DUP leader Arlene Foster with Theresa May. Image: BBC.

It appears that the secretive group that channelled a controversial £435,000 donation to the DUP’s Brexit campaign has been forced to pay a record fine – for failing to properly disclose to the UK authorities where the cash came from, openDemocracy can reveal today.

The DUP, Theresa May’s key allies in parliament, have always claimed that the unprecedented £435,000 donation to their Brexit campaign complied fully with the law. The secretive Constitutional Research Council, the group which channelled the mysterious cash to the DUP, has also made this claim.

However, new research by openDemocracy and Transparency International casts fresh doubt on these assertions, raising troubling questions about the true sources of Leave campaign cash – and about the extent to which secret interest groups continue to hold sway over the UK government as it negotiates Brexit.

Donor secrecy ‘protection’

Earlier this year, openDemocracy revealed that a mystery donor had given Northern Ireland’s Democratic Unionist party £435,000 to campaign for Brexit.

The secret donation – a much larger sum than the DUP has ever spent on an electoral campaign in its history – attracted particular interest because almost none of the cash was spent in Northern Ireland. Yet the donor secrecy laws which apply to Northern Ireland, and not the rest of the UK, have allowed the donors(s) to remain anonymous.

Since then, May’s Northern Ireland Secretary James Brokenshire has announced an end to donor secrecy in Northern Ireland. But, crucially, he has gone back on a prior commitment to backdate transparency to 2014 so that the source of the vast DUP donation could be revealed – despite calls from all the Northern Irish political parties (apart from the DUP) to do so.

Government and DUP sources have rejected accusations that Brokenshire’s refusal to make donor identities public is ‘protection’ for the DUP, as part of their £1 billion deal to keep the Conservatives in power.

A record fine – for what?

In May, party leader Arlene Foster responded to questions about the unprecedented donation by saying that “we have satisfied ourselves that it was all kept within the rules.”

And the chair of the CRC, the secretive group that channelled the cash to the DUP, has previously said to the Sunday Herald that “the CRC is regulated by the Electoral Commission. We operate solely in the UK. We accept donations only from eligible UK donors. We donate solely to permissible UK entities. Any suggestion that we have done anything else is basically defamatory.”

However, in August, the Electoral Commission made a mysterious announcement. The UK regulator announced it had fined someone £6,000. But it couldn’t reveal more.

The curious fine was one of a number listed by the Commission. But unlike the other charges, it was covered by a controversial secrecy clause protecting donors to Northern Irish parties from public scrutiny.

openDemocracy investigated, and subsequently revealed that the hefty fine was indeed levied on the DUP’s secretive donors, the Constitutional Research Council (CRC).

And our research now reveals that, according to the rules governing donations of this kind, the fine could only have been levied for failure to properly disclose information about the source of the donation, as all donors of this scale are required to by law.

How did we get here?

In order to establish what kind of organisation the CRC is, openDemocracy has previously examined the public records relating to every type of group that was allowed to give money to referendum campaigns – from the register of trade unions to the Gibraltarian Companies House. The CRC doesn’t appear on any of these, which leaves one remaining category, of which there is no register: a relatively informal organisational form called an “unincorporated association”.

And so, in order to uncover how the CRC broke the law in regard to the DUP’s secret Brexit cash, openDemocracy and Transparency International have assessed every law relating to unincorporated associations and enforced by the Electoral Commission. Some of these require the Commission to refer those who break it to the court system. And so we ruled that out – because we know that this was a fine issued by the Commission itself.

Among those laws for which the Electoral Commission are allowed to issue fines themselves, all but one have a maximum fine of £5,000. And so we ruled those laws out, too.

The remaining piece of legislation is a requirement that unincorporated associations which give more than £25,000 to a party must declare all donations to them of more than £7,500.

This is the only remaining law which the Constitutional Research Council could have been fined £6,000 for breaking. They paid the fine in full in August 2017.

“The rules are very clear”

In July, Channel 4 chief reporter Alex Thomson asked the CRC chairman Richard Cook whether he told the Electoral Commission the true source of the donation. Cook said: “The Electoral Commission are fully aware of everything the CRC has done, where it’s raised its money from, and of any declarable donation”.

Thomson clarified: “So the Electoral Commission know where that money came from?” and Cook replied with a firm, “yes”.

He also told Channel 4: “The rules regarding the CRC are very clear”.

What openDemocracy’s revelation means is that Cook’s organisation was in fact fined £6,000 for breaking these “very clear” rules, and that, if he had told the Electoral Commission all the details of where the money had come from at the point at which he told Channel 4 he had done so, it was only after being fined for failing to do so.

Both the CRC and the Electoral Commission have declined to specify exactly how the CRC broke this law, with the Commission simply repeating what is on its website: “A £6,000 penalty was imposed on a regulated entity, as reported on our website, in August. We cannot provide any further details in respect of that penalty because of the restrictions on disclosure under section 71E of PPERA.” Section 71E is the piece of the Political Parties, Elections and Referendums Act which bans them from revealing information about donors to Northern Irish parties.

Record fine

However, openDemocracy can also reveal that £6,000 is the biggest ever fine charged to an unincorporated association. Having assessed every fine charged by the Electoral Commission since it started regulating donations to unincorporated associations in 2010, we have found that the previous largest penalty issued was just £1,200. That fine was charged to the National Conservative Draws Society. An Electoral Commission press release at the time said:

“The society has been fined for repeatedly failing to notify the Commission that it had made donations to the Conservative Party in excess of £25,000 during 2012, 2013, and 2014.”

All other previous fines were under £1,000, with the usual charge of £400 applying to those who failed by the relevant deadline to notify the Commission of donations over £25,000 (which the 2010 law requires) and £900 being charged to those who had failed twice to make such a declaration.

Before the CRC, there was no example of an unincorporated association being charged for breaking the other half of the same law – the clause requiring them to declare to the Commission all donations of more than £7,500. (Although as openDemocracy has previously revealed, only one unincorporated association has ever made such a declaration – which points to wider concerns about the policing of the law as it stands).

Due diligence?

When openDemocracy challenged DUP MP and Brexit campaign manager Jeffrey Donaldson about the donation in his constituency office this spring, he told us that the party had done proper “due diligence” on the donation, but then claimed that they hadn’t known that the chair of the Constitutional Research Council had set up a business in 2013 with the former head of the Saudi Arabian intelligence service. Mr Donaldson said:

“I believe they have raised the money legitimately. We were delighted to receive the money for the Brexit campaign from them.”

He added: “We have complied not only with the law, but we’ve gone much further than the law requires… If the Constitutional Research Council wish to publish where they do their fundraising, that is a matter for them, not the DUP.”

When asked, “you have a legal obligation to do due diligence, do you not?”, he replied by saying,“ we have done that”.

“We have complied fully with our legal requirements and obligations… we have satisfied all the requirements. If you have an issue about that, go to the Electoral Commission; we have complied with all their requirements”.

While there is no suggestion that the DUP has broken any law, the question we put to them then remains: how is it possible they did due diligence on a donation while knowing neither the basic facts about the business activities of the man channeling them the money nor, as it transpires, that he had failed to follow the basic legal procedures required of those giving such donations?

We contacted the DUP again, and also asked why they had accepted a donation which breached electoral law to the extent that the donor was charged a record fine; whether they knew the Electoral Commission was investigating the CRC for breaking the law at the point at which their party leader claimed "it was all kept within the rules"; and how it's possible they did proper due dillegance, as Donaldson told us they had, if it later transpired that the donors had broken the law? They have chosen not to comment.

We put to CRC chair Richard Cook the conclusion of our research, that he had been fined for failing to declare who his donors are. We also asked him if he is now willing to reveal the source of this money. He refused to comment.

Despite our numerous revelations about the CRC and the surprising connections of those involved with it – including the former head of the Saudi intelligence service, a Danish spy accused of flying hundreds of rifles to West Bengali terrorists, the Brexit minister, an English weapons manufacturer and American billionaire Robert Mercer – we still don’t know where their funding came from.

We will continue to press both the Democratic Unionist Party and the CRC for full transparency on this matter.