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Lebanese arms dealer's £100,000 donation to Tories
12-24-2009, 08:50 AM,
Lebanese arms dealer's £100,000 donation to Tories
Quote:The Tories have received £100,000 from a company controlled by a former arms dealer who was at the centre of one of the party’s most notorious scandals.

The donations have come from the tiny British arm of Future Pipe Industries, which is controlled by billionaire Lebanese businessman Fouad Makhzoumi.

He was a key figure in the furore that toppled former Conservative Cabinet minister Jonathan Aitken and which came to typify an era of Tory sleaze.

The party’s decision to re-establish financial links with him is likely to raise serious concerns about its vetting of potentially controversial donations.

It will also lead to new questions about a loophole that allows foreign firms to make donations to British political parties as long as they have a trading arm in the UK.

Records at Companies House show that Future Pipe Ltd made pre-tax profits of just £20,000 last year. Despite this, it was able to make a £50,000 donation to the Conservatives in August this year.

The firm previously made a £50,000 donation to the Tories one month before the 2005 election. In that year it made a pre-tax profit of just £21,000.

In contrast, the firm’s Dubai-based parent group Future Pipe Industries was valued at £1billion last year and expects to turn over £600million this year. The firm is wholly owned by the Makhzoumi family.

It makes fibreglass pipe systems to transport oil, gas and water, but subsidiaries operate financial, commercial, real estate, security, information, multimedia and publishing businesses.

Fouad Makhzoumi, now a Lebanese politician, is listed as the company’s chairman. His son Rami is the firm’s president and chief executive.

Rami and Mr Makhzoumi’s wife May are listed as directors of the UK arm.

Mr Makhzoumi’s only previous known involvement in British politics was when he was caught up in the furore in the mid-1990s that led to the downfall of Mr Aitken.

The Makhzoumi family first struck up a relationship with Mr Aitken during his time as a merchant banker.

The MP became a director of one of the family’s companies, Future Management Services, from 1985 to 1992.

But it was claimed he failed to declare his relationship with the firm even when he became minister for defence procurement in 1992.

Mr Aitken was later accused of helping to engineer an arms deal involving Mr Makhzoumi.

The pair met at the Ministry of Defence in 1992 soon after Mr Aitken stepped down from his directorship.

Mr Makhzoumi, who had asked Lebanon’s Internal Security Forces what military equipment they required, asked his old friend to assist in setting up an arms deal.

As a result of the talks, according to Mr Makhzoumi, an agreement was struck to sell Lebanon several secondhand customs and excise vessels and 3,000 second-hand rifles.

Mr Aitken’s career began to unravel in 1995 when the Guardian and the ITV investigative programme World in Action published a series of allegations against him.

These included the meetings with Mr Makhzoumi and that Mr Aitken had failed to declare his directorship of Future Management Services in the register of MPs’ interests. Another central allegation in the Guardian was that Mr Aitken tried to ‘arrange girls’ for a Saudi prince and his entourage.

Mr Aitken made a now infamous speech rejecting the claims.

He pledged to ‘cut out the cancer of bent and twisted journalism... with the simple sword of truth and the trusty shield of British fair play’.

He sued for libel but abandoned the case after it emerged he had lied on oath about a stay at the Paris Ritz. He was charged with perjury and perverting the course of justice in 1999 and was jailed for 18 months.

Future Pipe’s motivation in donating money to the Tories is unknown.

But green groups have questioned why it and a string of other companies with interests in oil and gas have handed the party cash as it looks likely to form the next government.

Labour’s former Europe minister Denis MacShane last night called on David Cameron to explain precisely how and why the cash was accepted.

Mrs Makhzoumi was not in when reporters called at her £4million home in Kensington yesterday.

No one could be contacted for comment at Future Pipe’s offices in Dubai.

In a statement, a Tory party spokesman insisted the donations were legal, adding: ‘Our compliance unit applies two strict tests to all company donations in accordance with Electoral Commission guidance.

‘They are: is the company UK-registered and is the company carrying on business in the UK? These donations met those tests and were therefore legal and permissible.’

Mr Aitken could not be contacted for comment last night.

* Foreign gifts to political parties are banned under strict rules introduced in 2000. Overseas residents not registered to vote here are barred from making donations and only firms registered to trade here can make gifts.
It is also against the law for money to be given through a proxy, such as a British-based company, to disguise a donation from a foreigner. Gifts are allowed to be made through intermediaries, but the source must be declared.
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