Thursday, March 16, 2006

Taking it on trust, part two

Looks like Blogspot has a maximum post length. Didn't know that before! Anyway, here's the rest of the chapter ...

While the attendees obviously didn't miss the price of admission, few could properly have been described as front-rank business people. VIP guests included Sir Kenneth Berrill, former chairman of the Securities and Investments Board, and head of the Central Policy Review Staff at the Cabinet Office between 1974 and 1980 and Gerald Frankel, chairman of the British Office Technology Manufacturers' Alliance, later a leading light in the Industry Forum. Merchant banker Jon Norton, later Mo Mowlam's partner, was there with his then-wife.

Within five years, the event had grown considerably in stature. The 1996 dinner saw 450 tickets sold out a month before it was held in July. Hobsbawm Macaulay refused to release the guest list. "This is a private function", an employee explained. "People who have bought tickets have asked not to have their names disclosed."31 Names that did slip out included Bruce Shepherd, managing director of Shepherd Offshore; Caparo's Swraj Paul; Ulster Unionist David Montgomery, chief executive of the Mirror Group; and Hanson director Peter Harper, the company's linkman to Labour.

The Cable Communications Association booked a table for ten, the magic number guaranteeing that a Shadow Cabinet member would be seated with them. Meanwhile, an array of enticing corporate sponsorship options were available. Full-page advertisements in the souvenir programme came at £12,000, while sponsors were sought for the champagne reception, the wine, the after-dinner whisky or cognac and the chocolates. The obligatory auction gave MP Tony Banks the chance to shell out £17,500 for Eric Cantona's football shirt.

On the celebrity front, Richard Attenborough, Ruth Rendell, Richard Wilson, Simon Mayo and Claire Rayner – later to switch political preference to the Liberal Democrats – tucked in to mixed leaf salad with asparagus and chicken, salmon in watercress sauce, and lemon brulée on a raspberry coulis. Not a prawn cocktail in sight. Lesser-known individuals were there too. Lobbyist Neil Lawson – two years later famous for 15 minutes in the cash for access affair – commented: "Well, I'm a Labour man. So £500? I don't care. I can afford it."32

Once Labour was in office, the big business A-list started suddenly coming to the fore. At the 1998 dinner, held at the Park Lane Hilton, spin doctors made much of the presence of Richard Handover, chief executive of W.H. Smith; John Rose, chief executive of Rolls-Royce; and party donor Gerry Robinson, chairman of Granada. Companies with an estimated combined stock market value of a cool £250bn were represented at the event. Yet not one important trade union leader is known to have been on the guest list.33

Attendees were divided into two categories: the rich and the very rich. The hoi polloi were taken to a general reception, there to be plied with cheap champagne. The elite were whisked away to the Curzon Room, there to mingle with the Cabinet. This upper echelon included Elizabeth Murdoch, who was personally consoled by Cherie Blair over the break-up of her parents' marriage. Yet not even the media mogul's daughter qualified for one of the prized seats at Table 24. This privilege was for serious money backers only. Those dining with the Prime Minister and his wife included Levy, Sainsbury, Hamlyn, Gavron and Goldman.

In retrospect, 1998 marked the high point in the history of the annual dinner. Attendance was down the following year, with not even such dependables as Hollick and Puttnam showing up. Nevertheless, business guests included Creation Record's McGee and Tim Waterstone, founder of the eponymous bookshop chain. Enron, riding high at the time, took a table for ten.34

The 2001 bash, held at the Hilton Metropole, further underlines just how far the calibre of attendees has gone downhill. The 600 guests, who feasted on grilled artichokes, best end of lamb and bread-and-butter pudding, were led by Big Brother star Dean Sullivan, Jenny Seagrove, Lord Attenborough and thriller writer James Herbert, none of them exactly business movers and shakers.

New Labour fundraising dinners of this type are now replicated on a miniature scale across the country. For instance, just before the last election, Chief Secretary to the Treasury and Oxford East MP Andrew Smith sent personal invitations to a £65-a-head dinner to hundreds of business leaders in the Oxford area. Speakers included e-commerce minister Patricia Hewitt, addressing the topic "the new economy and business success", and Smith himself, although even his friends would admit that he is hardly a great orator. What was not made clear in the letter – which did not even mention the Labour Party – was that proceeds were destined for constituency funds.35

What, then, of the ultimate architect of Labour's funding revolution? What manner of man is Michael Levy? Acquaintances routinely describe him as bad-tempered, even prone to tantrums. Guitarist Chris Rea, one of the many Levy launched to stardom, remarks: "He is extremely tough, one of the hardest bastards I have ever met, but I would leave my children with nun rather than anyone else.' Drucker weighs in with the observation: "People hated him, for all the reasons Labour people hate people. He'd only joined the party three weeks ago. He is vulgar, which surprisingly matters in the Labour Party."36

Whatever his personality traits. Levy's career success has made him extremely rich. Together with his wife Gilda, he maintains luxury homes in both North London and Israel. Such is his standing in the Jewish community that the Jerusalem Post has hailed him as "undoubtedly the notional leader of British Jewry", a standing that must come as news to the Chief Rabbi.37

Yet for all his current status. Britain's envoy to the Middle East hails from modest East End origins, growing up in a house without a bathroom. After leaving Hackney Downs Grammar School at the age of 16, he trained to be an accountant. His ability to audit the books of record producers gave him entry into the music business. Levy founded Magnet Records, which at one stage enjoyed 8 per cent of the entire UK singles market, and sold it to Warner Brothers for £10m in 1988. Afterwards he founded M&G records – the initials stand for Michael and Gilda – which did not meet the same success. By the 1990s, Levy was devoting much of his energies to his role as chairman of Jewish Care, raising an estimated £60m for the charity.38

Although a lifelong Labour supporter, Levy had never been an active grassroots member. Nevertheless, by this point he had personal access to the party leadership. Smith regularly visited the Levy's huge Totteridge abode to enjoy Gilda's impeccable heimisch cuisine.

Blair became another regular guest, and a strong friendship has clearly developed between the two men. Indeed, during my one brief meeting with Levy, the fundraiser informed me that he and the Prime Minister are "like brothers".

A life peerage followed within months of Labour taking office. This, according to record producer pal Pete Waterman, is incredibly important to Levy: "This peerage possibly means more to him than anybody else. Being brought up where he was ... that would have been the greatest accolade anyone could have achieved. Working-class people like accolades. He is still working class. He personifies what people call working-class millionaires."39

The following year Levy was even appointed to Panel 2000, the government body charged with selling the idea of "Cool Britannia" to a sceptical Britain. Just how cool can an erstwhile rock 'n' roll schlock merchant pretend to be? Yet there are suggestions that he may not be paying his way as one of Cool Britannia's citizens, after Benjamin Pell – a Londoner who makes a living selling documents found in law and accountancy firm waste bins to the press – uncovered details of his tax affairs. Levy unsuccessfully sought a high court injunction to prevent publication of Pell's findings.

Levy paid only £10,000 in the 1997-8 tax year, and just £5,000 in 1998-9. At less than the cost of a table at a New Labour gala dinner, £5,000 is a remarkably low tax bill for a man worth an estimated £10m, being the equivalent to what a basic-rate taxpayer pays on a salary of around £21,000. The Sunday Times later suggested that during the 1998-9 period Levy drew £50,000 in business expenses from his company Wireart Ltd, including a £31,000 mileage allowance.

Levy insisted he had done nothing untoward. He stressed he had not resorted to offshore arrangements, despite earlier involvement with a Guernsey trust and his previous part-ownership of a firm of tax avoidance advisers. Levy maintains that in 1998-9, the bulk of his money was tied up in property and a pension, and he lived off his capital, in order to devote himself to political and charitable activities. His tax bills over the preceding 12 years had totalled £3.5m, he added.

The latest controversy to engulf Levy involves claims that he set up meetings between ministers and an Australian property group called Westfield, which hired him as a consultant to assist the company in expanding its chain of shopping centres in the UK. The contract, worth somewhere between £100,000 and £250,000, was terminated four months sooner than planned, allowing Levy to avoid declaring the consultancy in the House of Lords register of interests. There have also been reports that Levy has been paid a six-figure sum by Universal Music, a subsidiary of France's Vivendi, and around £100,000 by BEA Systems, an American company. Levy strongly denies any impropriety.40

After his peerage came the job of special envoy to the Middle East, an appointment that seems to derive purely from his sway with Blair. Never having run for political office in his life, Levy effectively bought his way into international diplomacy. In 1999 alone, he visited Syria, Jordan, Oman, Qatar, Israel, Egypt and Lebanon, usually staying in British embassies in the process. Since the launch of the US war against terrorism, the post is suddenly even more crucial then it was before.

But is Levy the right man for the job? As Foreign Secretary, Robin Cook was barely on speaking terms with the Prime Minister's appointee. Businessmen closely involved in the Middle East add that Levy is widely distrusted by Arab nations and British diplomats in the region alike. Given that he has personal and family ties to the Israeli Labour Party, even Ariel Sharon has grounds to consider him partisan. The Tories have also suggested that he may be engaging in Labour fundraising during his regular visits to the country.

Nevertheless, Levy has been able to act as broker in talks between Palestinian leader Yasser Arafat and Israeli foreign minister Shimon Peres that may not have taken place if he had not been on hand to facilitate them.41 In a region perpetually on the brink of war, we need to hope that the man who brought Alvin Stardust to the nation's youth can now save us all from Armageddon.


1. Guardian, 18 August 1997
2. Jerusalem Post, 24 September 1999
3. Daily Telegraph, 18 October 2000
4. Hansard, 12 February 1997
5. Independent on Sunday, 14 May 1995
6. Guardian, 16 May 1995
7. Observer, 5 October 1996
8. Daily Telegraph, 12 March 1997
9. Observer, 17 November 1996
10. Ibid
11. Daily Mail, 17 November 1997
12. Labour insider, interview with author
13. Financial Times, 23 November 1996
14. Sunday Telegraph, 5 September 1999; World Council of Hellenes Abroad website as of 4 December 2001
15. Sunday Times, 10 May 1998
16. Guardian, 19 March 1996
17. Henry Drucker, interview with author
18. Ibid
19. Ibid
20. Guardian, 18 August 1997
21. Henry Drucker, interview with author
22. Ibid
23. Sunday Times, 10 May 1998
24. Observer, 30 March 1998
25. Ibid
26. Daily Telegraph, 30 March 1998; Observer, 7 January 2001
27. Daily Telegraph, 30 March 1998; Sunday Telegraph, 5 September 1999
28. Sunday Telegraph, 5 September 1999
29. Private Eye (recent retraction)
30. Guardian, 14 February 1998
31. Financial Times, 15 June 1996
32. Observer, 14 July 1996. Lawson was working for Lowe Bell at this time
33. Daily Express, 26 April 1998
34. Observer, 11 April 1999
35. Guardian, 22 February 2001
36. Guardian, 18 August 1997; Henry Drucker, interview with author
37. Guardian, 18 August 1997
38. Ibid
39. Ibid
40. Financial Times, 5 April 2002; Financial Times, 15 April 2002
41. Daily Telegraph, 4 October 2001


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