Broken Vows (7 page)

Ever since Blair decided in 1994 that he would ignore his informal understanding made during the 1980s that the older man could have the first run for the leadership, Brown had promoted his own supposed superior intellect to expose Blair’s vulnerabilities, especially his inferior understanding of politics. Every effort by Blair to placate his chancellor and lead the government as equal partners was misinterpreted by Brown as an attempt to deny him his rightful elevation. Somehow he believed that he could have won the 1994 leadership election, whereas his support was limited to just 9 per cent of Labour MPs. Brown’s fury at Blair’s ‘betrayal’ was well concealed by Blair’s entourage until after the election. They had laughed off the chancellor’s petulant reaction to Blair’s plan for a high-profile party for pop stars, actors and London’s ‘luvvies’ in 10 Downing Street, when the Treasury had rapidly arranged a rival party for other celebrities to be held next door the day before. But the rivalry over the euro was of a different order, a major issue on which prime minister and chancellor should be seen to be thinking as one. Blair, said Peter Riddell, quoting an insider, is ‘well aware what a disaster it’s been … They have exposed damaging flaws in the way that the government is run.’ ‘Theirs is not a relationship,’ said Andrew Turnbull, the Treasury permanent secretary, ‘it’s a pathology.’

To clear the air, Blair asked Brown to see him in his office. Unless we stay as a team, he warned, ‘we’re dead. You’ll ruin the government.’ Brown was undaunted. If he had been prime minister, he too would have favoured membership. For two weeks, Blair struggled to understand Brown’s obstruction, until he had no alternative but to acknowledge defeat and issue a statement: ‘We do not propose to enter a single currency this parliament.’ The public, still wholly supportive of the government and unaware of Brown’s animosity, was bemused. The ruffled atmosphere settled until, on 8 November, a bombshell exploded.

David Hill, a Labour loyalist and one of Blair’s spokesmen, was asked by a journalist if Bernie Ecclestone, the chief executive of Formula One, had made a large donation to the party. ‘Good God, I’ve no idea,’ replied Hill. A few hours later, Hill emphatically denied the suggestion. The
following day, the
Sunday Telegraph
reported that Ecclestone’s unquantified donation had persuaded the Labour government to exempt Formula One from a European directive that banned tobacco companies from sponsoring the sport. The paper described the donation as a crude bribe because Formula One’s lucrative sponsorship deals with these companies – especially Philip Morris, the producer of Marlboro cigarettes – were threatened by Labour’s manifesto commitment to end financial relations between all sports and tobacco companies.

Inside Downing Street there was panic. For a prime minister who had deliberately used the vocabulary of trust to highlight Tory sleaze during the election and who had promised that he would be ‘whiter than white’, the allegation of corruption was shattering. Labour’s ‘moral crusade’, Blair had said, embraced compassion, integrity, community and honesty. Now, television news programmes illustrated their reports of ‘corruption’ by broadcasting pictures of Ecclestone walking up Downing Street. Viewers would assume it was the historic moment when Formula One had paid cash for access, but the images had been recorded earlier in the week at a charity event. How Blair now regretted the ‘sleaze’ soundbite. ‘The consequences were disastrous,’ he admitted. ‘I couldn’t see us doing some of the things the Tories had done.’

Unknown to the public, Ecclestone had indeed donated £1 million to the Labour Party, and was discussing a further contribution of £3 million. Although he was a Tory voter and contributor to the Conservative Party, he and his representatives had met Blair and paid the sweetener. On the Monday morning after the exposure, Brown appeared on BBC Radio 4’s
Today
programme. Asked about the donation, he lied, denying any knowledge of Ecclestone’s gift.

Events were moving beyond the government’s control. ‘This was the kind of issue’, Campbell noted in his diary, ‘that [Blair] hated most of all, though in truth there was nothing wrong about the way the decision was reached.’ Blair, he continued, had ‘nothing to hide’ because ‘the policy on banning was made after the donation was received, which blows the idea [Ecclestone] bought a change.’ The £1 million, wrote
Campbell mistakenly, had been brought in by Michael Levy, Blair’s friend and successful fund-raiser.

A false version of events was being swiftly embedded. In reality, the financial relationship had been initiated by Jonathan Powell, who himself would disingenuously write, ‘Our sin in this case was one of naivety.’ Combined with those inaccuracies was Blair’s own, written thirteen years later: ‘To be fair to [Ecclestone], he made no link whatsoever between the gift and the policy … not even implicitly.’ That was also untrue. Blair had been explicitly told by an emissary of the businessman that £1 million would be donated on condition that Formula One was exempted from the ban. The agreement was made because Blair and Ecclestone had forged a good relationship by then.

The two men had first met at the British Grand Prix in Silverstone in 1996. Blair’s visit had been organised by Powell after Ecclestone had featured in the
Sunday Times
Rich List as Britain’s highest-paid businessman. Powell telephoned David Ward, a former Labour Party official employed in Formula One. ‘Do you know how we can contact Ecclestone?’ he asked, and wondered whether Ecclestone might become a Labour donor. ‘Blair has already been invited to visit Silverstone in July,’ replied Ward, ‘and we can arrange for him to meet Bernie.’

On the day, Ecclestone welcomed Blair into his motorhome. The two leaders bonded instantly. The following day, Powell telephoned Ward. Would Ecclestone consider donating to the Labour Party? ‘Nowadays’, continued Powell, ‘we don’t consider anything less than £1 million.’

‘Are you serious?’ asked Ward incredulously.

Both knew New Labour had set a tariff for peerages and access – a sliding scale depending on wealth and importance to the party – but this amount for a simple donation was unprecedented. Ecclestone nevertheless agreed to consider the proposition. A meeting was arranged with Blair in the House of Commons. After a twenty-minute conversation, Ecclestone was taken by Michael Levy to another office.

‘We would be grateful’, said Levy, ‘if you could make a significant contribution, something around £1 million.’

Ecclestone listened, said nothing and after five minutes took his leave. ‘He’s amateurish,’ he told Ward.

In early January 1997, Levy telephoned Max Mosley, Ecclestone’s trusted partner in the transformation of Formula One from a sport for enthusiasts into a global business, to ask again for £1 million. By then Philip Morris was agitating against the European ban on tobacco companies sponsoring sport. ‘£1 million’, Mosley told Ecclestone, ‘will give us access and help us on tobacco.’ His words fell on fertile ground.

Ecclestone was furious that, despite big donations to his party, John Major had failed to secure him the promised knighthood. In revenge for that snub and to please the tobacco companies, Ecclestone agreed to pay £1 million to Labour. Ward passed the news on to Powell with a caveat: ‘I will support Bernie Ecclestone’s contribution so long as I can talk to Tony and outline the sensitive issues around Formula One.’ Powell agreed.

Soon after, Ward was seated opposite the prime minister in Blair’s living room in Islington. Powell and Peter Mandelson, who had welcomed Ward into the house, remained outside. ‘You’re getting £1 million from Ecclestone,’ Ward told Blair, ‘but you must understand that the issue of tobacco sponsorship will arise in a European directive, and we believe that a better way to achieve the same outcome is by a voluntary global agreement. We just want a transition period.’ The problem, Ward added, was the officials in Brussels, who were stubbornly resisting such a period. ‘There is no need for controversy, but we will want your help,’ he concluded. At the end of twenty minutes, Blair said, ‘I understand.’ Back in Ecclestone’s Knightsbridge office, Ward was given a personal cheque by the billionaire, although both knew that Labour remained committed to banning tobacco sponsorship of all sports.

On 15 May, Frank Dobson announced in the House of Commons that the government intended to implement the ban. Tessa Jowell, his junior minister, repeated the same pledge in Brussels. Soon after, Levy invited Ward to his home in north London and set about reassuring him that the government was sticking to their agreement to change the
law. Sitting in the garden, he asked, ‘Is Bernie thinking of giving more money to Labour? We wondered if he would commit himself to giving Labour £1 million every year for the life of the current parliament.’

‘There are problems,’ Ward replied.

‘We must arrange another meeting with Tony,’ Levy soothed.

Soon after, Levy spoke to Powell. ‘The prime minister needs to meet Bernie.’

‘OK,’ replied Powell.

The arrangements were made soon after. Blair’s agreement to meet Ecclestone in Downing Street, Ward reassured Mosley, was directly linked to their conversation in his Islington home before the election: another donation would protect the tobacco companies’ sponsorship of Formula One.

Seated in a circle in a small ground-floor room in Downing Street with Blair, Powell, Ward and Ecclestone, Mosley addressed the prime minister, as he would later say, ‘lawyer to lawyer’. Eloquent and precise, Mosley said, ‘We don’t oppose the end of tobacco advertising but we just want a gradual elimination so that alternative sponsors can be found.’

Blair nodded. If phased reduction was denied, Mosley explained, 50,000 British jobs as well as F1 Digital TV could easily be relocated outside the EU. Blair looked over at Ecclestone. The businessman wanted Blair to know that there was no contest between Dobson and himself. With a snap of his fingers Britain could lose its Grand Prix and the lucrative motor-sport industry. Those who ignored his warnings, Ecclestone implied, were always surprised that he did what he said.

‘Let’s keep in touch about this,’ said Blair after thirty-five minutes. The three visitors departed convinced that an understanding had been reached.

Shortly after, Mosley bumped into Mandelson at a reception in Lancaster House. ‘How’s it going?’ he asked.

‘The whole of Whitehall is reverberating to the sound of grinding gears,’ said Mandelson, implying that Formula One’s request was being granted.

The following Monday, Ward heard that Blair had given an order to ‘sort out the Formula One problem’. Powell explained that the government was seeking an exemption in Brussels from the directive. Shortly after, Tessa Jowell called Mosley. Blair, she said, had ordered that Formula One should be given special exemption until October 2006. Ecclestone’s money had forced Dobson to reverse the ban on tobacco sponsorship.

Although Levy would mischievously write, ‘To my knowledge [Blair] never altered any of his policies because of any of the big-money donations I brought in,’ he did criticise Blair for what followed.

Ecclestone’s success was leaked to a journalist and, the day after the Sunday newspaper’s report, Ward rushed to Downing Street to confront Powell and Campbell. He discovered ‘total chaos’. ‘They didn’t want to listen to me,’ he told Mosley, adding that Powell and Campbell, anxious to protect the prime minister, would cast Ecclestone as the villain and encourage Blair, if necessary, to lie. At Mosley’s suggestion, Ward telephoned Powell and urged that the government stay silent about the donation. The suggestion of a conspiracy to suppress the truth hardly appealed to Blair or his entourage. On the contrary, ignoring Ecclestone’s interests, Blair had already asked Derry Irvine, the Lord Chancellor, to limit the damage.

By then, Blair’s confidence in his former pupil master had been shaken by Irvine’s arrogance and misunderstanding of the media. The extravagant manner of Britain’s most senior lawyer would later be compared to Cardinal Wolsey’s behaviour, and in that vein Irvine blamed Blair for the disaster. ‘He could not believe how badly we had fucked it up,’ noted Campbell. Irvine advised that any confession of the truth was ‘utterly absurd’, and suggested that the government should create a smokescreen.

Acting on Irvine’s advice, Blair and Gordon Brown concocted a ruse. They ordered Tom Sawyer, the party’s general secretary, to write a letter to Patrick Neill, the commissioner for standards in public life, based on a lie. The letter referred to a new code of conduct for party funding. Sawyer mentioned that the Labour Party had accepted a donation from
Ecclestone while in opposition, and that ‘Mr Ecclestone has since the election offered a further donation’. So far, wrote Sawyer inaccurately, the second offer had been refused out of fear of a potential conflict of interest because of the tobacco exemption. He asked Neill whether the party’s concern was justified. The letter was sent on 7 November. On the same day, David Hill, as he would later admit, continued using evasions and menaces to deflect journalists’ questions.

Wracked by fear, Blair was not sleeping. His fate depended upon the ability of his clique – especially Alastair Campbell – to manage the media. After the election, the PR man had introduced himself to government information officers as ‘a believer in strategic communications’. Few officials immediately understood that in the daily battle for favourable headlines they were to serve Blair’s interests and not the media’s. ‘We must not let the press think they can push us around,’ Campbell said. While working for Robert Maxwell, he and other
Mirror
journalists were routinely ordered to distort the news, a practice that Campbell imported into Downing Street. Frightening people was his strategy. His misfortune was that Hill’s denials about Ecclestone were denying him his accustomed influence over the media. Blair, he realised, ‘was taking a real hit. We had made a big mistake in not going upfront. We were looking shifty and shabby.’

Patrick Neill only contributed to Blair’s plight. Regardless of the truth, he replied to Sawyer the same day, the appearance of taking Ecclestone’s money had raised questions of honesty and offended the rules. Therefore, he recommended, not only should the second donation be refused, but Ecclestone’s first should be returned. In Downing Street, the panic intensified. No one had anticipated that interpretation. Campbell suggested limiting the damage by admitting some truth. Accordingly, Hill told journalists that Ecclestone had given the party ‘over £5,000’. At the same time, another Downing Street spokesman said that, during their meeting in No. 10, Ecclestone made ‘no request regarding policy’. That lie was quickly contradicted by Campbell. Ecclestone’s donation, he admitted, was made to change Labour’s policy.