Labour has confirmed it received just over pounds 11,000 from Charilaos Costa, who fled the UK two years ago and now faces arrest for fraud. He is living in southern Cyprus.
Labour said that this money would be repaid following reports in the Independent on Sunday that Costa had siphoned money from his British fashion companies and that at least pounds 300,000 had been laundered through a north London bank account. Business associates say Costa used this account to make contributions to the party. Labour has denied receiving any further donations from Costa.
In a written reply to questions, Mr Follett said: 'It was I who asked Charilaos Costa to give a donation to the Labour Party, so I have been embarrassed by your allegation that the money was not his to give away. If what you say is true, then Charilaos used dishonest means to a noble end.'
According to former business associates of Costa's, Mr Follett occasionally visited the Cypriot's clothes factory in Enfield, north London, before the business collapsed in 1991.
The acknowledged donation of pounds 10,000 was made in 1990. Larry Whitty, Labour's general secretary, said last month that he was not sure how it had been paid but that it could have come 'via Ken Follett'. Labour said Costa also contributed a small sum to local constituency parties.
Neither Mr Follett, nor Neil Kinnock, the then Labour leader, encouraged Costa to invest in his Islwyn constituency in South Wales, would have known of Costa's activities. The Welsh Office are now investigating the circumstances of a pounds 76,000 development grant awarded to Costa.
Mr Follett seems an unlikely Labour supporter. But the thriller writer, who has a magnificent house in Cheyne Walk, Chelsea, one of London's most exclusive streets, has long been renowned for the generosity of his contributions to the party. He is one of its largest individual donors. Less well known is that he is also Labour's most successful fund-raiser, the closest it has to a Lord Archer.
Mr Follett has never been Treasurer nor indeed held any official position in the party. But his role as fund-raiser was vital in seeing Labour through the 1992 election. Between 1990 and 1991, Labour raised more than pounds 230,000 from individual donors. According to former officials, many of these will have come to the party as a result of Mr Follett's intervention. The party has refused to disclose the identity of any of the donors, except for Costa.
Several senior former Labour officials said last week that they had no idea Mr Follett had played such a role. He declined to talk to the Independent on Sunday about it.
But Mr Follett had a specific function. Before the 1992 election he organised fund- raising events including the well-publicised 'plate' dinners at the Park Lane Hotel, for which guests paid pounds 500 each. During the election, 'he had a job to do with identification and the organisation of prominent Labour supporters', a senior Labour source said. Many of these were drawn from the arts world. Mr Follett is a trustee of Arts for Labour, which provides celebrities for party events and campaigns for the arts.
He also promoted Labour with many wealthy supporters in the City and in business. He hosted a series of informal lunches at his home and arranged dinners for One Thousand Club members - individuals who had given more than pounds 1,000 to the party.
'Any fund-raising needs someone to represent it,' said one businessman. 'Ken Follett was that person for Labour. This was all healthy - the sums were not big enough for people to have any capacity to influence the party. There was absolutely no sense of sleaze.'
Mr Follett, a journalist before he became the author of the bestseller The Eye of the Needle, began active involvement in the Labour Party after meeting his present wife, Barbara, in 1983. She persuaded him to become press officer of Farnham Labour Party and to help her with her campaign when she stood, unsuccessfully, as Labour candidate in Woking.
The two married and then moved to Westminster, becoming close friends of the Kinnocks and prominent members of the Chelsea Labour Party. Mrs Follett is credited with reinventing Mr Kinnock's image by getting him to dress in double-breasted suits and colour-matched shirts and ties. She now runs Emily's List UK, which sponsors women candidates seeking selection for winnable Labour seats in Britain and the European Parliament.
Her husband has kept a lower public profile than his wife, but he has been important in encouraging Labour to embrace a more professional, American-style political method. He was among the organisers of a tea party at the Dorchester Hotel earlier this year to celebrate the inauguration of President Bill Clinton.
Ironically, Mr Follett has been more interested in the president's rival, the Texan maverick Ross Perot. His book On the Wings of Eagles, which tells how two Perot employees were rescued from Iran in 1979, casts the presidential candidate in a most respectful light. Perot distributed copies liberally during his campaign.
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