Gregory Campbell MP, treasurer of the Democratic Unionist Party, who accepted a £425,000 donation through an unincorporated association, from unknown sources. Image: BBC.
The revelation on openDemocracy that loopholes in Northern Ireland's party donation rules were used to anonymously channel hundreds of thousands of pounds into the Brexit campaign via the DUP is alarming, but unsurprising. Wherever political donation loopholes exist – and they do in abundance – individuals and companies are quick to exploit them. Political parties have shown themselves to be willing to accept donations that come through front organisations, in the form of a loan, or as smaller donations from numerous connected family members and friends – at least until they get caught out. The latest data from the Electoral Commission has shown that far from Northern Ireland being an exception to the rule, wealthy individuals, corporate interests and trade unions dominate the political donors list. Donation rules need to be overhauled, or we risk a further corrosion of public trust in political integrity.
Although the identity of the anonymous donor has now been revealed as the Constitutional Research Council (CRC), this has only raised more questions. The CRC are not a registered company or an unincorporated association, nor are they a registered charity. They have no website, and virtually no information is available about the group online. The CRC’s Chairman, Richard Cook, is the former vice-chairman of the Scottish Conservative party and holds a range of directorships. Who else is behind the CRC and their £425,000 donation that funded the DUP’s Brexit campaign, remains a mystery.
In Northern Ireland, unlike in the rest of UK, donations to political parties are anonymised under rules outlined in the Political Parties, Elections and Referendums Act 2000 (PPERA). For years, the government has pledged to bring Northern Ireland in line with the rest of the UK, which would require simple secondary legislation, and yet reform has never materialised.
Northern Ireland’s donations loophole is hardly an exception to the rule. Dark money runs throughout our political system. Existing rules that are meant to promote transparency are simply not comprehensive enough, and so long as loopholes exist, they will continue to be exploited, exploit them and political parties will be happy to help them along.
Conscious of avoiding a potentially reputation-damaging activity, like offering cash for an honour, there are a plethora of avenues open only to the wealthiest, which facilitate stealthy donations to political parties. These are detailed in a satirical guide, ‘How to be a Dodgy Donor,’ published by Unlock Democracy this month. For example, individuals can pay £50,000 to become a member of the Conservative party's 'Leadership Group.' Alternatively, setting up an Unincorporated Association enables donations of up to £24,999 to be made to a dinner club which can be passed on to a political party of choice without your name being published by the Electoral Commission. If a dodgy donor wants to disguise their identity, there are many ways to funnel cash into a political party – no questions asked, no names revealed.
To robustly scrutinise the decisions being made by the government, the public needs to know whether they are being subject to undue influence. Transparency measures around party donations are in place to make this scrutiny possible. However, the measures in place do not go far enough to eradicate opacity. Whether it’s setting up a limited company through which to channel funding to a political party, or splitting up donations so that each individual transaction is small enough to avoid the Electoral Commission’s registration requirements, what’s clear is that if you have the money, the rules are easy to circumvent. Those seeking to leverage their wealth to influence a political party should be accountable to both Parliament and the public, and yet existing rules do not enable this scrutiny process to happen.
Existing political donation rules create a system that inclines parties towards pandering to wealthy donors. In a healthy democracy, every citizen should be able to equally participate, and yet the current system enables the wealthiest in society to purchase political influence. If we want to stop the influence of big money in our politics, we need to introduce a low level cap on donations. By capping donations at £5,000, single donations could no longer have an overwhelming influence on campaigns. Politicians would have to appeal to a broader and more diverse audience to source their campaign funds rather than simply pleasing a few multi-millionaires.
The cap would need to be the same for everyone: individuals, companies, unincorporated associations and members’ associations. The only exception being affiliation fees from membership organisations. This would diminish the opportunities for getting round the rules. The low cap would mean that using tricks, like splitting donations or setting up companies, require more effort that the potential benefits. (You would need to find a lot of people to donate on your behalf to accrue any significant donation). While banning corporate donations would open up new loopholes – individuals making donations and then being repaid by the company for example – the thresholds for company donations do need to be strengthened. The definition that’s currently applied – “carrying on business” – is as broad as to be virtually meaningless.
The Brexit vote was in part motivated by a deep-set distrust of the political establishment and a dissatisfaction with the way politics is conducted. A perception prevails amongst at least some voters that those in Westminster work on behalf of the interests of the establishment elite, and not their constituents. The way we fund political parties only works to reinforce the perception that politicians are working in the interests of the privileged few, and not the many.
A lack of transparency and dodgy donor scandals corrode the public’s trust in politics, giving rise to the impression that influence over policy and access to politicians can be bought. Closing Northern Ireland’s donations loophole is only a starting point: we need to overhaul political donation rules, and bring an end to donor leveraging their wealth to determine policy. Capping donations is the single biggest change to our party funding system that would take big money out of politics and force parties to work in the interests of everyone not just the privileged few.