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Labour: Falkirk Candidate Karie Murphy Quits
Labour has cleared the Unite union over allegations of selection rigging that sparked a breakdown in relations with the movement.
The party, which in July referred the claims about the Falkirk constituency to the police, said an internal inquiry had found no evidence rules were breached.
It lifted the suspensions of Unite-backed would-be MP Karie Murphy and local party chairman Stevie Deans, saying they too had done nothing wrong.
Ms Murphy announced however that she was withdrawing as a potential general election candidate for the seat for the sake of "reconciliation and unity".
A Labour spokesman said "key evidence" had been withdrawn from the inquiry, leading to the finding that no rules in place at the time were breached.
The evidence is believed to relate to claims people were signed up as party members without their knowledge in a bid to stuff the local party with Unite supporters.
The rules have subsequently been tightened.
But the Tories said it appeared to be a "stitch-up" designed to end a bitter row with Unite - Labour's biggest single financial donor.
The GMB union has now announced it is cutting £1m from its affiliation funds to Labour in response to reforms to union links pledged by Ed Miliband at the height of the dispute.
With fears others could follow, Unite general secretary Len McCluskey was accused of "calling the shots" by Conservative Party chairman Grant Shapps.
Ms Murphy and Mr Deans were suspended and the Falkirk constituency party put into "special measures" after an internal report found concerns over the process of selecting a candidate for the 2015 general election.
Tom Watson - for whom Ms Murphy worked - quit as the party's general election co-ordinator at the height of the dispute.
In a statement released by Unite, Ms Murphy said she had been left "shocked and saddened" by the affair and had always acted in the interests of the party.
But she said her continued presence in the Falkirk contest would "detract" from the work of selecting a good candidate.