OCCRP Investigation Prompts Calls to Strengthen UK Party Financing Laws

The appeal comes as the Conservatives, who have faced accusations of failing to stem the flow of foreign money into the country’s politics, gear up for a general election on July 4.

“Independent bodies and security experts agree that U.K. electoral law has serious weaknesses that make our democracy vulnerable to undue influence,” said George Havenhand, a senior legal researcher at the advocacy group Spotlight on Corruption. 

“At a minimum, parties should be obliged to determine the true source of donated funds,” he told OCCRP. 

The investigation linked a 50,000-pound (around $64,500) donation to the Conservatives in October 2020 to the scandal-hit businessman Doug Barrowman, a resident of the Isle of Man. 

The contribution was made through a small accounting firm that was owned at the time by one of Barrowman’s business associates, and had been previously owned by an offshore trust company directed by two of Barrowman’s employees. 

The links raise the question of whether the company was used as an intermediary by Barrowman to make the donation. Barrowman did not respond to questions, and the Conservative Party declined to comment on the specific donation. 

The contribution was made several months after the Conservative government awarded a 203-million pound (over $250 million) contract for pandemic equipment to a separate company secretly owned by Barrowman, whose wife Michelle Mone is a Conservative member of the House of Lords. 

Those contracts are now the subject of a National Crime Agency investigation into potential fraud. Barrowman and Mone, whose assets have been frozen as the probe is underway, deny any wrongdoing. 

Because of its small size, the firm that made the donation, Pulse Accounting Ltd., was not required to file detailed public accounts. That makes it difficult to determine if the funds came from business carried out in the U.K. as required by electoral laws.  

This is a key regulatory gap when it comes to small company donations, said David Howarth, a former Liberal Democrat Member of Parliament who served as an electoral commissioner between 2010 and 2018.

“The company has to be doing business in the U.K. but that can be really hard to find out,” he told OCCRP. “The electoral regime was set up for big businesses – who used to donate a lot but have basically stopped donating altogether – but quite a lot of these companies [donating now] are very small and you can’t see what they’re doing.”

Havenhand, of Spotlight on Corruption, called for barring companies from making donations that exceed their U.K. profits from the previous two years.

“The fact that companies can just set up in the U.K. and donate even if they have no real economic activity in the country is a gaping loophole which leaves the door wide open for foreign money and proceeds of crime to enter our politics,” he said.

The Conservatives have also been accused in recent years of weakening the country’s Electoral Commission, the independent body tasked with overseeing elections and investigating donations. 

The 2022 Elections Act, for instance, was widely seen as a curb on the regulator’s independence as it requires the body to follow astrategy issued by the government of the day. The Commission has called the obligation inconsistent with the role that an independent regulator plays in a healthy democracy.

Former Labour MP and longtime anti-corruption champion Dame Margaret Hodge called on the Electoral Commission to “urgently” investigate Pulse Accounting’s donation in light of Barrowman’s previous dealings with the government.  

“The rules themselves need to be strengthened, and the Electoral Commission should have their powers strengthened so that they can investigate and prosecute those who break the rules,” she said.