Inside the murky world of political party donations

The Conservative Party is facing calls to hand back hundreds of thousands of pounds in political donations after major Tory donors were allegedly linked to corruption in a massive leak of financial documents.

Following revelations in the so-called Pandora Papers, Boris Johnson and his senior officials are facing tough questions over how party funds are raised and whether they are properly scrutinised.

Tory donors row

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The prime minister “had hoped his first in-person Conservative conference since his election victory of 2019 would be dominated by his agenda on levelling up”. Instead he has been “forced to field questions about the Tory donors”, reported The Guardian.

Some of the most serious revelations in the Pandora Papers relate to Mohamed Amersi, who funded Johnson’s party leadership campaign to the tune of £10,000 and has donated more than £500,000 to the Conservative Party since 2018, according to the BBC.

Documents show how Amersi, a 61-year-old corporate lawyer, advised Swedish multinational telecoms firm Telia on a £162m payment to an offshore company in 2010. That company was controlled by the daughter of the then Uzbekistan president, and the payment was later described by US authorities as a “$220m bribe”.

Investigations by BBC Panorama and The Guardian found that Amersi was involved in negotiations that “resulted in $220m being paid to a Gibraltar-based company”, explained the BBC. The company was “secretly owned through an offshore company” by Gulnara Karimova, the daughter of Islam Karimov, the Uzbek president.

Telia had given Karimova shares in one of its companies in 2007. Three years later it bought back the shares $220m, something that was later described by US authorities in a criminal prosecution as a “bribe payment… in order to continue its telecoms business in Uzbekistan”, said the BBC.

Amersi’s lawyers have said that any suggestion that their client “knowingly” helped facilitate any corrupt payments was false. Amersi had “no reason” to believe money given to Gulnara Karimova might be a bribe, they said, and that he had only worked on the project for six weeks, The Guardian reported.

The Conservative Party is also facing questions over two other major donors with alleged links to corruption.

One of them is Lubov Chernukhin, “one of the biggest female donors in recent British political history”, according to The Guardian. The wife of a former Russian minister, Vladimir Chernukhin, she has given £2.1m to the party since 2012, the paper claimed.

The Pandora Papers show the couple are “linked to a network of 32 companies, three trusts and more than £100m in assets”, says the BBC. But the leaked documents reveal that much of her personal wealth comes from her husband, who is “financially linked to people who were close to the Kremlin”, reported the broadcaster. Documents have described her being “financially supported by her husband”, and “a housewife”.

In a separate allegation, businessman Victor Fedotov, whose companies made donations to 34 Conservative MPs, is alleged to have made millions from “one of Russia's largest fraud scandals”, said the BBC.

The Pandora Papers reveal that Fedotov is “a secret owner of a company called VNIIST that benefitted from hundreds of millions of dollars in contracts from Transneft, the Russian state-owned oil and gas pipeline company,” explained the BBC. But a 2008 audit found that “Transneft had lost huge sums to corruption and that one of the contractors that had benefitted was VNIIST”.

Johnson has insisted that all donations are “above board” and properly scrunitised, according to the Evening Standard. During a visit to a Network Rail site in Manchester on Monday, the prime minister told reporters: “All I can say on that one is all these donations are vetted in the normal way in accordance with rules that were set up under a Labour government. So we vet them the whole time.”

Labour Party chair Anneliese Dodds has called for the cash to be returned, saying yesterday: “It’s really concerning that the Conservatives have accepted hundreds of thousands of pounds from a man who appears to be closely linked to one of Europe’s biggest corruption scandals.

“This is not the first time that Mohamed Amersi has been embroiled in controversy. The Conservatives should return the money he donated to them and come clean about who else is getting exclusive access to the Prime Minister and the Chancellor in return for cash.

“There can’t be one rule for senior Conservatives and their chums and another rule for everyone else.”

Labour funding scandals

The Conservatives, of course, are not the only party to have been involved in funding scandals.

Some of Labour’s most controversial donations came under the leadership of Tony Blair, who accepted £1m from Formula One boss Bernie Ecclestone ahead of his 1997 election victory. It was later revealed that Downing Street “had granted an exemption from the tobacco advertising ban for grand prix events”, reported The Guardian’s Westminister correspondent David Hencke in 2007. Hencke said the incident meant Blair’s Labour Party was “tarnished with sleaze” from then on.

A year earlier, Blair had been embroiled in a so-called “cash for honours” row that saw him become the first serving prime minister to be questioned by police as part of a criminal investigation. Ahead of the 2005 election, large donations were made to the Labour Party by four wealthy businessmen to the tune of £5m, all of whom were later nominated for peerages by Blair.

An extensive investigation followed into whether laws banning the sale of honours had been broken, although ultimately no charges were brought by the CPS.

Current checks on donations

Parties must legally report donations and loans of more than £7,500 to the Electoral Commission, which is documented in a register updated every three months.

According to guidance from the Electoral Commission, upon receiving a donation the donor’s identity and the “permissibility” of the donation must be checked, and a 30-day window is given to accept or refuse it.

A new parliamentary report has suggested further steps be taken to address the “risk that the current rules on donations from companies provide a route for foreign money to influence UK elections”.

In its recommendations, the report argues that “donations should only be made from profits generated in the UK”, and that new checks should be put in place “for identifying the true source of a donation”.

The government’s Election Bill, which is currently going through parliament, also contains new measures to “tighten the rules that prevent foreign money being used in campaigning”, said the BBC.