Liberal Democrats will curse the day they ever heard the name Michael Brown. The party’s rank and file should certainly be cursing the day their senior party officials accepted £2.4 million from Mr Brown without checking sufficiently who he was, where his money came from and why he was giving such a large proportion of it away. Mr Brown’s pleas of guilty at Southwark Crown Court to charges of perjury and passport fraud makes a party that enjoys lecturing others look at best woefully incompetent and at worst downright sleazy.

The immediate lessons are for the Liberal Democrats. Mr Brown’s money began arriving into party coffers from a Swiss bank account, via a company that did not have an office in the UK, and when Mr Brown was not registered to vote in this country. Some of those responsible for this highly irregular, not to say legally dubious, arrangement remain in Lib Dem HQ. They should be moved on.

Although Mr Brown’s pleas of guilty and the 30 other charges that will remain on file did not concern the origins of his wealth, the Liberal Democrats should feel under considerable moral pressure to divest themselves of the money. This is easier said than done, because the cash left Lib Dem coffers almost as soon as it arrived last year, to be blown on largely pointless campaign posters and other election fripperies. But the party will find it difficult to convince voters of its righteousness while this stain remains. The Electoral Commission could hold the money until it is decided to whom it should be returned. The party could expect time and understanding as to how it manages this process.

The wider lessons of the Brown case are for the overall “policing” of political donations, and are timely, given Labour’s cash-for-peerages travails and the review of party funding being conducted by Sir Hayden Phillips. At the moment, donations are not so much policed as observed. There is little point in the Electoral Commission taking a view on a donation after the money has been spent, which is all it can do currently. It needs “real time” authority, allowing it to veto high- value donations. And it should publish all its deliberations immediately. Voters have a right to know who is funding their preferred party before, rather than after, they cast their ballot.

Mr Brown is part of a vicious circle into which all parties have been sucked. The more that donation scandals tarnish the political process, the less ordinary voters and well-meaning business people are inclined to donate to parties, and the more the parties feel the need to turn to dodgy money. Only caps on donations, at about £50,000, and a ceiling on party spending, of about £6 million a year, will force the parties to cut their bloated budgets and reconnect with the public.

Bad though this has been for the Liberal Democrats, it could have been worse: revelations by The Times about Mr Brown’s personal and financial background could have come later, when he had been proposed for a peerage — or worse, already sitting proudly in the House of Lords.