Short Selling funds Political Party

Following disturbing revelations in the Observer published on Sunday 28th September, Fabian Hamilton has written to the Parliamentary Commissioner for Standards to call for an investigation into the grave concerns that have been expressed. It appears that some of those firms most closely implicated in short selling of shares, a process which has undermined the stability of the banking system in England, have made large political donations to the Conservative Party. 'This is not a simple bit of political banter." says Fabian. "It cannot be morally right for there to be funding links between these firms and the Conservative Party which is Her Majesty's Opposition. It is right that the opposition closely scrutinises actions taken by the government especially in these difficult times, but there should not be any suspicion or any temptation that politicians of any party be influenced by companies who are now in the spotlight for their actions which have been so destructive."

The banking crisis is especially disquieting for many people in Leeds and the Yorkshire region. HBOS is merging with Lloyds bank and job losses are widely predicted and there are large offices in both Leeds and Halifax. The nationalisation of Bradford and Bingley has also just been announced with implications for staff in Bingley and elsewhere.

Fabian Hamilton is calling for any moneys paid to the Conservative Party from firms implicated in short selling to be returned straight away. Fabian says, "Much better for all concerned for such tainted money to be handed back right away!"

The text of Fabian's letter to John Lyon CB, the Parliamentary Commissioner for Standards is reproduced below.

John Lyon esq CB
Parliamentary Commissioner for Standards
Committee on Standards in Public Life
35 Great Smith Street
London
SW1P 3BQ



29th September 2008


Conservative Party receipt of profits from Short-selling Shares

I am writing to request that the Committee on Standards in Public Life investigate the receipt of funds from profits made on the short-selling of shares on the stock market.

A report in yesterday's Observer newspaper by Jamie Doward names Michael Hintze of CQS who has given £662,500 to the Conservative Party. According to the journalist, his firm short-sold shares in Bradford and Bingley, badly damaging the bank, which this morning has been effectively nationalised. Similarly, it was reported that Paul Ruddock and David Craigen donated a total of £260,000 to the Conservatives. Their investment firm, Landsdowne, was exposed last week as short-selling HBOS shares.

When the Committee on Standards in Public Life was set up in 1994, its terms of reference were:

"To examine current concerns about standards of conduct of all holders of public office, including arrangements relating to financial and commercial activities, and make recommendations as to any changes in present arrangements which might be required to ensure the highest standards of propriety in public life".

I believe that an investigation is now necessary because the of the risk that the Conservative Party's policies are being unduly influenced by the large amount of money it is currently receiving from profits generated by highly dubious practices in the stock market. These practices have contributed to the potential failure, and necessary rescue, of two banks both of which have substantial numbers of employees who live in West Yorkshire as well as in my Parliamentary constituency.

The Conservative Party cannot condemn this practice because it is the beneficiary of the profits made through short-selling shares. There is thus a serious conflict of interest and I believe that this income should be returned to the donors immediately. It is surely in the public interest that Her Majesty's Opposition be able to make policy which would potentially protect the public from the abuse of the financial system rather than be beholden to its donors who have acted against the public interest and have contributed to the potential failure of two national financial institutions.

Yours sincerely,



Fabian Hamilton
Labour Member of Parliament for Leeds North East