Mandelson has his revenge as Osborne admits 'mistake'

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Indy Politics

George Osborne has tried to move on from the donations row by admitting that he made a mistake by becoming involved in discussions over a donation from the Russian billionaire Oleg Deripaska.

The shadow Chancellor has always denied that he asked for or received any money from the aluminium magnate but he admitted that his presence on the Russian's yacht when a £50,000 donation was discussed did not look good. His admission has been calculated to help him draw a line under the incident that has damaged his ability to tackle the Government over its handling of the economy.

Mr Osborne came out fighting when the news of his meeting with the Russian billionaire was first made public by his old Oxford University friend, Nat Rothschild. But he has since faced criticism from senior figures in the Conservative Party for his actions. He admitted to friends over the weekend that he felt he had made a mistake during his now infamous holiday in Corfu, and was preparing to say as much. Mr Osborne himself sparked off the row when he is said to have spoken to a Sunday newspaper about what Mr Mandelson had said to him in a private conversation.

"It's not what you say or do but how it looks," Mr Osborne said. "To be honest, this didn't look very good and that's something I regret. I have changed the way I am going to operate when it comes to fundraising and I will not discuss individual donations with individual donors."

But his admission has not satisfied his critics among Labour's benches, who believe he has still not explained the exact nature of his discussions with Mr Deripaska. The Labour MP Denis MacShane, who has led calls for Mr Osborne to reveal the full extent of his contact with the billionaire, said: "George Osborne is still refusing to come clean with the public about the nature of the conversations he had in which donations to the Conservative Party were discussed. He has now confessed that he made an error of judgement but, for the sake of clean politics, he now needs to answer the questions he refused to answer last week."

Senior figures in the Government used Mr Osborne's admission to repeat their claim that he is too inexperienced to be trusted with the task of looking after the country's economy. Geoff Hoon, the Transport Secretary, said: "His mistakes just go to show why this is no time for a novice."

Senior Tory advisers also believe Mr Osborne's admission will help the party ratchet up the pressure on Lord Mandelson. They are still asking the Business Secretary to make a full disclosure of his dealings with Mr Deripaska. "George's candid approach will increase the pressure for the Business Secretary to give a full and frank explanation of his relationship with Deripaska," said a source close to the shadow Chancellor.

His relationship with Mr Deripaska has come under scrutiny after it emerged that changes made to aluminium tariffs by Lord Mandelson during his time as the EU's commissioner for trade were beneficial to the Russian. Lord Mandelson has already been forced to admit that he met Mr Deripaska in 2004, two years before previously stated by his officials in Europe. The oligarch's name was also removed from the guest list of a drinks reception at the British embassy taking place this week though organisers said it had nothing to do with the row.

Pressure was mounting on the Business Secretary yesterday as he again refused to make a total denial to claims that he was assisted by Mr Deripaska's company in entering Russia while on a trip with Nat Rothschild to Moscow.

But, despite his determination not to allow the controversy to interrupt his current four-day trip to Russia, the allegations have affected Lord Mandelson. His concerns led him to hold secret talks with the Press Complaints Commission over the weekend prior to the appearance of the allegations in a Sunday newspaper but neither his spokesman nor the PPC would divulge the nature of the talks. A spokesman for the PCC said: "I can confirm we held discussions with Lord Mandelson but no formal complaint has been received."

No wonder he's so happy

Lord Mandelson continued his four-day trip to Russia yesterday amid renewed pressure to reveal the extent of his links with the Russian billionaire Oleg Deripaska.

The Business Secretary, currently on a tour designed to bolster trade relations between Britain and Russia, has already had to admit that he met the Russian billionaire in 2004 as EU Commissioner for Trade, two years before previously stated by his Brussels officials.

Answering questions outside the British Embassy in Moscow, Lord Mandelson described the suggestion that he should resign from the Government for the third time over his connection to Mr Deripaska as a "fantasy".

"I know what my job is and I am going to continue doing it on behalf of my country and my government," he said.

Lord Mandelson said over the weekend that he never asked for or had given any favours to Mr Deripaska during his time with the European Commission.