Skip to main content

Electoral Funding: Unincorporated Associations

Volume 655: debated on Wednesday 27 February 2019

I beg to move,

That this House has considered the role of unincorporated associations in electoral funding.

It is very good to see you in the Chair, Ms Dorries; I believe this is the first Westminster Hall debate I have participated in where you have been in the Chair.

I will introduce this somewhat obscure topic of the role of unincorporated associations in UK electoral funding by setting the scene. We begin in the Glasgow suburb of Clarkston, the type of place that is usually prefixed with “leafy”. As many hon. Members from Scottish constituencies, especially in the west, will know, it is composed of the mid-century, semi-detached houses that are a familiar sight across the west of Scotland and, I am sure, elsewhere. Anyone who has watched “Two Doors Down” on BBC Scotland might know what I am talking about.

In one of those houses lives a seemingly upstanding citizen by the name of Richard Cook, a former vice-chair of the Scottish Conservative party and former Scottish Conservative and Unionist candidate for East Renfrewshire. A cursory search turns up photos of Mr Cook with numerous Tory grandees, including the current leader of the Conservative and Unionist party in Scotland, Ruth Davidson, Member of the Scottish Parliament, and her interim replacement, Jackson Carlaw, the local MSP. There is also a photo of Mr Cook with the former Prime Minister, David Cameron, who came to East Renfrewshire to campaign for Mr Cook in 2010, in the election campaign that, as we all know, made Mr Cameron Prime Minister.

During that campaign, voters in East Renfrewshire were given an impression of a candidate in a Tory target seat who fitted the zeitgeist well—a waste management consultant who could almost have been hand-picked by Conservative campaign headquarters to represent the new, green Tories. His leaflets spoke about protecting green spaces and improving recycling.

Incredibly, during the campaign, the company that Mr Cook founded, DDR Recycling, was involved in a scam relating to the illegal shipment of waste tyres around the world, as confirmed by the Environment Agency in the UK. During investigations into those shipments, it was alleged that Mr Cook submitted false evidence to authorities in the United Kingdom and in the Republic of India investigating the case. That case is the loose thread that pulls apart the Scottish Conservative and Unionist candidate’s carefully managed public persona.

Thanks to the excellent work of investigative journalists such as Peter Geoghegan and Adam Ramsay at openDemocracy, we have been led carefully through a mystery tour of Mr Cook’s business dealings, which belied the conventional suburban milieu from which he came. DDR Recycling is now in liquidation, owing the UK taxpayer £150,000, but before that, it became embroiled in a Californian court case brought by an international haulage firm, which alleged $1.5 million of unpaid bills for waste shipments to South Korea.

That was only the beginning. Just before leaving DDR in 2014, Cook set up a company called Five Star Investment Management, with 75% of its shares held by the now late Prince Nawwaf bin Abdulaziz, a former head of Saudi Arabian intelligence, and the Saudi Arabian ambassador to the United Kingdom. A third partner, a Danish national by the name of Peter Haestrup, had previously been involved in a gun-running scandal in the Republic of India. That is only a glimpse into a dazzling array of international deals, including another $1 billion environmental project in the Islamic Republic of Pakistan, which looked to most trained observers like a litany of fraudulent deals.

While my hon. Friend wets his whistle, before he moves on from the role that journalists played in exposing the Constitutional Research Council and Mr Cook’s activities, will he acknowledge the role played by Jim Fitzpatrick of BBC Northern Ireland’s documentary series, “Spotlight”? His marvellous documentary, “Brexit, Dark Money and the DUP”, began this whole investigation and should be commended.

Perhaps I can remind the Chamber that my hon. Friend’s name is Brendan O’Hara. I totally agree with him and commend those who have assisted in exposing dark money to the light.

Why is all that relevant to a debate about unincorporated associations in the political process? Mr Cook is the poster boy for the way in which UAs have been used to funnel vast swathes of dark money into our political process. Even worse, the Electoral Commission allows fraudsters such as him effectively to mark their own homework. The Electoral Commission gave me a very informative briefing ahead of this debate, and I will use its definition of an unincorporated association:

“UAs are associations of two or more people, which do not fall into any of the other categories of permissible donors, are carrying on business or other activities wholly or mainly in the UK and have their main office here. They are permitted to donate money to political parties, non-party campaigners, individuals in elective office such as MPs, and referendum campaigners.”

The key phrase in that definition is,

“which do not fall into any of the other categories of permissible donors”.

That is what today’s debate is about. If the Minister answers only one question in this debate, I would like it to be this one: why, given all the ways in which individuals and organisations can donate money to political parties and groups in a transparent and straightforward manner, do we still allow this backdoor method, which seems to me to be easily exploited by those who would seek to obscure the provenance of funds?

My hon. Friend is giving an excellent speech. Is he surprised and disappointed, as I was, to learn that when SNP councillors lodged a motion asking Tory councils in North Ayrshire to make a statement on dark donations to local Tory branches, the Labour councillors abstained? Does he, like me, suspect that that is not unrelated to the much-denied informal confidence and supply arrangement that exists between Labour and Tory groups across Scotland?

[Mr Ian Austin in the Chair]

It sounds like “Better Together”.

The case that proves my argument beyond doubt is the unincorporated association that Richard Cook leads: the Constitutional Research Council, or CRC. He describes the CRC as a group

“to start promoting the Union in all its…parts”,

and while it is based in Scotland, critically, it has managed to spread its tentacles across the rest of these islands. The CRC is most famous—or should I say infamous?—for the £435,000 donation it made to the Democratic Unionist party during the Brexit referendum.

Not at the moment, no.

That was a vast sum for a party whose election expenses do not normally even get past five figures. Some £280,000 of that donation was spent on a wrap-around advert in the Metro newspaper in the lead-up to the Brexit referendum, despite the fact that the only part of these islands where the Metro is not distributed is the part in which the DUP itself stands.

The bizarre situation, Mr Austin—it is good to see you in the Chair, sir; perhaps you will remember folks’ names, if they are allowed an intervention—allied with the fact that the advert itself closely resembled the type of advertising promoted in the official “Vote Leave” campaign, meant that the case soon came to the attention of those investigating illegal collusion between the campaigns, including this Parliament’s own Digital, Culture, Media and Sport Committee.

While the where or why of that collusion is not relevant to the debate, the vehicle used by the campaigns as a conduit for this cash—the CRC—is. Because the CRC is an unincorporated association, it could mask the ultimate sources of those funds. I will let the Committee report say it, as it is incredible.

I will not, no. The Committee stated that

“this Committee and the wider public have no way of investigating the source of the £435,000 donation to the DUP made on behalf of the CRC and are prevented from even knowing whether it came from an organisation, whose membership had either sanctioned the donation or not, or from a wealthy individual.”

This is a political donation equivalent to twice the price of the average house in most parts of these islands. It is almost 60 times greater than the £7,500 threshold for naming normal political donors, but we know absolutely nothing about its source, and the Electoral Commission cannot tell us, as elected Members in this Parliament, how it verified that it was permissible.

I am extremely grateful. Sometimes this stuff is hiding in plain sight. The Electoral Commission figures released earlier today tell us that the Conservative party has received a total of £400,000, with one donation coming from the household of a former Putin Minister eight months after the Salisbury poisoning, which killed a British citizen, and the other one coming from a weapons dealer and gunrunner who is a personal friend of the President of Syria, Bashar al-Assad. Does my hon. Friend agree that if that money is not returned, it confirms the Tory party’s status as a complete moral sewer?

No, I will not. I will make it clear that I fundamentally agree with my hon. Friend the Member for Glasgow South (Stewart Malcolm McDonald), and the Minister will not be able to turn to civil servants to answer on behalf of the Conservative party, because this is purely political. Let me also make it clear that this is the exact opposite of the probity and good governance that we would expect from a properly functioning liberal parliamentary democracy. I am sure that I am not the only one to come to the same conclusion as the DCMS Committee—that the CRC used this method.

Let me quote the Committee again. It stated that

“in order to avoid having to disclose the source of this £435,000 donation, the CRC, deliberately and knowingly, exploited a loophole in the electoral law to funnel money to the Democratic Unionist Party in Northern Ireland.”

I am of course disappointed not to see, for the first time ever, a member of the Democratic Unionist party at a Westminster Hall debate.

No. I know that the hon. Gentleman wants to speak on behalf of the DUP, but I will not give way. I wonder how many DUP Members know what the true source of the money was and whether it did the requisite due diligence before accepting it. Why do we continue to let cowboys such as Richard Cook effectively mark their own homework? Surely there must be a way to ensure that the probity of major political donations can be assured.

Let us not forget that there is a legitimate reason for UAs to exist; it is not my intention to suggest otherwise. In a legal sense, it is understandable that certain groups may want to keep structures that have no legal existence separate from their members.

No. As someone who worked for many years in the third sector in my constituency, I know very well—[Interruption.] Perhaps hon. Members will listen, rather than asking for an intervention they will not get. I know very well the value of UAs to organisations that do not want to be encumbered by the bureaucracy of other statuses.

Once again, no. Political parties do this, of course. My own SNP branches—Clydebank, Dumbarton and the mighty Vale of Leven—make donations to the party, and vice versa, but the point is that they are able to do so in a transparent and accountable manner. Political parties and the sub-units therein are already, as you will know, Mr Austin, regulated as accounting units. Anyone going on to look at the list of donors to my political campaigns will know exactly where the money came from, and if it is not from an individual, people can be certain that it is from a group whose aims are well stated and well understood.

However, as we can see from the outcomes of the DCMS Committee report, donors who want to obscure the source of their donations are using unincorporated associations as a vehicle to do that. Quite simply, unincorporated associations beyond regulated political parties are a subtle legal fiction that allows fraudsters to dump dark money in our system, which is not confined to the outer reaches.

Again, no, I will not. [Interruption.] One moment. It turns out that using UAs and similar convenient legal fictions to funnel dark money into our political system is the favoured modus operandi not only of Richard Cook, but of the Scottish Tory party of which he used to be the vice-chair.

My hon. Friend is making a really powerful speech. He speaks of transparency and accountability being important and of a functioning liberal democracy being something that we should all support. Does he share my astonishment, because of course electoral support comes in forms other than hard cash, that the Prime Minister has yet to reply to my letter of 7 January about the visit of AggregateIQ to Downing Street? That follows on from her failure to write to me after Prime Minister’s questions as she said she would on 12 September.

It does not surprise me, because the leader of the Scottish Conservative party has never even responded to my request in terms of a letter about dark money.

No, I will not at the moment. I am going to make some progress, because I know we are short of time.

Let us be quite open: news outlets such as openDemocracy and the Ferret have documented how UAs and similar legal entities designed to obscure donations have been used to flood Scottish politics with cash. During the 2016 Holyrood election campaign that saw the Scottish Tories become the official second party, hundreds of thousands of pounds were funnelled through other organisations with an illegal remit such as the Irvine Unionist Club, the Scottish Unionist Association Trust, the Scottish Conservative Club and, of course, Focus on Scotland. Indeed, during the election to this place, in which Members from the other parties were elected, several elected candidates from the Scottish Conservative party accepted donations from opaque organisations.

Quite simply, I do not think it is befitting of our political system to continue with this type of ambiguity. In 2017, all my colleagues and I stood on a manifesto to enhance the powers of the Electoral Commission and increase the punishments available to it. The manifesto stated:

“SNP MPs will support new powers for the Electoral Commission, providing them with legal authority to investigate offences under the Representation of the People Act 1983. We will also support the Electoral Commission’s call to make higher sanctioning powers available to them, increasing the maximum penalty from £20,000 to £1,500,000.”

No. I think that we are all very rapidly—[Interruption.] If this is a debate, perhaps a member of the Democratic Unionist party should have been here, rather than members of the Scottish Conservative party.

No. I think that we are all very rapidly—[Interruption.] One moment. I think that we are all very rapidly becoming aware, if we were not already, that the current regulations and various pieces of legislation that police our electoral system are being tested to the absolute limit, and most certainly at the wrong time.

In learning about the activities of shysters such as Richard Cook in our own political process, I was sadly reminded of some of the characters in the recently released book “Moneyland” by the investigative journalist Oliver Bullough. In that book, we see how the unscrupulous and corrupt have used the mechanisms of international finance and regulation effectively to create a place—Moneyland—that puts them outside the normal jurisdictions that mere mortals such as ourselves must live under. One of the more upsetting aspects of the book is the way in which this city has become the clearing house par excellence for both the money and the reputations of a whole host of unsavoury characters who see the banks, the legal services and a whole range of other civil society bodies and institutions as ready and willing to help them in that regard, and do not ask too many questions about it. [Interruption.] Not at the moment.

Ultimately, this is what Richard Cook has done with the CRC. He has used his reputation as a former chair of the Scottish Conservatives and as a former candidate in East Renfrewshire to create the appearance of probity in the organisation, while at every turn refusing to reveal the ultimate source of its donations or even who constitutes its membership. It would be interesting to hear from the Minister whether she is happy to see the reputation of her party being used for that purpose. Although I have many profound disagreements with the Conservative party on policy, I understand that, in terms of parliamentary democracy, its reputation affects the entirety of our political system, and I cannot for the life of me understand why anyone would be happy with those realities.

No. This Government have undoubtedly allowed that to happen to our political system, with dark money now flooding unhindered through it. Dark money is a cancer in our political system, and unincorporated associations are the most prominent way in which that cancer enters the bloodstream. It is a malignancy that works by removing transparency and confidence in the system of political funding—something that undermines trust in the political system as a whole.

No. We must be unflinching in our determination to root this out. As Oliver Bullough writes near the end of “Moneyland”, political parties have been guilty of accepting money when they cannot be entirely clear about the ultimate source of those donations. Whether it be the Conservatives, the Democratic Unionist party or the Vote Leave campaign, they have simply failed to do the correct due diligence. I will draw my remarks to a close with a quote from that book:

“Disapproval of these surreptitious payments should not depend on whether they are befitting your own side or not. They are inherently harmful. Without trust, liberal democracy cannot function.”

I shall recap and pose the questions that I would like the Minister to answer. Given all the ways in which individuals and organisations can donate money to political parties and groups in a transparent and straightforward manner, why do we still allow unincorporated associations, which are not political parties, to participate so freely, especially in a way that is easily exploitable by those who would seek to obscure the provenance of funds? Will the Government support the Scottish National party’s manifesto commitment to increase the sanctioning powers available to the Electoral Commission from £25,000 to £1,500,000? Will the Government do the right thing and extend the transparency rules around donations made in Northern Ireland from 2014? The cancer of dark money must be removed from our political system. I call on the entire House to join us in that process.

It is an absolute pleasure to see you in the Chair, Mr Austin. I am grateful to the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) for calling this debate, and for the contributions made by various hon. Members. I am only amazed that he took no intervention from anyone other than his friends.

I am hoping that the Minister will say that the Government and all political parties want to root out any wrongdoing. I came here for a Westminster Hall debate, but the sewer of accusations spewed forth by the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) is an absolute disgrace. As the Minister said, he took many interventions from his own party, but refused dozens of interventions from others. This was not a debate; it was a diatribe, and he should be ashamed of himself.

On a point of order, was there a question to the Minister in that last intervention, or was that also a diatribe?

As far as I can see, nothing disorderly has taken place so far. The Minister can respond to Mr Lord’s question, if she wishes.

Thank you, Mr Austin.

I will set out the rules surrounding the involvement of unincorporated associations in election funding, which will be helpful in responding to the debate. These associations are included in the list of permissible donors set out in section 54 of the Political Parties, Elections and Referendums Act 2000. The additional Political Parties and Elections Act 2009 introduced reporting rules for UAs that supported political activities; those rules are in schedule 19A of the 2000 Act.

Unincorporated associations must notify the Electoral Commission if the political contributions that they make over a calendar year are more than £25,000, whether that is through a single contribution or several. An unincorporated association must also notify the Electoral Commission of the reportable gifts that it received in the calendar year before it made the contribution, the calendar year of the contribution, and the calendar year following the contribution. That information is published by the Electoral Commission in its register of unincorporated associations and its register of recordable gifts to unincorporated associations. In this way, there is transparency as to who is providing the funds that are paid out by the associations.

No, I will not, for entirely unsurprising reasons.

Reportable gifts include a single gift of more than £7,500, two or more gifts of over £500 given by the same person in the same calendar year that total more than £7,500, and any additional gifts of more than £1,500 given by a source from which the UA has already received a gift of more than £7,500 in the same calendar year. Electoral Commission guidance also states that any UA that intends to make contributions of more than £25,000 should keep records of all the gifts it receives that are worth more than £500.

There are various ways in which offences are deemed to have been committed. As hon. Members are aware, responsibility for regulating political finance sits with the independent Electoral Commission. It is right and proper that that should sit with an independent body. Any concerns about breaches of the law should be reported to the appropriate authority, and a record of the regulated groups who make and receive donations, including MPs, MSPs and other politically active people, is publicly available on the Electoral Commission’s website. That data is a treasure trove of information, because it reminds us that the Scottish National party and pro-independence campaigners have accepted political donations from unincorporated associations. Who would believe it?

It is very good of the Minister to give way; it is unfortunate that the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) would not. As the Minister was about to say, the Scottish Women’s Independence Fund Trust, an unincorporated association, has donated money to the SNP. On an associated subject, I would like to ask her opinion of another way of raising finance. The SNP have mentioned sewers; the former First Minister, Alex Salmond, raised £100,000 for a court case—and may have raised more money subsequently. We are talking about a different way of raising money, but does the Minister agree that perhaps Alex Salmond should give that £100,000 back? [Interruption.]

Thank you very much, Mr Austin. My hon. Friend reminded us that all parties ought to be above board and transparent about their donations. I can confirm that the Conservative party is above board and transparent, as I would expect it to be.

The Government believe that the rules governing permissible donors and the reporting rules for unincorporated associations are sufficiently comprehensive. The permissible donor rules capture the groups that operate in this area, and the relevant reporting rules provide appropriate transparency, but do not swamp these often small organisations in red tape, which is a consideration. The Government therefore have no plans to amend the law. The 2000 and 2009 Acts introduced greater transparency into this area. We welcome that, because it means that we are able to have this debate backed up by a record from the Electoral Commission of who has received what, allowing us all to be transparent.

I will address transparency in Northern Ireland before closing my remarks. The anonymity provisions there have an important historical provenance. They were introduced by the Labour Government in 2001 and were based on careful recommendations in the Committee on Standards in Public Life’s fifth report, published in 1998, which concluded that it would be unsafe to disclose the names of those who had made donations to the Northern Ireland parties, as it might result in their intimidation. The retrospective removal of anonymity could put individuals’ safety at risk. We understand the history of that rule. That is why the donations and loans regime for political parties in Northern Ireland was different from that in Great Britain, and that is a matter for the Secretary of State for Northern Ireland.

However, thanks to this Government, there is once again greater transparency around those donations and loans; the Electoral Commission publishes full details of all donations and loans to Northern Ireland parties from July 2017. That start date was set because it represented a consensus across the Northern Ireland parties, which is very important.

Finally, donations to the Conservative party are properly and transparently declared to the Electoral Commission. It is unhelpful when hon. Members make accusations that do not seem to fit with what senior members of their parties say. One might note what the hon. Member for Perth and North Perthshire (Pete Wishart) said on “Good Morning Scotland” in July 2018. Was there any evidence that the Conservative party had improperly received donations? “No. Absolutely not.” Let us have some consistency, and an understanding of what our elections rules exist to do and the way in which they provide transparency. That applies to unincorporated associations, as well as to the range of other organisations that are correctly mentioned in our electoral law. It is important that we have those rules.

I hope that I have set out why those rules exist, and how they provide transparency to the public. Through that transparency, some perhaps surprising points have arisen from the records. I hope that that is helpful to the House. I hope it allows us all to conduct politics in the respectful manner that we expect, and to display such respect to our constituents.

Motion lapsed (Standing Order No. 10(6)).