The Welsh First Minister has rejected calls for an independent investigation into a controversial donation he received during his bid to be Welsh Labour leader.

Vaughan Gething has insisted there was no conflict of interest in his campaign accepting £200,000 from a company which was loaned £400,000 by the Welsh government-owned Development Bank of Wales (DBW).

The company, Dauson Environmental Group, is owned by David Neal, who has previously been convicted of environmental offences.

The loan from the DBW was given to Neal Soil Suppliers – a subsidiary of Dauson – in 2023 to help purchase a solar farm.

It has led opposition groups in the Senedd to call for an independent investigation, over what they say is a potential conflict of interest.

His decision to take the money has been criticised by political opponents and members of his own party, with his leadership opponent, Jeremy Miles, saying on Sunday that he would not have taken it.

But Mr Gething has rejected the calls for an independent investigation, instead saying there will be an internal Labour review of the party’s election processes.

The review will be led by former First Minister Carwyn Jones and will also look into the length of leadership contests, campaign finances, the nomination process and communication with members.

Speaking at First Minister’s Questions (FMQs) in the Senedd on Tuesday, Andrew RT Davies, the leader of the Welsh Conservatives, said a “reasonable person” would think there was a “potential conflict of interest” in taking the donation.

“This is having a real corrosive effect on the Government, as the silence of your own benches is showing here before everyone today,” he said.

“There cannot be any question that (a reasonable person) would draw the conclusion that (Jeremy Miles) the economy secretary drew, that this donation should not have been accepted.”

But Mr Gething disagreed and stressed that investment decisions taken by the DBW are made entirely independent of the Welsh government.

He said: “There is no reason to undertake an investigation when the facts are so clear and unambiguous.

“There is no reason to undertake an individual independent investigation simply on the basis of an opposition press release.”

He added: “The development bank makes commercial loans and equity investments in small and medium businesses in Wales.

“Those lending and investment decisions are taken by the development bank, and they’re wholly independent of Welsh Government ministers.

“A reasonable person understanding the facts in the matter I don’t think will then conclude that there is a conflict that exists.”

Speaking after FMQs, Plaid Cymru’s Rhun ap Iorwerth MS said: “Sleaze has sadly been normalised in Westminster politics over the last few decades which has denigrated our democracy.

“Sadly, it is now threatens to rear its head in Welsh politics through this donations saga which continues to dominate the Labour First Minister’s first few weeks in office.

“The First Minister either knew of the donor’s convictions and thought nothing of it or failed to undertake due diligence.

“Mr Gething cannot just hope that putting a tin hat on will make the issue go away.

“The revelation that Dauson is in debt to the development bank of Wales – wholly owned by Welsh Government – has raised concerns even more, it goes to the heart of government operations.”

Mr Iorwerth called the decision Mr Gething to commission one of his predecessors, Carwyn Jones, to carry out the review “regrettable”, and said that it should be carried out by someone external to the party.

However, he added: “At least there’s hope that Carwyn Jones won’t pull his punches having previously called the donations ‘unfortunate’ and claiming that the First Minister has ‘lessons to learn’.”

Speaking after FMQs, Mr RT Davies added: “The First Minister’s campaign donations are now a major distraction from the work of the Welsh Government.

“There are fair and reasonable concerns about these donations and, without an independent investigation, those concerns will not go away.

“Unless the First Minister commissions that investigation to draw a line under this, his Labour ministers will continue to fight amongst themselves while our public services suffer.”