Dark Money Investigations: Investigation

Tories rake in £11m from hedge funds and finance tycoons

Exclusive: Financiers accused of buying ‘unparalleled access to the very heart of government’ as scale of Conservative Party's reliance on City donors revealed

Seth Thévoz close-up
Seth Thévoz
27 September 2021, 4.57pm
Just 140 wealthy financiers have donated £11m to the Tories since 2019.
Tayfun Salci/ZUMA Wire/Alamy Live News

The Conservative Party has taken £11m from the finance sector since the 2019 general election, openDemocracy can reveal.

New analysis shows how the party has become dependent on bankers and hedge fund tycoons, who are now responsible for almost 40% of all donations.

The findings have sparked warnings from opposition MPs and transparency campaigners that Boris Johnson is reliant on "vested interests" who want to "drive the UK towards a Singapore-on-Thames-style model of light-touch regulation and low business taxes".

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The flow of cash from hedge funds and private equity in particular has increased sharply since Brexit. Many leading hedge fund managers backed Britain’s vote to leave the EU.

In total, just 140 wealthy individuals in finance gave £11m to the Conservatives since the last election in December 2019.

Major City donors include billionaire Peter Cruddas – once dubbed the “richest man in the City” – who has given £843,854 to the party since the last election.

Cruddas gave half a million pounds just days after he took his seat in the House of Lords, after the Lords vetting body tried to veto his appointment. Cruddas later insisted there was no link between his donation and his seat in the Lords.

Britain’s hedge fund bosses and private equity partners could be seeking to influence a new round of deregulation.

Margaret Hodge MP

The Conservative Party’s increased reliance on the financial sector comes amid growing concerns about the potential for wide-scale post-Brexit deregulation of the City.

The government recently opened a consultation on changes to City regulation following a report by Boris Johnson’s Taskforce on Innovation, Growth and Regulatory Reform, which is headed by Tory MPs who have long called for more deregulation, including Iain Duncan Smith. Brexit minister Lord Frost is heading up the review.

Labour MP Margaret Hodge, former chair of the Public Accounts Committee said: “In the wake of Brexit, it seems that Britain’s hedge fund bosses and private equity partners could be seeking to influence a new round of deregulation.

“This important investigation by openDemocracy reveals how reliant the Tory party has become on donations from the financial services sector. Most worryingly, the government’s inaction in response to the ongoing pillage of British businesses by overseas or offshore private equity firms shows that it could be working.”

She added: “It seems ever clearer that the government is driving the UK towards a Singapore-on-Thames-style model of light-touch regulation and low business taxes. And as ever the Tory party will make workers shoulder the burden and prop up the economy, as they have done with their patently unfair social care levy.”

Other donations included £372,000 from the Britannia Financial Group, which is a client of embattled Tory chairman Ben Elliot’s Hawthorn Advisors.

And Lubov Chernukhin – the wife of Vladimir Putin’s former deputy finance minister – has given a further £456,000. She is the largest of a growing group of Russian donors to the Tories in recent years and describes herself as an “investment director” in company documents.

The average from each donor in the financial sector was £78,050.

George Havenhand, senior legal researcher at Spotlight on Corruption, said: “It is hardly surprising that hedge fund managers and private equity bosses are ramping up political donations to the governing party when it is increasingly clear that this provides unparalleled access to the very heart of government.”

“Party political donors paying the piper have a strong chance of calling the tune. The extent of the Conservative Party's dependence on the finance sector, with all of its vested interests, has profoundly serious implications for the health of our democracy.”

Influence of Brexit

openDemocracy’s analysis suggests that the influence of traditional City of London bankers on the Conservatives is steadily decreasing.

Instead, wealthy tycoons from the world of hedge funds, private equity and asset management are fuelling the party.

This follows a strong Leave/Remain pattern: while the City of London donated heavily to the Remain campaign in 2016, a number of the Tories’ hedge fund donors have long championed Brexit.

Other donors from the world of investment include financier Jamie Reuben – the son of property developer David Reuben – who has overseen £440,000 in donations, including £125,000 from a firm he controls, Investors in Private Capital Ltd.

Hedge fund billionaire Alan Eldad Howard has given almost £295,000. And £250,000 was donated by Eisler Capital UK, run by the former Goldman Sachs and Lehman banker Edward Eisler.

It also follows a trend of the Conservative Party turning away from traditional donors in areas such as manufacturing.

A decade ago, an in-depth study of Tory donations concluded they were already heavily dependent on donations from the financial sector.

Many of the same names are still donating, such as hedge fund bosses Michael Farmer, Stanley Fink and Andrew Law. But the overall sums are now much larger. In 2011, the Tories drew £14m in donations, compared to £29m in the 18 months after the 2019 election.

Fundraising push

Accounts for the Conservative Party show it took a serious hit due to COVID-19, with a huge reduction in donations during 2020.

But the party’s finances have now bounced back. The first six months of this year saw nearly £11m in donations made to the party, compared to just £6.6m during the same period last year.

In the past month, the Conservatives have had a flurry of exclusive fundraising events with Boris Johnson and Rishi Sunak.

The pair rushed straight from a key vote on social care in Parliament to a secretive donor event at the Wallace Collection museum in Marylebone. And Johnson addressed a £500-a-head Mayfair fundraiser at the Intercontinental Park Lane three weeks ago.

Last week, he dashed back from his address to the UN General Assembly in New York to make a black-tie dinner at Blenheim Palace, where seats cost £5,000. The event is thought to have raised £400,000 on ticket sales alone, before the proceeds of the lucrative fundraising auction were added.

None of these fundraisers have to be declared yet, so they are not included in openDemocracy’s analysis of donations.

The findings come ahead of the Conservative Party conference next week, where members of the so-called Leader’s Group of top-tier donors are given free hotel rooms in the main conference hotel, Tory sources have told openDemocracy.

Donor clubs

openDemocracy has previously shed light on the success of Tory donor clubs, and how they use a marketing concept called ‘versioning’, by meeting demand among the super-wealthy. Many of them want to meet Tory ministers, but are prepared to donate different amounts for the experience.

This is reflected in how donors often give very similar amounts every year. Twenty-nine donors have given more than £250,000, entitling them to access the super-secretive ‘Advisory Council’. Another 113 have paid at least £50,000; enough to access the elite Leaders’ Group for a year.

Some 71 more have given the £25,000 that would let them access the Treasurers’ Group. And 179 donated £10,000 that would admit them to the Renaissance Forum.

However, there is no longer any way of checking who is a member of these groups, since details were expunged from the Conservative Party website. A long-standing pledge by the party to release the names of attendees at quarterly donor dinners has been quietly dropped.

As well as its increasing reliance on the financial sector, the Conservative Party has also taken millions from property and construction tycoons. Research by Transparency International recently found the industry had given more than £60m to the party over ten years, accounting for 20% of all donations.

The Conservative Party, Lord Cruddas, James Reuben and Eisler Capital did not respond to a request for comment.

The Britannia Financial Group and a representative of Alan Eldad Howard both declined to comment.

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