Election '97: Businessman rebuffs claim on donations

Paul Sykes, the millionaire businessman who has given pounds 500,000 to local Conservative parties whose candidates oppose the single currency, has rebuffed suggestions that his donations would jeopardise their parliamentary future.

Mr Sykes, who is firmly opposed to the single currency and federalism, has exacerbated divisions within the Tory party by giving between pounds 1,000 and pounds 3,000 to areas with a sitting Tory MP. The money has been taken up by 237 associations, costing Mr Sykes about pounds 500,000, but he argues that suggestions that he gave the money to candidates are wrong.

He said yesterday: "The money was given to constituency associations and not candidates, and we checked the situation legally very carefully before making the donations."

Mr Sykes yesterday issued a writ against the Guardian for libel after it ran a story saying: "This man gave money to 237 Tories. They may well regret it."

Mr Sykes is demanding a retraction and an apology and warned that he was prepared to pursue it all the way. "I hope they give in, because I don't want to cause any job losses at the paper," he said. He also demanded the resignation of the editor, Alan Rusbridger.

It is unclear whether Sir Gordon Downey, the Commission for Parliamentary Standards, is likely to receive a complaint about the donations when Parliament resumes. If so, he may be asked to produce a report for the Commons Standards and Privileges Committee to decide whether they contravene rules issued 18 months ago by Parliament following the cash- for-questions affair.

Labour was officially playing down the story because it did not want Europe to become an issue on the day of polling. However, individual MPs or members of the public will be able to table a complaint after the election to Sir Gordon.

It is not certain whether the donations breached the rules, which say members should not take payments for speaking in the House on a particular issue, nor can MPs enter into any "contractual arrangement which fetters the Member's complete independence in Parliament by any undertaking to press some particular point of view on behalf of an outside interest." Mr Sykes argues that these MPs already held anti-single currency views beforehand and that they did not benefit personally from the donation.