Tories' mystery offshore backers lent £5m to bankroll election

The Conservatives relied on secret loans from offshore tax havens to fund their general election campaign, The Independent on Sunday has learned.

Most of the £5m loans, which the party has hurriedly paid back to avoid disclosing the identity of the lenders, came from the offshore trusts of wealthy supporters who did not want the arrangements revealed. Only one loan of £25,000 came direct from a foreign national. The rest of the cash came from supporters not domiciled in Britain for tax purposes or those with family in Britain and offshore funds.

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The Tories were yesterday facing questions about the tax implications of the secret offshore loans. The Liberal Demo-crats questioned whether tax had been paid on the cash when it was brought onshore.

There was also renewed pressure from Labour for the Tories to come clean over the identities of the secret backers who helped to bankroll their election campaign. Gordon Brown and Ian McCartney, the Labour Party Chairman, have asked Labour MPs to challenge their Tory counterparts over "scams" to get around the rules on foreign cash.

The Conservatives have admitted paying back £5m to avoid disclosing the identities of the lenders, and David Cameron has promised that a full list of donors and lenders will be given to the electoral watchdog. But party sources said that the identity of some lenders, whose cash has been paid back, may have to be kept secret because of confiden- tiality agreements.

Ian Austin, Labour MP for Dudley North, accused the Tories of executing a "crafty fiddle" and said he wanted the Electoral Commission to demand full disclosure.

"The Tories have taken funny money from dodgy foreign donors in the past and we want to know who gave the cash and what was in it for them," said Mr Austin. "It is clear the Tories have come up with a complex series of scams to avoid telling the British people the truth about their foreign paymasters."

On Friday the Conservatives disclosed the names of 13 wealthy backers who had lent the party £16m. They included Lord Laidlaw, said to be Scotland's richest man, who made a £3.5m loan, and Charles Wigoder, the chief executive of the utility supplier Telecom Plus, who lent £100,000.