How to funnel cash into British politics without anyone knowing who you are

LONDON — What connects a Lancashire manor house, several exclusive dining clubs, and a bronze sculpture of David Cameron on a bicycle?

The answer is millions of pounds in opaque donations to Britain’s political parties.

This is the weird world of “unincorporated associations” — shadowy groups which constitute one of the least-regulated and most-poorly understood aspects of British election finance. Jess Garland, of campaign group the Electoral Reform Society, said they represent a “dangerous loophole in our political financing rules.”

In the past five years alone, donations to British political parties from these little-known entities have surpassed £14 million — a sum almost equivalent to the ruling Conservative Party’s entire outlay during its triumphant 2019 election campaign.

British political parties are generally required to be open about how and where they raise their cash. Yet unincorporated associations remain an enormous transparency black hole — and experts fear they could in some cases even be used to channel foreign money into British politics, evading the watchful eye of regulators.

“At a time when foreign or commercial influence over our democratic process is rightly under the microscope, it is important that no ‘back channels’ are used either to support political bodies or to campaign for particular policies,” warned Labour peer Dianne Hayter, a former shadow Cabinet Office spokeswoman.

“Sunlight is the best disinfectant,” added Tory MP John Penrose, formerly the government’s anti-corruption czar. “It’s vital we don’t leave a gaping hole where people using unincorporated associations can dodge transparency.”

How it works

Unincorporated associations were conceived as a way to set up small organizations without the added cost and red tape that comes with acting as a formally-registered company or charity.

Any group of two or more individuals working toward a common goal — and not focused on making a profit — can set one up. Outside of politics, they serve an important function — granting community groups or local sports teams around Britain a simple template to manage their internal affairs.

At one end of the scale, a UA could be used to organize a residents’ association, letting members pool funds for repair work and vote on communal issues. A local football team could hire a pitch and use the UA to split the cost between players.

But with that simplicity comes a host of transparency red flags.

UA’s — unlike companies and charities — don’t have to officially register their existence with any outside body. They don’t have to file annual financial statements or open business bank accounts. They don’t even need to have a name. And their definition is so vast that some experts say it’s possible to technically form a UA without even realizing you’ve done so.

When it comes to politics, the safeguards on UAs are few and far between.

Under British electoral law, political parties do have to tell watchdog the Electoral Commission if they’ve received cash from a UA. But finding out who’s actually funding that UA is a different story.

Darwen awards

In the parliamentary constituency of Rossendale and Darwen in northwest England, the local Conservative association has received more than £80,000 in donations from a group called The Portcullis Club.

This “club” has been supporting the party and local MP Jake Berry, a former Tory Party chairman, for almost a decade.

Yet it has no online presence nor publicly-available information explaining how it is funded. It is one of seven UAs in the U.K. which use the “Portcullis Club” moniker in some form.

Address details for the group provided to the Electoral Commission also shed little light on its activities. They show that from 2013 until 2015 — a period during which the Portcullis Club donated almost £40,000 to the Tories — its registered address was a flat in south London. According to documents from Companies House, the club shared an address with a company run by one of Berry’s former parliamentary staff members.

By 2016, the UA’s address had shifted to a Georgian manor house in Berry’s constituency. Company documents directly link that manor house to a long-standing business associate of Berry.

There is no suggestion any rules have been breached with this set-up, and Berry did not respond to POLITICO’s questions about his relationship with the UA.

Wining and dining

Such complex relationships are commonplace among even the largest UAs — some of which describe themselves as “dining clubs” and appear closely linked to the political parties themselves.

One of the oldest, the United & Cecil Club, has donated over £1.5 million to the Conservative Party in the last two decades. But, despite journalists’ best efforts, its membership and what happens at its glitzy gala events remains largely unknown.

Attendees who have occasionally hit the headlines — such as businessman Nathan Steinberg, who reportedly paid £25,000 for a bronze sculpture of then-Prime Minister David Cameron riding a bicycle — are reluctant to comment.

The opacity of the current system makes following the money trail incredibly difficult. The United & Cecil was at one stage registered to a riding school in Berkshire. Another UA shares the same address as a London-based insurance firm. And many more provide private homes or serviced offices as their contact points.

In 2019, the Scottish Unionist Association Trust, a UA which operates from the same address as several Scottish Conservative Party associations, itself received nearly £500,000 in donations from another unincorporated association.

One of the most prolific groups, The Magna Carta Club, has donated over £190,000 since 2009 to Housing Secretary Michael Gove’s local Conservative Association. The Surrey Heath Conservatives — which shares an address with this club — has previously described it as a group for “Conservative-minded business and professional persons.”

POLITICO asked the Surrey Heath Conservative Association about its relationship with the Magna Carta Club, how it raises funds, and the level of access it offers donors. A spokesperson said only that they could “confirm that all fundraising … is done in compliance with the relevant legislation.”

‘Deeply worrying’

Some believe that legislation that needs to change — and fast.

In 2021, the Committee on Standards in Public Life — which advises the U.K. government on ethical standards — identified UAs a “route for foreign money to influence U.K. elections” and warned there is currently “no transparency” over the source of their funds.

Only if a UA makes political donations of more than £25,000 each year is it subject to additional Electoral Commission transparency requirements. If a UA does hit that threshold, it is required to tell the watchdog about any gifts of more than £7,500 it received from a single source in a 12-month period.

But even then there’s a caveat. UAs only have to count donations of £500 or more toward this £7,500 threshold. And that means donors wishing to keep their name off could simply make repeated contributions of £499 — without ever triggering the reporting requirement.

Campaign groups including Transparency International have raised concerns that the “diners’ club” model offers donors the opportunity to meet with senior politicians well away from public view.

And the Electoral Reform Society said overhauling these “murky arrangements” is now crucial to improving public trust in politics.

“At a time when concerns about who is attempting to influence our politics grow, that such a gaping hole remains in our rules on political donations is deeply worrying,” Garland, the group’s policy chief, said.

The government has so far resisted calls for change, insisting in 2019 that the set-up is “sufficiently comprehensive” to stop impermissible donations while avoiding swamping smaller societal groups in red tape.

The Electoral Commission, responsible for monitoring and enforcing the U.K.’s election laws, has limited power to regulate, and instead must largely rely on UAs to self-police.

Despite tens of millions of pounds being donated through UAs in the last decade, the Electoral Commission’s register shows that only a single group has ever reported hitting the £7,500 threshold, requiring more disclosure.

Speaking to POLITICO, Louise Edwards, director of regulation at the Electoral Commission, acknowledged that “public confidence in transparency of party and campaigner finance is declining.”

The Commission has therefore joined those calling for improved due diligence of political donations, bringing politics in line with anti money-laundering measures common in other industries. It wants cash from UAs and other donors to be subjected to more rigorous checks.

“These reforms would give parties the tools to understand the work and activity of a donor,” Edwards added. “They would also help give voters greater confidence in the transparency of the U.K.’s political finance system.”

For now, at least one key aspect of that system remains highly opaque.