Directors of the Lionel Cooke Memorial Fund Ltd include Bill Rodgers, now Liberal Democrat home affairs spokesman in the House of Lords, and David Owen, a fellow member of the "Gang of Four" which founded the SDP.
The revelation is bound to fuel speculation among the Labour left that Tony Blair wants to form a centrist coalition with Liberal Democrats, former SDP members and even moderate Conservatives. Some Labour and Liberal Democrat MPs have already expressed distaste for Mr Blair's closeness to the Liberal Democrats.
The fund was set up in 1956 and its original directors included the then Labour leader, Hugh Gaitskell. Although it was set up to fund the Labour movement several members of its board, including Lord Rodgers and Lord Owen, defected to found the Social Democratic Party in 1981. For the next nine years the SDP received money from the fund, but in the early 1990s it began giving small sums instead to a Labour education project and to the Social Market Foundation, a right-wing think tank.
The fund's accounts for 1996 and 1997 record donations of pounds 15,000 per year to "The Labour Party". However, instead of going into the party's general funds they went to the office of Tony Blair, who recorded them in the Register of Members' Interests without revealing their size. Lord Rodgers said that despite being on the board of the fund he had not played any major part in its decisions in recent times. "I am very much a sleeping trustee. I think one or two of us have turned a blind eye when there were things we didn't want to express a view on.
"I am sure that Paddy Ashdown would certainly be surprised. It's a historical thing. When I became a trustee I was certainly a member of the Labour Party," he said.
David Owen was on holiday, but a spokeswoman said he was "completely in favour" of the decisions the fund took. "Once the SDP stopped it was agreed that the money would be put to the Labour Party. He felt it was in keeping with what Hugh Gaitskell would have wanted," she said.
The fund's chairman is Jack Diamond, a Labour Cabinet minister between 1968 and 1970 who was later the SDP's leader in the House of Lords between 1982 and 1988. Among the other members of its first board was the then General Secretary of the National Union of Mineworkers, Samuel Watson.
Lord Sainsbury of Drury Lane, who left Labour in 1981 for the SDP and who is the 93-year-old uncle of the current trade and industry minister Lord Sainsbury of Turville, is one of the fund's directors. Lord Cledwyn of Penrhos, a Labour Cabinet minister between 1966 and 1970 and Labour leader in the Lords between 1982 and 1992, was appointed as a director in 1992.
Other former board members include Sir Frederick Hayday, a former Chairman of the Trades Union Congress, and Alfred Robens, a Labour minister between 1947 and 1951.
Lord Diamond said that although funding the SDP came within the organisation's stated aim of supporting the Labour movement, funding the Liberal Democrats would not.
Asked whether giving money to Labour indicated support for the party, he replied: "Of course it does. The fund is using its income entirely for the Labour Party.
"Our responsibility is to provide things for the Labour movement, which is wider than the Labour Party."
Lionel Cooke was a Brighton businessman, a Labour sympathiser and a friend of Jack Diamond, who died in the 1950s. His money was left partly to the Fabian Society and partly to set up the fund.
During the 1970s, it gave money for Summer School scholarships, for research assistance to the Labour leadership and for the running of Socialist Commentary, a pro-European magazine.
In 1978 its outgoings consisted of pounds 1,000 for scholarships, pounds 1,000 for Socialist Commentary and pounds 1,500 for the Campaign for Labour Victory, an organisation run by right-wingers in the Labour Party.Reuse content