Substantial subscriptions made to the Labour Party by the UK Defence Forum last year have been listed in Labour's "financial results" as donations from Robin Ashby, the man who created the forum as a means of generating contact between defence manufacturers and Whitehall.
But it emerged yesterday that some of the money donated to Labour through the Forum, to buy tickets for fund-raising events, has come directly from overseas defence firms, despite the foreign funding ban.
Among companies that back the Defence Forum are Lockheed-Martin, Boeing and the French-controlled firms, Thomson CSF UK, and Trimarine.
Under legislation to be published by Jack Straw, the Home Secretary, foreign finance is to be banned for all parties, and Labour's manifesto said: "The Conservatives are afflicted by sleaze, and prosper from secret funds from foreign supporters."
There is no suggestion that Labour has been funded on the scale that is being alleged for the Tories. A Commons motion is urging Sir Patrick Neill QC, chairman of the Committee on Standards in Public Life, to invite Ronald Walker, an overseas treasurer for the Conservative Party, to give evidence to the inquiry into party funding, following claims that he raised up to pounds 20m in the run-up to the last election. William Hague has nominated him for a knighthood.
Nevertheless, the revelation that Labour has received indirect funding from overseas will be an embarrassment.
A party spokesman told The Independent: "We have to differentiate between somebody making a direct donation and somebody buying a ticket for a fund- raising event and passing it on. If somebody wants to do that, there's not a lot we can do to stop them, other than turning people away at the door, when they have paid money for tickets.
"Also, they may be foreign-based companies, but they could still have significant British interests. Again, you can't do a check at the door."
As for the pounds 1m that has been offered by Robert Earl, of Planet Hollywood, to bail Labour out of its problem with Bernie Ecclestone's pounds 1m donation for Formula One, the fact that Mr Earl lives in Orlando, Florida, created no problem because he was a British voter, the spokesman said.
Weekend reports said it was enough that Mr Earl was eligible to vote in Britain, but the party spokesman said: "I'm assuming that Mr Earl is registered to vote in Britain. It's whether they can vote in British elections; that's the issue."
Asked if Mr Earl was registered, the spokesman added: "I assume we wouldn't have taken the money, if he wasn't."
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