I made a mistake but it was an innocent mistake – Hain

Jan 25 2008 by Tomos Livingstone, Western Mail

PETER HAIN’S Cabinet career came to an abrupt end yesterday morning when he telephoned the Prime Minister to tell him yet another police investigation into Labour was under way.

The Electoral Commission contacted Mr Hain, who was at his desk at the Department for Work and Pensions, shortly before 11.30am, and told him the £103,000 in donations to his Labour deputy leadership campaign was now a matter for the Metropolitan Police.

The Neath MP then dialled Downing Street and resigned.

“It was not a protracted conversation,” the Prime Minister’s official spokesman said.

Mr Hain, who held a dual role as Secretary of State for Wales and for Work and Pensions, said he was stepping down to clear his name. If he manages that, a return to the Cabinet still seems highly unlikely.

His resignation after more than five years at the Wales Office comes as a blow to Gordon Brown, who had offered his backing to the beleaguered minister.

Mr Hain’s is the first Cabinet resignation of Gordon Brown’s Premiership, and drags the Government back into the party funding mire. The involvement of the police – who are already looking at how property developer David Abrahams gave six-figure sums to Labour through proxies – brings unwanted echoes of the cash-for-honours inquiry that hounded, but ultimately cleared, Tony Blair.

As he left the DWP for the last time, Mr Hain told reporters, “In view of the decision of the Electoral Commission today, I have come to the conclusion that I have no alternative but to resign as Secretary of State for Work and Pensions and Secretary of State for Wales, and I have now done so.

“I severely and seriously regret the mistake in declaring donations late, and I have co-operated as soon as I was able to with the Electoral Commission, providing all the details they have asked for.

“And I will of course co-operate in the future with the police and with any other authorities that wish to ask questions about this.”

Mr Hain added in his resignation letter to Mr Brown, “I made a mistake but it was an innocent mistake.”

Questions are continuing to be asked about how Mr Hain became embroiled in such a row in the first place. After failing to become Labour’s deputy leader last summer – he finished fifth – a separate funding controversy prompted him to reveal in November that he had forgotten to declare a £5,000 gift as the law requires.

But two weeks ago he told the Electoral Commission that there were in fact 17 unreported donations, totalling £103,000. Some of the money came via a think-tank, the Progressive Policies Forum, which employs no staff and has produced no reports.

Mr Hain has blamed incompetence among his campaign team, some of who have since sought to blame each other.

One source close to the Hain campaign said last night, “It was very shambolic and was not a campaign that merited anything like what was eventually spent. Where did all the money go? Where is the money?”

A separate investigation by the parliamentary standards commissioner, John Lyon, has been suspended while the police investigate.

Mr Lyon was looking into complaints that the £103,000 had not been entered into the Commons Register of Members’ Interest, a separate legal requirement.

Mr Lyon said he would decide whether to resume the investigation once the outcome of the Metropolitan Police inquiry is known.

Allies of Mr Hain said they were sorry to see him leave office.

Caerphilly MP Wayne David, a Government whip, said, “Peter has been an outstanding Secretary of State for Wales and Secretary of State for Work and Pensions.

“I have had the privilege of working closely with Peter and he has never failed to impress me with his commitment, determination, honesty and hard work.

“Peter has handled vitally important issues like welfare and pension reform with sensitivity and has successfully taken forward devolution in Wales.

“He is a politician who speaks his mind and is never afraid to do what is right.”

There was also a sympathetic message from the Archbishop of Wales, Dr Barry Morgan, who praised Mr Hain for introducing the Government of Wales Act, strengthening the Assembly’s powers.

There was no hint last night from Scotland Yard’s Economic and Specialist Crimes Unit as to the exact nature of their investigation, or whether they would be focusing on the role of the PPF think-tank.

“We can confirm that the Met has today received a formal referral from the Electoral Commission in connection with potential offences under the Political Parties and Referendums Act 2000 regarding donations received,” the Metropolitan Police said in a statement.

A timeline to a downfall
September 12, 2006:

Peter Hain uses a Fabian Society fringe meeting at the TUC conference in Brighton to announce he will be a candidate for Labour’s deputy leadership – the first MP to announce his intention to stand.

September 28, 2006:

John Prescott formally announces his intention to stand down as Deputy Prime Minister and Deputy Leader of the Labour Party “within the next year”.

January 22, 2007:

Mr Hain sets out his stall for the deputy leadership in an interview with the New Statesman, referring to the Bush administration as “the most right-wing American administration, if not ever, then in living memory” and stating, “the neo-con agenda for America has been rejected by the people and I hope that will be the case for the future.”

May 10, 2007:

Mr Prescott confirms he will relinquish both roles at the same time as Tony Blair leaves 10 Downing Street, thus triggering a deputy leadership election.

June 24, 2007:

Harriet Harman is elected deputy leader, with Mr Hain coming a disappointing fifth out of six candidates.

November 29, 2007:

Mr Hain admits he failed to register a £5,000 donation to his campaign from Jon Mendelsohn, a Labour fundraiser, blaming “an administrative error”.

December 3, 2007:

The Western Mail is tipped off that there are further donations to Mr Hain’s campaign that have not been declared and calls his office to seek a statement.

Later that day he goes to the Electoral Commission to say further donations “were not registered as they should have been”. He issues a statement confirming the further problem to the Press Association.

January 10, 2008:

Mr Hain gives a list of undeclared donations to the Electoral Commission totalling £103,157. The list shows some of the donations have come through a little-known think-tank called the Progressive Policies Forum.

January 12, 2008:

Mr Hain announces he has no intention of resigning, saying his failure to declare the donations was a result of “poor administration”. He dismisses suggestions that he had tried to cover up donations to his Labour deputy leadership campaign as “absurd”.

January 14, 2008:

It is announced that there will be a parliamentary inquiry into Mr Hain’s donations row following a complaint by Monmouth Conservative MP David Davies. Westminster’s Commissioner for Standards, John Lyon, rules that the Work and Pensions Secretary has a “case to answer”. Gordon Brown tells The Sun newspaper that Mr Hain’s future will be determined by the results of the inquiries being conducted by the Electoral Commission and the Commissioner for Standards.

January 15, 2008:

Mr Brown tells ITN that Peter Hain was guilty of “an incompetence” but that he hopes the bodies concerned will accept his apology.

January 24:

Mr Hain resigns minutes after the Electoral Commission announces it has referred the matter to the police.

Chief reporter Martin Shipton assesses the events that led to Peter Hain’s resignation
In retrospect, the Labour deputy leadership campaign was a make or break moment for Peter Hain.

Always a highly ambitious politician, Mr Hain thought winning the deputy leadership would secure one of the high offices of state – possibly the Foreign Secretaryship. But, to have any chance of winning the contest, he knew he would have to run a highly effective campaign. It was a crowded field, including four other Cabinet ministers and a backbencher. To stand out from the crowd Mr Hain would have to spend a lot.

We now know that an astonishing amount of cash was raised in what was, after all, simply an internal party election – more than £180,000. Even so, the contest was won by Harriet Harman after she had spent a fraction of that.

The first hint there was anything amiss came on November 27, when Mr Hain announced he had failed to declare £5,000 donated to his campaign by the Labour fundraiser Jon Mendelsohn.

Four days before, the wider funding controversy affecting Labour had erupted when it emerged that the Newcastle property developer David Abrahams had donated more than £400,000 to the party using surrogate donors.Two days after that, Ms Harman confirmed she had received £5,000 indirectly from Mr Abrahams.

In the context of the Abrahams revelations, Mr Hain’s oversight seemed relatively minor. And, if that is how matters had remained, it would almost certainly have been forgotten by now.

Behind the scenes, however, and as we now know, it was becoming clear in Mr Hain’s camp that something more serious had gone wrong. On the morning of December 3, the Western Mail received a tip-off that a fundraising dinner organised for Mr Hain’s campaign in the Park House Club, Cardiff, had resulted in further donations that should have been declared.

The dinner was organised by Huw Roberts, a long-standing Labour supporter who had been a special adviser to Ron Davies when he was Welsh Secretary in 1997-98. At that time Mr Hain was a junior minister at the Welsh Office. Mr Roberts, director of Welsh Affairs for the Royal Mail, had himself paid around £1,300 for the food and drink – above the £1,000 threshold at which donations have to be registered. We sought a statement from Mr Hain’s office shortly after 9.30am on December 3, but it was not until shortly before 6pm that Mr Hain issued a statement to the Press Association saying further undeclared donations had been identified and that he had visited the Electoral Commission that afternoon.

Several weeks then passed before the full extent of the undeclared donations was disclosed on January 10 – some 17 donations, totalling more than £103,000. But, as if that wasn’t enough, the scale of the problem went even further. Six of the previously undeclared donations had been channelled through a little-known think-tank called the Progressive Policies Forum (PPF), one of whose trustees, John Underwood, had run Mr Hain’s deputy leadership campaign in its early stages. The circumstances under which money was donated to the PPF and then transferred to Mr Hain’s campaign have not yet been fully disclosed, but questions were raised about whether an attempt had been made to disguise the origin of the money.

Plaid Cymru MP Adam Price was also critical of Mr Hain’s decision to accept money from 78-year-old businessman Isaac Kaye, the former chairman of Norton Healthcare, a pharmaceutical company which had repaid £13.5m to the NHS in an out-of-court settlement of a civil action. It is facing a criminal charge of defrauding the NHS in an alleged price-fixing cartel, with a trial due to start in September.

After these revelations, Mr Hain appeared increasingly beleaguered and isolated. He appeared outside his constituency home to make a statement protesting it was “absurd” to suggest he had anything to hide. But he did his position no good by failing to answer specific questions.

By last Friday, when he visited Tower Colliery, he appeared to have lost his characteristic self-confidence, and was obviously taking each day as it came.

Yesterday’s announcement that the Electoral Commission had passed the undeclared donations case over to the Metropolitan Police sealed Mr Hain’s fate.

I made a mistake but it was an innocent mistake – Hain
Paul Murphy returns as Welsh Secretary
Resignation is a huge blow to Wales, says Rhodri
Hain an unconventional campaigner
Constituency supporters back Peter Hain after resignation
James Purnell – the other ‘new boy’ replacing Hain as Work and Pensions Secretary
Key players’ revolutionary exits
Peter Hain’s statement in full