Here's the relevant passage:
A Very Bad Day: The Lib Dems and The EU Reform Treaty
2. (SBU) March 5 marked the worst day for the Lib Dems since one infamous week in January 2006, when the party became the laughing stock of Britain after sex scandals involving two of the four candidates to succeed leader Charles Kennedy emerged one right after the other. This time around, the party imploded in the House of Commons over a Conservative Party motion to hold a nationwide referendum on the Lisbon Treaty. The Lib Dems' convoluted official position on the referendum was part of the problem. As Clegg sought to explain it to the public, the real issue for his intensely pro-Europe rank-and-file was not the Lisbon Treaty itself, but confirming UK membership in the EU once and for all. The Lib Dem official position therefore was to propose an alternate "in or out" referendum on whether the UK should remain in the EU, and abstain on the competing Conservative motion to hold a referendum on just the Treaty itself.
3. (C/NF) This position left both the pundits and the public scratching their heads: why would the UK's most pro-Europe party, whose new leader actually worked for the EU from 1994 to 1999, abstain on a vote on the Treaty? The answer, senior Lib Dems have confessed to us, is that the party leadership believes a referendum on the Lisbon Treaty would fail.
Hmmm, we kind of suspected that was the motive. Or, actually, it was blatantly obvious as the Lib Dems flip-flopped like crazy on the Lisbon Treaty.
All of this brings back some horrible memories...