PM's fundraiser in donor cover-up row

London: In a potentially explosive revelation, the Evening Standard has been told that Jon Mendelsohn suggested at least one Labour deputy leadership campaign should use a "network" of people to cover up the real identities of donors.

He was facing huge pressure to quit yesterday as a senior member of one Cabinet minister's campaign team claimed Mendelsohn rang them more than eight months ago and arranged a meeting to provide "help" with funding.

Mendelsohn admitted on Thursday he had known that businessman David Abrahams had been using intermediaries to make more than £650,000 (Dh4.9 million) in secret payments to Labour.

Mendelsohn claimed he had been told the arrangement was legal but "was unhappy with the arrangement whereby donations were taken through a third party" and decided it was "unacceptable".

He said: "I was very concerned that these arrangements did not meet the strict transparency test that I wished to see in place."

But amid increasing calls for a criminal investigation, the Standard has learned Mendelsohn himself raised the idea of keeping donors' names secret - a practice which the prime minister this week said was "unlawful".

Mendelsohn was still working for FD-LLM, the lobbying firm he co-founded in 1997, when he approached the deputy Labour leadership campaign earlier this year. The 40-year-old told at least one party worker he would soon be "back at the centre of things" in the Labour party - as a key player on Brown's leadership campaign.

He was later one of just 21 donors considered close enough to Brown to donate cash to his campaign, handing over £5,000 of his own money.

But as the deputy race was heating up this spring, the cash for honours affair was also at its height and ministers were struggling to find funds.

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A figure on one of the deputy campaigns said: "We were approached by Mendelsohn. He rang up to say he had ways of supporting people. He said he was close to Gordon and was going to help with his leadership campaign.

"We discussed things but it became clear early on what he was talking about.

"He said there were people who want to make donations but they can't be in the public domain.

"He said he could facilitate moving money around through a network of other people."