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8 November 2021

From the NS archive: Keeping corruption at bay

2 September 1994: You can hardly make a fuss about Hong Kong Chinese millionaires contributing £2m to Conservative funds if you accept £5m from some unknown person in Bangladesh.

By Ian Aitken

Moosa Bin Shamsher, the Bangladeshi businessman who offered a £5m donation to the Labour Party in 1994, may have been a perfectly genuine donor, but the party’s refusal of the gift was the right thing to do, given its previous criticism of the Conservatives for accepting such large sums from people with no direct business in the UK. “Quite apart from any other consideration, it wouldn’t look good on the front page of the Daily Mail, where it was bound to end up,” wrote political commentator Ian Aitken. The affair revived the long-running debate about how elections are financed, and how MPs are paid. The previous November, MPs of both parties had voted for an £1,500-a-year pay increase for themselves. Both the broadsheets and the tabloids agreed that “it was shameful for ministers to award themselves such an increase while the government was imposing a much stricter regime on humble workers in the public sector”.


All­ the alarm bells – and probably the smoke detectors as well – must have gone off in Labour’s Walworth Road headquarters in London last week when the unidentified “representative” of Moosa Bin Shamsher walked through the door and plonked down an IOU for £5m as a donation to party funds.

One can picture the thought that must have flashed through the mind of party officials. Could this man perhaps be John Deans, the Daily Mail’s chief Labour-hashing correspondent, in disguise? Or might it be 007 from the Conservative Party’s central office’s very own dirty trick department, bent on getting even with Labour for the Asil Nadir affair? Or, if he wasn’t either of these, could it be a representative of the Militant Tendency trying to play a comradely practical joke on old friends at Walworth Road?

Whatever the truth – and there is evidence to suggest that Bin Shamsher is a perfectly genuine Bangladeshi multi-millionaire who made his money out of shipping workers from the Indian sub-continent to various parts of Arabia – it must have caused Larry Whitty extreme anguish to squeeze out the words “No, thank you” in reply to the good doctor’s offer. Although Labour Party funds are said to be in uncharacteristically good health right now, turning down £5m isn’t something Walworth Road officials are used to doing as a matter of course.

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But – as even Bin Shamsher is reported to have conceded – it was absolutely the right thing to do. You can hardly make a fuss about Hong Kong Chinese millionaires contributing trifling sums such as £2m to Conservative funds if you accept £5 million from some more or less unknown person in Bangladesh. Quite apart from any other consideration, it wouldn’t look good on the front page of the Daily Mail, which is where it was bound to end up.

Moreover, turning the money down has provided Labour with yet another opportunity to give a public airing to the increasingly sleazy nature of the Conservative Party’s financial affairs. This is a procedure that has the double advantage of drawing public attention to the unpleasant smell that pervades the south-western corner of Smith Square, while simultaneously helping to dissuade respectable businessmen from maintaining their annual donation to Tory funds. That is a double whammy, if ever there was one.

However, the refusal has also revived the long-running debate about the way in which politics as a whole is financed in this country. Not surprisingly, Labour MPs have grasped the opportunity offered by Bin Shamsher’s remarkable generosity to reinforce the case for the party’s official commitment to state funding for political parties. For the moral of the Bin Shamsher case as well as the Asil Nadir case is obvious: they both demonstrate that it is potentially corrupting for organisations bidding for political power to have to beg the money for the election campaigns from people or organisations that might expect favour in return.

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Personally, I do not buy this argument. I concede that it has considerable attractions as a mean of ending the sleaze factor. But I remain convinced that there are other ways in which the business of harvesting votes can be protected from the threat of corruption. The most obvious of these – now recognised by the Labour Party – is to impose a statutory ceiling on the steadily escalating amount that parties spend at the national level during an election campaign.

After all, we already have strict legal limits on how much can be spent by individual candidates inside their own constituencies. It is simply an anomaly that no similar limit governs the enormous sums that central office has been spending in recent elections on things such as newspaper advertising, hoardings and the services of PR and television professionals. Never mind that Labour’s spending has begun to creep up in this field, too – it still isn’t defensible.

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But another recent event has underlined a second and, in my view, more persuasive reason for rejecting state funding. Perhaps you didn’t see it because you were climbing a mountain or stuck in a traffic jam on Monday but pretty well all the Bank Holiday newspapers were agreed on the scandalous nature of the fairly modest £1,500-a-year pay increase that (it now turns out) MPs of both parties voted themselves last November.

The headline-writers and the leader-writers ransacked their dog-eared copies of Roget for adjectives adequate to describe this outrage. The broadsheets saw it as hypocrisy, while the tabloids preferred the shorter expression, humbug. But both were agreed that it was shameful for MPs and ministers to award themselves such an increase while the government was imposing a much stricter regime on humble workers in the public sector.

Today newspaper summed up the MPs’ devil-may-care attitude as “Don’t do as I do, do as I say”. The Daily Telegraph called it an affront to public opinion, and also ran a feature suggesting (albeit partly in jest) that the Tories would be able to get rid of their more money-grubbing backbenchers simply by ceasing to pay them anything at all. And although the ever-reasonable Guardian deployed all the sensible arguments about how there never was a “right time” for MPs to have a pay rise, it added a paragraph that began, “And yet …”

And yet what? Well, that there may be something in the argument that MPs – or rather, Tory MPs – are ordaining one kind of regime for themselves and an entirely different one for others. It went on to ask what might happen if things such as performance-related pay were applied to them. They might, suggested the Guardian, be less keen to biff Jimmy Knapp’s signalmen if they had to follow the same productivity guidelines themselves.

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Now, all this is good Bank Holiday stuff, and no doubt makes passable reading in a Blackpool deckchair if there is nothing better to look at. But let us consider for a moment what these same leader-writers might say of an incoming Labour government that introduced a measure called the Representation of the People (State Funding for Political Parties) Bill soon after taking office. We already know that a new Labour government will not increase taxes on middle-income earners and below, and that its minister will be under severe restraints about spending. The new Labour Chancellor, if he looks at all like Gordon Brown, will almost certainly decree that money won’t be immediately available to repair all the damage done by the Tories to key services such as education and the NHS.

But if the hospitals and schools are still struggling under heavy financial burdens, how will the leader-writers interpret anything so patently self-interested as a Labour move to finance their own party with taxpayers’ money. My guess is that they will make an even greater fuss about it than they are currently making about MPs’ pay, and with greater justification.

And if they do, the new squeaky-clean government of Tony Blair could suddenly look almost as insensitive to public feelings of outrage as the present government has shown itself to be. In other words, it’s a non-starter.

Read more from the NS archive here, and sign up to the weekly “From the archive” newsletter here. A selection of pieces spanning the New Statesman’s history has recently been published as “Statesmanship” (Weidenfeld & Nicolson).