WHY would any outsider contribute large sums of money to fund an internal political party election campaign for an ornamental post that lacks power or influence? The answer to this conundrum is surely the key to the farrago surrounding Peter Hain's failure to declare £103,000 donated to his campaign to be Labour's deputy leader.
Mr Hain is the Work and Pensions Secretary and part-time Secretary of State for Wales. He has had a flamboyant political career characterised by rank opportunism at every turn. A childhood refugee from apartheid South Africa, he first came to promine
nce in the revolutionary 1960s, leading the "Stop the Tour" campaigns against visiting South African sports teams. But Hain wanted a more mainstream political career.
First, he joined the Liberal Party and became chairman of its youth wing. But, as the Liberals seemed destined to stay on the margins of British politics, so, in 1977, Hain jumped ship to Labour. Since Labour came to power in 1997, he has never been out of ministerial office, using his pugnacious, technocratic skills to good effect in numerous second-tier posts.
However, unlike mainstream Blairites, Hain was always careful to send coded messages to the party faithful that his politics remained progressive. He still calls himself a "libertarian socialist". Some believe him, some don't.
When John Prescott resigned as deputy Labour leader (and Deputy Prime Minister) last year, the way was open for Hain to seek the post as a way of consolidating a power base in the party. It was a massive misjudgment that reveals he is ultimately driven by ego rather than principle.
If Hain or anyone else thought that being deputy leader would mean instant elevation to the prestigious (if ceremonial) role of deputy prime minister, they did not grasp Gordon Brown's psychological need to run things himself.
Hain secured a miserly 3.87 per cent of individual members' votes and came fifth in the contest. At this point, we might all have let the matter rest, dismissing his kamikaze run for deputy as the arrogance of a politician who had started believing his own propaganda. But then, in November, a story broke about David Abrahams, who had channelled £400,000 in secret donations to Labour through third parties. As everyone scurried for cover, Labour's chief fundraiser, Jon Mendelsohn, blew the whistle on a £5,000 donation he had given to Hain's deputy leadership campaign but which had not been reported to the Electoral Commission. Hain explained this as an administrative cock-up by his underlings and promised a full account. There were gasps all round when he then owned up to having spent nearly £200,000 on his abortive campaign – half of which had not been registered.
Worse, it transpired £50,000 of the undeclared money had been channelled through a "think tank", the Progressive Policies Forum – not that Hain is alone in using personal "think tanks". Gordon Brown fostered the Smith Institute, named after the late John Smith. A registered charity, it nevertheless has hosted dozens of seminars on issues close to Brown's heart – and for free at No 11 Downing Street.
What did Hain's backers think they would get from funding his campaign? Possibly, they supported his campaign platform – higher income taxes and no new nuclear power stations. On the other hand, some might detect an ideological contradiction between his manifesto and the businessmen who funded his campaign.
Among the 17 backers we know of, there is an international diamond broker, the former head of a pharmaceutical company that had dealings with the NHS, a clutch of professional lobbyists and the chief executive of a loans company. The latter is Neville Allport, of Picture Financial Services, a Welsh company. Its website describes the company as helping homeowners "tidy up their existing credit arrangements with a secured consolidation loan". It adds "you can even borrow up to 125 per cent of the value of your home (less your outstanding mortgage), something that traditional lenders won't consider". Of course, traditional lenders won't lend you 125 per cent of your assets: it would be commercially dubious and fantastically risky, especially in today's financial climate.
Hain's failure to register his campaign finances is not a minor peccadillo, We are not talking of a mere £5,000 lost down the back of the settee or mislaid by the office junior. Peter Hain, a Cabinet minister, failed to register very large donations with the Electoral Commission, despite the fact that Labour had just been through a massive police investigation into previous allegations of financial impropriety. To compound his failure, much of the cash was deliberately channelled through a "think tank" in a manner that was hardly transparent.
His defence is that this was administrative incompetence and not deliberately obscuring the fact that his left-sounding campaign was being funded by business interests – something that would have upset party activists. But neither incompetence nor ignorance is a defence in any other breach of the law. Besides, Hain has presented himself over the years as competence itself – after four decades in politics, has he suddenly developed the incapacity to run a campaign?
Yesterday, in The Scotsman, the Labour MP Martin Linton likened Hain's failure to declare his campaign donations as "a relatively minor offence, just as the late return of a tax form is a minor offence compared with tax fraud". I suggest Mr Linton fails to disclose £100,000 in earnings and see if the tax man thinks it is a minor matter. At the very least, the interest charges would be steep.
