Labour must repay Enron cash

A FORMER Labour minister called on his party today to repay the £36,000 it received from collapsed energy giant Enron in the 'cash-for-access' row dogging the Government.

Former Defence Minister Peter Kilfoyle said he was embarrassed Labour had links with an 'evidently fraudulently set of people' and added the affair raised questions over the funding of political parties.

Kilfoyle, who helped to run Tony Blair's campaign for the Labour leadership, said he did not believe the party was guilty of serious wrongdoing but repayment would be a 'gesture of goodwill'.

His comments came as Blair faced a barrage of questions over the Government's dealings with the bankrupt company and its accountant Arthur Andersen.

Enron, which became the world's biggest corporate bankrupt with a £55bn collapse, has given £36,000 in sponsorship to Labour and £25,000 to the Tories. The central question is whether the Labour cash played any role in a Government decision made little more than a year ago to lift a ban it imposed on the construction of new gas-fired power stations.

Downing Street has denied this while admitting several senior ministers, including former Trade and Industry secretaries Peter Mandelson and Stephen Byers, had met Enron executives.

A senior Whitehall source appeared confident that the Opposition did not have a 'smoking gun' which would badly damage the Government. And a Labour spokeswoman said the £36,000 would not be paid back because the party did not classify it as a political donation. She added: 'It is a matter of record from our accounts that Enron bought tickets for dinners and sponsored an event.'

Kilfoyle claimed the affair was not as damaging to Labour as the Bernie Ecclestone case in 1997, but told Radio Four's Today programme: 'As a gesture of goodwill, it would be a very good thing indeed if the monies paid by Enron to the Labour Party were returned. These companies do not put out large amounts of money to political parties for nothing. I'm embarrassed for the party that it should be in the position where it's taking money from an evidently fraudulent set of people as those who ran Enron.'

The Tories called for an inquiry into Labour's links but were then forced on to the defensive over revelations that their party had received £25,000 from Enron. Tory vice-chairman Tim Collins said: 'Had we known then what we know now about the company, I hope and believe that we would have turned that donation down.'

Tory chairman David Davis was adamant there was some evidence Blair ordered the lifting of the ban, and asked for 'clarification' of his role. The controversy deepened after Ralph Hodge, former chairman of Enron Europe, said it was 'custom and practice' to sponsor events to meet ministers. He said the money 'was given to gain access and to at least know that you'd met the politicians concerned, and I do stress it was given to both parties.

'Cash-for-access? No. There was a desire to meet ministers, civil servants, constituency MPs, and certainly sponsoring those events was seen to be positive in that regard.'

Hodge, made a CBE last year, said it was 'difficult to opt out' when competitors gave money to parties.

INSOLVENCY expert Stephen F Cooper has been named as interim chief executive at Enron in the wake of Ken Lay's departure last week.

He is managing partner of corporate recovery and crisis management firm Zolfo Cooper.

The appointment was made by the board and the committee of creditors, which are owed tens of billions of dollars. 'Our focus is on the future of Enron,' said Cooper. 'With 19,000 employees worldwide, Enron has real businesses with real value.'

Enron: The questions Labour must answer