Morning:
11°c
George Osborne on rack over Russian
Joe Murphy and Nicholas Cecil21.10.08
GEORGE OSBORNE was at the centre of a mounting political crisis today after failing to deny that he discussed a possible donation to the Tory Party from a Russian billionaire.
The shadow chancellor's judgment and candour were being questioned after revelations that talks took place about a £50,000 gift that would have been illegal under British law.
Mr Osborne came out with denials that were so tightlyworded that MPs felt he had unwittingly fuelled the swirl of questions about his meeting with Oleg Deripaska on board an £80 million yacht moored off Corfu.
He voiced "regret" about the storm and appeared to admit that senior Conservatives may have advised Mr Deripaska on "how to make a legal donation", perhaps through a British company he owns. "We didn't ask for money; we didn't receive any," said Mr Osborne.
But in a crucial admission this afternoon, the Tories admitted that Mr Osborne did, after all, discuss a possible donation with financier Nat Rothschild. It was raised, said Tory sources, by Mr Rothschild just before the shadow chancellor and Conservative chief executive Andrew Feldman boarded the yacht. The Tories insisted that Mr Osborne "quickly made clear" that no gift could be accepted from a foreign source. But earlier when asked to deny claims that there was a discussion about such a gift, Mr Osborne said: "People make suggestions on behalf of other people about donations to the Conservative Party, like all political parties.
"But we have very rigorous checks and make it absolutely clear that any donations must be legal."
In an extraordinary political twist, Mr Osborne's turmoil was created by one of his oldest friends, Mr Rothschild, who arranged the meeting.
The key figure, however, appeared to be Lord Mandelson, who was staying on Mr Deripaska's yacht and who was outraged when Mr Osborne gossiped about his private conversations there.
Mr Rothschild alleged that Mr Osborne invited Mr Feldman to join him on board Mr Deripaska's yacht moored off Corfu in order "to solicit a donation".
The Standard has learned that Mr Osborne was enjoying a free family holiday with his wife Frances and children-at the Rothschild family villa in Corfu when he was invited to meet Mr Deripaska. He made two visits to the yacht, Queen K, each lasting an hour: once with Lord Mandelson and the second time with Mr Feldman.
Mr Osborne claimed Mr Rothschild's account was "completely untrue" and Tory officials flatly denied that he took part in any conversations about a donation. But Mr Osborne admitted: "I certainly-regret all the fuss and the misunderstanding that has come out of the trip to Corfu." However, when the shadow chancellor faced reporters later to answer questions on TV, he appeared unable to deny that discussions did indeed take place.
He said: "A very specific allegation has been made that we solicited a donation from Mr Deripaska and I want to make it absolutely clear that we neither asked for money nor did we receive money." Pressed on whether such a donation had been discussed with any third party, he said he refused to enter into a "detailed running commentary on all the offers that are made to us".
He added: "What the public are entitled to know is whether we accept donations and whether we explain to people exactly how to make a legal donation." The latter remark appeared to refer to a claim that Mr Feldman suggested that a donation made through a UK firm would be legal. In fact, such a donation would be unlawful if it was made for the purpose of channelling funds from a foreigner.
Today's claims about Mr Osborne also overshadowed new disclosures about the Mandelson-Deripaska links, including that they had dinner in January 2005, much earlier than previously admitted and, crucially, before a decision on EU tariffs was taken.
"It is pretty obvious that this is Mandelson's revenge," said an ally of Mr Osborne. "It is nothing more than Mandelson getting up to his old tricks."
However, there was no explanation from the Conservatives about why Mr Rothschild would make untrue claims. The financier set out his allegations in a letter to the Times, in which he complained at the attention being given to Lord Mandelson. "I am surprised that you focus on the fact that one of my guests, Peter Mandelson, is a friend of another, Oleg Deripaska," he wrote.
"Not once in the acres of coverage did you mention that George Osborne, who also accepted my hospitality, found the opportunity of meeting with Mr Deripaska so good that he invited the Conservat ives' fundraiser Andrew Feldman, who was staying nearby, to accompany him on to Mr Deripaska's boat to solicit a donation.
"Since Mr Deripaska is not a British citizen, it was suggested by Mr Feldman, in a subsequent conversation at which Mr Deripaska was not present, that the donation was 'channelled' through one of Mr Deripaska's British companies. Mr Deripaska declined to make any donation." In a statement, the Conservatives denied discussing a donation "with Mr Deripaska" but admitted that a donation was discussed with Mr Rothschild. It said: "Donations to the Conservative Party were not discussed with Mr Deripaska.
"In a conversation on 18 September, Mr Rothschild suggested to Andrew Feldman that Mr Deripaska wanted to make a donation to the party through one of his British companies. The offer was not taken up. For clarity - the Conservative Party has neither sought or received any donations from Mr Deripaska nor any of his companies." Mr Osborne tried to turn the tables on Mr Mandelson by publishing every meeting he and other Tories had with Mr Deripaska and challenging the Business Secretary to do the same.
Lord Mandelson has been accused of failing to come clean about his links with the tycoon, who benefited by an estimated £200 million when the European Commission decided to lift EU tariffs on aluminium imports.
A source close to Mr Deripaska flatly denied that the billionaire initiated discussions over a donation. "He has never donated to any political party in Britain and he has no intention of doing so," said the source.
Reader views (22)
Labour are in a hole and have no idea how to get out so they become spiteful and bitter.
Get rid of them!
- Holly, London
Fraternising with the likes of the Rothschilds is a very bad idea: he's out of his depth. If you lie down with dogs you'll catch fleas.
- Neil, London UK, Airstrip ONE .
If, like Rothschild you discovered a breach of practice like this, would you inform the Parliamentary Commissioner, or write to the Times? Fishy way to carry on.
- Mdj, Leyton, London
No sooner is Mandy back in the Labour Government then slime returns to British politics. I wonder if there could be a link?
- Joe, Thornton Heath, London, UK
Hands up if you've missed Mandelson and his mates using the press to try to manipulate public opinion. Perhaps he will realise soon that we have wised up to his tomfoolery while he has been away sorting out tariffs on aluminium and being friends with aluminium producers.
- St, London
George Osborne must learn to keep his mouth shut, and stop looking and acting like a naughty boy.
- Raymond, Stoke on Trent
Nice to see that the Dark Lord Mandelson has lost none of his poisonous touch. I didn't like Gordon Brown for his politics. Now I dislike him even more for the fact that he is willing to employ someone as unsavoury as Mandelson.
- Stephen, London
Mandelson back in government, Campbell we hear is working behind the scenes. First blow to smoke and mirror politics known as spin of "old" New labour returns. Disgusting. However the populus will not fall for it again in fact it will probably work in reverse and jog peoples memories what this bunch of conmen are realy all about. Incidently I vote Lib Dem.
- Den, London
Of course he didn't ask for a donation. He boarded the yacht of Russia's richest man in order to ask for a cup of sugar and complement him on his lovely yacht.
- Neil, london uk,
Do you honestly think that the Tory Party would solicit £50000 from one of the richest men in the World?
Utter nonesense and the work of Mandelson and Campbell.
Put it another way, would you believe Osbourne or twice sacked Cabinet Minister Mandelson?
The same Mandelson who stated on the Andrew Marr show this weekend that he would fully comply with the Ministerial Code, apart that is, from the two previous occassions when he forgot.
- Patrick, Oswestry, UK
You all seem to forget that Nat Rothschild, along with Boris Johnson, George Osborne and David Cameron, were all in the infamous picture of the members of the Bullingdon Club. Why would Nat Rothschild, a long time donor and fundraiser for the Tory party, turn on George Osborne, one of his closest friends? Perhaps he,too, is becomingly increasingly concerned at George Osborne's inability to know when to keep his mouth shut.
- Val Daniels, Mijas Costa. Spain
And what about the failure of Commissioner Mandelson (as he then was) to recuse himself from making decisions to the apparent benefit of his private companion? Is that no longer of any public interest? This is the way politics must be conducted now with the Lord of Hartlepool in government. How clever.
- Blackstone Coke, London
Good chance for Cameron to get rid of Osborne, who so far has been totally ineffectual. Of course, Cameron won't. They've been long known as the Notting Hill Twins, sort of like a Tory Tony and Gordon.
- Phil Jones, London, UK.
The fact that George Osborne is unable or unwilling to make a complete rebuttal speaks volumes. He will have to resign.
- Carl, London
Gideon tried to cause trouble by leaking what Mandy said to him about Brown now it has all blown up in his face.
- Colin, Barking, Essex.
This is Mandelson's revenge; unsupported allegations made a member of the Rothschild family who himself toadies to dodgy Russian billionaires.
- Iain Morse, Edinburgh, Scotland.
I have never liked Osborne. He is the weakest link in the Tory front bench team. He should be replaced by David Davis immediately
- John, London
Asking a billionaire for fifty thousand pounds is quite frankly insulting as any old millionaire could donate that amount. This story would have been more believable if the figure was five hundred thousand.
- Casper Slides, Ibiza, Spain.
Osborne will have to disprove this or resign.
- Thomas Brown, Uxbridge, England.
David Cameron needs to refer this to the Committee for Standards immediately. You can't have a Shadow Chancellor accused by a Tory friend of suggesting something illegal. The Blair Government was investigated by the Police for a similar case so Dave needs to do something quickly.
- Harold Hill, Acton
You just can't take the 'sleaze' out of the Tories...no matter how hard you try.
- Dhanraj, Basildon, Essex.
Whatever the ins and outs of this story - one thing is clear: That Mandelson is behind it.
- Delphine, Oxford, UK.
