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Parliamentary and Health Service Ombudsman (PHSO) report on Electoral Commission investigation into donations from 5th Avenue Partners Ltd to the Liberal Democrats

Published: 17 Jul 2014

The Electoral Commission welcomes the fact that the Ombudsman has not questioned its decision in this case. The Commission is taking swift action on the Ombudsman’s recommendations, and in most areas had already made significant changes to its procedures. There is one aspect of the Ombudsman’s findings that the Commission has not been able to accept, and we have published a full response explaining why. 

Background

Almost 10 years ago, in 2005, 5th Avenue Partners Limited made donations to the Liberal Democrats. In November 2009, having paused our investigation in response to a request from the police and then reviewed extensive evidence obtained by the police in the course of their investigation, the Commission concluded that these donations were permissible under the Political Parties, Elections, and Referendums Act (PPERA) 2000. The PHSO’s report sets out its views in response to a complaint that it agreed to consider about how we reached our decision in this case.

The Commission is clear that the decision it made in this case was the right one based on the legislation we operate under and has welcomed the fact that the PHSO’s report does not suggest otherwise.

We also said in evidence to the Committee on Standards in Public Life in October 2010 that the rules for company donations were not as robust as those previously recommended by the Committee, mentioning this case as an example.

What has changed in the last 10 years

The Commission now has new investigatory powers:

  • In 2005 the Commission could only require evidence from the people we regulate (political parties, elected representatives and some other organisations involved in politics).  This meant we could not seek evidence directly from Michael Brown (who was the sole Director of 5th Avenue Partners Limited).
  • In 2010 the Political Parties and Elections Act changed the law to allow the Commission to obtain evidence from anyone relevant to a case we were looking at, including people who donate money.

The Commission has also improved how we regulate:

  • our investigative work follows procedures based on good practice, including procedures for the handling of allegations and information received, and not making public statements about ongoing cases;
  • we now provide far more substantial written guidance on our website, and bespoke advice when requested.

Response to the PHSO report: where we agree

Two of the Ombudsman’s three recommendations say that we should:

  • Reflect on the lessons to be drawn from this case and write to the complainant, his MP, the Ombudsman and the Speaker’s Committee to set out our conclusions.
  • Review our guidance on the checks political parties have to make in light of the PHSO’s findings.

We have accepted these recommendations. Our guidance has already been updated significantly since this case, but we will consider it again in light of what the Ombudsman says and will update her on any changes we make.

The Ombudsman also recommended that we should apologise to the complainant; we have met him to apologise for the inconvenience caused to him. We have acknowledged his concern that it would have been better if the Commission’s case summary had been more comprehensive.

Responding to the PHSO’s report, Peter Wardle, Chief Executive of the Electoral Commission said:

“Our decision in this case was the right one and we are pleased that the Ombudsman does not suggest otherwise. We agree with many of their recommendations and will be taking action on those where we haven’t already done what is needed.”

Response to the PHSO report: where we disagree

Because the Commission differs from the PHSO in relation its finding of maladministration, our apology to the complainant was not on the specific grounds recommended by the PHSO. 

The PHSO’s report does not question our decision in this case. However, it suggests that it was maladministration not to make further checks on what the Liberal Democrats did to establish that the donations were permissible. The Commission does not agree that there were more checks that it should have done in this particular respect.  The report does not provide a full picture of what we did, including that:

  • We asked for evidence from the party of the checks it conducted that 5th Avenue Limited Partners Limited was carrying on business and the documents we received included company documents, such as the certificate of incorporation, company member resolutions, memorandum and articles of association and shareholder list.
  • In reaching its final decision the Commission considered a much wider range of evidence than just what the party had passed to us, including over 30 boxes of documents and electronic evidence obtained by the police.

It is disappointing that the PHSO’s report does not, in our view, give sufficient weight to these aspects of our investigation.

Peter Wardle said:

“Our decision in this case, which the Ombudsman has not questioned, was taken after a full investigation and careful consideration of the law. We had access to a wide range of evidence beyond what the party was able to give us and are disappointed that the Ombudsman’s report does not present a full picture of what we did. 

“We have not been able to agree with the Ombudsman’s findings of maladministration in relation to one aspect of our enquiry. But we welcome the Ombudsman’s scrutiny and we have accepted all of their other recommendations.”

The Commission has written to the Speaker’s Committee today to share our response to the Ombudsman’s report with them and expects that the Committee will want to discuss it with us.

Read the Electoral Commission’s response to the Ombudsman’s report (PDF)

Ends

For more information contact Karim Aziz in the Electoral Commission press office on 0207 271 0704 or press@electoralcommission.org.uk


Notes to Editors

  1. 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 and are responsible for the conduct and regulation of referendums held under the Political Parties, Elections and Referendums Act (2000).
  2. To see the Electoral Commission’s original case summary of its investigation into its decision that Fifth Avenue Partners Limited was a permissible donor, visit http://www.electoralcommission.org.uk/_media/executive-summary/5th-avenue-statement-case-summary-11-09.pdf
  3. To see the Electoral Commission’s Enforcement Policy, visit http://www.electoralcommission.org.uk/__data/assets/pdf_file/0003/106743/Enforcement-Policy-30March11.pdf
  4. To see how the Electoral Commission works with the Speaker’s Committee, visit http://www.electoralcommission.org.uk/our-work/who-we-are/governance-and-decision-making/speakers-committee 
  5. Read the Electoral Commission's response to the Ombudsman's three recommendations here (PDF)


     

Journalist