Who Funded Brexit? - The American Interest

The seismic vote for the UK to leave the EU has propelled a hitherto obscure individual to the center of national politics. Until a few weeks ago Arron (sometimes Aaron) Banks was a little-known insurance entrepreneur and UK Independence Party (UKIP) donor. Since the resignation of UKIP’s leader Nigel Farage he is being tipped as a possible new party leader. Far from rendering the party obsolete, the leave vote makes UKIP all the more influential, as it will now harass the government of Prime Minister Theresa May until it triggers Article 50 and commences the formal exit process; despite having just one MP, UKIP now commands a far greater role on the national stage.

Who, then, is Arron Banks? In some ways he is a novel figure in British politics, having bought his way onto the national stage. Although there is some uncertainty over exactly what Banks lent and donated to the Out campaigns, there is no doubt that it was a huge sum by UK standards. In an interview with the Sunday Times on 10th July he volunteered the figure of £6.5m ($8.7m)—a sum which we will return to later.But Banks himself is mysterious. He has been a director of over 35 UK companies, and is currently running 13. His fortune mainly appears to derive from three insurance companies that he founded, and then sold, in 2005: Brightside, GoSkippy and Southern Rock. He has made extensive use of offshore companies in the Isle of Man and Gibraltar. Andrew Wigmore, his right-hand man in business and politics, has interests in the Caribbean offshore center of Belize, and indeed serves as the Belize ‘Trade, Commercial & Press Attaché’ in London (despite not being Belizean). He also serves as the communications director of Leave.EU. Sebastian Payne, writing in the Spectator Blog in October 2015, quoted a senior Conservative close to the Leave campaign:

[Conservative donors] regard him [Banks] as a total liability and nobody serious wants to have anything to do with him. His campaign is owned in an offshore company1. His director of communications is also the Belize trade representative in London. They antagonise everybody they deal with. Serious people won’t touch him with a bargepole.

As Payne’s rather uncharitable report suggests, Banks defines himself as an outsider, and reportedly defected from the Conservative party to UKIP after a social slight by the foreign secretary at the time, William Hague. He lives in Bristol with his Russian wife Katya, formerly named Ekaterina Paderina. In 2001 she married Eric Butler, a British seaman twice her own age, but the union ran aground after three months. The Home Office questioned the authenticity of the marriage, and might have deported her were it not for the intervention of her local MP, the Liberal Democrat Mike Hancock. In a curious footnote, MI5 (the Security Service, responsible for counter-espionage) later accused Hancock’s assistant and girlfriend Katya Zatuliveter of being a Russian agent, although she was cleared in a national security court in 2011.

When Banks piled over £6 million into the Leave campaign, he chose to do so in a baffling way. He is principally associated with Leave.EU, the leading ‘unofficial’ campaign (the ‘official’ campaign, Vote Leave, benefitted from a higher spending limit and some state subsidy and was backed by Boris Johnson and Michael Gove). In the pre-poll period, Banks loaned Leave.EU £6m, according to the Electoral Commission. However, the only cash recorded as donated (rather than loaned) to Leave.EU was £3.2m donated by the stockbroker Peter Hargreaves.At the same time, another campaign, Grassroots Out, received £1.95m from Banks’ wholly-owned company Better for the Country Limited (which itself owns Leave.EU). Intriguingly, this donation was recorded as ‘non-cash’. I asked Grassroots Out by email to explain the nature of the non-cash donation, and its spokesman Rupert Matthews asked for more time to respond. Two weeks later, at the time of writing, Matthews still had not responded.One explanation may be found in the above-mentioned Sunday Times profile: Banks explains that he paid for the services of the U.S. political campaign consultancy Goddard Gunster. He said, “The American advisers said that you can only go so far on facts; people have got an intolerance towards facts. You have to connect with people emotionally and that’s what both official campaigns failed to do.”Banks certainly seems to have heeded this advice. During the referendum campaign Leave.EU put out a video of Donald Trump reading the lyrics of the song “Vicious Snake”, accompanied by footage of migrants attempting to cross European borders. The voiceover advises voters, “Donald Trump’s take on immigration…Vote to Leave the Vicious Snake that is the EU on June 23.”Leave.EU also employed the consultancy services of Paul McKenna, a popular hypnotist who appears on the television persuading people to do unseemly and unlikely things. It was in one of McKenna’ online videos for Leave.EU that he intoned “Isn’t it time to take back control?” (a counter-intuitive message from any hypnotist). Farage himself would repeat this phrase time after time in his campaign speeches. When the Leave vote started to surge in the polls in late May, Prime Minister David Cameron’s election guru Lynton Crosby said: “the Leave campaign increasing focus on lack of control over immigration and associated message discipline has helped their case.” (It must be admitted that the Remain campaign’s tin-eared insistence that Brexit would devastate the UK made it a sitting duck.) Goddard Gunster’s role, beyond the imposition of “message discipline”, is unclear.Despite some of his colorful links to Russia, Banks’ ascent represents an import of some of the less desirable elements of U.S. campaigning into the British political process. A new precedent has been set: money can generate a political career and “facts” are seen as an electoral liability. In a closely fought referendum with vast implications for the UK and the Western world, he has undoubtedly made a serious impact.In the brave new world of Americanized politics, the UK ought to look into strengthening and reforming its transparency laws. A question to the Electoral Commission, on how far it looks behind donating companies and individuals to determine the origin of their funds, elicited this response: “Where a company makes a donation, it needs to declare the source of the donation if it was not the company—i.e. it needs to declare if it is acting as an agent for the true donor… A UK incorporated company is not prohibited from donating simply because it might be owned by a non-UK or other impermissible donor, and transactions between parent and subsidiary companies are an expected part of normal business… A person commits an offense if he is knowingly involved in an arrangement which facilitates or is likely to facilitate the making of donations by an impermissible donor.” In other words, there is little or no due diligence or oversight of donations. Though there is absolutely no suggestion that foreign funds featured in Banks’ donations and loans to the Out campaigns, a more intensely money-fueled politics requires more stringent supervision by the government.Banks is now promising that UKIP will work against the May government: “We would get enough people to get £10m into the party, rebrand it and reform it, and come back hard at the Tories.” But in terms of becoming a real parliamentary power, it is traditional Labour seats in working class areas of the North and the Midlands that would be vulnerable to a reformed UKIP, voting as they did to leave. Leave.EU, meanwhile, with a £6m loan from Banks, is continuing its operations post-referendum.New forces are at work in British politics, and Brexit marks the beginning, not the end, of these forces’ influence over Westminster.

1. Until late 2015 Better for the Country Limited was owned by a Gibraltar firm, STM Fidecs Limited; Gibraltar companies are allowed under Electoral Commission rules to contribute to UK election and referendum campaigns. Better for the Country Limited is now entirely owned by Mr Banks himself.

Neil Barnett is a former foreign correspondent and is now CEO of Istok Associates Limited.