A fish rots from its head

Lest any one should doubt that the integrity of British politics has been corrupted by the venal nature of the political establishment they should look no further than the Electoral Commission's findings on Michael Brown's donations to the Liberal Democrats. If the Irish football team feel aggrieved about Thierry Henry's handball, that is nothing compared to the refereeing blunder by the Electoral Commission.

To save you having to look up the references, the Liberal Democrats received a donation of around £2.4 million from a UK company controlled by Michael Brown a Scottish "businessman" based in Switzerland, who nobody had ever heard of and who turned out to be a crook and the money came from his customer/victims in what turned out to be a Madoff type scam.

There is strong evidence that the donor company was merely acting on the instructions of its Swiss parent, mostly because the only accounts (draft) show that the UK subs were funded entirely by loans made from the parent and incurred a deficit on their equity accounts after the donations had been paid. I have a copy of the draft accounts obtained via Dominic Kennedy of The Times. The Electoral Commission has not published them, but I may do in due course.

But there is equally the valid question as to whether the company was engaged in business in the UK, a requirement to be regarded as a permissible donor.

The Electoral Commission say:

"The evidence indicates that 5th Avenue Partners Limited undertook a number of actions consistent with carrying on business including, opening bank accounts with a major high street bank, opening trading accounts with a financial services broker, contracting for staff/services and passing company resolutions"

Well blow me. My grandmother, god bless her, had an account with a High Street bank, but that doesn't mean she was in business. Companies have to pass corporate resolutions to be able to open bank accounts, not least because they have to show the bank what they intend to do, but that doesn't mean they are in business. And once they have opened accounts they are at liberty to accept funds into those accounts.

What the Electoral Commission neglected to say was that the High Court found that the options trades were merely executed to create the dealing slips to give the impression of a business to defraud further investors. In other words, as the High Court stated, there was never any business. And if you read the Electoral Commission report, they don't deny this.

There were no staff, no VAT registration, no FSA registration, and frankly no business. The "office" that the company rented in Upper Brook St was in fact a top floor flat in a residential apartment building that Michael Brown used when he came to London.

Did the Lib Dems bother to check that out? Of course not. And neither did the Electoral Commission, supposed guardians of our electoral system. That the Electoral Commission can only reach their conclusion by considering aspects of 5th Avenue Partner's behaviour that was intrinsic to their proven fraud show that the conclusion is wrong.