Labour keeps source of pounds 200,000 gifts secret

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LABOUR has refused to disclose the source of more than pounds 200,000 given to the party by individuals in 1991. The Independent on Sunday disclosed last week that Charilaos Costa, a Greek Cypriot businessman facing fraud charges in Britain, donated money to Labour between 1987 and 1991. It has also been claimed that the party ordered pounds 250,000-worth of promotional goods, such as T-shirts, from one of Mr Costa's companies in the run-up to the 1992 election, but the firm went under before the goods were delivered.

Last week Labour returned donations totalling pounds 11,000 from Mr Costa made during this period. The party said that this was all that records showed he had given to official party funds.

Close business associates of Mr Costa said that he used private accounts to fund his donations to Labour and causes he associated with the party, which contained money siphoned off from his company account. In 1990, according to documents in the possession of the Independent on Sunday, more than pounds 300,000 was laundered through the account. Mr Costa left Britain for his native Cyprus in February 1991 after the collapse of his businesses in the UK. Fraud charges involving pounds 3.5m were brought against him by the Serious Fraud Office.

Labour's accounts show that between 1990 and 1991 a total of pounds 238,000 was received into its Business Plan from 'high-value' individual donors. This includes pounds 10,000 from Mr Costa, already acknowledged, and Labour has confirmed that he gave a further gift of about pounds 1,000 before 1990. This is said to have been given to the constituency funds of Neil Kinnock, then Labour leader, who hasconfirmed a close acquaintance with Costa.

Asked if he would reveal the sources of the remaining Business Plan donations, David Hill, Labour's director of communications, said: 'The line has to be drawn somewhere. We are not going to unilaterally announce who our donors are.' Given the refusal by the Conservative Party to reveal the identity of its donors, Labour did not intend to name names. The party had received no more than 15 donations above pounds 10,000 and three above pounds 40,000 since 1987. 'The names remain confidential,' Mr Hill said.

Mr Costa, speaking from his home in Nicosia last week, told reporters that money given to Labour was not 'fraudulent money'. He refused, however, to state how large his total contribution to Labour had been: 'I am not putting a figure on my donations.'

Former business associates of Costa who were involved in his fashion companies based in Enfield, north London, say that shortly before the collapse of his business Labour placed an order worth an estimated pounds 250,000 for promotional clothing with him.

It is said to have included T- shirts, boxer shorts and scarves which were to have been distributed at the 1991 Labour Party conference, and then during the general election campaign. Mr Costa's businesses went into receivership before the order had gone into full production.

Mr Hill said: 'People have heard rumours but there is no record of any goods having been delivered.'

Officials who would have been responsible for placing such an order could not remember any details.

The Independent reported last week that Costa had contributed to the cost of a party to celebrate the release from detention of Nelson Mandela. Mr Kinnock confirmed that he had allowed the organisers to use his name while seeking funds for the celebration party. He said that he was 'pretty certain' he had not personally asked Costa to donate.