Robin Cook, the trade and industry spokesman, said at a press conference: 'The danger to democracy of secret donations is that they put public government under private obligations. If ministers are not scrupulous in obeying the letter of the law in their conduct to secret backers, they must face the suspicion that they favour those who bankroll them.'
He accused the Government of showing favourable treatment to Nadir by not applying to have him disqualified as a company director. He also challenged the Government to bring charges against Nadir for failing to declare political donations in his company accounts.
Under Sections 6 and 7 of the Company Directors Disqualification Act 1986, Michael Heseltine, President of the Board of Trade, can apply to the courts for an order to ban the director of an insolvent company if his conduct makes him unfit to manage a company. Mr Cook said that no application has been made for Nadir to be disqualified from running a company.
Mr Cook said that last October, the Department of Trade and Industry ran out of time to disqualify Nadir - since, under the law, proceedings must be brought within two years of the company going bankrupt. Mr Heseltine had justified his failure to act on the ground that as an undischarged bankrupt, Nadir cannot act as a company director.
But, Mr Cook went on: 'This is a fig leaf, and a scanty one. Asil Nadir will become eligible to hold company office again when his bankruptcy is discharged, which Mr Heseltine admits is a process which normally is completed in three years.' In 1992-93, the year in which the DTI ran out of time to disqualify Nadir, it started proceedings against 564 directors of bankrupt companies. 'What made Asil Nadir different from all of them?' Mr Cook asked. 'Had the rest of them omitted to make a donation to the Conservative Party?'
The Tory party had admitted receiving nine donations totalling pounds 440,000 from Nadir but none of these payments had been declared in Polly Peck accounts, in breach of the Companies Act. Mr Heseltine 'has no excuse for further delay. He must not shrink from doing his duty because it would embarrass his party,' he said.
A DTI spokesman said that Mr Cook had written to Mr Heseltine, who would reply in due course.
Controls over political donations by companies should be as stringent as those applying to unions, the TUC argues in a memorandum to the select committee on the funding of parties, writes Barrie Clement.
There is a 'massive imbalance' in the rules governing employers' contributions - overwhelmingly to the Conservative Party - compared to union payments to Labour, the TUC's ruling general council says.
The memo says: 'It is not in any way partisan to point out that controls which in effect apply to the Labour Party, including the cost to trade unions of running political fund ballots, are immeasurably - even scandalously - more severe than those which affect the Conservative Party.'
The TUC wants company donations to be authorised by a resolution at the annual meeting; businesses to have a separate 'political fund'; while shareholders should have the option to 'contract out' of the fund. Such changes would create a 'level playing field' between the parties.
In a speech to the annual conference of the health union Cohse, John Smith, the Labour leader, said he had never seen a reason to apologise for the fact that millions of trade unionists voluntarily pay a political levy which sustained the work of the Labour Party. 'Our relationship is open, honest, legal. Compare that with the financing of the Tory party in secret donations from mysterious foreign tycoons and fugitives from justice.'
Leading article, page 25