Gordon Brown was facing a full police investigation into Labour’s donations scandal as his campaign team admitted yesterday that it had links with David Abrahams.

The Prime Minister was dragged deeper into the affair after it emerged that his election staff had told Harriet Harman about a proxy for Mr Abrahams who might be willing to offer her financial help. It was disclosed that Mr Abrahams himself contacted Mr Brown’s team, giving them the name of Janet Kidd who was acting on his behalf as a potential donor to his campaign to be Labour leader.

Although the Brown campaign eventually tore up Mrs Kidd’s cheque for £5,000 because she was not known to them, it suggested her name to Ms Harman when she was looking for help to pay off her campaign debts after being elected as deputy leader.

She received £5,000 from Mrs Kidd, a secretary for Mr Abrahams, but has insisted repeatedly that she did not know that the money was really from Mr Abrahams. Friends of Ms Harman claimed that her campaign team had “no idea” about David Abrahams until last Friday. They alleged that a cheque had arrived from Mrs Kidd accompanied by a note saying that it had been sent “following conversations with Mr [Chris] Leslie”, suggesting that it had come entirely at the initiative of Mr Brown’s campaign chief.

Q&A: secret donor scandal

Our Political Correspondent analyses the origins of the secret donor sleaze row and its potential implications

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BACKGROUND

• A walking paradox who gave £600,000

• Brown is made to play the fool in stage farce

• Jack Dromey declares he is victim of concealment

Related Links

• Yates of the Yard to oversee investigation

• Labour reform of party finances grinds to halt

• Timeline: how Labour's funding saga unfolded

Multimedia

• Pictures: Labour funding row - key players

The latest extraordinary twist emerged after Mr Leslie, the former minister who directed Mr Brown’s campaign, went through his notes in preparation for the Labour internal inquiry being conducted by Lord Whitty, the former general secretary.

He found a reference to a telephone call from Mr Abrahams in which he had said that Mrs Kidd wanted to donate, but had not said that she was acting on his behalf. Mr Leslie said: “In late May I received a phone call from a man calling himself David Abrahams referring to a woman named Janet Kidd who said she wanted to be a donor to the campaign. I did not know who Mr Abrahams or Mrs Kidd were.”

Mr Leslie said: “At no point either then or afterwards was I aware that Mr Abrahams was a donor to the Labour Party or that he was using Mrs Kidd or others as proxies to make donations to the party.”

He added: “Subsequently, when the leadership election was over, I was approached by members of Harriet Harman’s campaign team asking if I knew of any individuals who might donate to her deputy leadership campaign. I passed them the details of Mrs Kidd as someone whose offer of a donation we had not taken up.

“The Prime Minister and Jack Straw [Mr Brown’s campaign manager] were at no stage involved in, or aware of, the contact from Mr Abrahams or the offered donation from Mrs Kidd, as it was not my practice to discuss with them offers of donations which we did not intend to take up.”

Baroness Gale of Blaenrhondda, treasurer of Ms Harman’s campaign, said: “As part of our fundraising effort, the campaign team approached Chris Leslie at the end of June and asked if he could put us in contact with anyone who might be approached to donate to our campaign.

“Contact was made with Janet Kidd, a donor to the Labour Party of long standing, who then sent us a donation for £5,000. We had no reason to believe that this donation was coming from anyone other than Janet Kidd.

“Harriet Harman first heard about this on Friday and the campaign has arranged to return the donation to Janet Kidd.”

The Times also learnt that Mr Brown was the guest of honour at a dinner at which Mr Abrahams alleges to the BBC that he was “buttered up” by Jon Mendelsohn, his fundraiser. Mr Brown, then Chancellor, spoke at the annual dinner of the Board of Deputies of British Jews held in April this year. Also at the event were Mr Abrahams and Mr Mendelsohn, who has admitted that he knew that the controversial property developer was using proxies to donate significant sums to Labour.

In his statement explaining why he did not speak out on learning of the arrangement, Mr Mendelsohn has said that he had a “history of past disagreements” with Mr Abrahams and was determined to end his secret funding. However, the two men sat side-by-side at the fundraising dinner in the Portland Hotel, London, this spring. A Labour spokesman said that Mr Mendelsohn recalled sitting next to Mr Abrahams but categorically denied that he had solicited cash.

A senior figure at the Board of Deputies of British Jews said that Mr Abrahams had been invited because he was a well-known supporter of charitable causes and that it was a “bizarre coincidence” that the two men had been seated next to one another.

The Times has also learnt that officials from the Electoral Commission have raised doubts privately about Mr Brown’s decision to return Mr Abrahams’s £600,000 in unlawful donations. Commission staff were examining whether it was appropriate for an unlawful gift to be returned to the donor, who could give it back to Labour in his own name. The regulator has powers to apply to a court for an illegal donation to be surrendered to the Treasury’s Consolidated Fund.

Labour’s donations controversy spread to Scotland yesterday when Charlie Gordon, a Labour MSP and shadow minister, quit after admitting that he unwittingly misled Wendy Alexander over a £950 donation.

The donation was from Paul Green, a businessman based in the Channel Islands, to the leadership campaign of Ms Alexander. The sister of Douglas Alexander, the minister who master-minded Gordon Brown’s election campaign, she was elected to lead Labour in Scotland in September.

In a further twist, Peter Hain, the Work and Pensions Secretary, admitted that he failed to register a £5,000 donation to his deputy leadership campaign from Mr Mendelsohn. Mr Hain blamed an “administrative error”.

Mr Mendelsohn, who was not the party’s fundraiser at the time, is facing calls for his resignation.

A YouGov survey for The Daily Telegraph puts the Conservatives on 43 per cent – 11 points ahead of Labour on 32 per cent, with the Liberal Democrats on 14 per cent.

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