Hague pledge on foreign donors `broken' by pounds 666,000 Ashcroft gift

WILLIAM HAGUE was embroiled in a damaging new controversy last night after allegations that the Conservative Party had broken his pledge to ban foreign donations.

As Tory MPs questioned Mr Hague's leadership over his handling of the Jeffrey Archer affair, it emerged that the party has received pounds 666,500 in recent months from the Belize Bank Trust Company, the trust arm of the Belize Bank owned by Michael Ashcroft, the Tory treasurer and close ally of Mr Hague.

It is understood that financial records held at Conservative Central Office list three separate donations from the Belize-based bank since this summer.

After being questioned by The Independent about the gifts yesterday, the Tories took the unprecedented step last night of calling in the police to investigate a breach of security over the party's account.

Michael Ancram, the Tory chairman, said: "It is deeply significant that the private bank accounts of the Conservative Party have been penetrated. This appears to be but the latest of a series of dirty tricks being perpetrated by those who will stop at nothing in order to keep this Government in power ... Now private bank accounts are hacked into in order to discredit and destroy anyone who stands in the way of this Government's lust for power."

Mr Ashcroft admitted giving the Tories pounds 3m and has promised a further pounds 1m this year. The Tories have always denied that his donations are "foreign money" because the Florida-based businessman, who is Belize's ambassador to the United Nations, holds dual nationality in Belize and Britain.

Labour MPs seized on the revelation that the recent gifts were listed as coming from the Belize-based bank, rather than from Mr Ashcroft personally. They demanded that Mr Hague refer the issue to the Tory ethics and integrity committee, which is to investigate Lord Archer of Weston-super-Mare after he was forced to stand down as the party's candidate for mayor of London for asking a friend to lie for him during his libel action 13 years ago.

The new allegations are a setback to Mr Hague, who is already engulfed in his worst crisis since becoming Tory leader in 1997. Two of the six guiding principles he set out soon afterwards were to "refuse to accept any foreign donations" and to take new powers "to deal with individuals who bring the party's good name into disrepute".

Mr Ancram confirmed that Mr Ashcroft gave the Tories pounds 250,000 in June and had been giving pounds 83,300 a month since - which would amount to pounds 1m over 12 months.

The Tory chairman insisted that the donations which were leaked yesterday were "Mr Ashcroft's money" and not from the Belize Bank: "The detailed banking arrangements for transferring his money merely reflect the fact that the large proportion of his income is earned and banked abroad."

Foreign donations will be outlawed under a Bill announced in the Queen's Speech. Under the proposals, a trust would qualify as a "permissible source" if it carried on its business wholly or mainly in the United Kingdom and had its main office in the UK. The proposed law would also give party treasurers, including Mr Ashcroft, a key role in policing whether a foreign-based trust would be a "permissible source".

The Tories insist that Mr Ashcroft's donations would not breach the planned law because he is entitled to vote in UK general elections - which would still be allowed after the Bill becomes law. However, any donations directly from a foreign-based trust would be stopped, Labour MPs said.

Labour MPs dismissed the decision to call in police as a "smokescreen" and said they would raise the matter in Parliament. They demanded an explanation about why the donations were not listed simply as coming from Mr Ashcroft .