of course now be writing direct to the Standards Commissioner John Lyon clarifying the time line of campaign events and the role of those involved."

It is understood that Mr Hain is likely to make his apology to the House on Monday.

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