This watchdog can growl and maul (9 October 2008)
Forensic accountancy is a difficult business but the Electoral Commission takes its investigative duties seriously
David Hencke and his investigative colleagues at the Guardian have a fine record of unearthing dubious and corrupt practices in British politics. The Conservative party has a longer but not so fine record of being less than transparent and clean in its finances. From the share it took from the sale of honours in the 1920s to the secretive “river companies” set up in the 1940s to channel funds to the massive donations from wealthy foreigners it accepted in the 1990s, it is not surprising that the arrangements over Constituency Campaigning Services (CCS) have attracted suspicion. But sometimes, as Freud observed, a cigar is just a cigar, and even with political finance sometimes a company is just a company.
Forensic accountancy is a difficult business, as I found out when I tried to unravel the business dealings of Reginald Maudling and John Poulson, but the Electoral Commission takes its investigative duties seriously. If the commission’s conclusion is that CCS charged commercial rates for its services, and therefore did not effectively donate to the Conservative party, it is incumbent on its critics to find solid evidence to the contrary.
It is hard to see how paying the going rate amounts to an abuse of the spending limits, or a donation to the party. Whatever the party pays has to be within the spending limits, and any free or discounted services must also be accounted for. Nor is CCS entirely exempt from transparency rules. As with other organisations made up mostly of party members, it must report donations to the commission, which publishes them on its website. In recent years, the Conservative party has tried to be punctilious about following the letter of the rules, in something of the spirit of a reformed alcoholic making long detours to avoid his former favourite pub.
While it is not ideal that CCS does not have to publish its accounts, it is not the commission’s fault that the law fails to require it to do so. The government has the opportunity to tighten this up in its party funding bill.
Given the high profile of the Midlands Industrial Council (MIC) as CCS’s funder, it is easy to see why some think the money has been funnelled into the party, but the commission’s conclusion means that there could be other, potentially more entertaining possibilities. There would, after all, be a gentle irony if the prominent businessmen behind MIC had wasted so much money on keeping an unprofitable business afloat for the sake of party pride.
It is also unfair to blame the commission for the fact that the “cash for honours” affair did not result in any prosecutions. It was mainly focused on the Honours (Prevention of Abuses) Act 1925, a notoriously sloppy piece of legislative drafting that has nothing to do with the commission. And perhaps nothing that bad happened in the first place. Simply labelling something “cash for honours” does not mean that a trade took place. The “cash for questions” affair at least had witnesses and hard evidence.
The Electoral Commission is in a difficult position, in that it has to rule on matters that are highly contentious, and often has to irritate one side or other of the political spectrum. It has to do so within the law as it stands; that is frustrating, perhaps, but it is up to parliament to amend the law. The commission is far from a toothless watchdog, as Hencke says. If anything, there is an argument that its teeth are too sharp. It can growl, by issuing advice, and maul, by referring situations to the police for further action, but it has not been given the power to give minor offenders an admonitory nip to the ankle. However, in the case of CCS, it seems that a growl was really all that the situation called for.