By JANE MERRICK

Last updated at 13:22 19 December 2007

The far-right British National Party is being investigated over alleged spying, money laundering and theft, it was revealed last night.

A Labour MP used Parliamentary privilege to publish a dossier lifting the lid on "apparent illegal activity and financial irregularities" in the BNP.

Jon Cruddas, who came second in Labour's deputy leadership contest, said he had passed on the claims of "systematic illegality" to the police and the Electoral Commission for investigation.

The dossier claims the BNP's leader Nick Griffin orchestrated the "illegal spying" and sanctioned a covert raid on the home of a BNP councillor, who later resigned from the party.

Sadie Graham, a councillor in Broxtowe, Notts, quit the party along with seven others following the campaign of bugging, the House of Commons was told.

Mr Cruddas, whose own constituency of Dagenham in east London is under threat from rising support for the far-right party, said that during two meetings over the last week, Mr Griffin is "believed to have admitted to some device being used and insisted he would not hesitate to use such devices and methods in the future.

"The BNP has boasted this information was gleaned by its intelligence department. This department consists of former police officers from the apartheid South Africa."

Mr Cruddas accused members of the BNP's security division, under "instructions from leader Nick Griffin," of entering Miss Graham's home "by deception," removing property including her computer and of "trawling through" it, in breach of data protection laws.

The MP's claims are protected from libel because they were made in the Commons.

It is rare for MPs to use parliamentary privilege to make accusations of this nature.

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The alleged financial irregularities are contained in a 20 page dossier by the anti-fascist Searchlight Information Services.

Mr Cruddas said: "What's been uncovered in the internal workings of the BNP appears to be systematic illegality in terms of data protection, bugging, money laundering, theft and the operation of the Political Parties Elections and Referendums Act 2000.

"This demands a most thorough investigation. This is not the behaviour of a legitimate political party and I hope to see the police and the Electoral Commission investigate these charges.

"The fact this is being orchestrated by the leader of a political party is the most shocking aspect.

"The BNP leadership and Nick Griffin in particular are showing us their true colours."

He said the BNP was "engulfed in a political crisis that threatens to tear the party apart".

Mr Cruddas said on December 9 the party leadership "sacked" two of its senior officers amid claims of "gross misconduct, after they were found to be behind a blog that criticised other BNP officials".

As a consequence over 58 BNP organisers and regional officials had resigned their positions and eight councillors resigned the party whip and become independent nationalist councillors.

"While I welcome these divisions, I would like to highlight some particularly unsavoury aspects to this feud that is unbefitting to any legitimate party. I believe much of the behaviour of the BNP leadership is actually illegal."

Mr Cruddas said he was particularly concerned over allegations that the BNP had posted on their website a recording and transcript of a private conversation between the two people subsequently sacked.

"It is the belief of the people concerned that their house, phone and computer have been bugged."

BNP accounts for 2006 have not been submitted to the Electoral Commission, more than five months after they were due, the MP added.

He said the BNP had failed to report a specific donation of £5,315 in the period of July 1 2007 to September 30 2007 in contravention of the Political Parties Election and Referendum Act 200.

"There are allegations the BNP has paid workers in cash to avoid tax and NI contributions.

"Finally the BNP claims to have spent at least £70,000 on printing equipment in 2005 alone but no such expenditure is shown in the accounts."

Deputy Commons leader Helen Goodman said Mr Cruddas had described a number of "extremely unpleasant criminal activities, which have been admitted to by Mr Griffin.

"It was in keeping with the horrible racist politics (of the party), which I'm sure the whole House would wish to condemn."