Opaque Election Campaign Financing Threatens British Democracy

The Guardian

The Electoral Commission’s decision to refer Leave.EU donor Arron Banks to the National Crime Agency for investigation has come not a moment too soon. Since February 2017 I’ve been asking the commission to do more to investigate how Banks’s money was spent during the EU referendum and, more recently, why he has refused to disclose the source of his money to the commission and the Digital, Culture, Media and Sport select committee.

On Thursday that call was answered, with the commission’s director of political finance and regulation, Bob Posner, speaking of suspicions that “money given … came from impermissible sources” and that Banks “knowingly concealed the true circumstances under which this money was provided”. “Our investigation has unveiled evidence that suggests criminal offences have been committed,” he said.

This is much bigger than Brexit. It points to a cancer at the very heart of our democracy. The public needs to trust our democratic system, and that means we need transparency regarding where the money funding political campaigns comes from. Banks gave an astonishing amount of money – the biggest donation in British political history when you add it all up – and the public remains confused.

“So isn’t Banks just being targeted for being wealthy and successful?” one might ask. This question goes straight to the root of the problem. A number of investigative journalists, and now the commission, have questioned how Banks’s struggling businesses were the source of the donation.

But there are even bigger questions that the NCA will surely want to clarify. When Banks met the Russian ambassador in the run-up to the referendum, what business did they discuss? Why did they need to meet 11 times? Why, when Banks was first asked, did he say he met him just once, twice or three times? We know Russian business offers were made to Banks, but did he accept them? Why were Russian officials paying so much attention to a struggling British businessman? These are all questions he has failed to answer adequately. I lived in Russia for three years while working for the British Council and, given my experiences there, it has certainly been of grave concern to learn that Banks was in contact with one of the Russian officials whose visas were under review after the Salisbury attack.

But clearly these questions go far beyond Banks, Brexit and Britain. A recent report by the Atlantic Council – Democracy in the Crosshairs: How Political Money Laundering Threatens the Democratic Process – included three case studies of opaque political funding: Banks, the German far-right party Alternative für Deutschland and the staggering number of small donations received by Donald Trump’s campaign. It is notable that 59% of the $624m in donations Trump received were smaller than $200 – either evidence of staggering success in generating grassroots support or evidence of financial wrongdoing on a grand scale.

But we must look forward not back. The Brexit vote is over, so the big question for me and other British politicians is about how we can restore trust and safeguard our democracy.

The starting point is to give the commission – an analogue regulator in a digital age – some real teeth. Working with the organisation Fair Vote we have come up with a number of outline proposals that require urgent discussion and consultation, and may require new legislation.

First, the commission works best as a regulator and policy body, so let’s transfer its investigative and prosecutorial powers to the police, to whom suspected electoral offences can be referred. There should be unlimited fines for electoral offences, rather than a maximum of £20,000, which is an insufficient deterrent.

Second, campaigns should be made to report spending online. We have a precedent for this with the Independent Parliamentary Standards Authority, which tracks MPs’ spending. This would make it easier for campaigns to track their spending and bring more transparency into elections.

Third, let’s end financial transfers from a referendum’s designated campaign. Current rules allow the designated campaign to give up to £700,000 to groups as long as they do not coordinate their work, but it is surely unreasonable to think gifts of this size are entirely without expectation?

Fourth, we should regulate paid political digital advertising in the election period with a digital bill of rights for democracy.

The sooner we find a cure for this cancer the better. The soul of our democracy is caught in the crosshairs and it is time for politicians to take action.

https://www.theguardian.com/commentisfree/2018/nov/02/election-campaign-financing-threatens-british-democracy-arron-banks