Labour in trouble over £2m donations

The Labour Party runs the risk of heavy fines and its treasurer a possible jail term after failing to declare more than £2m of donations on time.

The Electoral Commission said it would be investigating what could be a breach of civil and criminal law. "The Commission regards the failure to declare donations on time as a serious matter," Sam Younger, the Electoral Commission chairman, said.

Labour failed to report £236,952 on time for the first quarter of 2002 and £1,815,549 for the second quarter. The Tories failed to declare slightly more than £3,000, while the Green Party submitted £2,545 late.

Under the Political Parties, Elections and Referendums Act 2000, failure to declare a donation on time is a civil offence for the party and a criminal offence for the party treasurer.

Any donation worth more than £5,000 to a political party's head office must be registered with the Commission and anyone who "knowingly or recklessly" makes a false declaration breaks the law. Since the Act was introduced by Labour to clean up "sleaze" in party finances, the latest news ishugely embarrassing.

A party spokesman said an "administrative error" led to the late declaration of the £2m, consisting of at least £500,000 each from the GMB, Unison and the AEEU, as well as donations from other unions.

"The Labour Party is committed to openness and transparency in party funding, which is why we set up the Electoral Commission process and why we are as determined to make it work as we were to introduce it," he said. "When we became aware of the issue, we notified the Electoral Commission and those contributions are listed in this quarter's report."

David Davis, who shadows John Prescott, the Deputy Prime Minister, said Labour received a further £13,000 from the Fire Brigades Union on top of the £66,000 donated since March 2001. "Accepting union donations during an active dispute certainly raises serious questions," he said.

Labour received £2.7m for the second quarter of 2002, which will help to pay off some of its debts, estimated this summer at £6m. Donations to the Tories were down from £1,977,807 in the summer to £1,780,038. The Liberal Democrats received £165,778.