Newspaper article The Evening Standard (London, England)

LABOUR'S [Pounds sterling]10Million Loans-to-Gifts Scheme; Plan for Backers to Write off Debts and Stay Anonymous

Newspaper article The Evening Standard (London, England)

LABOUR'S [Pounds sterling]10Million Loans-to-Gifts Scheme; Plan for Backers to Write off Debts and Stay Anonymous

Article excerpt

Byline: JOE MURPHY

THE LABOUR PARTY faces new secrecy questions today after senior sources admitted planning to convert some of the party's [pounds sterling]10million hidden loans into gifts.

A senior figure in party funding confirmed there was a plan to approach wealthy backers who loaned millions just before last year's general election and ask them to write off the debt.

The disclosure is significant because it could be seen as a device to conceal millionaire names for a temporary period, only revealing them later.

Loans can be kept secret under current laws, while donations have to be publicly registered.

It emerged amid reports that Labour borrowed between [pounds sterling] 8million and [pounds sterling]10million from multimillionaire-backers last year - twice the [pounds sterling]4.5 million known about so far.

Any arrangement where loans are later converted to gifts is controversial because it could hide the identity of a millionaire backer temporarily - for example, during the sensitive general election period - only to emerge on a list of donors later.

Alternatively, a backer's identity could be kept secret while he or she was being considered for an honour or a peerage.

The Labour source insisted that concealment was not the motivation for soliciting loans, which were purely a way of bringing in cash when it was most needed.

The "cash for peerages" storm erupted when it emerged that three businessmen nominated by Tony Blair for peerages had all loaned Labour more than [pounds sterling] 1million each.

All three were blocked for the honour by the House of Lords Appointments Commission. Two of them - Barry Townsley and Sir David Garrard - withdrew from the list while the third, Dr Chai Patel, had his name removed by Downing Street last night.

The Labour insider said none of the loans were ever linked to offers of peerages. He said Lord Levy, Mr Blair's chief high-value fundraiser, was asked to solicit loans last year when banks refused to extend Labour's overdraft and it needed money for its most expensive election campaign ever - [pounds sterling] 17million compared with [pounds sterling]11 million in 2001. …

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