Porter hands over £12m to end 'homes for votes' scandal

The Westminster "homes for votes" scandal came to a long-overdue conclusion yesterday when it emerged that Dame Shirley Porter, the council's former Tory leader, had handed over £12.3m to settle the affair.

The Westminster "homes for votes" scandal came to a long-overdue conclusion yesterday when it emerged that Dame Shirley Porter, the council's former Tory leader, had handed over £12.3m to settle the affair.

After 15 years of wrangling, Dame Shirley, who had earlier insisted she could not afford to pay up millions of pounds, finally paid the money into a bank account for her role in the gerrymandering.

Hundreds of people were moved into cockroach-infested and asbestos-ridden tower blocks as a result of Westminster Council's policies, so that 500 good-quality council properties could be sold to people more likely to vote Conservative.

A seven-year inquiry found her guilty of wrongdoing during the affair designed to boost the Tories' electoral prospects. But it took years of battling in the courts to try to obtain £42m in surcharges from Dame Shirley, 73, to pay back the council the cost of her policies.

Westminster council froze £35m in trusts linked to Dame Shirley, a Tesco heiress, and her family. But it faced court cases as far afield as Israel, Guernsey and the British Virgin islands to obtain the cash, which was held in various offshore accounts and family trusts.

Yesterday the council said it had reached a final settlement with Dame Shirley, who is now free to return to Britain from her home in Israel, to draw a line under the affair.

On 1 July she wired over £12.3m in cash to Westminster Council's bank account.

"We wanted to get the best final result for Westminster and its residents that we could," said Kit Malthouse, the council's deputy leader. "As far as I am concerned this can be filed, archived and forgotten."

But yesterday Peter Bradley, Labour MP for the Wrekin, expressed fury that Dame Shirley had been "let off the hook". He accused the council of settling for far too little cash and said they should have pursued her for the full £42m in surcharges, including costs, interest and legal fees.

Critics have also alleged that Dame Shirley's fortune is far larger than she has claimed and may even total £24m.

But the settlement will mean that she can no longer be pursued in the courts for cash.

"This is £30m short. This is not a tariff, it was the auditors' assessment of the loss to the council tax payer of her unlawful policies. Westminster Council have allowed themselves to be ripped off on the public's behalf," said Mr Bradley.

Around £7m of the cash will be invested in new social housing, including building new council homes. Around £1m of the money would be passed on to the Audit Commission to cover its expenses in fighting the case to the House of Lords, while the rest would be used to reimburse the council tax payer.

In 1987 the Tory-controlled council decided to sell 500 homes a year under a policy called "building stable communities". The aim of the policy was to try to ensure that the Tories retained Westminster, held up by Mararet Thatcher as a Conservative flagship council, at the 1990 election and avoided embarrassing the government.

HOW THE SCANDAL UNFOLDED

May 1986: The Tory majority on Westminster council falls from 26 to 4.

July 1987: Council's housing committee votes to sell 500 council homes a year to designated tenants in a policy called "building stable communities."

1987-1989: Council offers properties for sale in eight marginal wards at below market price to tenants likely to vote Tory. Council moves voters likely to back Labour into less marginal areas and stops homeless families moving into the targeted properties.

May 1996: District auditor John Magill finds Dame Shirley guilty of "disgraceful gerrymandering". She and her deputy, David Weeks, are liable for repaying £36.1m.

December 1997: High Court overturns Dame Shirley's initial appeal.

May 1999: Appeal Court says politicians may pursue policies and make "voter-pleasing decisions" to their party's advantage. They clear Dame Shirley and Mr Meeks.

December 2001: Mr Magill takes the case to the law lords, who unanimously find in his favour. One of the judges, Lord Bingham, says: "This was a blatant and dishonest misuse of power."

April 2002: Dame Shirley attempts to fight the ruling in the European Court of Human Rights.

September: She misses the deadline for payment.

November 2003: Court orders freeze £30m of assets in Guernsey - with which Dame Shirley denied any connection - and elsewhere.

July 2004: Dame Shirley wires £12.3m to Westminster council in full and final settlement.