The row over the donation that never was has exposed the grey area of the money that has been given by many wealthy foreigners with interests in Britain. This loophole is not the result of some unintended flaw in the 2000 Act governing political funding, but was explicitly recognised in the discussions leading up to the passage of the Bill. The law could now be tightened to limit such donations.

Ten years ago, when the Committee on Standards in Public Life produced its seminal report on political finance, the two main parties favoured banning foreign donations, rather than requiring only full disclosure. This was on the ground that parties should be able to seek support only from those entitled to vote for them.

This is clear-cut for individuals. You have to be on the electoral register, which includes many British citizens living abroad.

The problem is over companies. They can qualify as permissible donors by being registered under the Companies Act or incorporated within the UK or another member state of the EU, which “carries out business in the UK”.

The EU point is to comply with EU rules on freedom of setting up companies. But that is secondary to doing business in the UK. This recognises that such companies have a stake in the future of Britain.

This definition, though, says nothing about ownership. Many British-registered and incorporated businesses wholly or largely owned by foreign companies or individuals who would not themselves be allowed to be donors to British parties can legally be so since they do business here. The key is that the donation comes from a British company, regardless of the ultimate owner. This was the option raised, but rejected on all sides, over a possible donation through Oleg Deripaska’s British subsidiary.

The Electoral Commission is reluctant to become involved in ruling about talks over soliciting or discussing donations, as opposed to cash changing hands. The scope for foreign donations to be channelled through companies carrying out business in the UK could be limited by focusing on ultimate ownership. Hence, companies wholly or majority-owned by foreign groups could be banned from making donations.

However, this raises tricky EU issues, as well – no doubt– as charges of discrimination against foreign investors, who are otherwise welcomed in the UK.

This narrowing of the definition of permissible donors would appear to be the only route by which such inflows of foreign money could be halted.

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