The Electoral Commission has cleared as legal £5.1m of donations to the Conservatives from a firm belonging to Lord Ashcroft.

The commission has ruled that the donations by Bearwood Corporate Services were “legal and permissible”, after a 14 month investigation.

Firms must be “carrying on business in the UK” to be allowed to donate money to British political parties. BBC.

So what is the evidence that has allowed the Electoral Commission to deem the donations legal? Because what The Guardian has uncovered looks anything but legal.

The ultimate source of the Ashcroft millions that have helped bankroll the Tories in the past appears to be Belize, the Caribbean tax haven that the billionaire has claimed in the past to be his home.

But the route that the money follows on its 5,200-mile journey from the impoverished country to Conservative HQ – and then out to Britain’s marginal constituencies – is highly complex.

In recent years, the tycoon’s donations to the party have been made by Bearwood Corporate Services (BCS), a company registered in the UK and with a registered office at the offices of its auditors, BDO Stoy Hayward, in Southampton.

During the year ending March 2006, BCS received £4.79m in cash for shares that were bought by its holding company, Bearwood Corporate Holdings.

Bearwood Holdings had received that money by selling shares in itself to another company, Astraporta UK, for £5.54m.

Astraporta, in turn, appears to have received its funds, around £6m, by selling shares to a company registered in Belize called Stargate Holdings. Where Stargate receives its funds is unclear. It is registered offshore – at a registry controlled by an Ashcroft company. When the Guardian visited the registry’s offices in Belize City to inquire about Stargate, a registry official said: “You will never know who owns Stargate.”

Astraporta and Bearwood Holdings were put into liquidation last year and were formally dissolved on Monday, just as Ashcroft was making his announcement that he was a “non-dom”. Rajeev Syal, Ian Cobain, Jamie Doward and Polly Curtis, The Guardian.

It appears theses donations have been deemed legal not because the rules haven’t been broken – but because Ashcroft has made it impossible for the Electoral Commission to identify what’s going on – surely that alone should mean the donations have broken the rules – if they hadn’t then surely Ashcroft wouldn’t have to employ so much smoke and mirrors.