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Home , Anthony Bamford, Arron Banks, Crispin Odey, European Research Group, James Goldsmith, Jeremy Hosking

Dark Money and Democracy: Review of Peter Geoghan’s Democracy for Sale

‘Major changes are never impossible. Who would have thought that a coalition of people, working over two decades could convince a country to leave a major international organisation? But with a lot of perseverance, we managed to make history.’ Michael Elliott, founder Tax Payers Alliance and .

Political parties have always required money to project themselves into the democratic marketplace. Given their role of defending and advancing the interests of property holders and business, the Conservative Party has never wanted for rich donors and supporters. In its early days, the Liberal Party also could call upon rich business sponsors and, of course, Lloyd George supplemented such income by selling honours to those rich enough to buy them. Labour’s rise was funded by and still survives upon regular donations from UK’s trade unions.

‘Dark money’ is a term used to describe funding of legitimate political activities with money which has been funnelled in anonymously, often through ‘backdoors’ like ‘front’ organisation or offshore tax havens. Peter Geoghan’s superb and alarming book (2020), Democracy for Sale: Dark Money and Dirty Politics, Head of Zeus, analyses and assesses the impact of such dodgy finance but offers very much more. This book by a brilliant young investigative journalist, working for the website Open Democracy, also tells, in fascinating detail, the inside story of: the growth of Euro-scepticism to its triumph in 2016 and how the ERG - ‘a party within a party’ finessed the final victory; how the growth of social media gave the anti-EU cause a dangerously powerful tool which helped them succeed; and how the far right in western countries over the past decade has been enabled to advance often into government. He also explains how weak and insufficient official regulation plus transformative digital technology allowed these forces to grow its strength to a point where democracy itself is now in considerable existential danger. As he concludes: ‘Far from being an aberration, dirty politics is the new normal.’1 Geoghan identifies the far right as the major recipient of ‘dark money’ but should anyone think this is mere knee jerk left-wing criticism - I’m sure he’s no Tory - they should recognise the impeccable research behind the book. His story begins with a body established early in the new millennium.

Tax Payer’s Alliance (TPA): This was set up in 2004 by 25-year-old Mathew Elliot, intent on applying American libertarian methods to British politics: it advocated ending the BBC’s licence fee and replacing the NHS by US style private insurance provision. Soon the TPA enjoyed a £1m annual turnover and employed a dozen staff. Elliott defended the right of those donating to ‘charities and campaigns’ to remain anonymous. Investigations revealed funding came mostly from Tory donors like JCB’s Anthony Bamford, billionaire banker-businessman, Peter Cruddas (former co Treasurer of the party) and the unconvincing ‘front’ organisation the Midlands Industrial Council.2 In 2011 Elliott was appointed to lead the campaign against the referendum proposal to change the UK voting system from First Past the Post to the Alternative Vote. It focused on finance, claiming it would cost £250m to deliver AV. The crushing 2-1 victory of No to AV meant Elliott, already friends with anti-EU zealot, Daniel Hannon, was a natural to set up the 2016 campaign, Vote Leave. Elliott also, daringly, hired maverick firebrand, , who had earlier, using tabloid style stunts and financial arguments,

1 Peter Geoghan (2020), Democracy for Sale, Head of Zeus, p6. 2 Ibid, p18. successfully defeated the referendum campaign to establish a regional assembly in the north east.

UK Election Laws and the Brexit Campaign: These laws comprise 50 Acts and 170 statutory Instruments; expert in this area, Gavin Millar QC, is quoted as saying ‘almost no one knows how it all works’. 3 This might explain why Vote Leave’s cavalier spending during the campaign was never properly called to account. Another strong factor was that the maximum fine for breaking UK election law is only £20,000 - small change to causes with deep pockets filled from dubious sources.

Moreover - one of democracy’s perennial weaknesses - there is no check on the veracity of claims made during campaigns. During the last three days of the campaign Vote Leave placed millions of Facebook ads spreading outright lies about immigration: one claimed, ‘Turkey’s 76 million people are being granted visa-free travel by the EU.’ Turkey, of course had only applied for EU membership but had no chance of being allowed in. Cummings admitted that without the Turkey ploy plus the false NHS/£350m red bus claim, Remain might have won the vote. In the wake of the Leave victory, there was almost no calling to account of the campaign’s excesses.

DUP used as ‘Front’ to Avoid Overspending: It seems almost certain that Vote Leave channelled close to half a million pounds via Ulster’s DUP into the UK campaign to avoid breaching ‘spending limits imposed by election laws.’4 This money, ‘donated’ by a fictional organisation called the Constitutional Research Council was then used to conduct and fund the campaign elsewhere in the UK.

Arron Banks, and Brexit: Businessman with South African connections whose wealth has never been fully explained; had tried several times to be elected, without success (just like Farage) so clearly had political ambitions. After the Referendum was announced, Banks donated £1m to UKIP and later a total of £8.4m to anti-EU causes plus many gifts in kind – staff, offices etc; a record donation by anyone in British political history. Cambridge Analytica (CA) was favoured as a possible source of using psychographic techniques to target political ads - it was bankrolled by Trump backer, billionaire hedge funder, Robert Mercer and his daughter Rebekah who sat on CA board and also backed Breitbart run by Steve Bannon. These techniques have been viewed by many as undermining democracy in that they can provide political campaigners with such a wealth of data that, using new digital techniques, voters’ opinions can be divined and voting behaviour predicted, thus providing huge advantages to its users. Banks was rumoured to have broken election laws by overspending and external donations both of which he fiercely denied plus dodgy connections with the Russian ambassador and interests within Russia; Banks also had a Russian wife. He claimed his South African diamond mines were worth £100m but inquiries revealed they had not produced more than a few low standard diamonds. Banks took out a loan from his offshore business to cover his spending on the referendum. He won his case against the Electoral Commission re overspending; however, the case proved it was legal for companies in offshore to underwrite political donations: a virtual open door.

3 Ibid, p25. 4 Ibid, p89. Electoral Law and Foreign Dark Money: Foreign interests can set up shell companies purely for the purpose of donating to political causes- the Electoral Commission accepted this was a ‘weakness in the law’.5 In 2016 Britain First (member of which murdered ) set up a shell company - Albion Promotions - to hide £200,000 of donations; it was dissolved before any source of donations could be identified. Anyone not resident in UK for tax purposes or not domiciled in UK (‘non doms’) are banned from giving more than £7500 to a political party. But parties can raise millions from abroad: Tories received £5.5m from tax haven donors 2009-19.

‘The vast offshore empire that runs through Britain is tailor made for secretive donations…Future political donors will be able to make campaign contributions through secretive companies in the , and other offshore vestiges of empire…. In the US it’s the ‘super PACs which are used to funnel vast sums of dark money into the political system.’ Spending caps apply only to the period of the election campaign itself so any amount can be spent before and after. Electoral rolls are for use only during campaigns but Banks, via Leave EU – the Farage rival to Vote Leave - retained the data and used it to advance adverts for his insurance businesses including Eldon; he was fined £120,000.

The (ERG): Geoghan begins the provenance of this body by recounting how, back in the 1990s, James Goldsmith invested £20million of his own money into supporting Euro-scepticism.6 His own attempt to defeat in Putney in 1997 failed: he memorably and ‘maniacally’ led chants of ‘out, out, out!’ when Labour took the seat. The ERG began as a group of Tory MPs who had lunchtime meetings during the 1990s, with - intent upon breaking up the EU - as its motivating force; later became its organising and transforming core. Baker’s attendance at an American Principles conference on global finance in 2015 drew him into the orbit of ‘dark money - funded US conservative groups.’; the Koch brothers and Robert Mercer - all billionaires - being the financial source.7 Baker also joined the Freedom Association - dubbed by David Baddiel as a ‘slightly posher version of the BNP’: the BBC apologised when Baker complained.

On the ERG, Geoghan comments, ‘rarely has a pressure group exerted so much influence on a governing party’; of course, May’s vanished majority handed unusual power to the faction, but Baker’s militant stewardship maximised its control over May’s Brexit direction; even when he and his successor, , were given ministerial office, Baker maintained his control. Funding for the ERG was unusual - it came from our, the taxpayers’ pockets. Each MP member pays £2000 a year, claimable from expenses: £340,000 2010-2018. In theory ERG’s ‘research’ was publicly available and not party political but in practice was ‘veiled in secrecy’; Jacob Rees-Mogg’s office told Open Democracy their boss was not a member and had not contributed - he was, and he had. ‘Taxpayer funding was crucial to the ERG’s success. It paid for the staff that oversaw the group’s transition from talking shop to well-drilled political force.’ Occasional meetings were replaced by a virtually constant ‘in session’ status. Private donors were impressed; pro Brexit businessman, Paul Dyer, gave £10,000; the shadowy CRC, source of that massive gift to the DUP, gave £6500 to Baker. Given the ERG did not have to publish its accounts, Geoghan admits its true funding cannot be known but criticises Parliamentary Standards Authority (IPSA), set up in 2009 in the wake of the expenses scandal, for its

5 Ibid, p61. 6 Ibid, p104. 7 Ibid, p111. excessively’ light touch approach’ to the ERG. Finally, the persistence of Jenna Corderoy, of Open Democracy, was rewarded when she told a court hearing in London that the public needed to view ERG research to ‘understand what kind of research these MPs have relied upon to mould their views on Brexit.’ After 18 months insistence, the judges agreed.8 When ERG material was revealed it was clearly party political: ‘the British taxpayer had paid a small fortune underwriting a highly political party within a party.’ Geoghan comments that ‘regulators err on the side of institutions not the public they are supposed to protect.’ He concludes that without the stakhanovite thoroughness of the ERG, ‘Britain would almost certainly have left the EU at the end of March 2019 with the agreement negotiated by . Their reward was issued in ‘top table’ ministerial form; when Johnson revealed his first cabinet in July 2019 was Foreign Secretary, Home Secretary, Rees Mogg Leader of the House.

Libertarian Think Tanks: Geoghan suggests that an alternative to ‘bribing a gaggle of venal politicians’ to vote in a specific way is ‘to own the ideas that dominate the political conversation.’9 In the past this was done mainly by debate, argument and trial and error - for example with Keynesian ideas - but American, Richard Fink, adopted a different route to the same objective. Virtually self-taught, and looking more like a hippy than a libertarian de-regulating economist, he persuaded billionaire, Charles Koch in 1967, to back his ‘Structure for Social Change’ strategy: appoint pro-Hayek academics; distil their messages into a digestible form via public ‘Institutes’ dedicated to research, like Brookings but different in that they were not academically objective but openly partisan, preaching ‘the undiluted doctrines of Hayek and Friedman’; and finally, the subsidizing of citizen cause groups to lobby within established parties: probably The Tea Party being the most successful example. The idea was to pull the Republican Party towards the libertarian right.

‘Guided by Fink’s insights, a tiny group of American plutocrats invested billions in think tanks, universities and election campaigns over the past four decades. Before this methodical and precisely targeted spending spree, libertarians had been largely thought of as cranks. Afterwards, the limited space within which policies are created and publicly discussed was filled with proposals that they wanted’.10 When Ronald Reagan and then the Bushes and latterly Trump came to power, the blueprints for deregulation were readily available: the arguments won, delivery merely awaited. So, Trump left the Accord, rejected 85 environmental rules, and promised to ‘drain the swamp’ in Washington: the foundations and billionaire backers applauded him.

Tufton St: This London street has become the home to several libertarian think tanks. They urge open markets and transparency in every aspect except their own funding. Madsen Pirie, of , recalls visiting companies soliciting donations; Goldsmith chipped in with £12,000 but since early 1980s no references made to donors. Anonymous donations provide a convenient way to influence government policy: titles like ‘Institute’, ‘Centre’ give a sense of academic objectivity, but these are in essence, ‘paid-for lobbying.’ David Frum (fellow American Enterprise Institute) calls them ‘public relations agencies. ‘If you are willing to put a quarter of a million into a , you can get a lot of bang for your buck’ says Guto Bebb (former Tory MP). Alternatively, one can donate to parties or individual politicians - often the term used is ‘office expenses’ contributions.

8 Ibid, p119. 9 Ibid, p124. 10 Ibid, p126.

Heritage Foundation: In July 2018 made a speech to Heritage Foundation urging post Brexit US-UK trade deal – the audience included many of Trump’s transition team. Trump, amongst other billionaires, was influenced by ideas of Ayn Rand - she rejected altruism in politics in favour of ‘rational egoism’ or acting in one’s own self-interest - within a laisser faire economy. Consequently, she idolised self-made capitalist tycoons and in reciprocation received the slavish support of many of them, especially those in Silicon Valley. Heritage is a big beast in the think tank world funded by Coors brewing industry, the Kochs, Robert Mercer and Trump - it has an annual budget of $100m.

Atlantic Bridge: This was an educational charity set up by Liam Fox in 1997 to resist those forces seeking to ‘pull Britain away from its relationship with the United States… and dragged into European integration’11 Thatcher was honorary patron. It played a key role in fostering links between UK and US libertarians and neo- conservatives; many, (including Gove and Johnson) Atlantic Bridgers went on to play key roles in Vote Leave and Brexit. Fox poured energy into his think tank getting Kissinger to accept its Medal of Freedom and to deliver the inaugural Margaret Thatcher lecture in London. He established a link with the important free market American Legislative Exchange Council (ALEC) funded by the Kochs, Philip Morris, Exxon Mobil, and the NRA; it drafts 1000 bills a year with a 5th being enacted - these have included restricting the minimum wage and defending gun ownership. The think tank received much more funding after linking with ALEC paid for Tory MPs to be flown to USA; it also paid Fox’s curious friend Adam Werrity who followed Fox around the world as an ‘adviser’- eventually causing his resignation October 2011. After a negative report by the Charity Commission, was dissolved in 2011.

The ‘Anglosphere’: ‘In two decades, the idea that Britain should leave the EU, de-regulate and form a new trading relationship with predominantly white English-speaking nations went from a fringe concern to a widely held political aspiration.’12

The US had little interest in the idea but ‘a small, well connected network of journalists, politicians and intellectuals were starting to talk about a realignment of Anglophone nations. Libertarian-minded universities were helping to nurture an outsider idea that would later come to prominence during the Brexit referendum’. 13 A series of conferences, think tank reports and books followed; a Heritage analyst called on Britain to join an alternate future path that recognises that its natural economic and political partner remains the US and not the .’ Conservatives in UK - Gove, Fox, Redwood, Lamont - joined the chorus as did conservative leaders in Canada, , and Australia. US corporate funded think tanks - Cato Institute, Heritage and AEI plus those in UK-IEA, ASI, Henry Jackson Society and - rallied around the idea, envisioning a ‘Global Britain’ striking deals around the Anglophone world. In 2003 prosperous lawyer, Donal Blaney, set up the Young Britons Foundation (YBF), essentially to ‘import American political techniques into the UK’ and ‘place young radical free-market Anglosphere Conservatives in public life.’ Established Tories applauded and supported the YBF, with Steve Bannon adding his imprimatur as he saw something like the Tea Party emerging in the UK. Blaney claimed he provided most of its funding but Geoghan suspects major US funders like the Kochs, Mercer and the Amway billionaires, Richard and Helen DeVos were also involved. This nascent

11 Ibid, p130. 12 Ibid, p127-8. 13 Ibid, p136. right-wing institution met a crisis in 2015 following the suicide of an activist, Elliott Johnson. YBF was disbanded in the same year but many of its ideas and personnel went on to advance its causes. Three rising young Tory stars-Raab, Truss, Patel, elaborated a “neo-imperial vision of a ‘buccaneering’ Britain in their controversial Britannia Unchained. The use of ‘trade’ as a euphemism for ‘empire’ became a staple of Brexit’s somewhat atavistic ideology.” Daniel Hannon wrote in about the coming gilded age of the English-speaking nations.14

Political Funding in UK: Compared to the US, says Geoghan, the amount of money involved in British politics is pretty meagre. Indeed, to draw in an external source:

‘According to the Center for Responsive Politics, a non-profit research group that tracks money in politics, almost $14 billion was spent on the 2020 races, with about $6.6 billion going towards the presidential campaigns alone.’15 When cash was in the early seventies, Lord McAlpine revolutionised fundraising, ‘reputedly turning up in the City with a large sack and asking for bundles of cash to fill it.’16 Whilst the majority of the Remain funding came from the City, substantial funding for Brexit was also forthcoming though mostly from operatives like Jeremy Hosking, Peter Cruddas and Crispin Odey who made £220m out of betting that sterling would fall sharply if Leave won. In the wake of Brexit, two thirds of Tory donors distanced themselves from the party, leaving it more dependent on those pro Leave donors. During the 2019 election Conservatives harvested a record amount of funding: £37m, most of it from super rich donors from hedge funds or companies. ‘As in the US, Britain’s traditional party of government has become increasingly reliant on a handful of very wealthy donors - who only need to spend a fraction of the money the Kochs or Scaifes spread around in order to wield huge influence’. 17 Philip Hammond, and even the PM’s sister, argued Johnson was in league with financiers who stood to profit from a no deal departure. Inevitably this means Tory party policy is going to be skewed to satisfy its donors. Émigré Russians are also enthusiastic donors, perhaps explaining why a report into interference from that quarter in UK politics, was withheld for so long. Significantly Rees-Mogg’s investment company moved to Dublin to guard against ‘considerable uncertainty’ caused by Brexit; vacuum tycoon, James Dyson shifted his production to Singapore; and INEOS billionaire Sir James Ratcliffe moved to tax haven Monaco.

Government policy is now more likely to reflect the interests of its small group of donors: essentially, and in conflict with public opinion, radical de-regulation.

‘Digital Gangsters’: Aaron Banks, one of the self-named ‘Bad Boys of Brexit’, has already been mentioned in connection with Cambridge Analytica (CA) but Geoghan also reveals the US side of the story Robert Mercer, head of a huge hedge fund, relied on accumulating ‘big data’ to predict stock market movements - even tiny ones can earn millions for clever investors - and has long been interested in applying the same approach to politics. CA acquired Facebook data on 50m users and applied it to political advertising: targeted ads are much more likely to be persuasive, especially when assisted by algorithms which effectively exploit the big data. Facebook was fined £5bn for not keeping personal data private but such huge sums are not huge to Silicon Valley mammoths.

14 Ibid, p141. 15 Refinery 29, 10th November 2020. 16 Geoghan, op.cit. p144. 17 Ibid. p146. Given the cavalier approach which now seems to inform Tory tactics, the digital exploitation seems yet more threatening. During the 2019 election, the Conservative Party renamed its account ‘factcheckUK’ and used it to disseminate partisan messages under the guise of ‘independent verification.’18 ‘In the long run, it is this misinformation revolution that could have the biggest impact of all on the future of democracy. Or whether we have a democracy at all’ 19

Improve Regulation of Political Activities? In his concluding chapter Geoghan focuses on regulatory structures. i) He quotes the Electoral Commission’s Sir John Holmes: ‘Britain’s electoral laws are not fit for purpose’- singling out the inadequate £20,000 maximum fine for violation. He suggests campaign spending should be disclosed when it happens and not after the event. ii) Laws to prevent elections being bought have been rendered obsolete when huge sums can be spent before or after campaigns or by clandestine surrogates. iii) ‘Politicians wilfully spread disinformation’ 20 iv) We know too little about dissemination through inadequate transparency regulations: ‘law makers have largely outsourced decisions about the integrity of democracy to the CEOs of large American technology companies.’ v) It is far too easy to funnel dark money into British politics: form an ‘unincorporated association’ like the ERG and then money can be given to politicians without hindrance or need to declare.’ vi) We should replace the handful of super rich donors with smaller contributors - say £10K a year so parties need to spread their funding net wider. vii) Think tanks should be compelled to declare their funding. viii) Politicians should be fined for disinformation: ‘until politicians are incentivised - by much stronger public demands - to overhaul the system, they won’t.21

Writing in , columnist John Naughton praises this ‘remarkable’ book:

“The integrity and trustworthiness of elections is a fundamental requirement for a functioning democracy. The combination of unaccountable, unreported dark money and its use to create targeted (and contradictory) political messages for individuals and groups means that we have no way of knowing how free and fair our elections have become. Many of the abuses exposed by Geoghegan and other researchers are fixable with new laws and better-resourced regulators. The existential threat to liberal democracy comes from the fact that those who have successfully exploited some inadequacies of the current regulatory system – who include and his current wingman, Cummings – have absolutely no incentive to fix the system from which they have benefited. And they won’t. Which could be how our particular version of democracy.”22

Bill Jones, March 2021

18 Ibid. p189. 19 Ibid. p224. 20 Ibid. p292. 21 Ibid. p301. 22 John Naughton, ‘Democracy for Sale by Peter Geoghan review- the end of politics as we know it? The Observer, 16th August 2020.