Tory Scandal: Web of secrecy cloaks the truth about policy on donations

The Tories have "very strict rules" banning anonymous donations to party funds, Sir Norman Fowler, chairman of the party, told a Commons investigation in June 1993. Anthony Bevins, Political Editor, explores the tight secrecy that surrounds party funding.

Tim Smith, a joint treasurer of the party who was subsequently disgraced for accepting payments of up to pounds 25,000 from Mohamed Al Fayed in return for Commons lobbying, told the Home Affairs Committee one month later, in July 1993, that the identity of private donors could be very tightly restricted - even within the party machine.

But Sir Norman's evidence to the Commons committee hearing on party funding was used as the basis for a code of practice, in April 1994, which included a warning to donors that "substantial anonymous donations would be refused".

The committee's recommendations, including the code, were accepted in full by the Tories, as John Major told Tony Blair in in May 1996, when the then prime minister rejected a call for the Committee on Standards in Public Life to carry out its own probe on party funding.

Mr Blair has commissioned that investigation, by Lord Neill's Committee on Standards in Public Life, which is due to take evidence in April.

Following his 1996 Commons exchange with the Labour leader, Mr Major told Paddy Ashdown: "I devolved any responsibility whatever for party fund-raising more than three years ago to avoid any possible conflict of interest."

That move, in 1993, coincided with a "very radical" change of organisation at Tory Central Office, with the setting up of a board of treasurers, chaired by Lord Hambro.

It has been reported that Lord Hambro and his fellow treasurer, Sir Philip (now Lord) Harris, and the party's overseas treasurer, Australian Ronald J Walker, between them wiped out a Tory debt of pounds 20m between 1993 and 1996.

As for the party's fund-raising rules, Sir Norman told the Commons investigation: "We refuse to accept any donation to which strings are attached, or any donation which we have reason to believe is illegally obtained money."

However, Labour MP Barbara Roche told Sir Norman that Sir Brian Wyldbore- Smith, who had been chairman of the Conservative board of finance for 22 years, had told the Financial Times "that very often he was not aware of donors' identities?".

Mr Smith said in a subsequent memorandum to the committee: "The remarks attributed to Sir Brian Wyldbore-Smith, namely that he received cheques on behalf of the Conservative Party whilst not knowing who the donor was, are, I can confirm, incorrect.

"Sir Brian was referring to the fact that the identity of all donors to the party were not necessarily known to him [Mr Smith's italics]; they were however known to other senior personnel within the treasurers' department.

As Lord Neill said in a preliminary paper on party funding last month, any system that disguises the identity of a donor - as with Labour's blind trusts - can ensure that there is no direct influence brought to bear. "On the other hand," he said, "the secrecy implicit in a blind trust may arouse suspicion."