The United Kingdom Independence party is being investigated over a £118,000 black hole in its accounts after donations made to the party appeared to have gone missing.

The Electoral Commission is investigating why the donations, made by individuals in five instalments, never appeared in any of the four main bank accounts used by the party and bypassed the party treasurer Bruce Lawson.

The Sunday Times reports that the Commission found out about the missing money after it was leaked in a letter written by Lawson. In the letter Lawson threatened to resign and warned that the controversy would 'haunt' the party for years and create problems with authorities.

In the letter, sent to party leader Nigel Farage and his deputy David Campbell Bannerman, Lawson wrote: 'I joined UKIP because I thought we were different to the other parties but even on the grounds of expediency I will not be associated with this sort of behaviour.'

Lawson added that the missing cash was a 'very serious situation' and that his faith in the transparency of party dealings was 'greatly diminished.'

The Electoral Commission declined to comment other than to state: 'We have written to the party on a number of issues including the late submission of the accounts.'

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