BNP leader faces jail over 'funding from US'

The British National Party is facing financial collapse and its leader a possible jail sentence after allegations that it used illegal US donations to fund its general election campaign.

In the first-ever inquiry of its kind, the Electoral Commission is set to investigate the BNP over claims that it broke the law in raising more than £80,000 in the United States, the Independent has learned.

The inquiry, which was formally requested by Labour MPs and MEPs last night, could result in crippling fines for the party and a possible prison sentence for the BNP leader Nick Griffin.

The US Justice Department is also considering its own investigation into the American Friends of the BNP (AFBNP), a shadowy group responsible for the fund-raising effort.

Mark Cotterill, a British expatriate who founded the AFBNP two years ago, is facing deportation and jail after he was unmasked by a leading US civil rights group. The Southern Poverty Law Center has asked the US Attorney General, John Ashcroft, to take action against Mr Cotterill, claiming his activities are illegal under American laws designed to prevent Nazi fund-raising.

As a former member of the Tory Party, Mr Cotterill's involvement could prompt fresh embarassment for the Conservatives following revelations of BNP links of an Iain Duncan Smith supporter.

But it is the prospect of criminal and civil proceedings by the British authorities that will most concern the BNP at a time when it seeks to exploit racial discontent in Northern towns such as Oldham and Bradford.

Labour MPs Martin Salter and Tom Watson triggered an investigation by the Electoral Commission with letters calling for a full inquiry into the allegations. Under the Political Parties, Elections and Reform Act 2000 donations of more than £200 to political parties from overseas were illegal from 16 February 2001.

But Mr Griffin, who visited the US in May, has admitted on camera that he has used American cash to fund the BNP's general election campaign.

When asked if he had used American-raised funds in the last election, Mr Griffin said: "Yes, certainly, but only a few thousand pounds."

In the general election the party contested 33 costituencies, gaining up to 16 per cent of the Oldham vote. It spent heavily on posters and dropped two leaflets through the front doors of every home in Burnley, Oldham and London's East End.

Mr Watson, Labour MP for West Bromwich East and a member of the Home Affairs Select Committee, said his committee would ask the commission to give evidence on how it was monitoring far right groups and donations.

"The BNP are a fundamentally undemocratic organisation and it appears they are also financially questionable," he said.

The commission has a duty under the law to investigate any complaint of electoral malpractice. Mr Salter, MP for Reading West, said: "I would not be surprised in the least if the neo-Nazi groups like the BNP were seeking foreign donations in defiance of UK law in order to fund their programme of poisonous propaganda."

Labour MEP Glyn Ford also called on the commission to investigate the allegations that the BNP raised cash from neo-nazi and extreme-right wing sympathisers in the US.

The groups include members of the Klu Klux Klan and the author of the racist Turner Diaries, the book which inspired Timothy McVeigh, the Oklahoma Bomber.

"This is just the latest example of how the BNP and its members flout the law," Mr Ford said. "They claim to be a law abiding party, yet they have senior members with convictions for race hate crimes, attempted bombings and anti-Semitic attacks."

Mark Potok, who led the US civil rights investigation into the affair, told The Independent that he had been surprised that the AFBNP had operated so openly. "What is unusual is that we have never seen a fund-raising operation of this size or operating in the open," he said. "In a way they operated very stupidly."