Ian McCartney, the former Labour Party chairman, has attacked as "stupid" the manner in which Peter Watt, who was the party's general secretary, accepted secret donations from the property developer David Abrahams.
In an interview with The Independent, Mr McCartney said: "It was stupid. It should never have happened and the people involved should have known that." He said he had met Mr Abrahams at party functions, but insisted he never discussed the proxy donations with him.
Mr McCartney added that Mr Watt never briefed him on the way he was obtaining money from Mr Abrahams, who used his secretary, solicitor and two other associates as intermediaries. "What I would have done is stop it," he said. "I would have had said no, full stop. I am not arguing with the benefit of hindsight. It is just a fact. He should have told the officers. He obviously chose to keep that quiet. We will have to wait to see what the [Labour Party] inquiry says."
Mr Watt, who resigned on Monday after admitting he knew about the secret payments by Mr Abrahams, could face prosecution as a result of the police inquiry requested by the Electoral Commission. The 2000 Political Parties, Elections and Referendums Act, which says that people cannot donate money anonymously through a third party, includes a maximum penalty of a year in jail.
Mr McCartney said: "Abrahams has been around the Labour Party for years. He is not somebody who pushes himself on you. He would be one of the hundreds of people milling around. He seemed happy to do that. He never pushed me or anything like that. I just always assumed he was a member of the [party's] 1,000 Club."
Mr Abrahams was thrown out of the Labour Friends of Israel group when Jon Mendelsohn, now the party's chief fundraiser, was its chairman. Mr McCartney said he did not know what had caused the differences between the two men, but he said Mr Abrahams "had an interest in support for the Palestinian women. There could be some people who would not take kindly to him talking with PLO people."
Mr McCartney, campaign manager for Hilary Benn in Labour's deputy leadership election, was also critical of the funding system proposed by Mr Watt for the contest. He said it included a 15 per cent levy on each of the teams to go to party funds, which encouraged them to seek more donations. The system had no funding cap, and no limit on expenditure, he said.Reuse content