tax havens

Tories and LibDems given £658,000 by firms linked to tax havens

The Conservatives and Liberal Democrats have accepted £658,000 to help fight the general election from companies with links to offshore tax havens, according to an analysis of Electoral Commission records.

Since the election was called the Conservatives have accepted £567,000 from four companies with links to Luxembourg, Guernsey and the British Virgin Islands.

The Liberal Democrats accepted £75,000 from an investment fund manager whose parent company is registered to a post office box in the Cayman Islands and £16,000 from a property developer whose parent company is registered to the Isle of Man.

Experts and campaigners told The Ferret that political parties should not deal with companies which base themselves in these jurisdictions to avoid tax and ensure secrecy. But there is no suggestion of illegality, and the Conservatives have pointed out that donations are “properly and transparently declared”.

Professor Christine Cooper, chair in accounting at the University of Edinburgh University, warned political parties to be “extremely careful” from whom they accepted donations.

She said: “Taking money from companies which avoid their taxes sends out the signal that it is acceptable for corporations to avail themselves of British resources  – educated healthy workers, decent transport, policing and so on – while not paying their fair share of the tax bill.”

Party political donations linked to tax havens

RecipientAmountCompanyLinks to
Conservatives£250,000Shore Capital GroupGuernsey
Conservatives£200,000European Land and PropertyJersey
Liberal Democrats£75,000Attestor ServicesCayman Islands
Conservatives£50,000HappybadgeBritish Virgin Islands
Liberal Democrats£16,000Inshmore PropertiesIsle of Man
Source: Electoral Commission and Companies House.

During an election campaign, political parties are required to inform the government’s Electoral Commission of any donations they receive over £7,500. The commission makes the declared donations available online in a searchable database.

The Financial Times reported that on 8 November 2019 a stockbroker group run by Tory donor, Howard Shore, gave the Conservative Party £250,000. Shore Capital Group has an office in London but its parent company is registered in Guernsey.

According to the Tax Justice Network, Guernsey does not charge corporation tax – except for a 10 per cent rate on banks. The UK’s corporation tax rate is 19 per cent.

When Shore Capital moved to Guernsey in 2010, the Independent reported that Howard Shore repeatedly refused to say whether the move offered tax benefits. “We have been in Guernsey since the mid-1990s,” he was quoted as saying. “Most of our funds are there and this is driven by our desire to expand our business internationally.”

On the same day Shore Capital donated, a company called European Land and Property gave the Conservatives £200,000.

This company’s accounts say its main activity is developing the Merchant Square complex in London’s Paddington district. But its parent company is registered in Jersey where corporate profits and capital gains are not taxed.

According to the Financial Times, European Land is a joint venture between the billionaire Reuben brothers and the family of Bruce Jarvis.

The Reuben brothers are longstanding Tory donors who made much of their £19 billion fortune in Russian aluminium. Bruce Jarvis is a British property developer who lists his country of residence as Switzerland.

Russian donors have given £3.5 million to the Conservative party

On the 12 November the Tories received two donations worth £67,000 from a company called Aquind whose main business is linking the British and French electric power grids.

Its parent company is registered in Luxembourg. A February 2019 European Parliament report said that Luxembourg “display(s) traits of a tax haven and facilitate(s) aggressive tax planning”.

Aquind’s director is a former Russian defence ministry official, Alexander Temerko. As reported by The Ferret, he gained British citizenship in 2011 and has given more than a million pounds to the Conservatives.

According to Reuters, Temerko claimed that he and Boris Johnson call each other “Sasha” and regularly “plotted” late into the evening, drinking wine on Johnson’s parliamentary balcony when he was foreign secretary.

Aquind has also employed top Tories, such as former MPs James Wharton, who helped run Boris Johnson’s leadership campaign, and Martin Callanan, the government’s Brexit minister in the House of Lords.

On 14 November a property development company called Happybadge Projects gave the Conservatives £50,000. Its ultimate parent company is Zinzendorf Holdings, registered to a post office box in the British Virgin Islands which is also the registered address of many other companies.

Zinzendorf Holdings is owned by Robert Bourne, the chairman of London-based property developer Bourne Capital.

The Liberal Democrats have also been given significant donations from companies with offshore connections. On 12 November the party received £75,000 from a London-based investment fund manager called Attestor Services.

It is ultimately owned by a 42-year old German, Jan-Christoph Peters, but its immediate parent company is Attestor Capital.

Attestor Capital is registered to a post office box at a building called Ugland House in the Cayman Islands. The managers of this five-storey building claims it has 18,000 companies registered to it.

On its website the Ugland House management features articles in the Telegraph titled “don’t we all invest in a Cayman Island tax haven these days” and “stop condemning tax havens – it’s perfectly legitimate to avoid taxation”.

The Liberal Democrats have also accepted £16,000 from Inshmore Properties. It is ultimately majority-owned by investor, John McGlynn, through a company called Scottish Capital based in the Isle of Man. The Isle of Man has a zero per cent corporation tax rate.

The two parties’ decisions to accept donations linked to offshore tax havens have been widely criticised by academics and campaigners. “Tax havens exist to undermine the tax revenues of democratically elected governments,” said Richard Murphy, a chartered accountant and professor of political economy at City University of London.

“No reputable political party in the UK should then have anything to do with companies incorporated in them.”

According to Prem Sikka, professor of accounting at Sheffield University, there were only two reasons for registering firms in places such as the Caymans. “One is opacity, because you’d be hard pushed to find out how it makes money and what is behind it,” he said. “The second is tax avoidance. No other reason.”

Alex Cobham, director of the Tax Justice Network said: “For political donors to run companies in secrecy jurisdictions need not imply wrongdoing, but it certainly increases the risks – the risks of tax abuse, and of violations of the laws on political funding.”

He added: “It beggars belief that the UK is conducting another election without addressing any of the very clear issues of opaque funding that have been, and are still being, uncovered in relation to the most recent votes held here.”

Academic Dexter Whitfield, a specialist in private finance at the European Services Strategy Unit, argued that companies were supporting the two political parties out of self-interest.

“Finance capital, and real estate and investments funds in particular, will finance the Tory and Liberal Democrat election campaigns because they want to ensure that the conditions and weak regulatory frameworks continue to enable them to maximise capital accumulation with as few borders as possible.”

Jo Swinson criticised over donor links to fossil fuels and tax avoidance

Both the Conservatives and Liberal Democrats have previously been accused of being too close to the tax avoidance industry.

The Ferret revealed in July 2019 that the LibDem leader, Jo Swinson, had accepted £17,000 in personal donations from two individuals who work as senior tax advisers at accountancy firm, KPMG. KPMG has been described as “active advisers on tax avoidance”.

In the same year four Tory MPs praised the Cayman Islands after being taken on a £18,000 tour of the islands. The trip was paid for by the Cayman Islands government.

Declared donations to political parties

PartyTotal donationsCompany donationsIndividual donationsTrade union donations
Liberal Democrats£526,000£91,000£435,0000
Green Party of England and Wales£67,750£10,000£57,7500
Scottish National Party£10,000£10,00000
Scottish Green Party0000
Source: Electoral Commission. Only includes donations worth more than £7,500 since the election was called.

The list of donations worth over £7,500 published by the Electoral Commission shows that the Conservatives and Liberal Democrats have also received hundreds of thousands of pounds from individuals and companies without links to tax havens.

According to the commission, as long as companies are registered in the UK, incorporated within the European Union and carry out business in the UK, they are “permissible donors”.

Since the election campaign began on 6 November the Conservatives have been given by far the most large donations of any party, amounting to £8.6 million from companies and individuals.

The Labour Party has been given £3.7 million. Of this, £3.6m was from trade unions with £40,000 from renewable energy supplier, Ecotricity.

The Liberal Democrats have received £526,000 from companies and individuals. The Scottish National Party has received just £10,000 from Edinburgh-based translation company, Rubric.

The Scottish Greens have received no large donations while the Green Party of England and Wales has received £67,750. None of the donations received by the SNP, Labour or the Green Party are from companies with parent companies in tax havens.

The Conservatives and Liberal Democrats did not reply to requests to comment. The Conservative Party has previously defended taking money from donors linked to tax havens by saying: “Donations are properly and transparently declared to the Electoral Commission and comply fully with the law.”

The Liberal Democrats responded to criticism of tax haven donors in 2012. “Liberal Democrats are committed to targeting companies and individuals who are using aggressive tax avoidance measures by hiding money offshore,” the party said. “In some cases, there are legitimate reasons for global companies to not base themselves in the UK, and even corporations such as the Guardian Media Group have on occasion used the Cayman Islands.”

Shore Capital, Aquind, Alexander Temerko, the Reuben Brothers, Attestor Services, Bourne Capital, Inshmore Properties and Scottish Capital did not reply to requests for comment.

Poll: should political parties take donations from UK companies owned in tax havens?

Cover image of Ugland House in the Cayman Islands thanks to Google. This story was published in tandem with the Sunday National.

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