THE Conservative Party appeared to be embroiled in another scandal over its funding yesterday after its chairman, Dr Brian Mawhinney, ordered a "full investigation" into media allegations that the Tories have received more than £100,009 sterling in donations from businessmen linked to the Bosnian Serb leader, Dr Radovan Karadzic, who is wanted on war crime charges.
Both the Labour Party and the Liberal Democrats demanded an immediate explanation, describing the allegations, if true, as "the worst scandal in this parliament". The Shadow Foreign Secretary, Mr Robin Cook, wondered why the Tories had failed to deny the media reports and suggested the party had "something to hide".
"It would be appalling if it were confirmed that the Conservatives took money from people with links to the Serb politicians who took British soldiers hostage," he added.
The Liberal Democrat leader, Mr Paddy Ashdown, wrote to the British Prime Minister, Mr Major, urging him to make an emergency statement on the affair. "If it is true that the Serbs made donations to the Conservative Party, then I am sure you will understand that this will be regarded as a scandal, given that the government was claiming to be neutral in this conflict and that British troops were on the ground in Bosnia at the time," he wrote.
After describing the allegations in the Sunday Times newspaper and ordering an investigation, Dr Mawhinney said he had no reason to believe there had been an impropriety, but the party would repay any money if the report were true.
"Ever since I have been party chairman, I have insisted that party donations observe our strict rules of propriety. We do not accept funds with conditions attached from foreign governments, from anonymous donors and from criminal sources," he said.
According to the newspaper, Mr Major allegedly discussed the donation with senior government officials, who warned that the money could be traced to Dr Karadzic.
However, it has also emerged that the Conservative Party has so far failed to repay the £440,000 sterling donated by the fugitive businessman, Mr Asil Nadir, which was proved to be stolen, despite pledges by senior government officials. The party's coffers are currently £2.2 million in the red.
Mr Nadir, former chief of the collapsed Polly Peck conglomerate, is now a fugitive from British justice in the Turkish controlled part of Cyprus.
One of Britain's top businessmen, broadening the issue, said he felt company donations to political parties were inappropriate.
The British Airways chairman, Sir Colin Marshall, who takes over this week as president of the Confederation of British Industries, told Sky Television that some companies gave cash to political parties but said "I personally believe it is not appropriate to do that. I think that if one wants to make a contribution, one should make it on a personal basis."
The right wing maverick Tory MP, Sir George Gardiner, added to Mr Major's woes over the week end by threatening to force a by election in his Reigate constituency and imperil the Government, reducing it to a minority, if he is deselected.
"I have no interest in being a lame duck MP unable to push Tory grassroots values at Westminster and with little clout representing my constituents either. Not even my critics dispute that I am a good constituency MP," he said.
Reigate Conservative Association has already decided by 15 votes to 14 not to readopt Sir George because of his support for Mr John Redwood during last year's leadership challenge.