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By a Newsnet reporter

Secretary to the Treasury, Lib Dem MP Danny Alexander, has been accused of hypocrisy after accepting a donation of £10,000 from nightclub owner James Palumbo, who was created a Lib Dem peer just 2 days after Mr Alexander registered the donation.

Mr Palumbo has given over £10,000 to Mr Alexander's Inverness, Nairn, Badenoch and Strathspey branch of the Lib Dems, and has reportedly given more than £500,000 to the party over the past few years.

The donation was accepted on March 17th – but not declared in Mr Alexander’s register of interests until July 30th.  Mr Palumbo was made a peer two days later.

The revelations follow a similar row about Domino-s Pizza entrepreneur Rumi Verjee, who was also made a peer at the beginning of August.  Mr Verjee is reported to have donated around £800,000 to the Liberal Democrats.

In the run up to the 2010 General Election, the Lib Dems said that if they acheived power they would make a priority of cleaning up the discredited system of party donations and peerages being given to large donors.  In a policy document published in 2009, the party stated:

"The issue of cash for honours and large donations to particular parties by individuals undermines public confidence in the political system and the democratic process.  People are seen as being able to buy influence, and peerages, thereby influencing political decisions.  Without a clean-up of the way political parties are funded, people will not trust the integrity of political parties and involvement in the political process will continue to decline.  We've got to stop big donors from bankrolling the big parties to get their way with our country."

Speaking to the Strathspey Herald, James Holt, the Lib Dem's head of media, said Mr Palumbo had been a Lib Dem supporter for some time, and had previously given donations to deputy party leader Simon Hughes, in whose constituency Mr Palumbo's nightclub is based.

Mr Holt said:

"James has supported a number of MPs in their constituencies. I know he has been particularly supportive of Simon Hughes and a couple of others. He has worked with Simon Hughes on a number of issues and Danny is one he is supportive of too."

All three of the main UK parties have given peerages to party donors this summer.  When Mr Palumbo's and Mr Verjee's peerages were made public, it was also revealed that Sir Anthony Bamford, Chairman of JCB, is to become a Conservative peer.  The Bamford family has given around £2.5m to the Conservative party since 2002.

Also created a peer in August is Scottish businessman Sir Willie Haughey, who will sit in the House of Lords as a Labour peer.  Mr Haughey has donated over £1.3 million to the Labour party and was reportedly a close ally of Stephen Purcell, the disgraced former leader of Glasgow Council.

Angus MacNeil, the SNP MP who uncovered the Cash-for-Honours scandal, has hit out at the hypocrisy of Danny Alexander for accepting the donation and his delay in reporting it.  

Mr MacNeil also criticised the main UK parties for their repeated failure to reform the House of Lords and continuing to stuff the upper chamber with party donors and political appointees.

Mr MacNeil said:

"After all the attempts by the Liberal Democrats to appear squeaky clean during the Cash for Honours scandal, they are no different to the other Westminster parties quite happily awarding peerages to major donors.

"Danny Alexander must also explain why it apparently took so long for this donation to be declared – just 48 hours before Mr Palumbo's peerage was actually announced.

"The UK parties have repeatedly failed to properly reform the Lords and the cronyism culture just goes on and on with no end in sight. It is an affront to democracy for Westminster to be stacked full of party donors and political appointees - when Scotland is able to elect just 4% of Westminster’s parliamentarians.

"A Yes vote for independence means that people in Scotland can get rid of the expensive and unrepresentative Westminster tier - which means better and cheaper government."

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