Those gaping loopholes in our democratic process

The report that billionaire X/Twitter owner Elon Musk is considering donating nearly £80 million ($100m) to Nigel Farage’s Reform UK party has certainly started to concentrate minds on the flaws and loopholes in our dmeocratic process.

Byline Times reports on warnings by anti-corruption experts that outdated regulations leave the door open for hugely wealthy foreign donors to interfere in UK elections:

They say that the sheer scale of Musk’s mooted donation should not be underestimated, given it is close to the total amount donated by all other political donors put together in the UK last year:

However, as things stand there is little to prevent it happening. Although current UK electoral laws prevent foreign nationals donating to British political parties, there is nothing stopping the money being funnelled through a UK-registered company, like Tesla.

Questions over just such an arrangement surfaced during the recent Conservative leadership contest when Robert Jenrick received £40,000 from two companies – one owned by an Israeli billionaire and another owned by an Australian hedge fund scion – as well as further donations from a company that received funds from an untraceable British Virgin Islands company.

Following the reports of Musk’s potential donation, Keir Starmer is facing calls to urgently overhaul the system.

Starmer so far appears resistant to act, with a Downing Street source insisting this week that it was “not a priority” to implement a cap on donations.

Senior figures in his party are starting to raise the alarm, however.

At an event in Westminster on Wednesday, attended by Labour MPs, campaigners from Transparency International revealed that almost a tenth of the cash recently donated to parties and politicians came from unknown sources.

Proposed reforms include restricting corporate donations, and strengthening the Electoral Commission’s independence and enforcement powers which were scaled back under the previous Conservative Government.

Other key recommendations from the campaigners include a £10,000 annual cap on individual donations, and banning public contractors from donating to parties.

Transparency International’s CEO Duncan Hames revealed that UK political parties raised £85 million from private donations in 2023, while £115 million over the past 20 years came from “questionable” sources. More than two thirds of that went to the Conservatives.

Meanwhile, two thirds of the donations to parties last year came from just 19 individuals giving over £1 million each.
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Hames noted that foreign interference appears to be growing in Europe: “Those with great wealth have used it to claim great power in Georgia, in the Caucasus, where citizens protest the theft of their election daily.

“Now the country’s wealthiest man commands his ‘Georgian Dream’ party and controls the direction of the country. In Moldova, an oligarch flew voters to Russia, who then returned with suitcases full of cash.

“And in Pennsylvania [US], one of the world’s richest men [Musk] created the spectacle of making people millionaires, through a lottery for those engaging in a political campaign. It was perhaps most influential in persuading ordinary Americans that he and his billionaire friend would just love the chance to make them rich too.”

The report also identified £48 million from donors alleged to have bought privileged access or honours, and £42 million from those linked to allegations of corruption or fraud, since 2001. Foreign governments like Qatar, Saudi Arabia, and Bahrain also spend heavily funding visits to their countries for MPs, stoking concerns about foreign influence and the PR-washing of dictatorial states.

Public trust in political financing is also declining, with only 30% believing party funding is fair and transparent, down from 37% in 2011, according to Transparency International.

Former Public Accounts Committee chair Baroness (Margaret) Hodge emphasised the need to fully ban foreign donations and strengthen criminal enforcement of rule-breaking.

Concerns were also raised about third-party campaigning and “super PAC” style influence by non-party groups developing in the UK, imported from the United States. Falling voter turnout is seen as linked to the perception of wealthy donors’ influence on politics.

The time for reform is long overdue.