It appears that it is not only the Labour party that is facing serious problems because of dodgy donations. The Liberal Democrats could be facing bankruptcy after receiving a £2.4 million donation from a man called Michael Brown who turned out to be a crook.
The Liberal Democrats accepted the money from Brown's company 5th Avenue Partners, just before the 2005 election. This was the biggest donation in the party's history and almost 10 times more than the party's previous largest donation. It was this cash injection that enabled the Lib Dems to fight their successful campaigns in a number of key seats in 2005 including Ceredigion and Cardiff North.
The High Court ruled last October that 5th Avenue Partners was a fraudulent company that had never actually traded. As the company never actually traded it could not be considered to be carrying on business in the UK at the time the donation was made, so the donation was impermissible under UK election laws. If a party receives an impermissible donation then The Electoral Commission can ask the courts to order the party to pay a fine which is an amount equal to the value of the donation. According to a report in Scotland on Sunday the Electoral Commission is going to seek such an order.
To add to the Liberal Democrats woes a group of millionaires who invested in the fraudulent company are insisting that the money wasn't Brown's to donate but money that he had received through deception from them, understandably they want it back. Making the total amount that party has to pay out £4.8 million - money they don’t have and might find impossible to raise forcing the party into bankruptcy.
Other blogs on this subject:
Iain Dale's Diary
Chris Paul: Labour of Love: Libdemologists:
Bill for Fibs dodgy dealings: £4.8 million