Why HSBC’s indirect donations to the Conservatives (and Buzzfeed’s dismissal as a 'conspiracy') matters to our democracy

There are serious questions to ask about the links between HSBC and the leadership of the Conservative party. Dismissing them as conspiracy theories is dangerous for our democracy.

Joel Benjamin
16 May 2017

In late January 2010, a sleek Executive Jet landed at RAF Northolt in London, returning 6 passengers from Davos, Switzerland. Two of the passengers on the flight, donated by Tory Treasurer Michael Spencer’s IPGL Ltd, were then opposition leaders David Cameron and George Osborne. The identity of the four other passengers remains a mystery.

Fast forward to 28th April 2017. Metallic silver and blacked-out Mercedes shuttled HSBC executives to elevated pews at the QEII Centre in London for HSBC bank’s Annual General Meeting (AGM). By this time both Conservative leaders had resigned from UK politics. One day prior, Osborne had recorded a fee of £68,225.00 in his final parliamentary declaration form as a sitting MP, for a five hour speech in HSBC’s offices.

HSBC is the largest bank in Europe, the seventh largest in the world. For this year’s annual sermon, there was no controversy to attract the TV cameras: no Panama Papers, no Swiss Leaks or Mexican money laundering scandals. Two HSBC AGM regulars, Nicholas Wilson (Mr Ethical on Twitter), and Fionn Travers-Smith from Move Your Money, were there to ask probing questions.

Part of their aim was to ask why, and under what circumstances, HSBC bailed out a troubled company run by a former Tory treasurer.

IPGL Ltd is a holding company, run by Michael Spencer – a former Conservative Party Treasurer and a leading fundraiser for Cameron’s 2010 election campaign. He remains chairman of the Conservative Party Foundation, which aims to strengthen the financial future of the party. IPGL Ltd has donated in excess of £4.2m to Conservative HQ and leadership candidates, including both Cameron and May, since 2005. There were additional donations of £1m from ICAP (CEO, Michael Spencer again), City Index and Michael Spencer himself, plus executive jet flights from Davos.

In 2008, at the height of the banking crisis, when most other UK banks stopped lending, HSBC extended a £214m loan to IPGL, secured against shares in Spencer’s brokerage firm ICAP and 14 other public and privately listed companies held by IPGL group. HSBC also extended the loan into 2015 instead of 2011 as initially agreed.

Taking shares as security, related to the company being lent to is risky, because if the company runs into financial difficulties, the collateral is unlikely to be worth much.

That’s the brief introduction sorted.

Since 2010, HSBC appears to have won a string of regulatory concessions from George Osborne and the Conservative government. Since he was fired as Chancellor, HSBC has paid Osborne a sum of £120,054.29, for eight hours work, involving just two speeches.

At the HSBC AGM, Fionn Travers-Smith asked a series of questions of Chairman Douglas Flint regarding HSBC political lobbying activities. They included:

1) If HSBC is politically neutral as claimed – how does it justify senior directors such as former deputy chairman Simon Robertson donating large sums to the Tory party, or does HSBC consider personal donations made by its own highly-paid directors irrelevant?

2) Did HSBC comply with UK and EU policies and HSBC rules regarding lending to Politically Exposed Persons (PEPs) under Anti-Money Laundering and Know Your Customer protocols – when extending credit to a company controlled by Michael Spencer; the chief fundraiser for the Conservatives 2010 election campaign and a close friend of David Cameron?

3) If HSBC is ‘politically neutral,’ why was Tom Fairhead – a Conservative councillor at the Royal Borough of Kensington and Chelsea and husband of former HSBC non executive director and former audit and risk committee chairman Rona Fairhead, provided with gifts/ donations – against HSBC policy on the use of company resources?

4) Why did HSBC roll over the IPGL loan, which was due for repayment in November 2011 until late 2015?

These are legitimate questions to which we the public deserve honest answers. Financial corporations play an oversized role in our politics and their lobbying is not always as transparent as the media likes to pretend.

Unfortunately, big banks can use threats to pull their advertising to restrict negative coverage. This is the sad reality of our print media model. As former Telegraph journalist Peter Oborne put it in his classic resignation letter: “HSBC is the one advertiser you can’t afford to lose.”

Enter Buzzfeed. A few days after our questions were raised and started circulating on social media, the Canary picked them up. Then the SNP MP Roger Mullin wrote to the Electoral Commission to raise the issue. The letter went viral.

Buzzfeed then rushed to shout “conspiracy” to their readers, in response to the Canary, without focusing on the substance of the claims made by Move Your Money and Debt Resistance UK. It weaponised the language employed by Mr Mullin (that IPGL “laundered” donations to the Tory party) in an attempt to associate legitimate questions with a “theory which began on The Canary.”

Buzzfeed’s James Ball claimed this is a ‘conspiracy’ because in his opinion IPGL was not in serious distress in 2008 and 2009, and while IPGL did borrow money from HSBC, it paid it back. However, these are not the questions we asked of HSBC, and are not the main focus of Move Your Money’s investigations.

Our questions for HSBC ask how much the bank knew about IPGL’s close relationship to the Conservatives. What questions did HSBC ask of IPGL’s track record of generous donations to the Tory party when extending credit? Furthermore, we wanted to know about the close links HSBC developed with key Tory leaders.

The BBC’s Nick Robinson attempted to dismiss questions about the riskiness and purpose of the HSBC loan to IPGL, by simply parroting the phrase “strong collateral”. In fact, the loan was secured against shares in Spencer’s own company, brokerage firm ICAP, which issued a profit warning shortly thereafter.

Moreover, Michael Spencer was forced to step down from stockbroker Numis Corporation in February 2009, for failing to declare he had pledged shares of Numis Corp (where he was chairman) as collateral against the HSBC loan.

We have a long list of unanswered questions for HSBC, IPGL, ICAP and Michael Spencer, but here are a few worth considering:

1) On four separate occasions, David Cameron put forward Michael Spencer for a peerage, only to be turned down by the Cabinet Office Head of Ethics. Why was Michael Spencer so consistently denied a peerage if he has done nothing wrong?

2) Why did IPGL/ Michael Spencer sell off a £45m stake in ICAP shares (aka the “strong collateral”) to repay loan interest, a week before a profit warning prompted a 30% drop in ICAPs share price?

3) Was Michael Spencer a passenger in the IPGL funded executive jet flying from Davos to RAF Northolt in January 2009 and January 2010, along with Osborne and Cameron?

Obtaining answers to these questions is vitally important to the ongoing political discussion around financial transparency, electoral reform and addressing the shadowy bankrolling of political parties in this country that appears to occur with impunity.

Charges of political corruption should not be dismissed as “conspiracy” without due interrogation and analysis, something the Electoral Commission’s snap response to Roger Mullin MPs concerns, before additional evidence could be sought or interrogated failed to deliver.

My greatest fear is that as long as these questions remain unasked by the mainstream media and unanswered by those in positions of power – our democracy will continue to suffer.

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