A music mogul who has given Nick Clegg more than £500,000 and won Lib Dem support in a row which threatens his nightclub faces a major setback after Boris Johnson ordered a probe into ‘odd goings-on’.
The London Mayor is tipped next month to throw out a controversial decision to back a campaign by Ministry of Sound boss James Palumbo to stop a 41-storey residential tower being developed near the club.
Mr Palumbo, a close friend of Deputy Prime Minister Mr Clegg, claims it would force him to close the lucrative Ministry of Sound.
The Mail on Sunday has learnt that Mr Johnson ordered an investigation into the decision by Southwark Council, South London, after being told of the row over Lib Dem donations.
The Mayor was informed that Lib Dem councillors who backed the decision to turn down the apartment block failed to disclose that Mr Palumbo gave the local Lib Dem party £21,000 in the run-up before the crucial vote.
Electoral Commission files show that Mr Palumbo’s Ministry of Sound gave the national party £10,000 in the five years up to 2009. But since March 2009, the figure has soared to a total of £528,000. The apartment block plan opposed by Mr Palumbo was first put to the Labour-run local council in 2009.
The most recent donation was made last August when Mr Palumbo, an Old Etonian, gave a £50,000 cash donation to Mr Clegg’s coffers.
Mr Clegg held a Christmas party for MPs at the club, using the theme of Willy Wonka And The Chocolate Factory. One guest described it as ‘unbelievably lavish . . . it was a free bar all evening for everything except champagne’.
There has been a gaping hole in Lib Dem finances since fraudster Michael Brown, who gave the party £2.4 million in 2005, fled the UK four years ago. Mr Palumbo’s donation over three years makes him one of the Lib Dem’s biggest ever donors.
He has also given £11,000 to Lib Dem deputy leader and Southwark MP Simon Hughes since 2006. Mr Hughes has publicly sided with the nightclub in the dispute, but has made it clear he had no role in the planning process.
All three Lib Dems on Southwark’s six-strong planning committee, which rejected the application by developed Oakmayne Properties, voted against the project, as did two Labour councillors. The third Labour councillor abstained.
The Lib Dems say they were advised by officials they did not need to declare the Ministry of Sound donations to the wider party.
But Oakmayne, which wants to convert Eileen House, a Sixties office building at the Elephant & Castle in South London, into 335 flats, claimed it ‘cast very serious doubts over the decision to refuse planning permission’. A public hearing on the application to build is scheduled for February 26.
A well-placed source said: ‘Mr Johnson decided to look into this after reports of odd goings-on. All the planning officers advised it should be approved, but for some reason this one wasn’t. There is a wide expectation that it will be overturned when the hearing takes place next month.’
Mr Palumbo, 49, who founded the Ministry of Sound club and record label in 1991, has made an estimated fortune of £170 million. He was estranged at an early age from his father Lord Palumbo, the Conservative peer and former Chairman of the Arts Council.
Last night, a spokesman for the Ministry of Sound said. ‘The initial vote against the move by the local council had nothing to do with donations to the Lib Dems.’
The Lib Dems also vehemently deny that the donations affected the planning decision, stressing Labour also voted against.
A spokesman for the Liberal Democrats said: ‘The Mayor of London has the right to call in any planning decision. This is not connected in any way to Liberal Democrat opinions of the development.
‘Liberal Democrats have fully declared all donations and have continually taken legal advice from council officials.’