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David Abrahams, the wealthy businessman at the centre of the political storm over illegal donations to the Labour Party, is unlikely to receive his money back, despite Gordon Brown’s insistence last week that it would be returned.
The donations, channelled to Labour via third parties and totalling almost £700,000, is instead likely to be paid into government reserves, according to sources at the Electoral Commission.
Officials have expressed doubts over whether it is appropriate to return unlawful gifts to the donor, who could easily give it back to the Labour Party under his own name.
The Times has learnt that the regulator is examining whether it should instead be surrendered to the Treasury’s Consolidated Fund.
News that the money cannot be handed back is another political headache for Mr Brown, who attempted to forestall the mounting scandal last week by pledging to return the donations, which he accepted were illegal.
At Prime Minister's Question Time today, Mr Brown struggled to defend himself against a savage attack from David Cameron, who accused him of failing to restore trust in government as he had promised upon becoming Prime Minister.
Claiming Mr Brown's government was "falling apart," Mr Cameron told him: “It took Tony Blair 10 years before confidence in his administration collapsed. You’ve managed it in six months.”
The Conservative leader also revealed that Lord Whitty's internal inquiry into the 'donorgate' scandal ordered by Mr Brown last week had already been partially suspended, though the Prime Minister insisted this was because conducting interviews now would conflict with the ongoing police inquiry.
Mr Brown is already grappling with further revelations of illegal donations from Mr Abrahams to Peter Hain, the Work and Pensions Secretary, and claims from Scottish Labour Leader Wendy Alexander that she challenged the legality of an overseas donation now under investigation.
Now he is also under pressure to explain the confusion over the repayment of Mr Abrahams' £663,975, which has seen Labour ministers seemingly at odds with officials over the money's whereabouts.
James Purnell, the Culture Secretary, suggested during a BBC interview on Sunday that the money had actually already been repaid.
Yesterday, however, Jack Straw, the Justice Secretary, admitted to the Commons that he did not know if it had even left Labour Party coffers.
Questioned as to whether the money had left Labour accounts and where it was now, Mr Straw said: “I cannot answer that question. I don’t know, is the answer.”
His response drew an angry reaction from the Conservatives and Scottish National Party. Outside the Commons, Chris Grayling, Shadow Work and Pensions Secretary, said: “James Purnell and Gordon Brown have a lot of explaining to do.
“The Government is all over the place. People no longer know what to believe when senior ministers talk about this increasingly murky affair.”
Now it appears that Labour is still holding the donations. A party official told Times Online today that the money would remain with the party until the Electoral Commission had decided what should be done with it.
Under electoral law, donations either have to be returned to the donor within 30 days or paid into the Treasury's Consolidated Fund.
Angus MacNeil, the Scottish National Party MP whose complaint prompted the cash-for-honours inquiry, said he was astonished by the mix-up.
He said: “Gordon Brown clearly said the cash would be repaid but a week later it seems the money’s still in the biscuit tin under the Labour leader’s mattress.
“Labour must get their house in order."
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I do hope the Inland Revenue are noting all this, if this WAS a loan, then the tax has to be sorted out. I'm not asking, I'm DEMANDING this is done.
John, Clacton , UK
Anyone wanting to know the whereabouts of this cash should ask the omniscient Treasurer, Jack Dromey.
Robert Williams, Halifax, England
How can MPs, who are lawmakers, claim ignorance of the law? They are not fit for purpose and should resign their seats.
Tom, London,
If he's looking for a place to put it, I'll have some. I'd be delighted with just a small portion.......in place of the job that my middle aged husband cannot get because of the competition from foreigners. It would certainly help to subsidise the appalling pension that he's going to get.
Judy , Liverpool, england
The illegal donations saga, which the Labour party is most deeply embroiled in, continues to amaze and dumbfound. A further revelation into the affair was revealed today - the corruption of Government in its willingness to conclude back room deals and accept financial assistance from wealthy sources by unacceptable methods. In the context of the Labour party over the last few years, a certain pattern of unlawful behaviour and undesirable policy seems to be emerging - those that lend set the trend. Then Brown says the money will be returned but the opposite turns out to be true. Also, the fact that nobody seems to actually know about the sum's whereabouts smacks of, in anything else, administrative incompetence and financial mismanagement. And all this comes from a man whose previous tenure in Whitehall was that of the Chancellor of the Exchequer. May be the money has become lost, indeed in trasit, just as the CD's were last week ago or thereabouts? Now that really wound be something.
Marcin Roth, London, UK
Has David Abrahams or the intermedries paid the gift tax on the monies which passed between them?
If not why is this not being reported?
Mark, Leicester,
There is a direct correlation between the soulless and subtly devious politicians who have taken the stage over the last 15 years and the deterioration of the political, social and economic institutions over which they have influence.
Politics is a business for the politicians, run by the politicians, manipulated by the politicians to fill their pockets, increase their pensions, do deals and increase their inflated egos so that they can go onto some consulting job financed by some government that they did favours for at the expense of their own constituents and country.
The mantra of the politicians has truly become âwhatever it takesâ to get what âI wantâ. lie to millions of people with a straight face, even when caught out continue to lie or say âI am innocentâ, or âI didnât know I was doing anything wrongâ, or âdonât interpret it that way.â
JC, Lisbon,
After ten years of the Blair/Brown government all I can say is that we are in moral, politcal, social collapse. The State, the new political 'aristocracy', the corporate sector and the media have colluded to put personal financial gain before all else particularly the good of the nation. We are now reaping the whirlwind.
Mrs Leigh, London, England
David Abrahams has already stated that he paid this money via intermediaries as he did not want to attract any publicity directly to himself regarding these donations. In the light of this it seems that Labour's real reason for not returning the money is the doubt that Mr Abrahams would not give the money back again.
So here we are again, a morally bankrupt political party who seem to consider it perfectly ok to retain illegal donations. Sleaze runs like blood through arteries with these people. If people like myself tried to retain monies from illegal sources we would find ourselves in trouble very quickly once it was discovered, but then I am not a political party. As usual Gordon shows his usual ineffective lack of action.
This is the man who as chancellor robbed the pension funds, told us he had not put up income tax while effectively taxing the self-employed at 30%, including 8% "national insurance" for which we receive no benefit at all. Roll on election time, byebye Gordon.
Ray , Clacton on Sea,
Clearly Mr Brown intends honourably to return £700K to Mr Abrahams (since it cannot be used for the purposes intended) and then pay whatever fine or levy The Electoral Commission or the Coutrs require from general Labour Party funds (overdraft).
Chris, Winchester, England