Blair targets Tory funds

Lord Nolan to be asked to investigate controversial donations to party coffers

The issue of Conservative Party funding will be referred to the Nolan Committee on Standards in Public Life if Tony Blair wins the next election.

There has been considerable disquiet and anxiety on both sides of the Commons for many years about the way in which the Tories have raised funds.

Donations have included pounds 50,000 from Tung Chee-hwa, a 59-year-old shipping tycoon chosen by the Chinese Communist Party to head Hong Kong's first post-colonial government; pounds 250,000 from Mohamed Al Fayed before the 1987 general election; and pounds 440,000, later found to have been stolen, from fugitive businessman Asil Nadir.

Ann Taylor, Shadow Leader of the Commons, told The Independent yesterday: "After the election, there will have to be a thorough overhaul of party financing, and it will be for the Nolan Committee to make the initial inquiry."

Last May, Mr Blair asked John Major to widen the remit of the Nolan Committee, "so that the funding of all political parties could be looked at in a proper and impartial manner."

Refusing that request, the Prime Minister told him that the matter had already been investigated by the Commons Home Affairs Committee, and that was that.

But Mr Blair will not leave it at that, if elected. He told Mr Major that if the governing party rejected the demand for impartial investigation, "the inevitable question that everyone will ask is what it has got to hide?"

Lord Nolan is scheduled to finish looking into local government next spring when he will be ready for fresh meat. Senior Labour sources believe that, "once the stone is turned over, all sorts of muck will crawl out."

While the 1994 Home Affairs Committee inquiry was kept on a tight leash by the inbuilt Conservative majority, a minority report by Labour MP Chris Mullin pulled no punches in its description of the sleaze that could be exposed by a thorough public investigation.

Labour refuses all foreign donations, but Sir Norman Fowler, then Conservative Party chairman, told the Home Affairs Committee that he would not want to spurn gifts from people who "may well have business interests in this country [and] perhaps take the view that they want this country to continue as a free enterprise economy and want to support a free enterprise party."

However, the Mullin Report was far more critical. It quoted a former Tory party treasurer, Lord McAlpine, talking of off-shore accounts, and recalled a 1993 Independent report that Octav Botnar, a former head of Nissan UK, had in the early 1980s "channelled large donations to the Conservative Party through an off-shore bank account in Jersey."

The report added: "Botnar began his association with the Conservatives in the 1970s when he was lobbying for an end to the quota system which restricted the volume of Japanese cars that could be imported into the UK ... Mr Botnar is now wanted in the UK on allegations that he was involved in a huge tax fraud."

The Mullin Report also cited Independent reports about donations made through covert companies, used to disguise the destination of the cash, and other bodies that were used to "launder" gifts.

It also touched on the most difficult allegation, of "a relationship between political donations and honours", saying: "Between the election of Mrs Thatcher in 1979 and the 1993 New Year's honours, 18 life peerages and 82 knighthoods have been given to industrialists connected with 76 companies which have between them over the same period donated pounds 17.4 million to the Conservative Party and its front organisations.

But Mr Mullin also drew links between donations and privatised companies; donations from British-domiciled foreign businessmen who receive generous tax treatment; and the election-time availability of prime-site advertising billboards, and the Conservative Government's treatment of the tobacco and brewing industries that control them.

After the last election, the Conservatives were reported to have a pounds 19m deficit. They are believed to have about pounds 20m to spend on the next election.

The secrecy of Conservative funding is so great that even members of the party's Board of Finance are kept in the dark about where the money comes from, and where it goes.

In evidence to the Home Affairs Committee, Eric Chalker, a member of the Conservative Board of Finance between 1989 and 1993, said that "over pounds 67m of expenditure was recorded by Conservative Central Office in that time, but nobody had to account for one penny of it."