British Prime Minister David Cameron bowed to pressure on Monday to disclose his own contacts with wealthy donors after a newspaper sting caught a top fundraiser for his party offering meetings with the premier in return for big contributions.
Conservative party co-treasurer Peter Cruddas resigned after The Sunday Times filmed him telling reporters posing as financiers that, for 250,000 pounds ($400,000), they could dine with Cameron and might possibly influence government policy.
Although Cameron and other senior Conservatives distanced themselves from Cruddas's behaviour, calling it unacceptable, the scandal is potentially deeply damaging for Cameron as it revives worries over the corrosive influence of money on British politics and reinforces Cameron's image as a friend of the rich.
The episode played into the opposition Labour Party's accusations that Cameron and other senior Conservatives, who come from wealthy, privileged backgrounds, are out of touch with ordinary people who are being forced to tighten their belts to cope with the government's deficit-cutting measures.
The funding row broke days after finance minister George Osborne announced a cut in the top rate of tax for the highest earners, exposing the Conservative-led coalition government, which won power in 2010, to Labour charges that the pain of austerity was not being shared between rich and poor.
After initially resisting Labour calls to disclose which party donors had dined with him at his private apartment above the premier's office at 10 Downing Street, Cameron gave way to the pressure on Monday and announced he would publish the names.
In the two years I have been prime minister, there have been three occasions on which significant donors have come to dinner in my flat, he said, during a speech in London.
In addition there was a further thank you dinner, which included donors, in Downing Street itself shortly after the general election. We will be publishing details today.
None of these dinners were fund-raising dinners, and none of these dinners were paid for by the taxpayer, he said.
Cameron also promised that the Conservatives would publish details every quarter of any meals with the prime minister attended by any major donor to his party.
The Conservatives said they would launch an internal inquiry, although they resisted Labour calls for an independent inquiry into the affair, drawing scorn from the opposition.
It is just not acceptable or credible in any way at all for the Conservative Party to investigate themselves, Labour lawmaker Michael Dugher told BBC radio.
An aide to Cameron portrayed the disgraced treasurer, who rose from a modest background to make millions as a currency trading entrepreneur, as having broken with party guidelines: We are just as flabbergasted as you guys, the aide told reporters when answering questions about Cruddas's remarks.
We are more transparent than any government and any prime minister have ever been. We behaved properly. What Cruddas was doing was totally unacceptable.
However, the aide said there was nothing wrong with the prime minister meeting people who had also given to the party. We shouldn't discount policy ideas simply because they have been put in by a donor, the aide said.
Cruddas told the journalists posing as financiers that their concerns about government policies would be fed into a prime ministerial policy committee.
Cameron said no one in his policy unit had met anybody at Cruddas's request. However, he said the government would put in place new procedures so that if any ministerial contact with a party donor prompted a request for policy advice, the minister concerned would seek advice from civil servants.
The prime minister offered to resume talks with other parties on how they fund their political organisations and said he was ready to impose a cap on individual political donations of 50,000 pounds ($80,000).
Party funding has long been a toxic issue in British politics and has periodically led to scandals affecting both Conservatives and Labour.
The Conservative Party, regarded as business-friendly, relies on large donations from wealthy individuals for much of its funding while the centre-left Labour Party is heavily dependent on trade unions for its funding and would suffer if union contributions were capped at 50,000 pounds.
Previous attempts by the parties to agree on reforming party funding have failed. Using more public money to fund political parties could be an answer but most voters oppose increasing the amount of taxpayers' money used for the purpose.
Former Labour Prime Minister Tony Blair's final years in office were overshadowed by a police probe into allegations that political parties had nominated people for seats in the upper house of parliament in return for cash or loans.
Blair was quizzed by officers as a witness three times before prosecutors announced in 2007 that no one would face any charges.
For many voters, the latest affair also revived feelings of mistrust of the political elite as a whole which were heightened in the last year of the previous parliament with revelations of the abuse of out-of-pocket expenses by members of the legislature from all major parties. Several were sent to jail.
Conservative member of parliament Zac Goldsmith, one of the most visible of many younger Conservatives elected for the first time in 2010, said the Cruddas affair was shocking: I hope it leads to rapid and radical reform of political party funding.
Contributions must not only be totally transparent, I believe they should also be capped, he told Reuters. It is important for democracy and for the parties themselves that they reach out to the wider population, instead of relying on a handful of powerful groups or individuals.
Mark Wickham-Jones, politics professor at Bristol University, said the scandal was potentially very awkward for the government.
Over the last 20 years in British politics each new government has promised to set a new standard in terms of party financing and resolving the dilemmas of funding, he said.
The reality has been each new government has found it very difficult to ensure such a standard is achieved.
(Additional reporting by Matt Falloon; Editing by Alastair Macdonald)