The Electoral Commission – the independent party funding regulator – has said it will carefully consider the implications of the Supreme Court’s decision for how donations to political parties that have come from an impermissible source are dealt with in future.
In 2007, the Commission sought forfeiture of £367,697 in impermissible donations accepted by the United Kingdom Independence Party. These 67 separate donations were from an individual not on the electoral register and a company not registered under the Companies Act 1985. The Magistrates Court found that all the donations were from an impermissible source, but ordered forfeiture of only £18,481 of this amount. An appeal from the Commission after consideration by the High Court led to a judgment in October 2009 by the Court of Appeal that the law required all impermissible donations to be forfeited, other than in exceptional circumstances.
The Supreme Court’s decision today is in response to an appeal by UKIP against the Court of Appeal’s judgment. In a majority decision the Supreme Court has taken a different approach to the Court of Appeal and upheld the wide discretion as exercised by the Magistrates Court in relation to the amount that should be forfeited on this case.
Lisa Klein, Director of Party and Election Finance at the Electoral Commission, commented:
Throughout this process, we have made clear that what we wanted to achieve was clarity about the way the law should be applied. Today’s Supreme Court judgement sets out how the rules on forfeiture apply to impermissible donations. The law on what an impermissible donation is has not changed.
Political parties need to raise money to develop policy and communicate with voters. Parties need to be clear about the rules that apply to raising money. And voters expect the Commission, as the independent regulator, to hold to account those who do not comply with those rules.
The Supreme Court has now set out how the rules apply to donations from an impermissible source, and we will carefully consider the implications of the judgment for how impermissible donations are dealt with in future.
Background for journalists
In February 2007 the Commission decided to seek forfeiture from the United Kingdom Independence Party of donations amounting to £367,697 from Alan Bown and Nightech Ltd. These 67 separate donations were received between December 2004 and January 2006. These were from impermissible sources as Mr. Bown was not on the electoral register at the time of making the donations and Nightech was not registered in the UK under the Companies Act 1985.
The application by the Commission for a court order for forfeiture was heard at Westminster Magistrates Court in July 2007. In August 2007 the District Judge ordered that UKIP should forfeit £14,481 of donations given to the party by Alan Bown. The Judge also ordered them to forfeit the £4,000 from Nightech ltd.
Given that the District Judge did not order forfeiture of the full amount, although they found all donation in question to be from impermissible sources, on 28 August 2007 the Electoral Commission applied to the High Court to review the Magistrates Court judgment to ensure there was clarity in how the law should be applied.
On 22 January 2009, the High Court upheld the Commission’s appeal and ordered the re-hearing of the case at Westminster Magistrate’s Court. However, the Commission considered that the High Court provided insufficient clarity for political parties as to how the rules should be applied. The Commission applied to the Court of Appeal to review the High Court judgement.
On 19 October 2009, the Court of Appeal unanimously upheld the Commission’s appeal concluding that, in all but exceptional circumstances, political parties should give up in full donations accepted from impermissible sources. UKIP appealed to the Supreme Court, and the Supreme Court hearing took place on 8 and 9 June 2010.
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Notes to Editors
- The Electoral Commission is an independent body set up by the UK Parliament. Our aim is integrity and public confidence in the UK’s democratic process. We regulate party and election finance and set standards for well-run elections.
- Under section 58 of PPERA, the Electoral Commission has the power to apply to the courts for an order to forfeit a sum equal to any impermissible donation a party has accepted and not returned within the statutory 30 days.
- Any amount forfeited is paid into the Consolidated Fund. It is not retained by the Electoral Commission nor returned to the donor.