Zarah Sultana now has sole control of over £800,000 of Your Party donations following a fresh internal fallout.
Sky News understands she has assured co-leader Jeremy Corbyn the money will be transferred to the party as a whole.
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However that is yet to happen, frustrating some Your Party figures who have been trying to access the funds for weeks, in a situation one source described as “an insane mess”.
There has been a major row behind the scenes with the previous custodians of the donations – former Labour MP Beth Winter, former Labour mayor Jamie Driscoll and former South African politician Andrew Feinstein.
The trio were the directors of a company called MoU Operations, which was set up in April to support an independent alliance of MPs centred around former Labour leader Mr Corbyn.
When Your Party was launched in July, its privacy policy stated that donations would be collected by MoU until the new movement was formally constituted and had its own bank account.
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Your Party was registered with the electoral commission on 30 September, when it declared assets of £850,000, but no transfer of funds was made despite repeated requests from senior figures to MoU, seen by Sky News.
The row reached boiling point this week as Your Party sources said they were considering legal action. Sky News understands lawyers had drafted a ‘letter before action’ to send to MoU, putting them on notice of court proceedings, before the three directors broke their silence and quit on Wednesday night.
In a lengthy statement, the trio said the role of holding donations was “thrust upon” them and the company had been “repeatedly been used without our agreement”. They said a transfer of funds had been further complicated by Ms Sultana’s unauthorised membership launch last month, which left MoU vulnerable to liabilities.
‘Totally undemocratic’
The group said that since the end of September, they have been asking Your Party to take complete ownership and control of MoU, but this was refused.
Ms Sultana taking the reins was aimed at breaking the impasse. However one Your Party source told Sky News it is “only a resolution if Zarah transfers the money to the Your Party bank account”.
Another Your Party source pointed to a statement she made on social media on Wednesday night, in which she said the MoU resources “will now be used for Your Party as was always intended”.
The source said: “Zarah created this utter mess then poses as coming to the rescue, but she didn’t actually say she would transfer it in her statement.
“Imagine if this was the Labour Party and one MP had control of the funds. It’s totally undemocratic.”
A source close to Ms Sultana said that legal formalities are being concluded and the cash will “100%” be moved over as soon as practically possible, stressing there is no deliberate delay.
Sky News understands she was willing to take on risks associated with MoU to get the issue resolved before the founding conference next month.
The row, which also relates to data, is deeply damaging for a party that had promised to revive the British left but has so far been marred by chaos and division.
Ms Sultana announced the new party in early July in a move that appeared to catch Mr Corbyn off guard – with the official launch coming weeks later.
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Botched membership launch comes back to haunt Your Party
On 18 September, she sent an email to supporters asking them to become a paid member for £5 a month or £55 a year, which Mr Corbyn said was unauthorised. The website had a different domain name to Your Party’s website, though it looked similar, and said it was being managed by MoU, which received the membership fees.
However neither MoU nor Ms Sultana was the owner of the data of those who received the email, which was being managed by Mr Corbyn’s Peace and Justice Project. The matter was referred to the Information Commissioner’s Office, and an investigation is still ongoing.
The money collected by MoU in membership fees is not expected to be transferred to Your Party as those people who paid are entitled to a refund – a process Ms Sultana will now have to manage.
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Some 20,000 people signed up to Ms Sultana’s portal but Your Party still does not have access to their emails, meaning there is no way of contacting them.
‘Lack of governance at top of Your Party’
Your Party had been requesting the transfer of this too, but MoU’s outgoing directors suggested this would breach GDPR regulations.
In their statement, they said they had no involvement in the “confused membership launch” and they could not “accept personal liability for actions that were taken without our knowledge or approval”.
“Nor could we agree to a proposed ‘resolution’ that put MOU at risk of having liabilities exceeding its assets,” they added.
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The group also claimed they raised concerns about the “lack of appropriate governance” of Your Party ever since its launch and “tried many times to hand over everything to Your Party, lock, stock and barrel”.
They said they wanted to find a resolution behind the scenes but have repeatedly been subject to “hostile briefings”.
“In simple terms, we offered to hand over ownership to Your Party, and make the six Your Party MPs directors in our place, giving them full control. Only one of the six was willing to agree,” the statement said.
“We will have no further involvement with MOU. We want nothing for ourselves. We have taken no money or benefit in kind.”
Your Party has not released a statement of its own.
But Ms Sultana paid tribute to her predecessors on X, saying they have been “patient, constructive and consistently sought to resolve matters diplomatically”.
She said: “Thank you for your patience – this brings the chapter to a close and these resources will now be used for Your Party, as was always intended.”
