It is not difficult for Britain’s major political parties to move on from their funding scandals: there’s a new one every week. Every revelation blots out the memory of its predecessors. Peter Hain’s misdemeanours dropped out of the news before we had heard the half of it. I want to drag you back there for a moment, because there’s an aspect to this story which was either missed altogether or mentioned only briefly in most reports. It says far more about the rotten state of British politics than Hain’s failure to declare his donations.
The new scandal concerns the identity of one of his donors. There is no suggestion of illegality here: it is a moral issue. But it illustrates, perhaps more clearly than ever before, the abandonment of everything the Labour party once claimed to stand for. It shows us that in any contest between money and principle, the money wins.
Hain was not the first beneficiary of Isaac Kaye’s munificence. Mr Kaye, who has made many tens of millions of pounds from his drugs companies, gave the Labour party a few thousand in both 1997 and 1998, and £100,000 in 1999. But Hain had two powerful reasons not to put his hand in this man’s pocket.
The first is that the company Kaye used to run, Norton Healthcare, is now subject to the biggest prosecution for alleged fraud ever launched in the United Kingdom. Norton is one of five firms accused of dishonestly fixing the price of drugs sold to the National Health Service. The charges relate to the period 1996-2001, when Kaye was chairman of the company. In 2006, Norton paid the Department of Health £13.5m to settle a civil case concerning the same allegations.
Norton Healthcare has been involved in other controversies. In 1998 the Department of Health named it as one of the companies offering “inducements” to doctors and chemists: Norton gave them mountain bikes and Marks and Spencer vouchers if they stocked its products. Labour’s health minister complained that “it is completely unacceptable for pharmaceutical companies to encourage health professionals to use their products through free gifts and other sweeteners.”
In the same year, the government announced that it was giving a Norton plant in London’s Docklands £990,000 in the form of “regional selective assistance”, whose purpose is to boost employment. This grant, the government claimed, would promote “inward investment in the manufacturing sector”. As Private Eye points out, the fund – as its name suggests – is normally used to bring jobs to the regions (which means places other than London). But there was something even odder: the week before the government announced this funding, Norton’s parent company revealed that it would stop manufacturing in the UK, and would shift the jobs in that sector to Ireland.
But the particular discomfort for Mr Hain concerns Kaye’s activities in his previous place of residence. Until 1985 he lived in South Africa, where he was involved in another “gifts for influence” scandal. His drugs company, Alumina, gave cars, televisions, chandeliers, swimming pool equipment, tennis courts, shares and trips abroad to people working in the health sector, including academics who sat on the government’s advisory panels, the head of the Medical Research Council and the minister of health. When these gifts were exposed, Kaye explained that they were “not an inducement, but in appreciation of their having prescribed drugs marketed by the Alumina group.” The official inquiry into the scandal found that he had “no scruples about applying dishonest or unethical methods.”
More importantly as far as Hain is concerned, Isaac Kaye has been accused of providing campaign finance for National Party candidates during the apartheid years. Kaye admits to funding the National MP John Erasmus. An article in the Daily Express, drawing on an award-winning investigation by the South African journalist Martin Welz, alleges that Kaye seconded one of his company’s executives to campaign for another candidate, Gerrit Bornman. It also claims he provided cars to help Lapa Munnik, the minister of health and a fierce defender of apartheid, win a by-election. Gerrit Bornman told the Express that Kaye had been a “substantial” backer of the National Party. I tried to contact Mr Kaye, but I was told he was unavailable. In the past he has denied funding the National Party and has maintained that his company’s gifts were not intended to win favours.
Taking money from Isaac Kaye defaces Peter Hain’s only remaining conviction. When Hain became a Labour cabinet member and was obliged to ditch everything he once believed, he was allowed to keep just one political memento: his admirable record of opposition to the apartheid government. When he moved from South Africa to Britain he became this country’s leading opponent of apartheid. The regime first tried to kill him then tried to fit him up for a bank robbery. He was a brave and remarkable campaigner. But in 2007 he trampled his medals into the mud to get the money he needed.
This is the story of our political system, of most of the world’s political systems. You enter politics with the highest ideals and end up grovelling to multi-millionaires. Campaign finance is not the only reason for the corruption of leftwing political parties. But any system without a cap on individual donations encourages the mass abandonment of political programmes. You need to spend much less time and effort and money to secure thousands of pounds from a rich man than to shake it out of the piggybanks of hundreds of new members. Who can blame you if you adjust your programme to please the millionaires?
The newspapers say that our system is one of the least corrupt in the world. It’s probably true – but so much the worse for the world. The British Labour Party knows that no enormity would persuade the trade unions to disaffiliate. So it can ignore their demands and concentrate on the needs of the multi-millionaires. In 2006 and 2007, 27% of its money came from individual donations of more than £100,000. Aside from the largesse of Lord Sainsbury and Lakshmi Mittal, almost all of this is City money, much of it from men who run private equity companies. To what extent this influences Labour’s failure to tax the super-rich, we will never know – which is, of course, the problem.
Because the Labour Party (thanks to the endless funding scandals) is always on the brink of bankruptcy, Gordon Brown has promised to do something. But, in line with the recommendations by the Phillips Review of party funding, he proposes to cap donations at £50,000. Witness the democratisation of British politics: even the ordinary millionaire can now participate.
Why should one person be allowed to give the equivalent of 1388 Labour Party membership fees? Brown’s formula would preserve Labour’s funding link with the trades unions – and the super-rich. I don’t mind how it is done; whether, as both the Phillips review and the Power Inquiry recommend, the state gives more, or whether the cap is set at £100 and parties must rely on a host of tiny individual gifts. (Who cares if they have less cash with which to bamboozle us?) Just get the big money out of politics.
This article first appeared in the Guardian newspaper on 5th February 2008. The article with full footnotes also appears on [Monbiot.com]
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This post was written by George Monbiot