The House of Lords has reimposed a £26.5m surcharge against former Westminster council leader Dame Shirley Porter over her involvement in the "homes for votes" scandal of the late 1980s.
Dame Shirley and her former deputy, David Weeks, had been cleared by the court of appeal in May 1999 of wilful misconduct and "improper gerrymandering" by selling off council homes to potential Conservative voters in marginal wards to boost the party's election prospects.
But today five law lords unanimously allowed an appeal by district auditor John Magill and ordered the Tesco heiress and Mr Weeks to make good the losses claimed by the council.
Lord Bingham said: "The passage of time and the familiarity of the accusations made against them cannot and should not obscure the unpalatable truth that this was a deliberate, blatant and dishonest misuse of public power.
"It was a misuse of power by both of them, not for the purpose of financial gain but for that of electoral advantage. In that sense it was corrupt."
Dame Shirley's solicitor Alan Langleben said she would fight the ruling in the European courts.
Lord Scott said: "Gerrymandering - the manipulation of constituency boundaries for party political advantage - is a clear form of political corruption."
He said that if unchecked "it engenders cynicism about elections, about politicians and their motives, and damages the reputation of democratic government".
Lords Steyn, Hope and Hobhouse agreed in allowing the challenge by Mr Magill, who has led a 12-year battle to make Dame Shirley pay up, against the appeal judges' 2-1 majority decision in her favour.
The case centred on a decision by Westminster's housing committee in July 1987 to sell 500 homes a year under a designated sales policy called "building stable communities".
A year earlier, the Conservative majority on the council had been reduced from 26 to four, and Dame Shirley was determined to achieve a great majority in the 1990 elections.
Lord Bingham said the council had power under the 1985 Housing Act to dispose of its property to promote any public purpose for which the power was conferred, but it could not lawfully do so for the purpose of promoting the electoral advantage of any party represented on the council.
A statement from Dame Shirley, read by her solicitor outside court, said: "I am very angry and shocked. I am not corrupt. I did not abuse power. I was appalled during the hearing by the hostility of Lord Bingham and cannot understand his comments in the light of the court of appeal verdict which acquitted me on all those points of which I am now accused. "Everyone agrees that I stole no money and I made no personal gain. Six hundred Westminster families were helped to buy their own homes for which the council received £42m.
The statement added: "It is utterly unfair that I alone among all local authority leaders should be singled out and ordered to pay £26m for promoting the right to buy."
"This judgment threatens all elected councillors by telling them they can no longer rely on legal advice to protect them against similar charges.
Mr Magill said: "I am, of course, delighted that the House of Lords has confirmed the decision of the high court."
"Both courts unanimously concluded that the facts I unearthed were the truth and that Dame Shirley Porter and David Weeks had lied to me in attempting to cover up their activities.
"The judgment also confirmed that their conduct in using council resources to achieve party political advantage was disgraceful and that they should be surcharged £26.5m."
Mr Magill called for Dame Shirley, who has 14 days to pay the money, to be stripped of her Dameship.
Rod Ainsworth, solicitor to the audit commission, said: "The audit commission is delighted by their Lordships' judgment in this significant case. We supported the appeal by the auditor because important principles were at stake."