Brown calls for shake-up in party funding

LONDON - Prime Minister Gordon Brown called for a change in political funding rules on Saturday after the millionaire businessman at the heart of a secret donation scandal said Labour was at fault.

Brown said revelations that property developer David Abrahams donated 600,000 pounds to Labour through intermediaries had shown the need for "immediate change" in his party and "broader change" in the funding system.

"I am angry, as you are, when standards fall below what we and the general public want and have a right to expect," he told a meeting of the party's national policy forum in West London.

He said he was "saddened by the situation, which is under investigation by Scotland Yard. Earlier, Abrahams said it was Labour's job to check donations and he was not aware he had risked breaking the law by giving money through third parties.

Writing in Saturday's Guardian newspaper, Abrahams said the affair -- which has battered Brown's public standing -- was a "product of cock-up, not conspiracy".

"I trusted the party to ensure that its donations were being received and spent in the manner in which they were intended, as anyone in my position would," he wrote.

In response, a spokesman for Labour told Reuters the party was co-operating fully with the police investigation, but would "not be providing a running commentary".

Abrahams earlier told Channel 4 News that Brown's chief fundraiser Jon Mendelsohn knew about his method of making donations in April, five months earlier than Labour said it did.

But the Guardian said Mendelsohn flatly denied Abrahams' statements over the timing of their discussions.

Mendelsohn earlier suggested he only knew about Abrahams' method of donating to prominent members of the Labour party via "agents" in September.

INVESTIGATION

The police investigation is likely to involve Mendelsohn and will seek to establish exactly who knew about the donations that might have breached electoral laws.

Electoral Commission rules require those making donations on behalf of others to give details of the source of the money. Brown has said the funds from Abrahams had not been lawfully declared and would be returned.

A survey this week put the Conservative Party 11 percentage points ahead of Labour -- its biggest lead since Margaret Thatcher was at her most popular in the 1980s.

A number of senior Labour figures have become embroiled in the row, and opposition parties have stepped up their criticism.

Deputy Leader Harriet Harman has said she acted in good faith in accepting a 5,000-pound donation from Abrahams through a go-between, a move newspapers said had involved Brown's campaign coordinator.

And on Thursday, Work and Pensions Secretary Peter Hain said he had failed to register a 5,000-pound donation from Labour's chief fundraiser because of an administrative error.

The scandal is the latest in a series of setbacks for Brown, who has also presided over the Northern Rock disaster -- the first run on a British bank in more than a century -- and news last week the government had lost computer discs containing the personal details of 25 million people.