29 November 2007

Mendelsohn should go - says Dianne Abbott

Dianne Abbott was on Channel 4 News this evening calling for Jon Mendelsohn to be fired or resign, and used the phrase "beggars belief" in response to the suggestion that Watt did not know that the arrangements with Abrahams were illegal.

Abbott also made the very sensible point (which had occurred to me earlier) that no new laws are needed, political parties just need to abide by the ones already in force. Indeed, how could politicians be expected to abide by new laws if they cannot manage the ones already in place. Some people will use this episode to argue for state funding. It would be like the Dangerous Dogs Act - tough cases make bad law.

28 November 2007

Jon Mendelsohn - beggars belief

At PMQs today, Gordon Brown stated that Jon Mendelsohn has put out a statement (which I have not been able to confirm or get sight of) stating that on his appointment on 3rd September this year he was told by Peter Watts of the "arrangements" under which David Abrahams donated money to the Labour Party, but that, whilst irregular, these arrangements had been approved by the Electoral Commission. Mendelsohn, although apparently accepting the statement in respect of the Electoral Commission, decided he need to "regularise" the position and took steps to contact Abrahams (which he did by way of a letter delivered to Abrahams, just as the story was breaking).

This account raises the following questions:

  1. Did Watts give the same explanation to anyone else re Electoral Commission approval?
  2. Did Mendelsohn really believe this explanation - unlikely since (a) it flies in the face of the whole basis of transparency in political funding and (b) he sought to undo the arrangements.
  3. Why did Mendelsohn not seek to verify Watt's explanation or mention it to anyone else? Or did he?

The whole thing stinks to high heaven.

UPDATE: Mendelsohn's statement is now on the BBC website and he said in respect of the explanation offered to him by Watts: "He told me these donations fully complied with the law and I had no reason to doubt that information" - except you think as a senior fundraiser, he might know what the laws says and might have dug a bit deeper.

I have a feeling that the Watts/Abrahams defence to all this is going to be that the money was really given to Kidd and Ruddick (although it would be harder to say this with a straight face in the case of the other lady who signed a blank cheque) and they freely made the choice to donate to the Labour Party - except it wasn't and they didn't. As I commented on Iain Dale's Diary earlier this week, it was either a taxable gift or they were given the money as agents. I suspect that Mendelsohn knew that the reason Watts said it was all OK was that it was originally a "gift" from Abrahams to Kidd/Ruddick, but if he says that, he will look even more daft as on any proper legal analysis, they were clearly Abraham's agents.

David Abrahams, the Labour Party and the Proceeds of Crime Act 2002

It has widely been accepted (including by Gordon Brown) that it is illegal to disguise the source of donations made to a political party. Various people have raised the spectre of money laundering, so I thought it might be helpful to set out how a money laundering offence might have taken place, given the facts we know about David Abraham's donations to the Labour Party.

Under the Proceeds of Crime Act 2002 ("POCA") it is an offence for a person to "become concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acqusition, retention, use or control of criminal property by or on behalf of another person" (section 328) and under section 329 "A person commits an offence if he: (a) acquires criminal property; (b) uses criminal property; (c) has possession of criminal property".

It seems to me that the donations became criminal property when they passed from Mr Abrahams to Mrs Kidd and Mr Ruddick with the intention that they be passed to the Labour Party as donations with the purpose of disguising their source, because under section 340 of POCA, criminal property is defined as any property that you "know or suspect" is or represents the benefit of "criminal conduct".

The penalty - up to 14 years in prison and an unlimited fine.

UPDATE (29-11-07): In response to this post, Head of Legal has responded in the comments of his own blog as follows: "I think talk of POCA is wild, too, Danvers. In what sense was the money the proceeds of crime? How did it represent the benefit of criminal conduct? If Janet Kidd told Labour the money came from Abrahams - and Peter Watt did know that - then she acted lawfully, and so did Abrahams. And so did Peter Watt in accepting it. Nobody gets the money by doing anything unlawful. What was unlawful was wrongly reporting the agent as the donor."

My response was: "I am not sure it is as simple as that. If Kidd/Abrahams donated the money to Labour and told Labour (i.e. Watt) that it was Abraham's money but that it should be reported as Kidd's money, they (all three of them) are setting out to breach the PPERA. My understanding of POCA is that just about any transfer of cash in furtherance of a crime constitutes an ML offence. It could be argued that the cash became tainted with criminality the moment it was transferred to Kidd for the purpose of disguising its true origins for the purposes of a declaration under the PPERA.It would be the same if an employer and employee were deliberately cheating on Income Tax and giving the difference to a political party - and the political party knew about the scheme. To be fair, I think to prosecute under POCA would be unfair, but the police love using it to stitch up the nearest and dearest of the real offenders, once they have touched the tainted cash."

16 November 2007

Comment moderation

Until I figure out how to delete or overwrite offensive or downright weird posts, comment moderation will be on.

Sorry for that, but if you look at the comments on the post two below, you might understand why.

If anyone can help, please leave a comment....

UPDATE: That was quick. Now have figured it out, so comment moderation is back off. I will also experiment with removing the word recognition stuff as well.