Gordon Brown is facing a massive political and business row over his choice of Sir Ronald Cohen, the Labour donor and ally of the Chancellor, to run the body that will channel billions of unclaimed funds to charity.
The Chancellor will announce tomorrow, in the pre-Budget report, that he has asked Sir Ronald to head the Commission on Unclaimed Assets. It will investigate up to £2.5bn sitting in so-called dormant accounts in British banks, with the aim of redistributing much of this to charity.
But the move is likely to bring Mr Brown into conflict with the big banks, and the choice of Sir Ronald has brought accusations of cronyism.
Sir Ronald, 60, is the founder and former chairman of the venture capital group Apax Partners. Having made £70m in a successful business career, he turned to philanthropy.
His political allegiances changed in the mid-1990s. Having been an unsuccessful Liberal candidate for both the British and European parliaments, he became a prominent backer of Labour under Tony Blair.
His donations to the Labour Party in the past decade total £800,000 and he accompanied both Mr Blair and Mr Brown on trips to the Middle East. He was knighted in 2001.
Recently he has been identified as a supporter of Mr Brown's campaign to replace Mr Blair as Prime Minister, and is strongly tipped to replace Lord Levy as chief party fundraiser. However, this party allegiance has led to accusations of cronyism in Sir Ronald's appointment and questions about his independence.
Lord Oakeshott of Seagrove Bay, a LibDem Treasury spokesman, said: "In a week when the Chancellor has accepted that the Office for National Statistics should not be under his control, it is quite wrong of him to make a political appointment in the role of handling billions for charity."
The banks are also angry. They proposed to Mr Brown last month that any money freed from dormant accounts should be channelled through the banks' own charitable giving schemes.
A source close to the banks said they thought Sir Ronald was too party political. They contrasted his appointment with the scrupulously independent commissions set up during John Major's premiership to distribute money from the National Lottery.
The Chancellor is expected to say that all money untouched for 10 years would be liable to be redirected to "good causes" by Sir Ronald's commission. This is a victory for the banks, after Mr Brown has previously indicated that bank accounts that had been untouched for only three years might be considered dormant.Reuse content