Gordon Brown, who vowed to clean up politics as Prime Minister, was last night confronted with the nightmare of a second criminal inquiry into Labour Party funding after the Electoral Commission called in the police to investigate the "dodgydonations" scandal.
The Prime Minister made it clear that he believed the police investigation was in the "public interest" and promised that "every question" would be answered over the use of proxies by the property developer David Abrahams to donate more than 600,000 to Labour.
But his attempt to stay above the growing scandal suffered a serious blow as it emerged that an close aide had recommended one of Mr Abraham's proxies to Harriet Harman's deputy leadership team.
The police had remained wary about mounting a fresh criminal investigation after the year-long "cash for honours" inquiry by Assistant Commissioner John Yates led to criticism of the Met. But Mr Brown made it almost inevitable that the police would have to investigate after telling MPs earlier this week that the payments to Labour made by proxies were "illegal".
Yesterday afternoon the Electoral Commission said that it had referred the matter to the police.
Downing Street said: "The Labour Party will cooperate fully in every way. What happened was unacceptable and it is in the public interest that every question is answered."
Mr Brown faced further bad news last night as his campaign team was dragged back into the row. The team of the deputy party leader, Harriet Harman, blamed Chris Leslie, Mr Brown's campaign co-ordinator, for suggesting they should approach Janet Kidd, Mr Abrahams' secretary and one of his proxy donors, for a donation to her team. Mr Leslie, a former Labour MP, said he was not aware that Mrs Kidd was being used as a proxy by Mr Abrahams. But Mr Brown's leadership campaign team had already refused to take a cheque from her for 5,000.
Mr Leslie said: "In late May I received a phone call from a man calling himself David Abrahams referring me to a woman named Janet Kidd who said that she wanted to be a donor to the campaign. I did not know who Mr Abrahams or Mrs Kidd were.
"I contacted Mrs Kidd, and unprompted, she sent a cheque for 5,000. I made the usual checks to establish her bona fides, that she was a permissible donor, and also ascertained that she was an established Labour donor.
"However, after consulting other members and supporters of the campaign team, and having established that no one knew her, I decided not to take up her donation in line with our practice and tore upthe cheque."
He went on: "Subsequently, when the leadership election was over, I was approached by members of Harriet Harman's campaign team asking if I knew of any individuals who might donate to her deputy leadership campaign. I passed them the details of Mrs Kidd as someone whose offer of a donation we had not taken up.
"The Prime Minister and Jack Straw were at no stage involved in, or aware of, the contact from Mr Abrahams or the offered donation from Mrs Kidd."
Mr Leslie is seeking a Labour seat in Hull East to be vacated by John Prescott, the former deputy prime minister, at the next general election.
Have Your Say: On the question of who is to blame for the illegal donations scandal
Laundering donations by Labour would be a comical Whitehall farce if it weren't so serious, but hearing the many lame excuses coming from ministers reminds me of a kindergarten class if the cookie jar went missing but no one knows anything. Only Hilary Benn looks honest having refused proxy donations but for other senior figures to duck and dive saying they thought no offences had been made, that doesn't cut it. Even without clear rules, kids at kindergarten know full well when they are doing something wrong.
Mike
It's rather like watching some large edifice collapsing in slow-motion. Initially, everyone claimed to have never heard of David Abrahams. This position is becoming more untenable by the hour. I watched Jack Straw deny ever having heard of the man and promptly followed up by calling him "Dave". One also notes that Abrahams had a front-row seat at Blair's Sedgefield leaving bash. It's going to get much worse before it gets better.
Mishari Al-Adwani
Since: 1 Peter Watt has entered a plea of Not Guilty because he was incapable of understanding clear guidance from the Electoral Commission; and 2 Jon Mendelsohn has entered a plea of Not Guilty because a) Peter Watt told him it was all right, and b) he was going to do something about it soon; they are evidently expecting a prosecution. Do they and the Labour leadership expect to get off with a slapped wrist? With the most damaging evidence of the cash-for-honours scandal still undisclosed? An honest party a question which does not seem to arise here or a competent one would have seen that their only hope was to come clean in full immediately.
Diversity
I am not in the least surprised by all this. The other parties shouldn't crow too soon, who's to say they are whiter than white? I don't expect anyone in power, whether they be Conservative, Lib Dem, Ukip or BNP, will ever be able to put their hands on their hearts and say they wouldn't have done the same.
Ann Beirne
I think Cameron was right to call into question Brown's integrity. As leader, as soon as he found out that the law had been broken, he should have informed the police. He can now be accused of playing for time to allow a cover up. Labour will not recover from this.
Johnny, Norfolk
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