Thursday, December 06, 2007

Abrahams and Ashcroft: Time For Openness and Honesty


Barrister and conservative Evan Price has given a different view of the Abrahams and Ashcroft matters than mine, which was responding to Iain Dale's gauntlet of the wee small hours.

Evan and I don't entirely agree. But both attempt to make arguments to support our case which is not always the case in this political blogging game. For the most part the disagreement is not on the facts, or the letter of the law, but on the spirit or purpose.

Two facts though:

1. Whereas Evan suggested that Labour had gone to Abrahams with the scheme, my reading of the Guardian article is that Abrahams and his lawyer came to the Party with a scheme. The opposite. At the time in checking it out legally the LP decided it was OK. That would put this device in the same category as the MIC really. Against the spirit of the reforms, or the stated purpose even, and ugly to behold. But legal. In both cases a loophole being exploited to obscure the identity of donors.

2. Whereas Evan appeared to say that Ashcroft had complied with his promises that is not my understanding. My reading of David Cameron's response to Andrew Marr is opposite to that in fact. Cam said that the promises were being complied with - there is a process going on - and admitted they had not been met. The process might include "still thinking about it and not ruling it out" I suppose. Here is part of the Marr-Cameron exchange:

ANDREW MARR: What about Lord Ashcroft? Because it was promised by the former party leader, William Hague, and indeed by Lord Ashcroft, way back, that he would be registered in this country, and a lot of people feel that he's not properly registered in that way. Are you absolutely happy and satisfied that he is in a position to be making the kind of funding commitment to your party that he is?

DAVID CAMERON: I am satisfied that the undertakings he gave are being met and I have had reassurances on that. But I would like to put it in context.

Side-stepping the question of being "satisfied that he (Ashcroft) is in a position to be making the kind of funding commitment to your party that he is?" Completely side-stepping it. Which I did not notice before.

ANDREW MARR: Being met, but haven't been met.

DAVID CAMERON: No, in terms of the reassurances that he is resident in the UK and pays taxes in the UK. But the point, the point I would like to make, if you look at the last year actually Mittal and David Sainsbury have given more money to the Labour Party than Lord Ashcroft has given to the Conservative Party.

The "No" means "No they haven't been met" and not "No, you're wrong Andrew they have been met" which is what some people thought he said.

It was interesting too that when a Labour supporting Muslim association donated money in the same way as the Midlands Industrial Council there was a hoo ha and specifically an attempt - particularly in the Times and on one blog - to smear one man, actually an IT entrepreneur, as an associate with gun dealers. That story never went anywhere now did it?

I think Cameron seems to be content to play games with participles and declensions instead of dealing with the underlying problem - that Ashcroft remains offshore in tax exile. Belize is where his heart is. Things have come to a pretty pass when even the Telegraph is telling him to come out with his hands where they can see them.

In the tax avoidance game I'm told the modus operandus when accountants and advisers find a previously undocumented loophole or potential loophole is that they write it up and inform the Inspectors that they'll be using it or reserve the right to. It will get closed in a year or two. But in the meantime there are less surprises. Perhaps there is a lesson in that?

4 comments:

Evan Price said...

"At the time in checking it out legally the LP decided it was OK. That would put this device in the same category as the MIC really. Against the spirit of the reforms, or the stated purpose even, and ugly to behold. But legal."

I don't agree ... the bar on hidden donations using agents is expressly dealt with in the legislation. Establishing a club may appear to be similar, but the Electoral Commission has agreed that the club can be a legitimate donor under the law as it stands and unless the EC comes to the same conclusion in relation to what Abrahams did, which on the basis of what I have read so far I doubt, we are left with Labour saying that it was unlawful justifying the sacking of the general secretary.

As to Ashcroft - even if he personally is offshore, a matter on which everyone is making assumptions (save for David Cameron's assurances) and most on the basis of prejudice rather than any knowledge, he hasn't made any personal donations. He has caused UK companies to do so - and they are permitted to do so, provided that they comply with the relevant requirements of Company law as well as electoral law ... now I suppose the conspiracy theorists will say that means that he is offshore - but it proves nothing.

As to the spirit of the law - I don't think its relevant; the letter is. And it does baggar belief that the individuals in the Labour Party with responsibility for managing donations appear not to have known the law at all!

Chris Paul said...

Mmmm. I'm not saying Abrahams' scheme is the same as the MIC route. Just that if some m'learned friends decided his covenants made the scheme legal and the LP relied on that then it was a scheme with the same sort of effect viz. allowing the source and size of donations to be obscured. Which is not transparent in either case.

Dave Cameron's "assurances" seem to me to confirm Ashcroft is still off shore, and be specific to Ashcroft's promises to get the big P. He completely ducked the question from Marr about other aspects of being permissible. Voting registration for example. How many years has Ashcroft been offshore?

Michael White's blog referred to Ashcroft telling him that he was no longer giving to CA's via Bearwood but giving direct to CCHQ. That could still be through a company vehicle. Ashcroft persistently refers to "My" donations and it looks like the companies are in every regard his agents. If so they should surely be declaring that openly? As Abrahams agents should have declared being his agents. Unless that is his scheme holds up.

And then the question of being a permissible donor or lender applies to Ashcroft as well as to the agent company. Surely?

The spirit and purpose of the law is not relevant legally - except that it should be amended from tiem to time to achieve its main purpose i.e. transparency. But it is very relevant to perception and that is critical in politics.

On your last point, I think we should expect a reasonable understanding of the law from all concerned with procuring, recording and reporting donations. But what the Guardian are saying is that Abrahams came up with a scheme to make his way of giving legal. And being as this went beyond their ken the LP took legal advice which they say ruled the scheme in as legal.

If this explanation is true then the arguments m'learned friends used will need to be rehearsed and tested. They may or may not be found to be adequate and sound. But if the LP and/or the individuals concerned can show they were relying on this opinion and if the advice is judged unsound were not knowingly breaking any law then it does change things does it not?

Perception wise it is much as MIC and Ashcroft though. The public think it's a shady to some degree or other. With the Michael Brown problem the Lib Dems are also compromised and the response "they're all at it" makes this question a sideshow to the real politics.

About economic stability, minimum wage and other fairness and equality issues, police numbers, overseas aid, relationship with USA, with Europe, immigration, security, constitution, tax and so on.

Evan Price said...

"Dave Cameron's "assurances" seem to me to confirm Ashcroft is still off shore, and be specific to Ashcroft's promises to get the big P. He completely ducked the question from Marr about other aspects of being permissible. Voting registration for example. How many years has Ashcroft been offshore?"

This is an assumption ... and the 'assurances' are not David Cameron's but Lord Ashcroft's. DC has no more 'right' to know what his status is. The other difficulty, of course, is that being resident for tax purposes is a continuing matter where someone has been offshore ... and so the use of the present tense is not, in my view, something from which assumptions can properly be drawn.

I accept that presentationally it is exceedingly difficult for the Conservatives and life would be made much easier politically for them if Lord Ashcroft answered the question ... but even if he did, the questions would remain and I doubt that his critics would be satisfied; so his position, of saying that it is none of your business is both understandable and defensible.

"Michael White's blog referred to Ashcroft telling him that he was no longer giving to CA's via Bearwood but giving direct to CCHQ. That could still be through a company vehicle. Ashcroft persistently refers to "My" donations and it looks like the companies are in every regard his agents. If so they should surely be declaring that openly? As Abrahams agents should have declared being his agents. Unless that is his scheme holds up."

The Abrahams scheme involves other individuals making the donations on his behalf as secret agent and principal. As such it is, so far as I can see, a breach of the letter of the law requiring principals to be named.

The Ashcroft scheme invovles a company - which has reporting requirements to Companies House to which public access is given - and which is making the donation itself. Ashcroft's description of it is not relevant - the company makes the donation and it does so in its own capacity not as agent for Ashcroft. The hoops that companies have to go through to make donations are not simple but they are clear and will, I have little doubt, have been complied with.

Your criticism, I am sorry to say, exposes a common misconception about companies - a misconception that is shared with many directors of small companies. It is a misconception that in my experiencevery often leads to sloppy accounting and difficulty with the courts and the DTI.

I accept that argument about the Abrahams scheme will be forthcoming if the Electoral Commission take it further and, more importantly, if the Labour Party choose to contest it - at the moment, the Labour Party appear to accept that it was unlawful; and that means that the arguments may not be aired at all.

Chris Paul said...

I am assuming that the Guardian revelations about the supposedly approved scheme are news to most people in the LP and PLP and that Gordon Brown may revise his view, or perhaps he won't.

On companies as intermediaries I remain concerned that any company, whether SPV or normal trading company, registered in the UK can launder donations for off shore people who are not entitled to vote, who don't pay tax, and are not resident. Is that what you think the law allows?

And please don't think I'm saying that Lord Ashcroft ticks all three of these boxes. We just don't know do we?