Labour draws veil over source of leaders' funds

THE LABOUR leader, Tony Blair, the shadow Chancellor, Gordon Brown, and the shadow Foreign Secretary, Robin Cook, are receiving funds for their private offices from a secretive trust financed by donations from individuals and businesses.

The Industrial Research Trust is a body about which Labour Party officials are remarkably reticent. They will not disclose who its donors are, the size of the donations, the amounts the trust gives out, nor the trustees' names apart from the chairman, the Labour peer Lord Gregson.

Another Labour peer, said openly by senior Labour officials to be closely involved with the running of the trust, Lord Has-kel, three times denied all knowledge of it when questioned by the Independent on Sunday.

The trust is similar to the shadowy Conservative body which attracts donations from big business, British United Industrialists. As Lord Nolan attempts to turn his spotlight on party funding, the existence of such an organisation on the Labour side leaves the party open to accusations of being no more transparent than the Tories about the source of some of its cash.

A central aspect of the Industrial Research Trust is that it is not part of the Labour Party itself. Any company donating to it, therefore, does not have to declare its political donations. As it is a trust it is not obliged to make its accounts public.

Secretive or not, the trust has been financing the top three Labour frontbenchers, the register of MPs' interests reveals. In it, Mr Blair says his office "receives support, in addition to public funds, from affiliates of the Labour Party and from the Industrial Research Trust".

In his entry, Mr Brown says he received "research help" from the Industrial Research Trust. Similarly, Mr Cook says "the costs of two specific pieces of research work have been met by the Industrial Research Trust".

The trust was set up originally to fund John Smith's private office. The late leader's last entry in the interests register declares: "The office of the Leader of the Opposition receives support, in addition to public funds, from several affiliates of the Labour Party and the Industrial Research Trust."

Lord Haskel, 60, an industrialist who runs a Leeds-based textile group, is believed to have played a key role in its establishment. He was a close friend of John Smith, and was ennobled in Mr Smith's first list of Labour working peers.

Earlier, as plain Simon Haskel, he was a close associate of Lord Kagan, another Yorkshire textile manufacturer whose celebrated raincoat became a trademark of Harold Wilson, sparking a fam-ous business-political alliance.

Both Lords Kagan and Haskel originally came from Kaunas, Lithuania. Lord Haskel did not know about the frauds that led to Lord Kagan's jailing in 1980.

When the Independent on Sunday contacted the Labour Party to ask about the Industrial Research Trust, Paul Blagborough, the party's director of finance, said: "I believe Simon Haskel is concerned with that. It's best that you talk to him about it. This is not something we're concerned with whatsoever. It has no involvement with us."

Asked what it was, Mr Blagborough said: "It's a trust. I believe it's run by Simon Haskel. It's not something that party headquarters does at all. I understand it provides some funding for Labour frontbenchers."

Lord Haskel, a little-known figure outside high Labour politics, proved unenlightening when asked about his role. Interviewed briefly in the lobby of the House of Lords, where he is a Labour whip, he was asked three times about the Industrial Research Trust. The first time he said: "I don't know what it is." Asked who runs it, he said: "I don't know." Asked again, he said: "I have never heard of it." Asked a third time, he paused,then said "No, I do not know."

A former adviser to Mr Smith said Lord Haskel had been heavily involved with the trust in 1993. Other senior Labour officials displayed ignorance or reticence where the Industrial Research Trust was concerned, not wanting to be quoted on the record.

Eventually, Tony Blair's office issued a statement which said: "The Industrial Research Trust was set up in April 1993 to provide support for John Smith's office when he was leader of the Labour Party. It has continued in that role for Tony Blair. The chairman of the trustees, Lord Gregson, is a long-established member of the Labour Party. The distribution of funds in the trust is at the sole discretion of the trustees."

Asked, on the record, "Who are the donors?" a spokeswoman for Mr Blair said: "The whole point of the trust is that the recipient does not know who has donated to the trust."

Asked, on the record, "Who are the trustees?" Mr Blair's spokeswoman said: "Talk to Lord Gregson."

Lord Gregson, 71, the trust's publicly admittable face, proved elusive and did not respond to messages. His position in public life is well established - he is one of Britain's best-known scientific industrialists and a prominent member of the House of Lords Select Committee on Science and Technology.

Lord Gregson is closely connected with Lord Haskel through the Labour Finance and Industry Group (LFIG), founded by party-supporting industrialists and financiers in 1972 to give advice on business policy. Lord Gregson is the group's president and Lord Haskel its chairman.

But connections between the two peers go closer still. Both give the same address, in Rosemont Road, Richmond Hill, south-west London. Lord Gregson lists the smart terrace house in Who's Who, while Lord Haskel gives it on his business card and at Companies House. Lord Has-kel and his wife are registered at the house on the electoral roll.

Frontbench Labour politicians have been prominent in recent years in criticising secrecy in political party funding. Jack Straw, the shadow Home Secretary, said in January: "It is the secret funding of the Tory party that, in many people's eyes, lies behind the corruption in standards in public life over the past 15 years." Margaret Beckett, now shadow Health Secretary, said in a debate on political funding in 1993 that rumours persisted about the Tories because they would not reveal who gave them money. "When they tell us, then there will be presumably no further rumours," she said.