During the course of the political squall known as Donorgate which beset Gordon Brown's Labour government in November 2007, a certain Peter Hain, the member for Neath and both the Secretary of State for Work and Pensions and the Secretary of State for Wales, stood up on the 29th November 2007 to announce that he had failed to register one £5,000 donation to the Electoral Commission. In his defence he claimed that this was simply an "administrative error", which he now wanted to declare "in light of recent events". Although oddly enough the source of this £5,000 gift was the same Jon Mendelsohn whose name had already featured in connection with the 'dodgy donations' emanating from David Abrahams, at the time no one paid that much attention to Hain's admission, since being a bit late in registering one donation hardly appeared to be the crime of the century.
However on the 3rd December 2007 news emerged of one Huw Roberts, a former aide to the former Welsh Secretary Ron Davies, who had spent £1,300 hosting a fundraising event on behalf of Hain at the Park House Club in Cardiff on the 23rd April, and that Hain also appeared to have neglected to report this donation as well. Hain emerged once more to admit that were indeed yet more donations to his Labour deputy leadership campaign which "were not registered as they should have been", and on the following day announced that he was preparing a "full declaration" and would pass on the details to the Electoral Commission. In his statement he said that "This is extremely regrettable and I apologise", but excused himself on the grounds that he had given his "campaign for office within the Labour Party second priority to my government responsibilities". However even this news failed to dent the overall impression that Hain's misdemeanours were nothing more than a footnote to the real exciting business of the Donorgate scandal.
These sundry regrettable administrative errors related to Peter Hain's efforts during the summer of 2007 to become Deputy Leader of the Labour Party in succession to John Prescott. Hain first announced his attention to stand for the expected vacancy on the 12th September 2006 and set up the Hain4Labour campaign to promote himself to the Labour Party electorate. Hain first appointed Phil Taylor to run his campaign, although by the time the deputy leadership contest had actually began on the 10th May 2007, Taylor had been replaced by Steve Morgan. As it turned out Hain only came a rather disappointing fifth out of six in the contest, and according to the information filed with the Electoral Commission raised around £77,000 towards the campaign. (To which of course, one now had to add the off few thousand that had initially been overlooked.)
Matters got a little more involved during the new year when Messrs Taylor and Morgan had a very public disagreement, with each blaming the other for the failure to report donations, whilst a Phil Woolas, who acted as chairman for Hain4Labour, was also later dragged into the row as he was blamed for running up debts that no one else new about. Indeed according to later reports (or at least according one member of his campaign staff) the Hain4Labour campaign was run on the principle of "spend now and we'll worry about how to pay for it later", and it certainly appeared that the campaign had spent so much money that even after the contest ended they were frantically having to raise money to cover the unpaid bills that kept emerging. The Times also alleged on the 25th January that Hain was effectively running his own second fundraising operation in Wales, trying to raise money from his various Welsh business friends, and that he had failed to keep his campaign team informed of these activities, thereby compounding the problem. It was even claimed that Phil Taylor had sent Hain an e-mail warning him of these shortcomings, and that this was the reason why the two fell out in the first place.
Whilst details of the administrative chaos that engulfed the Hain4Labour had yet to emerge, everything changed on the 8th January when The Guardian reported their understanding that Hain had in fact failed to declare donations worth "tens of thousands of pounds"; two days later on the 10th January Hain supplied the Electoral Commission with the full details of the previously unreported donations and the news emerged that we were now talking about seventeen donations amounting to the grand total of £103,156.75. This was of course a quite different matter altogether; forgetting to report the odd few thousand pounds here and there was one thing, but to spend over a £180,000 on a campaign and then only report £77,000 and not realise there was a problem, was something else entirely.
The Times of the 11th January noted that amongst these seventeen donations, was one from a diamond broker named Willie Nagel, others from the businessmen Michael Cuddy and Isaac Kaye, as well as one from Hain's own campaign manager Steve Morgan, and that these donations together with others amounting to the total of £51,613.75 had arrived through a think-tank called the Progressive Policies Forum. As it happened no one had previously heard of the Progressive Policies Forum (PPF), indeed even some of Hain's leading supporters such as the MPs Dan Norris and Martin Linton said that they knew nothing about the PPF. It rapidly emerged that the PPF had no staff and no office, and as the Guardian noted on the 12th January; "There is no evidence that it has published anything or held any meetings. It also has no website." The paper therefore concluded that it was a "shell think tank, which has done precious little thinking".
The Progressive Policies Forum
The PPF had earlier been established on the 5th December 2006 by John Underwood, (a former journalist now running the public relations company Freshwater, and described as "a key figure in the Hain campaign") although its sole director and shareholder was a solicitor named Gregory McEwen who practiced at Wimpole Street in London and specialised in setting up off-the-shelf companies. John Underwood went on record as claiming that the think-tank had been set up to "advance progressive policies through research and other political activities", although he neglected to explain precisely what "research" or "political activities" it had even planned to carry out. His explanation of events was that "After the Labour deputy leadership campaign it became clear that Hain4Labour had significantly overspent and it was decided that contributions made to PPF should be used to help meet this overspend. This is entirely permissible."
It turned out that the largest benefactor was the aforementioned diamond broker, Willie Nagel, who had first met Peter Hain in 2000 whilst working on the Kimberley Process to stem the flow of 'blood diamonds'. Nagel made a £5,000 donation to the PPF on the 9th July 2007 and then on the 10th October advanced a further £25,000 by way of a three month interest-free loan. Nagel told the Financial Times that he had no idea his donation to PPF would then be paid to Mr Hain's campaign, but later issued a statement through his solicitors stating that he "had no objection that this money be used to support Peter Hain's campaign". It was noted that this was the same Willie Nagel who once made donations to John Major's Huntingdon constituency while he was promoting a proposed defence deal to the Government back in the days of Cash for Questions. Another £15,000 was received from Isaac Kaye, the former head of Norton Healthcare, a leading supplier of generic drugs to the National Health Service which was subsequently found to be part of a price-fixing cartel after a major investigation by the Serious Fraud Office and ordered to repay the sum of £13.5m, whilst two former directors were due to face trial later in the year on criminal charges. Isaac Kaye was also reported to have once been a supporter of the pro-apartheid South African National Party. Naturally speculation arose that the PFF "may have been a front set up to support Hain's deputy leadership campaign" and established purely in the hope that the donors' names could remain secret. It was certainly reported that Nagel had previously been approached by John Underwood to give money to the campaign, but had said he would only do so if his name was kept private, whilst there were obvious reasons why Hain might not have wanted anyone to know that he was taking money from Isaac Kaye.
Once the scale of Hain's unreported donations became public knowledge, not to mention the rather dubious role of the PPF in the whole affair, there were naturally those that suggested that he should immediately tender his resignation as a government minister. The headline in the Daily Telegraph of the 12th January was 'Calls mount for Peter Hain to quit over donors' whilst according to the Times, even one of Hain's own campaign team was urging him to resign (although the paper neglected to mention which one.) Other noted the delicious irony of the fact that as head of the Department of Works and Pensions, Hain was ultimately responsible for the Department's long running advertising campaign under the headline 'No Ifs No Buts Benefit Fraud is a crime', or as the Schools Minister Jim Knight put it to the BBC on the 17th January (in an entirely different context, and with presumably no thought as to the consequences of what he was saying) "No ifs or buts - there is absolutely no excuse not to comply with the law". However none of this struck a chord with Peter Hain, whose clearly expressed position on the 12th January was that his failure to comply with the law was simply "an innocent mistake" and that he had no intention of resigning, although he carefully avoided answering any questions about the think tank.
Of course the word from 10 Downing Street was that Gordon Brown continued to express his full confidence in the minister, and as both The Times and The Guardian noted on the 14th January, Gordon Brown appeared eager to defend his subordinate in an interview to The Sun newspaper, claiming that he had "done a great job and it would be a great loss if he had to leave the government". (Although to some the statement rather suggested that the Prime Minister had indeed contemplated the possibility of Hain's departure.) Nevertheless Gordon duly appeared on ITV's News at Ten on the following day, and stressed there had been "no corruption" and no illegal donations, and that Hain was guilty merely of "an incompetence". (No doubt the public was reassured by the news that minister of the crown was merely incapable rather the crooked.)
The fall of a minister
As far as British electoral law is concerned, it is an offence to fail to report a donation within the specified limit of sixty days, unfortunately whilst the Electoral Commission had powers to impose financial penalties on political parties for the late reporting of donations, it had no such power as regards individuals, and could do no more than administer a symbolic 'slap on the wrist'. According to a BBC News report on the 14th January, staff at the Electoral Commission were feeling "real frustration" at this state of affairs but hinted that "other sanctions" might be available. Indeed as The Independent reported on the 15th January, the usual "sources close to the investigation" were claiming that the Electoral Commission was considering referring the case to the Metropolitan Police simply because of the sheer scale of the amounts involved. The paper also referred to what it called "one well-placed source" who noted that Hain's basic defence of having been 'too busy' to keep track of his campaign contributions showed "contempt" for the law, and appeared to indicate a certain enthusiasm on the Commission's part for police involvement.
This indeed proved to be the case, as on the 24th January 2008 Hain was informed by the Electoral Commission that they were referring the affair to the Metropolitan Police. He therefore phoned the Prime Minister at around 11.30am and tendered his resignation. When the Commission duly made the public announcement of its decision at 12.20pm, Hain released a one-line statement to the effect that he would be "resigning to clear my name". It took all of two hours for Prime Minister Brown to announce a Cabinet reshuffle which saw Hain's former job at Work and Pensions going to the former Culture Secretary James Purnell, and ended up with Yvette Cooper being promoted to the Cabinet as Chief Secretary to the Treasury. The speed with which the announcement was made clearly showed that Hain's departure was not unexpected, and that arrangements had been made some time ago. This was of course, the second police investigation announced into dodgy donations made to the Labour Party, and therefore only deepened the woes of Gordon Brown's government.
Peter Hain therefore became the first ministerial casualty of Brown's administration, as he resigned in order to "clear my name". It was however difficult to understand what Hain meant by this, since by his own admission he had already failed to comply with the law, and there was, of course, "absolutely no excuse not to comply with the law". It remains to be seen whether charges will follow, and whether or not his protestations turn out to be anything more than pure bluster.
Incidentally Steve Morgan is now running the outreach programme on behalf of the Hillary Clinton campaign.
Based on reports from BBC News, The Guardian, The Times, The Daily Telegraph, The Independent etc in the period between the 29th November 2007 and the 25th January 2008.