The former Labour treasurer in First Minister Jack McConnell's constituency has admitted embezzling £11,000 from party funds.
Funds went missing from the constituency office
Hamilton Sheriff Court heard that Elizabeth Wilson, 62, siphoned money from the Motherwell and Wishaw party and from a fund-raising dinner account.
A further 11 charges of forgery against Wilson, of North Lodge Avenue, Motherwell, were dropped.
Sentence was deferred for background reports and for proof of payment.
Wilson had come under suspicion when a "black hole" was uncovered in the branch finances.
Mr McConnell and local Labour MP Frank Roy were cleared of any blame following an internal party probe launched by Scottish Labour general secretary Lesley Quinn.
Following the investigation, Ms Quinn passed documents relating to financial irregularities in the local party funds to Strathclyde Police in November 2002.
Fraud squad detectives arrested Wilson after examining the constituency party accounts, a development fund account and an account relating to the Red Rose fund-raising dinner.
The event at Dalziel Golf Country Club near Motherwell in March 2002 was attended by the then Northern Ireland Secretary Dr John Reid, Mr McConnell and Mr Roy.
A spokesman for the Scottish Labour Party said: "All I can say is I hope this will bring what has been a difficult episode to a close."
A Conservative spokesman said: "This closes one chapter in the Red Rose saga, but leaves other questions unanswered about who was at the dinners and where did all
the money go.
"No doubt Scottish Labour will heave a sigh of relief that senior politicians will not now be called to give evidence."
The Scottish National Party called for Mr McConnell to make public all documents relating to the Red Rose fund.
A spokesman said: "If he is not entirely transparent about this murky affair then there is real danger of serious damage being done not just to his personal credibility, but to the office of first minister."
Sentencing was deferred until 29 April.