In May 2009, about a week after Sven Hughes joined the Strategic Communications Laboratories Group political consultancy, he was handed what seemed like a cushy assignment: Fly to the Caribbean nation of St. Kitts and Nevis and manage the prime minister’s reelection campaign.
Denzil Douglas had been in his post for almost a decade and a half, and his Labour Party held a majority. But the race was looking tighter this time around. When Hughes, a former British army reservist, asked a director of Strategic Communications Laboratories (SCL), Alexander Nix, who would fund the campaign, he met unexpected resistance.
“I was told very firmly at that point to not ask those questions and to concentrate on my job, which was to run the campaign,” Hughes told OCCRP.
His suspicion grew, he said, when he was asked to prepare financial statements for an unnamed backer. When he met with Douglas, the prime minister also made oblique references to a mysterious “financier” directing money toward the campaign.
In the years since, evidence has emerged that the “financier” was in fact Christian Kälin — a Swiss lawyer often known as the “Passport King” and “Mr. Citizenship” because of his lucrative business marketing Caribbean and other passports to the world’s wealthy.
Today, SCL is widely known for the scandal that broke out around its subsidiary, Cambridge Analytica — headed by Nix — after it was exposed for misusing Facebook data to influence the 2016 election of Donald Trump as U.S. President. That same year, it was probed over its role in the British vote to leave the European Union, though it was not charged with any illegality. But its earlier involvement with Kälin in the Caribbean has also raised questions about the tactics it was willing to deploy on behalf of its clients.
SCL's use of propaganda tools against citizens in democratic elections — and by extension any support Henley or Kälin may have provided to these tactics — has been widely described as unethical, but the legality of these activities is a matter of ongoing debate and no charges were ever filed.
In 2018, a British parliamentary report on disinformation and “fake news” said MPs were told Kälin struck a “Faustian pact” with Nix and that the Swiss lawyer’s “hidden hand” was behind SCL’s campaign work in multiple Caribbean countries. Through these arrangements, it said, Kälin organized funding for politicians. If they won, they gave him and his firm, Henley & Partners, the right to market citizen-by-investment programs, the report said.
Henley has consistently denied providing or facilitating funding for any election campaign. In a statement to OCCRP, the company said the British parliamentary committee had been given “many false statements.” Henley said it “never paid any fees to SCL or anyone else for any political campaigns,” and neither the firm nor Kälin had “ever made any donations to political parties.”
The firm has also said its link to SCL had never been a formal “working relationship.” In a response to the parliamentary report, Henley wrote that the firm did advise Caribbean governments at the same time SCL was active in the area. It was “entirely incorrect, however, to suggest that Henley & Partners worked in partnership with SCL or in any way sought to gain from the outcomes of any elections,” it wrote.
But leaked internal documents obtained by OCCRP, working with the Daphne Caruana Galizia Foundation, show that Henley did enter into at least three agreements with SCL or its affiliated companies to help each other find potential clients and work together across the Caribbean in the months after the Douglas campaign.
Hughes’ account also gives further insight into the relationship between the two entities as they worked to back Douglas and then later unseat the incumbent government in the nearby St. Vincent and the Grenadines, issues reported on by the Guardian in 2018.
Denzil Douglas said the financing of his 2010 election campaign was “completely within the law” and he was “not aware of any illegal activity by SCL or any other person or entity.” SCL’s Alexander Nix did not respond to a request for comment.
The Cambridge Analytica Scandal
Disputed Payments
As Hughes settled into his job in St. Kitts and Nevis, he learned that Nix was speaking directly with Kälin about campaign finances. Eventually Hughes was introduced to the Swiss lawyer himself.
The two began a correspondence. At first, they wrote to each other using a “dead letter drop email” system, leaving messages in draft form on a shared email account to avoid having them intercepted. Later, the two started speaking over Skype or by phone “on a very regular basis,” Hughes said.
By then, Kälin had established a lucrative business in St. Kitts and Nevis, selling citizenship in exchange for substantial real estate or cash investments. The mismanagement of those funds has led to controversy in St. Kitts and Nevis.
"There is no misunderstanding in my mind that Christian Kälin was either directly paying or he was facilitating and arranging the money on behalf of his network of passport buyers or other industry figures who would see a benefit from investing in, I guess, in these people getting into power,” Hughes said.
Henley described Hughes’s comments as “wrong or misleading.”
Though Henley has repeatedly denied orchestrating such funding, Douglas himself acknowledged it in a recorded but unpublished interview from 2018, which was obtained by OCCRP.
“The SCL bill was a high figure, over $3 million definitely, … and the payment to SCL was being provided through Henley & Partners and Dr. Kälin,” Douglas said in the recording. “It’s difficult for me to say specifically where the money came from because the money never passed through us as such, all we knew was that SCL was going to manage the campaign and [Kälin’s] or Henley & Partners’ role was to facilitate the payment.”
Under this set-up, Douglas said, people who had invested in the St. Kitts and Nevis citizenship program were approached for contributions to the campaign, which were then paid directly to SCL.
“The Labor Party was presented with an invoice and the invoice would then be sent to Kälin and the invoices would be paid,” he said.
Henley told OCCRP that Douglas’s statements on the financing of the elections were false. Douglas “has frequently and blatantly lied publicly…and this is no exception,” Henley wrote. “Neither Dr Kälin nor Henley & Partners have ever paid for his political campaigns.”
Douglas did not respond to Henley’s allegation by the time of publication.
On January 25, 2010, Douglas’ Labour Party won the vote comfortably, coming in over 14 percentage points ahead of its closest competitor. But that did not mark the end of SCL’s cooperation with Henley. Leaked documents indicate the two companies strengthened their partnership in the following months.
Growing Cooperation
In March, two months after Douglas’ victory, SCL hired Henley to help scout for new political clients in countries where it was not yet active.
According to a copy of the signed contract, obtained by OCCRP, Henley would “identify potential government/Party political client parties in that territory and, if deemed appropriate by SCL, facilitate communication between SCL and the potential government institutions and representatives.”
Henley would receive five percent of the gross revenue from any agreements made by SCL with new clients, and another 10 percent of any “success fees” SCL received. The agreement, dated February 25, 2010, and signed in March, was valid for 60 months.
In September that year, Henley drew up an agreement with a company run by Nix, Behavioural Dynamics Institute (BDI) Ltd, to do the same thing for them in the island nation of St. Lucia — find new political clients and make introductions. SCL was already active in St. Lucia at the time, according to a letter sent in February 2010 stating that SCL would help run a reelection campaign for the Prime Minister Stevenson King.
The two agreements were drafted with very similar wording, including references to “developing and rolling out” their respective businesses in different regions. BDI was to receive 15 percent of gross revenue from any contract Henley secured via this arrangement, which was likewise set for 60 months.
According to Emma Briant, an expert on propaganda and information warfare, BDI acted as a research center for SCL, “developing the methods and giving SCL academic credibility which they used to win clients, the benefit for academics was access to data as they aided SCL campaigns, while maintaining a perception of academic distance.”
Documents suggest that Henley also signed a research and analysis deal with Professional Research Ltd., a U.K.-registered company Sven Hughes says was a front company used to hide SCL’s involvement with St. Lucia’s Prime Minister Stevenson King. OCCRP found that Professional Research was registered at the same London address as several other SCL companies.
Documents indicate the contract between Henley and Professional Research, set to last for 12 months from 2010 to 2011, was signed by senior Henley executive Hugh Morshead and SCL’s Alexander Nix.
Briant said the use of such covers is a common tactic in hiding propaganda activities, but it was especially important for SCL since the company was gaining a negative reputation. “Hiding the source of all this was essential, not just to protect SCL staff and protect the party that they were working for but most importantly, to protect SCL's reputation with future clients and not jeopardize ongoing profitable contracts with Western governments.” she said.
One of the contracts reviewed by OCCRP was signed and dated by representatives of both parties. Henley told reporters the agreements were never “formalized and implemented, even if they were partly signed,” and said the firm has “never had any formal, working relationship with SCL.”
New Opportunities
Following the success in St. Kitts and Nevis, SCL ran another election campaign in St. Vincent and the Grenadines. But this time, they were working for the opposition — the New Democratic Party, which was seeking to upset the incumbent Prime Minister Ralph Gonsalves.
The SCL campaign in St. Vincent and the Grenadines had an estimated budget of over $4.1 million, according to internal documents. As in St. Kitts and Nevis, emails show that Kälin was in regular contact with SCL staff and involved in key aspects of the campaign, though there is no evidence he financed it.
By then, Sven Hughes had left SCL, but he agreed to return for one last job. Once again, he said, he was in regular contact with Kälin, discussing the investors Henley could bring to the country if Eustace won. Many of Kälin’s ideas wound up in Eustace’s speeches, Hughes said.
The stakes were high. At the time, St. Vincent and the Grenadines did not have a citizenship-by-investment program. If Arnhim Eustace, the opposition candidate, won the premiership, Henley could be in line for a huge contract to run a passport sales scheme.
"In principle, it was agreed that if [Eustace’s] party were elected to government…we would be interested in helping develop a citizenship by investment program for St. Vincent and the Grenadines, to bring much-needed investment into the country,” Henley said in a statement to reporters.
Documents support the notion that Kälin was feeding Eustace and his team policy lines and campaign promises. A few days before the vote, Kälin emailed Eustace with a vague list of “major investors” in various key sectors, including banking, construction and aerospace, that he said he could bring to the country if Eustace won.
“This is what we could do for you once you are in government,” Kälin wrote in the email. “Please feel free to use any of the above points in your manifesto, campaign messages etc. as all of this I can personally assure you we will be able to actually realise.”
In a follow-up email to staff at SCL, Kälin emphasized that his promises were “not just pies in the skye [sic],” adding: “They (and we) are only waiting for a good government to be in place.”
As the election loomed, however, the race looked close and victory far from certain. Emails show Kälin became increasingly frantic, even proposing to bring in a Trinadadian lawyer to “assist us with the legal aspects of preventing the government of St. Vincent and Grenadines from stealing this election.”
SCL also flew around 50 law students from Trinidad to the island to monitor ballot boxes on election day after Henley offered to cover their costs.
Henley said the idea to fly in the students was not Kälin’s, but did say Kälin “would have been helpful to his friend Arnhim Eustace in support of any initiatives that would ensure free and fair elections in Saint Vincent and the Grenadines.” The company said it had a “keen interest” in the outcome of the election, but that any opinions it offered were “given on an informal basis and were unpaid.”
In the end, Kälin’s help wasn’t enough. Eustace lost the vote by one seat.
