Benn team 'turned down fund offer'

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But the Benn campaign team turned down the cheque from Janet Kidd after discovering that the money in fact originated from wealthy property developer David Abrahams.

Mr Abrahams later offered a donation of the same sum in his own name, which was accepted by Mr Benn's team.

Mr Benn's spokesman said the Cabinet Minister was not aware at any time that Mr Abrahams had been channelling large sums to the Labour Party via Mrs Kidd and two other associates.

Mr Benn's spokesman said: "During the deputy leadership contest, Hilary Benn's campaign was sent a cheque by Janet Kidd for £5,000.

"(Baroness) Margaret Jay, who was supporting the campaign, made us aware that this donation was on behalf of Mr David Abrahams.

"We didn't accept it because we felt that if Mr Abrahams wanted to make a donation, he could do so in his own name. We returned the cheque.

"Subsequently, Mr Abrahams made a donation of £5,000 to the campaign, which we accepted and reported to the Electoral Commission as required.

"Hilary Benn was completely unaware that Mr Abrahams was making donations to the Labour Party nationally via others."