Labour faces inquiry over party donations

The Labour Party is to be investigated by Britain's electoral watchdog over its "repeated failure to report donations on time".

The Electoral Commission said yesterday that the Labour Party's conduct had been "unacceptable" and a formal probe would be launched. If it is found guilty it could face a fine of up to £5,000 and its treasurer could face one year in jail.

Sam Younger, chairman of the commission, said: "Persistent late reporting of donations undermines the efforts being made to ensure greater transparency in the finances of political parties. The commission is determined to ensure that parties are doing everything they can to meet their legal obligations."

The commission seized on a £10,000 donation to the Welsh Labour Party, which was reported by Labour in its declaration for the third quarter of this year instead of for the second quarter. This is not the first time Labour has been criticised for late reporting of donations. But yesterday Labour said that the commission's accusation was unrelated to previous problems.

A spokesman said: "We consider that the above 'late reporting' is entirely unrelated to the previous late reporting of donations by the Labour Party, which was due to systems and control deficiencies during 2001 and 2002.

"Since then we have made substantial improvements to our procedures, details of which have already been provided to the commission, and we are confident that we will be able to demonstrate to the commission during their proposed investigation that we have made substantive progress in addressing their concerns."