Fugitive Cypriot gave 25,000 pounds for Mandela party: Former Labour leader's endorsement used to persuade businessman to give money

The endorsement of Neil Kinnock, the former Labour leader, was used to persuade Charilaos Costa, a fugitive Cypriot businessman, to pay pounds 25,000 towards a party held after a concert celebrating the release of Nelson Mandela.

Mr Kinnock told the Independent he had given permission for his name to be used to attract sponsorship for a Wembley concert in 1990, but was 'pretty certain' that he had not made a personal request for money from Costa, whom he knew socially.

The Independent has learnt that the money was drawn from accounts in north London containing money siphoned from Costa's companies, which were also used to make donations to Labour. There is no suggestion that Mr Kinnock or the Anti- Apartheid Movement, which was involved in organising the concert, knew the origin of the money.

Mr Kinnock, who said he and his family once dined with Costa at the Cypriot businessman's expense, said that he had been approached by the Anti-Apartheid Movement to endorse the concert. The former Labour leader said that he was 'not unfriendly' towards Costa before it was known that he was being investigated by the Fraud Squad. But there was 'no reason' for him to ask Costa to make the donation because 'that wasn't the procedure of fund-raising being used by the Anti-Apartheid Movement'.

Richard Caborn, treasurer of the Anti-Apartheid Movement and also Labour MP for Sheffield Central, said that he had approached Mr Kinnock to ask him for permission to use his name for fund-raising purposes. Mr Caborn said that Costa was 'one of many' potential sponsors he approached. It was Mr Caborn's job to play host to Costa at the 1990 concert and introduce him to Mr Mandela.

In a sworn affadavit, Robinson Zymboulakis, Costa's former bank manager, said Costa had paid pounds 60,000 towards the costs associated with the Mandela visit. It is not yet clear what happened to the pounds 35,000 not spent on the party.

Mr Zymboulakis and other business associates of Costa's said that pounds 300,000 had passed through one account in 1990 and that the account was used to fund activities linked with Labour, including straightforward donations to party funds. Costa fled to Cyprus after being charged in 1991 with fraud involving pounds 3.5m.

There is no suggestion that either Mr Kinnock or the Anti-Apartheid Movement would have known of the origins of the money used for the after-concert party, which was held at the Natural History Museum in west London, as it was transferred to a legitimate company run by Costa before being paid out as sponsorship. Mr Kinnock and his wife Glenys were both present at the party.

Mr Kinnock and his wife visited Costa's factory in Enfield, north London. The former Labour leader also encouraged Costa to invest in his constituency and performed the opening ceremonies for his new factories in Pontllanfraith and Bridgend.

Mr Kinnock said he and members of his family had attended a restaurant lunch hosted by Costa and his family, but could not remember where or when. He confirmed that Costa had picked up the bill, but did not know what it amounted to.

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