ONE of Labour’s biggest donors was able secretly to channel more than £300,000 into the party’s election funds through an Islamic lobby group that hid his identity.

Inquiries by The Sunday Times have established that Imran Khand, a 43-year-old computer entrepreneur, was behind three large donations to the party earlier this year.

But his name was never disclosed to the Electoral Commission, which regulates party funding, because the money was given in the name of Muslim Friends of Labour, a lobby group.

Separately, Harriet Harman’s deputy leadership campaign registered a £5,000 donation from Muslim Friends, when the cash was almost entirely from Moham-mad Sarwar, the Labour MP who runs the group.

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

The disclosures are likely to intensify the row over Labour’s secret donors. Police are already investigating how David Abrahams, a property developer, was able to hide his name by giving more than £600,000 through intermediaries.

Under laws introduced by Labour the names of donors to political parties should be declared so that they can be placed on a public register by the Electoral Commission.

Donors to Muslim Friends were not declared because the group exploits rules that allow groups with large numbers of small donors (such as trade unions) to give under the umbrella of a single association.

However, figures obtained this weekend show that Muslim Friends does not have a large number of donors.

On the contrary, it appears to be mostly a front for just one man, Khand. He provided at least 96% of the money given to the party through the group this year.

Yesterday, David Davies, the Conservative MP for Mon-mouth, called for an inquiry into the donations. He said: “If virtually all the money from this group was actually coming from one person, then it is not transparent. We need a full investigation into who this person is, why he gave all this money and why his name was kept off the Electoral Commission register.”

The donations are thought to be legal as the group was using the loophole of “association” status. This has been recently changed so they now have to declare their donors.

Muslim Friends of Labour uses a post office box in London but is run by Sarwar from Glasgow. When this newspaper revealed claims earlier this year that Khand was one of the group’s backers, Sarwar was reluctant to reveal how much he and others had given.

However, in the wake of the latest Labour donor crisis, Sarwar agreed to give a detailed breakdown of the group’s funders for the first time.

It gave a total of £312,000 to the party this year. Sarwar says Khand gave “more than £300,000”, which would account for the three £100,000 donations in spring before the Scottish elections in May.

Khand built up the Glasgow firm Picsel Technologies into a business producing software for mobile phones. He declined to comment this weekend.

The rest of Muslim Friends’ funding was made up of £4,000 from Sarwar and £6,000 from Maq Rasul, whose chain of Global DVD rental shops folded earlier this year. A dinner attended by Scottish Labour politicians raised £5,500.

Sarwar also gave £5,000 to Harman’s deputy leadership campaign, registered as a gift from Muslim Friends.

But he admitted that most of that money had come from his own pocket. He said: “I promised her campaign team that I would raise £5,000; I made a commitment. Strictly speaking, £4,500 came from me and £500 came from the [Muslim Friends] account.”

He revealed he didn’t tell Harman’s team the money was from Muslim Friends when he made the pledge but he used a cheque from the group to send it.

Harman’s team, which was also criticised for accepting cash from an Abrahams intermediary, dropped the PO Box address when registering the gift and instead used Sarwar’s home.

The details about Muslim Friends’ backers are likely to embarrass Labour. The party attempted last week to deflect the row over Abrahams by attacking the Tories for receiving cash through a similar association, the Midlands Industrial Council.

Jack Straw, the justice secretary, said associations such as the Midlands Industrial Council have been “used, albeit lawfully, as a means of avoiding disclosing the identity of the original donors”. He made no mention of Muslim Friends of Labour.

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