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The news that the police launched a criminal investigation into the tens of millions in foreign funding for Reform UK came at a crucial time. It was just before the Representation of the People Bill, the “once-in-a-lifetime” opportunity to tighten Britain’s disgracefully loose political funding rules, returned to the House of Lords.
The police acted on the evidence in Channel 4 documentary, which showed Reform UK officials agreeing to accept proxy donations, ie: legitimate-looking donations that are channelled through permissible donors (proxies) from an impermissible foreign source. Such foreign donors are often proxies’ business partners, relatives, clients, various types of allies and political patrons tied to their business interests abroad.
The new bill, in its current form, is not designed to stop this particular political fundraising practice. Parliamentarians are now running around with proposals for a cap on donations, but it won’t solve the proxies problem. As Liberal Democrat Spokesperson for the Cabinet Office, Lord Mark Pack, correctly pointed out, “one large donation could be, completely legally, split into multiple small donations to candidates and kept secret”.
In fact, our laws are so toothless, and their enforcement so weak, that there is a serious chance Reform UK will be cleared of laundering illegal donations. The long-term consequences of that for our democracy, the rule of law and freedom of speech would be hard to overstate.
There is still a small window of opportunity for Britain to bring its rules into line with those of most other Western democracies, where they are much tighter. Indeed, last week, the Government put it about that ministers have been working on additional, tougher rules, which could be applied retrospectively.
The question is: having failed to learn the lessons from the Russian shenanigans around Brexit, is our Government capable of building effective defences?
Serial offenders
Clearly, this is hardly the first time Nigel Farage’s party, in its various incarnations, has faced allegations of being bankrolled by foreign money. There have been persistent and well-founded suspicious that Russia was the real source of the millions donated by Arron Banks to UKIP in the run-up to the EU Referendum. This money helped not only to build an effective Leave campaign, but also to turn what was a marginal party into a considerable political force.
However, having investigated, the National Crime Agency (NCA) cleared Banks because it could not find any evidence of Russian money within his personal and corporate UK banking records. Nevertheless, as journalist Carole Cadwalladr recently revealed, the Electoral Commission considered launching a judicial inquiry into the NCA decision because the investigation did not go deep enough into Arron Banks’ complex offshore banking arrangements. He then sued the Electoral Commission “for defamation”, and the inquiry never happened.
To be fair, the problem with political finance in the UK is much bigger than Farage and his party funding. Lord Wills, during the second reading of the Bill in the upper chamber about a week ago, pointed out that “research by Transparency International has found that one in 10 political donations originates from an unknown or dubious source.”
Why is it then that MPs voted down Matt Western’s amendment to “give the Electoral Commission power to require financial institutions to disclose documents and information” about political donors? He is the Labour MP who chairs Parliament’s Joint Committee on the National Security Strategy (JCNSS) and knows how foreign political interference works. The Commission previously complained that “we currently have no ability to obtain any information from financial institutions that we can use to monitor and independently verify provenance or the permissibility of funds, unless we open a full investigation.”
In contrast, in Canada, France and Italy, electoral authorities can inspect political donors’ banking records as a matter of course.
Was Western’s amendment opposed by the same MPs who required prosecutors to produce evidence of an “agreement” between an impermissible donor and their proxy? Lord Carter of Haslemere explained that “crucially, without evidence of that agreement, it is not possible to prove that the donor was just a conduit and in breach of the law. There rarely is such evidence.”
Presumably, on the planet inhabited by the ministers who write such rules, criminals put the details of their intended crimes in writing.
Toothless
Such a ridiculous evidential threshold required to secure a successful prosecution has meant that there has not been one in more than 25 years, in the entire time that the current rules have existed.
The only prosecution concerned £39,000 allegedly channelled through nine proxies to former Conservative MP for Northampton South, David Mackintosh’s parliamentary campaign. Section 61 of the Political Parties, Elections and Referendums Act 2000 (PPERA) made it an offence knowingly to enter into or further an arrangement that facilitates donations from someone other than a permissible donor, including through “concealment or disguise”. Property developer Howard Grossman and Mackintosh were accused of concealing the money’s true source from the Conservative association treasurer, but were acquitted in November 2023.
Missing a Bigger Picture
One of the reasons why Britain is so far behind the times – arguably, worse than most other G7 countries – is that it refused to investigate what really happened around Brexit.
The details are sketchy, but what we do know already points to tens of millions of pounds of Russian money being channelled, around the time of Brexit, into our politics through proxies. The lessons were never fully learned, which was a key point in a report I recently edited.
UK’s Russian Lesson: Building Deterrence against Foreign Political Interference was published jointly by The Citizens and Democratys. It features written contributions from 12 expert witnesses, including Dominic Grieve, Marina Litvinenko, Dr Susan Hawley, Christopher Steele, Prof Rory Cormac, Carole Cadwalladr, and Andy Pryce.
Our legislators are being asked to build new defences against foreign meddling without ever having been given a proper account of how exactly it has worked until now. With the best will in the world, it won’t be an easy task.
Politicians of all parties have more in common with each other than with the people of the country. They all benefit from weak regulation on funding and lobbying, and all see their future careers, if they lose their seats, in lobbying and serving as advisers.