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Monday, 21 October, 2002, 11:58 GMT 12:58 UK
Timeline: Labour's cash trouble
First Minister Jack McConnell
Jack McConnell pledged "full support" to the inquiry
Scottish Labour has found itself embroiled in a row over managing its funds which began in the constituency of First Minister Jack McConnell.

The controversy began with allegations of the mismanagement of funds in Motherwell and Wishaw and it then emerged that the party had broken the law by failing to declare union donations.

Mr McConnell has sought to distance himself from the row but his political opponents have been quick to make capital, accusing his party of incompetence at the very least.

Labour officials were called in to look at the books but opposition parties have called for an independent inquiry.

In a further twist, the party announced that it had launched an inquiry into constituency party accounts across Scotland after concern that breaches in the law on union donations may be more widespread.

BBC News Online Scotland looks at a controversy which has led to an uncomfortable period for Scotland's minority party.

21 November 2002: First Minister Jack McConnell dismisses fresh claims he obstructed inquiries into problems with his constituency party funds.

Local party auditors claim he "obstructed" their efforts to probe the accounts.

They claim the first minister promised receipts and explanations for expenditure, then failed to deliver.

They also claim he was unwilling to divulge information and talk of "a culture of secrecy".

Mr McConnell says despite making a few "enemies" during his career he will not be deflected from governing Scotland.

21 October 2002: Independent auditors assist Labour officials in the scrutiny of the Motherwell and Wishaw constituency accounts.

20 October 2002:A Sunday newspaper identifies the Kirkcaldy and Glasgow Pollok constituencies as two of the five local Labour Party branches which have breached the strict rules governing the registering of political donations.

19 October 2002:Scottish Labour Party chiefs pledge to bring in independent auditors to examine the accounts of First Minister Jack McConnell's constituency

However, a spokesman said there were no plans to bring in auditors to look at the books of other constituencies.

18 October 2002: The Scottish Labour Party tells BBC Scotland that it has begun an investigation into all of its constituency parties to identify those which are receiving cash from trade unions.

This move comes after it is revealed that a second Scottish Labour constituency party failed to fully declare cash it has received from trade unions.

The Falkirk West party branch neglected to inform the Electoral Commission of two 375 contributions from Unison, a Newsnight Scotland investigation reveals.

16 October 2002: The SNP claims the first minister's reputation is "in tatters". Party leader John Swinney urges the Electoral Commission to investigate all donations made to the constituency party.

The latest disclosure concerns cash collected at a fund-raising dinner for the Motherwell and Wishaw constituency party which should have been declared to the Electoral Commission in July but was not.

A Labour Party spokesman admitted that there had been "a mistake" over declaring funds from the dinner event.

15 October 2002: Labour admits its local party in Motherwell and Wishaw broke the law by failing to declare union donations.

Donations from the Iron and Steel Trades Confederation (ISTC) to a development fund of the Motherwell and Wishaw constituency Labour Party were not declared.

Under rules which came into effect in February 2001, donations of more than 1,000 a year should be declared to the Electoral Commission.

An Electoral Commission spokesman says it will contact Labour about the claims.

Mr McConnell describes the revelation as "shocking" and says as first minister he "will always put the law before the Labour Party".

14 October 2002: Mr McConnell accuses his political rivals and others of trying to "smear him without foundation".

The claim is made in letters exchanged between Mr McConnell and the party's general secretary Lesley Quinn.

The letters are published in an attempt to draw a line under the affair.

In his letter, he states his desire for a thorough investigation, while Ms Quinn promises a "speedy .response".

It emerges that Labour councillors run the bank which holds the constituency accounts.

The husband of the former treasurer of the Motherwell and Wishaw Labour Party is among the directors.

11 October 2002: The Sun newspaper reports that the first minister was asked to explain why his constituency party's development fund was used to meet hotel bills.

The money was reportedly used to pay for rooms, for two nights, for himself and his then PA Christina Marshall at the Caledonian Hotel in Edinburgh during the Scottish Labour Party conference in March 2000.

A spokesman for Mr McConnell says that expenditure on Ms Marshall's hotel costs had come from local party funds in the normal way and there was absolutely no public money involved.

Mr McConnell denies accusations he misled parliament over the accounts controversy.

He says he contacted Labour officials three months ago to register his concerns. But his political opponents seize on newspaper reports which allege he was questioned by Labour seven months ago.

Labour says there is no discrepancy because Mr McConnell did answer questions at an earlier stage from local party auditors in his constituency.

In a letter to Sir David Steel, the parliament's Presiding Officer, Mr McConnell says it is "unfortunate" the SNP confuses a local audit process with a formal investigation by Labour Party HQ in an attempt to mislead the public.

But the SNP counters that the first minister has misled parliament and the electorate.

10 October 2002: Mr McConnell breaks his silence and welcomes the party's inquiry into the constituency accounts.

He says he is "delighted" the party is investigating concerns he raised three months earlier, and will "do nothing, absolutely nothing that will ever bring this parliament into disrepute".

One newspaper report alleges a "black hole" in the accounts amounts to 11,000.

Opposition parties draw parallels between the row and that which led to the downfall of former First Minister Henry McLeish over the Officegate affair.

Scottish National Party leader John Swinney says only "full disclosure" of the alleged irregularities will reassure the electorate there has been no breach of ministerial code.

A Labour spokesman says it will publish the results of its inquiry in its own time "but we will not allow the pace or scope of the inquiry to be dictated by the media or by opportunistic politicians flat-lining in the polls".

9 October 2002: Labour officials launch an investigation into the financial affairs of First Minister Jack McConnell's constituency party.

The move follows reports that funds within the Motherwell and Wishaw office were misused.

Officials stress neither Mr McConnell, nor MP Frank Roy, are signatories to the accounts - and are therefore not subjects of the inquiry.

Labour's Scottish general secretary Lesley Quinn is given "full and unfettered access" to constituency accounts.

The period under scrutiny covers the financial years January to December 2000 and January to December 2001.

Political opponents seize on the disclosure. The Scottish Conservatives claim the constituency has "fallen down on the job" of keeping its books in order.

See also:

16 Oct 02 | Scotland
15 Oct 02 | Scotland
15 Oct 02 | Scotland
14 Oct 02 | Scotland
13 Oct 02 | Scotland
11 Oct 02 | Scotland
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