Labour is facing questions on whether a series of donations amounting to more than £380,000 breached the law by using intermediaries to shield the identity of a major donor.

David Abrahams, a wealthy property developer, yesterday admitted he used “friends and colleagues” to give substantial sums to Labour over four years in order to avoid publicity.

The episode threatens to reignite the controversy over donations to Labour after the year-long police inquiry into whether the party sold peerages to wealthy supporters, which ended with no charges being brought but cost millions of pounds.

In a bizarre twist one of the people Mr Abrahams used was a jobbing builder who so dislikes politics he does not even vote. The other was a woman who works for him. Both are of modest means.

Around two thirds of the sum that was donated – a total of £222,000 – was given to Labour in the six months since Gordon Brown entered Downing Street as Prime Minister, making Mr Abrahams Labour's third largest donor over that period, behind Lord Sainsbury of Turville and Anglo-Iranian businessman Mahmoud Khayami.

The Electoral Commission demanded an explanation as Jack Straw, the Justice Secretary, admitted the donations were “plainly not transparent”.

“Whether these arrangements are within the letter of the law they are plainly not transparent. I am concerned about them,” he said “I shall ask both the Electoral Commission and my officials for immediate advice on what action should be taken.”

Labour began an inquiry to check whether the donations complied with the law requiring that gifts to political parties over a modest amount are fully declared. Donations made via third parties are illegal unless the person behind the donation is also declared or there is a “reasonable excuse”.

The Conservatives said that the revelation raised questions about what checks Labour carries out on donations it receives and contrasted the bizarre episode with Mr Brown’s promise to usher in a new type of politics. Mr Abrahams, 53, who owns a string of property firms in Newcastle, was forced to admit his donations after it emerged that a builder, Ray Ruddick, 55, who drives a Transit van and lives in an ex-council house, was registered as having given £196,850 to Labour since 2003.

Mr Ruddick, who is a director of several of Mr Abrahams’ property companies, initially denied ever having made donations to Labour, saying he “couldn’t stand the party nor any politicians” when he was approached over the weekend. He later said that he had given some money to Labour.

Yesterday, Mr Ruddick laughed off the row and declared he was off to play bingo. Wearing a tatty brown fleece jacket and carrying an armful of newspapers, he told reporters: “I have got nothing more to say about the Labour party donations apart from that today I’m off to the bingo to try and win the kind of money they say I have. Then I’ll be able to make the kind of donations they say I have too.”

Janet Kidd, 56, who works as a secretary for Mr Abrahams and is also a director of some of his companies, is also registered as having given £185,000 to Labour over a similar period. She lives in a modest, semi-detached home in Gateshead, Two of their donations, each of £80,000, were made on the same day in July shortly after Mr Brown became Prime Minister. The combined total of the donations is £381,850 over four years.Mr Abrahams insisted he had done nothing wrong but said that, as a “private person”, he did not want to attract publicity by making donations in his own name.

He said: “I’m a member of the Labour Party and have been for about 40 years, since I was 15. I have always been fortunate enough to be able to make substantial donations to several charitable organisations as well as to the Labour Party for a number of years.

“But I am a very private person and I did not want to seek publicity. I gifted money to my friends and colleagues so they could make perfectly legal donations on my behalf. Donors to the Labour Party get a lot of publicity and I did not want that.”

Mr Abrahams has strong links to the Labour Party in the North East of England. He served as a Labour councillor in Tyne and Wear and his late father, Bennie Abrahams, was Lord Mayor of Newcastle. Mr Abrahams was in the front row when Tony Blair made a speech to local Labour party figures in his former Sedgefield constituency in June announcing his decision to stand down and quit Parliament.

He was selected to stand as a parliamentary candidate for Labour in Rich-mond, North Yorkshire, against William Hague in 1992 but was deselected after a gruelling series of rows with the local Labour party over his personal life and business interests. There were claims that he had presented himself as a married man with a young son when, in fact, he was single. He blamed the row on a smear campaign.

The Electoral Commission said that it was too early to comment on what action it might take, and said only: “We are contacting the Labour Party and asking them for an explanation about the circumstances of these particular donations.”

However, Chris Grayling, a prominent member of the Shadow Cabinet, said: “This whole affair raises a series of serious questions about the level of scrutiny that the Labour Party carries out into the donations in receives. All of this is hardly consistent with the new politics that Gordon Brown promised us.”

The law

- It is a criminal offence to give money to a political party via an intermediary, or “agent”, unless details of the original donor are declared too

- The Political Parties, Elections and Referendums Act, passed in 2000 to force all political donations above £5,000 to be declared, says that the party receiving the money must be told who it originally came from

- The Act says in section 54 that “where any person [the agent] causes an amount to be received by way of a donation on behalf of another person . . . the agent must ensure that, at the time when the donation is received by the party, the party is given all such details in respect of the donors as are required . . . to be given in respect of the donor of a recordable donation.” It continues: “A person commits an offence if, without reasonable excuse, he fails to comply . . .” Under schedule 20, such an offence is punishable by up to a year in prison or an unlimited fine or, if a case is heard in a magistrates court, six months in jail or a fine up to £5,000.

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