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The Party's Over?
UK Independence Party faces bankruptcy; judge rules "impermissible donations" of £367,697 must be paid back
The UKIP's leadership has described the ruling, handed down by the Electoral Commission, as "wholly disproportionate." Party Chairman John Whittaker said that the party is guilty of nothing more than "a simple clerical error which could have been easily rectified had it been known."
The UKIP claims that the anti-EU party's major donor, businessman Alan Bown, was not on the Electoral Register between December 2004 and January 2006. Under the The 2000 Political Parties, Elections and Referendums Act, parties are forbidden from taken money from people or organisations not registered in the UK.
Bown's absence from the Electoral Register thus counts him as an impermissible donor, even though the UKIP insists he was on the register before and has been since. The missing year, the UKIP describes as a "simple clerical error" and claims to have been unaware of Bown's absence from the Kent register. The total of £367,000 was made in 68 separate donations over the course of the year.
The UKIP says that if Bown had realised his name had been removed from the Register, he would have rectified the situation promptly; the party's spokesman says that Mr Bown was resident in the UK for the time, and paid his UK taxes in this period.
"I don't believe the law was designed to catch out this sort of donor; it was intended to prevent dodgy overseas money being given to UK political parties", said the UKIP's leader, Nigel Farage.
Should the UKIP have to pay back the £367,000 the Commission demands, the party could go bust (though most British parties are in debt).
Donations are not returned to the donor if they are found to be impermissible; instead, they are paid to the state.
The UKIP's difficulties echo problems faced by the larger and more established Liberal Democrat Party last year. In 2005, the LibDems received a donation of £2.4 million from Michael Brown. Because Brown was resident in Spain at the time of the donation, he created a business - 5th Avenue Partners - to donate the money.
In October 2006, the High Court ruled that the company was fraudulent and had never traded.
The previous month, Michael Brown had been sentenced to two years in prison for perjury and obtaining a passport with deception.
The Electoral Commission claims it is still deliberating as to whether or not the LibDems will have to forfait the £2.4 million "impermissible donation."
It also claims to be satisfied that the LibDems "acted in good faith" at the time of the donation, and that it would not reopen an investigation into whether the party's officials checked Michael Brown's background sufficiently.
Britain's system of party financing is notoriously murky. There is currently a police enquiry into what has been described as a "Cash for Honours" scandal, where figures close to PM Tony Blair have been linked with deals promising businessmen titles in exchange for party donations. The 2000 Act was only one designed to make the system more transparent - but the various scandals haven't deterred some very large donations from very prominent figures. Last month, Labour announced it has received another £2 million donation from Indian businessman Lakshmi Mittal, one of the world's richest men.
A previous donation by Mr Mittal, in 1995, was claimed by some newspapers to have helped win Blair's support for a bid to by a Romanian steel firm.
Another Labour donor, Bernie Ecclestone, had some of his donation returned to him following similar allegations.
UKIP figures complain that the speed with which their party has been dispatched by the Electoral Commission, compared to the LibDems, shows a bias in favour of established parties.
"I think it's outrageous and it feels to me like an attempt by the establishment to close us down," said Nigel Farage, following the ruling.
