PETER HAIN has been accused of “sailing close to the wind” over a string of campaign donations each for £1,000 - just 1p below the threshold at which they would have had to be declared.

The embattled work and pensions secretary - who is also the Welsh secretary - received the cheques from wealthy businessmen who were asked at a dinner in Cardiff to support Hain’s bid for the deputy leadership of the Labour party.

The Cabinet minister is already battling for his political life after he failed to declare £103,000 of campaign donations above the £1,000 cut-off point to the Electoral Commission. Gordon Brown said last week that Hain had been “incompetent”.

Hain’s wife, Elizabeth, a recruitment consultant and former Welsh woman of the year, and Shaun Woodward, the then broadcasting minister, were also at the dinner at the members-only Park House club last April.

One of the 12 businessmen present has told The Sunday Times that each guest at the four-course dinner was asked to make out a £1,000 cheque to Hain4Labour and send it to the Cardiff offices of Morgan Allen Moore, the lobbying firm run by Hain’s chief aide, Steve Morgan.

Among the donors were John Underwood, one of Hain’s campaign advisers and a director of the Cardiff-based public relations consultancy Freshwater. Another donor was Underwood’s boss at Freshwater, Steve Howell.

Howell acknowledged last night that his company had a contract with the Welsh Assembly.

But he insisted that he and Underwood made the donations in a personal capacity.

He said: “It is a free country. People can give money to political causes. There is a fundamental democratic issue here. It wasn’t anything to do with Freshwater. It was my own money. I have also given money to the Barack Obama campaign.”

The other guests included Russell Goodway, the chief executive of Cardiff Chamber of Commerce, Brian Morgan, chairman of the Welsh Whisky Company, Sir Roger Jones, the venture capitalist, and Frank Maloney, a Cardiff-based businessman who advised the rock radio station Xfm on its bid for a licence to broadcast in South Wales.

David Davies, Conservative MP for Monmouth, said: “Peter Hain is sailing very close to the wind. Politics has to be seen to be fair.”

A spokeswoman for Hain said: “All donations above the declarable threshold have been registered with the Electoral Commission and the Register of Members’ Interests. Peter is satisfied that no conflicts of interest arose from the financing of his deputy leadership campaign. Peter is getting on with his government jobs.”

Hain is the subject of two separate investigations by the Electoral Commission and the Commons standards commissioner.

He is also expected to face questions this week about a possible conflict involving the work of his wife who, under the name of Elizabeth Haywood, is managing director of KMC International, a headhunter that specialises in finding jobs for senior figures in the public sector.

KMC was given “preferred supplier status” by the Cabinet Office to fill Whitehall positions, including those to the DWP.

Hain has declared his wife’s professional interests to the most senior civil servants in the Welsh Office and the Department for Work and Pensions. Ray Ruddick, 55, the Newcastle builder who gave £196,850 to the Labour party on behalf of the Tyneside property developer David Abrahams, has been questioned under caution by the police.

He said that Janet Kidd, the secretary who also channelled illegal donations to Labour from Abrahams, had met police separately under the same terms.

Times Recommends

• Revealed: how Eurocrat leaked secrets over dinners
• Politicians use the net to brainstorm
• British spy in longbow plot to kill Himmler