Patrick Hennessy tells us that there is an interesting dinner planned for tonight, and that in a new found spirit of peaceful cooperation, bread will be broken by two old enemies. Before the great tribal truce and the summoning of the Dark Lord from over the water by the One-Eyed Son of the Manse, Peter Mandelson and Ed Balls were the most vicious champions of their respective masters; Blair and Brown. Briefing and pouring bile about the enemy camp into the ears of anyone who would listen.

It was at the height of the Blair destabilising cash for honours investigation that Guido was sent a document outlining the use of 11 Downing Street by the Smith Institute and the role of that “charity” in furthering Gordon’s ambitions. The note was passed to Guido by an über-Blairite close to No. 10. This was hardly surprising since No. 10 suspected (rightly) the Brownies were stoking the flames of cash for honours, this was essentially a sleaze counter-attack. The note outlined how Gordon got private polling and personal consultants flown in from the States. How they were paid for by cash-for-access meetings in No. 11 involving Brown and his aides under the auspices of the Smith Institute. Balls himself was paid an £89,000 bung by the Smith Institute and is now under scrutiny with the Tories looking to link this payment and others to the unlawful furtherance of Brown’s political ambitions.

The Mail on Sunday this morning is following up on this story. Guido will have more revelations next week…

The Sunday Times is reporting that the Electoral Commission is to investigate whether, in breach of electoral law, Ed Balls continued working for Gordon Brown while on the payroll of the Smith Institute charity before becoming an MP.

Regular readers will know that this allgation was a central part of Guido’s campaign against the Sith. Essentially the Smith Institute was a slush fund for Gordon’s ambitions. The Tories are now convinced that Ed Balls continued working for Gordon Brown when he was on the charity’s payroll. They have been trying for six months to ascertain whether or not he continued to have access to the Treasury with a security pass. Guido has other evidence that Ed Balls continued to act as Gordon Brown’s political adviser during th 2004 / 5 period when he was being paid by the charity. Not only Balls but also Tony Pilch, a former SpAd close to Balls, and Bob Shrum during the same over-lapping period were working for the Smith Institute.

According to the Sunday Times “the Tories are submitting a complaint to the Electoral Commission and John Lyon, the parliamentary commissioner for standards. They want Brown to be challenged over whether Balls had a pass.”

Guido understands that the Electoral Commission is already making inquiries, including in the United States, following a complaint made last July (after the Charity Commission report condemned the Smith Institute for partisan activity) by the Sunlight Centre for Open Politics. That letter of complaint (here) focused on the activities of U.S. pollster Bob Shrum. Shrum was paid by the Smith Institute to advise Gordon Brown, these slush payments are a serious breach of electoral law.

The Telegraph is floating the perennial rumour (it has been going around for years) that Wilf Stevenson, the disgraced former head of the Smith Institute, is to go to Downing Street in a policy role.

A couple of years ago when Guido first started exposing the Smith Institute’s links to Gordon Brown – that it was an illegal slush fund for Gordon Brown’s ambitions, acting as his all-but-in-name campaign HQ – a canny observer of Westminster told Guido that “You don’t realise how much of a favour you have done Gordon. If it weren’t for you Wilf would be in Downing Street and he is a walking disaster”. Now he as at a loose end it is more feasible that Wilf could shift to Downing Street, moving from Brown’s policy engine room to join his captain on the ship before it sinks.

Excellent. Wilf’s time as head of a think tank was distinguished only in that it was mired in controversy, was twiced investigated for breaches of the law, was found by the Charity Commission to have broken the law and is now facing the possibility of a third investigation for other breaches of the law by the Electoral Commission. The Smith Institute was not exactly a font of vote winning policies – if it had been any good Brown would not be reduced to desperately nicking Tory policies. If Wilf does move to Downing Street he will only be formalising his role as adviser Gordon. It is somehow fitting that he will be joining his former Smith Institute deputy Konrad Caulkett in Brown’s Downing Street bunker at the end…

Sir Michael White this morning confirms the accuracy of Guido’s exclusive report yesterday. Through gritted teeth the left-wing journalist reported that “right-wing bloggers celebrated what they see as two Brownite scalps”. Too right.

Comical Wilf told Sir Michael that there is nothing to see here, the savaging that the Institute’s trustees got from the Charity Commission was “brilliant”, he told the Telegraph: “The Commission’s report was excellent in every respect and it is only because it was so good that I am able to step down now at this time” and that he always intended to resign as director, presumably Lord Haskel, donor to Brown’s leadership campaign and chairman of the trustees, always planned to resign as well.

Nothing then to do with the direct criticism of the trustees, finding “evidence of unchallenged party political comments being made at Institute events by politicians and also party political comments made by or on behalf of the Institute… combined with the predominant involvement of Labour Party politicians in the Institute’s activity, compromised the Institute’s independence. Bearing in mind the previous engagement between the Commission and the trustees in 2001/02 on this matter, the Commission concluded that the trustees had not safeguarded or adequately supervised the risks posed to the independence and reputation of the Institute… the trustees had allowed the Institute to become exposed to concerns that is supported Government policy and was involved in party political activity inappropriate for a charity”.

Haskel was damned as “not sufficiently engaged to ensure the proper supervision of the charity”.

Guido doesn’t entirely agree with Iain Dale that the “Institute will cease to be”, it will however cease to be what is was, a slush fund for Gordon Brown. It will become a more normal think-tank, not a partisan vehicle for one politician’s ambitions.

Guido has learnt that following the condemnation by the Charity Commission of the trustees of the Smith Institute, Lord Haskel has resigned as chairman of the trustees, Wilf Stevenson has also resigned as director after the unprecedented criticism of the charity for partisanship.

Paul Hackett, a wonk who has written some pamphlets for the Sith, is the “acting director”. The offices are closed and Guido has confirmed that the Smith Institute will no longer be based at the New Statesman’s offices. The rumour in wonk-land has it that the IPPR has taken pity on them and will be giving them space at their offices.

According to charity sector specialist magazine Third Sector, Andrew Hind, chief executive of the Charity Commission, has said he is “extremely concerned” that the Smith Institute is misrepresenting the contents of the regulator’s report into the think tank.

The commission reprimanded trustees of the think tank this week for failing to protect the charity from claims that it is supporting the Labour Party.

Paul Myners, deputy chair of the institute, responded by saying the commission was asking trustees to ensure that all speakers were politically neutral and that the regulator had “shown a fundamental lack of understanding of the work that all think tanks undertake”.

But Hind responded: “We are not saying we expect trustees to guarantee that no party political statements will be made. What we are saying is that if you want to have politicians at your event, as a think tank charity you have to ensure that there is balance.

“The trustees are disputing some of the clauses of the report and are alleging that the Charity Commission is naive and doesn’t understand how think tanks operate. But we have had extraordinarily in-depth discussions with them over the past few months.”

At the commission’s open board meeting in Liverpool yesterday, Hind again defended the report and said it would be “a reference point for the future” for other think tanks.

He said: “Not only are there some important findings about the Smith Institute, but there are also some important points of principle for all charity think tanks.”

Dame Suzi Leather, chair of the Charity Commission, said the enquiry had produced “an exemplary report from an independent regulator”.

Guido has been pleasantly surprised with the thoroughness of the Charity Commission report – the way the Sith’s trustees have tried to spin it has demonstrated their unsuitability to be a charity. Paul Myners really ought to resign.

Last week’s Charity Commission report ruled the Smith Institute was in breach of the laws on political impartiality. Paul Myners whines that the Charity Commission “have shown a fundamental lack of understanding of the work that all think tanks undertake.”* It is Myners and his fellow trustees who have clearly shown a fundamental disregard or lack of understanding for Charity law. A “think tank” is not a legally defined entity, legally the Smith Institute is a registered charity. Other think tanks, such as the similarly named but rather more illustrious Adam Smith Institute think tank, do not seek charitable status. Partisan think tanks should not be able to abuse the tax exemptions available to charities, because charities can reclaim taxes on donations they are legally obliged not to stray in partisan politics.

In the years leading up to Brown seizing the premiership the Smith Institute was functioning as his political secretariat. Whenever he needed something done outside the party structures, the Smith Institute was used. Photo-opportunity with Al Gore needed? Get the Smith Institute to invite him. Want to get the line out to Toynbee and the media fan base? Have the Smith Institute invite them. Want private polling advice? Get Deborah Mattinson to do it for the Institute (didn’t she do well as a result). Gordon wants expensive strategic advice from Bob Shrum? Put Bob on the payroll and slush the money through the Smith Institute…

Herein lies a very difficult problem for Gordon Brown – the Charity Commission has found that the Institute’s Senior Research Fellow, the expensive pollster and strategist Bob Shrum, was unsupervised. The Inquiry could only identify him leading two events in 2006, both of which did not further the Institute’s charitable purpose. So what was he doing for his money between September 2005 – April 2007? He was advising Gordon Brown on strategy and tactics. This service was undeclared to the Electoral Commission and is a breach of Section 50 (2) (f) of the Political Parties, Elections and Referendums Act 2000. Following the publication of the Charity Commission report a formal complaint has been put in to the Electoral Commission. Although he has so far refused to respond to questions from the Charity Commission about the Smith Institute, this is not yet over for Gordon Brown. He may have thought the issue closed, but it has opened up a new front.

See also : Flashback : The Smith Institute Exposé