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Sunday, July 30, 2006

Cohen's moment of insanity

Nick Cohen in today's Observer is absolutely right when he writes that political advertising on British TV will unleash corporate and political monsters that will hijack rational argument and debate.

Unlimited spending by big corporations on TV advertising is capable of changing the language of any single issue so as to swing the argument their way. They will be able to target individual politicians who, out of principle, take an opposing view and they will be able to use television to feed, sustain and reinforce already-out-of-control lobbying at all the seats of power in the UK. In other words, it will be one more way of enabling rich people and big business to buy influence.

However, Cohen loses it later on in his column when he allows his irrational hatred of the Liberal Democrats to get the better of him, by alleging that Michael Brown was using the party to launder dirty money. Where is his proof? He has none.

The whole purpose of laundering money is to enable the person feeding the cash into the system to benefit from it legitimately at the end of the process. There was no prospect of this happening with Michael Brown. He gave the money to the Liberal Democrats with no chance of it being returned and with it being made clear to him that he could expect no reward for the donation. What Michael Brown's motives were I cannot say, but his subsequent travails have nothing to do with my party nor is there any evidence that the money he gave to us is tainted in any way.

What has been established but not reported is that all the donations from 5th Avenue Partners Ltd were made from a UK company that was carrying out business in the UK and operating from London premises at the time. That has now been confirmed beyond doubt. All the possible, reasonable and proper checks were made by the party within the thirty-day period of receiving a donation that is allowed under electoral law.

There are two main differences between the Liberal Democrats' handling of these donations and that of funding given to the other major parties. Firstly, all these donations were fully and properly disclosed to the Electoral Commission. Secondly, there was never any suggestion of any reward or honour for Mr Michael Brown. Our opponents will no doubt continue to try and beat us over the head with this association but all they have to work with is innuendo and smears. It is a shame that a respected columnist such as Nick Cohen should feel that he has to stoop to that level as well.
While I agree with much of this, it has not been proven without doubt that 5th Avenue Partners were operating in the UK at the time - for the simple reason that they have never filed a set of accounts at Companies House. Indeed, by definition there is no evidence that they have had any dealings in the UK.

Also, in May 2005, and in my work capacity I phoned the address listed as 5th Avenue Partner's address - it turned out to be a law firm and the person I spoke to had never heard of them. They promised someone would get back to me - they never did.

The problem wasn't that there was evidence at the time that Brown wasn't on the level; the problem was that a political decision was made to accept £2.4m from an ex-pat who wasn't a registered voter via a company that hadn't at that time filed a single set of accounts, and knowing that the money could not have been spent at such a late stage before the general election anyway. In my view, and I appreciate I can only say this with the benefit of hindsight, that decision was a poor one. But it isn't as if we haven't turned down similar big donations before - the point is someone's political radar was not working.
Yes I agree with the political radar point. It was however reported at the last Federal Executive that evidence had been received by the party that proved that they were trading.
Peter - nice to find ourselves in agreement again :o)

I don't know what the precise definition of "doing business" is for PPERA purposes but there are plenty of definitions in tax law to which it may have been piggy-backed.

The most obvious are the so-called 'badges of trade'. However "doing business" is undoubtedly a wider definition that "trading" and ought to encompass being an investment company as well as a trader. Given Mr Brown's wealth apparently comes from property investment, it seems more likely that the investment business defintion would be in point. That is a rather broad definition - and if there is evidence that the UK company was involved in the "making and mangement of investments" then I would feel quite comfortable that it was "doing business".

More of a worry might be if there is an inconsistency between the tax treatment of the company and that for PPERA. I suspect HM Revenue & Customs would be interested in the comnpany's tax return - if the accounts have not been filed then it is likely the tax return has not been either.

Prima facie it sounds more likely that Mr Brown may have a problem with HMRC (& Companies House) than that the Lib Dems have a problem with the PPERA.
Did the FE get to see this proof, or was it just a reassurance? I seem to remember quite a lot of reassurances that didn't amount to anything back when I was on the FE.
I think you know the answer to that James but I have no reason to doubt what we were told by a member of the FE who I respect and trust.
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