LABOUR'S finance spokesman is facing questions after accepting money from a "charity" meant to promote relations between Scotland and Pakistan which is being investigated by watchdogs.

Eastwood MSP Ken Macintosh took £1625 from the Scottish Asian Pakistan (SAP) Foundation in December, as a candidate for the Labour leadership.

Although the SAP Foundation is a limited company, its articles of association say it is a "charity" whose aims include relieving poverty, advancing education and health, promoting community cohesion, and providing advice and support for the Asian and Pakistani communities.

However both the Office of the Scottish Charity Regulator (OSCR) and the UK Charities Commission say they have never received an application from the SAP Foundation to be registered as a charity.

OSCR is now checking on the Foundation under its "Inquiry and Intervention policy".

Even if the SAP Foundation were a registered charity, both OSCR and the Charities Commission say charities must not make political donations, to parties or to individual candidates, and must remain independent of party politics. The SAP Foundation's president is Labour activist Amer Masood, the general secretary of Edinburgh Labour's Community Cohesion Taskforce. The SAP Foundation and the Labour Taskforce have the same phone number.

The SNP have urged Macintosh to return the money.

According to the Electoral Commission's records, Macintosh, 50, received the £1625 on December 4, the same day he attended a dinner held by the SAP Foundation at an Edinburgh restaurant.

Photographs on the SAP Foundation's Facebook site show he was accompanied by his campaign manager, Michael McMahon, MSP for Uddingston and Bellshill.

Two days later McMahon addressed an anti-Nato protest by the SAP Foundation outside Holyrood.

The £1625 was formally accepted by Macintosh on December 19 – two days after Johann Lamont won the party leadership – and reported to the electoral watchdog on January 13 this year.

The money, the sole registered donation given to Macintosh as a leadership candidate, was attributed to the SAP Foundation in its form as a limited company rather than a charity, or to its individual members.

According to Companies House, the SAP Foundation was incorporated in May last year by Masood, 42, Masood Malik, 73, a veteran community campaigner in Edinburgh, and Hassan Shah Bukhari, a 52-year-old businessman in the capital.

It is based at a business centre in Edinburgh's Morningside and has yet to publish any accounts.

Despite being a new body, the Foundation has made connections with a number of politicians. It was involved in a cross-party reception at Holyrood last November to mark the festival of Eid, attended by LibDem leader Willie Rennie and Labour MSP Hanzala Malik. Tory MSP Murdo Fraser is an honorary patron.

Justice Secretary Kenny MacAskill also met the Foundation in November, in the same restaurant Macintosh attended, but a source close to MacAskill said there was "never any question" of fundraising.

Despite Macintosh reporting that the money came from the Foundation as a limited company, Bukhari, its finance secretary, said the cash was raised from individuals at the December dinner. "We raised it from the people attending," he said.

Asked if people knew they were contributing to Macintosh personally, he said: "Yes, most likely that's why they gave it to him."

Asked about the Foundation's articles calling it a charity, he said: "Oh my. I didn't realise that. I have to look into it." He denied there was anything untoward.

Masood did not return the Sunday Herald's call.

Macintosh said he understood the Foundation was a charity, and gave the money as a company.

"They promote good relations between Pakistan and Scotland. That's what they say they're about. That's what they do. It was a very up-front donation. We had a dinner. We got together specifically to raise money for my campaign. It could not have been more straightforward."

Asked how giving money to his campaign would advance relations between Pakistan and Scotland, he said: "That's a question for them."

An SNP spokesman said: "This was a serious error of judgment by Ken Macintosh in taking a political donation from a charitable body. As it appears to have come from a non-permissable source, he should return the money immediately."

An OSCR spokesman said: "I can confirm that we do not have an application for charitable status for this body [the Scottish Asian Pakistan Foundation] and it is not a recognised Scottish charity.

"We are currently looking at whether there are issues of representation in their Memoranda and Articles of Association, in line with our Inquiry and Intervention policy.

"It is a breach of the legislation for a body to hold itself out as a charity if it is not on the Scottish Charity Register. OSCR has powers to act in these circumstances."