Downing Street chief of staff, Morgan McSweeney, in Downing Street, central London, ahead of the visit today of President Zelensky, October 10, 2024
A BLAIRITE think tank reportedly paid at least £30,000 for private investigations into journalists who exposed its failure to declare £740,000 said to have supported Sir Keir Starmer’s rise to power.
Labour Together was run by the PM’s chief of staff Morgan McSweeney when it did not register the donations between 2017 and 2020.
Cabinet Office minister Josh Simons took the helm when Mr McSweeney left Labour Together in 2020 and joined Sir Keir’s team.
Under Mr Simons’s leadership in 2023, Labour Together hired APCO Worldwide to investigate journalists from the Guardian, the Sunday Times and other outlets and to identify their sources of stories about its funding, according to Democracy for Sale.
The late filings led to a £14,250 fine by the Electoral Commission in September 2021.
One of the APCO’s reports for Labour Together was reportedly an investigation into the London-based investigative outlet run by the South African journalists Paul Holden and Andrew Feinstein, Shadow World Investigations.
Mr Feinstein said: “Labour Together, led by Starmer’s Chief of Staff, tried to dig dirt on me, my colleague Paul Holden and our organisation.
“It was already known I was likely to stand in the election against Starmer. Their contempt for British democracy must lead to their removal from office and investigation by law enforcement.”
Ahmed then moved to work with Angela Eagle MP, who would soon challenge Corbyn for leadership of the Labour Party. During this period, Ahmed amplified an allegation that angry Corbynites had smashed Eagle’s window with a brick after she announced her leadership challenge. This incident had been dubbed ‘Brickgate’ in the media. In the midst of the resulting furore, Ahmed released a press statement on behalf of Eagle’s office that included numerous questionable claims for which he was later chastised by independent media. Ahmed’s statement, for example, alleged that a planned event at a Luton hotel where Eagle was slated to appear had been cancelled because the venue received threats.
Alas, the hotel quickly pooh-poohed the story. ‘Brickgate’, an entirely ludicrous affair, would nevertheless bolster the media narrative that left-wing members of the Labour Party who supported Corbyn were intolerant reprobates. It was a narrative that Ahmed and McSweeney would continue to foster, covertly, when they started working together in 2018.
Dogged investigations by independent bloggers and media outlets revealed that Eagle’s office window had not been smashed (it was instead a window on the ground floor in a shared office stairwell); the police had no evidence this incident was linked to Eagle; and there was no evidence the window had been broken by a brick. It eventually emerged that there wasn’t even a brick on the scene – just a stray piece of masonry on the road, which may or may not have played a role in the damage. Nobody knew, in fact, what had broken the window, or who had done it, or why – yet the incident still somehow retains its force as a shorthand for the alleged thuggishness of Corbynism.
Unsubstantiated accusations of homophobia
Brickgate was part of a broader attempt to defend Eagle’s position against the real prospect that her mostly leftwing constituency would organise and vote to deselect her. It coincided with an allegation made by Eagle’s supporters, and then by Eagle herself, that, at a critical meeting where left-wingers won control of the local Constituency Labour Party (CLP), members had engaged in rampant homophobia, including limping their wrists at a young gay man. The claim was never properly substantiated. It was also fiercely disputed by people who, unlike Eagle, were physically present at the meeting.
Emma Runswick, the self-identified ‘queer’ daughter of the CLP meeting’s chair Kathy Runswick, wrote in the New Statesman of how unimaginable it would be that her loving, accepting mother would ever tolerate such gross and blatant homophobia. In fact, the day after the meeting at which Kathy was said to have allowed homophobia to run amok (and at which she was elected chair of the CLP), she attended her daughter’s wedding – to another woman. Unsurprisingly, despite years of investigations and alarmist reporting, not a single individual was ever sanctioned or found guilty of homophobia in this case.
Nevertheless, Eagle’s supporters flooded the bureaucracy with complaints alleging that homophobia at the meeting, alongside a generalised air of left-wing menace, meant it was no longer safe or appropriate for the CLP to convene meetings. Of course, if the party agreed, the newly elected left-wing leadership of the CLP would be unable to move motions that could censure Eagle – or seek to replace her as an MP. Emails show that at this time, Labour Party bureaucrats opposed to the Corbyn leadership were working with Eagle to ensure her CLP remained suspended in order to prevent her deselection.
Hedge fund Quadrature Capital has given £4m to Keir Starmer’s Labour – the largest donation in the party’s history | Jack Taylor – WPA Pool / Getty Images
Quadrature’s donation is noteworthy not just for being Labour’s largest-ever, but for its timing ahead of election
The Labour Party’s largest-ever donation came from a Cayman Islands-registered hedge fund with shares worth hundreds of millions of pounds in fossil fuels, private health firms, arms manufacturers and asset managers.
While the £4m donation by Quadrature Capital is the sixth-largest in British political history, it is noteworthy not just for its size, but also its timing.
Electoral Commission records suggest Labour received the donation in the one-week window between former prime minister Rishi Sunak announcing the general election and the start of the ‘pre-poll reporting period’ in which all political donations over £11,180 had to be published weekly, rather than the quarterly norm.
This means that despite being made on 28 May, Quadrature’s generous donation was published by the Electoral Commission only last week, more than two months after Labour won the election.
Neither the Labour Party press office nor No 10 responded to openDemocracy’s questions on whether the timing of accepting this donation was intended to minimise scrutiny and critical coverage during the election.
Paul Holden, an investigative journalist and author of The Fraud, a forthcoming book on Starmer’s leadership, told openDemocracy that the donation’s timing fits the Starmer project’s pattern of delaying the disclosure of potentially sensitive or controversial political donations.
Holden said: “Sir Keir Starmer and the organisations close to him have an unfortunate history of reporting donations in controversial ways.
“During his bid to become leader of the Labour Party, Starmer refused to contemporaneously publish details of who had donated to his leadership campaign. His rivals, Rebecca Long-Bailey and Lisa Nandy, agreed to share details of their donors in real-time, which they published. Starmer, however, decided only to declare his donations via his MP’s register of interests, which created a significant lag between when Starmer accepted his donations and when they were made public.
“Labour members, as a result, had no idea at the time of voting that Starmer had been funded with large donations from the likes of wealthy millionaires like Martin Taylor and Sir Trevor Chinn and Baron Waheed Ali; the latter now at the centre of the furore about Starmer’s acceptance of gratuities.”
Holden also referred to a fine issued by the Electoral Commission to Starmerite think tank Labour Together in 2021 for its failure to declare donations worth more than £800,000 – including £730,000 received while it was under the directorship of Starmer’s key adviser and No 10’s director of political strategy, Morgan McSweeney.
openDemocracy has consistently reported on Labour’s increasingly strong ties with the financial sector in recent years.
The party has received more than £8m from businesses or people linked to the financial industry since Starmer became leader in 2020 and now boasts two multi-million-pound donors from the world of hedge funds; Quadrature and Taylor, who has managed several billion-dollar funds over his career.
While Quadrature had not donated to Labour before May, one of its senior employees has contributed significantly to the party under Starmer. Daniel Luhde-Thompson, a strategic adviser at the firm, has given the party more than £500,000 this year, according to the Electoral Commission.
Transparency campaigners have warned Quadrature’s huge donation raises questions about what the financial sector is getting in return.
Rose Whiffen, senior research officer at Transparency International UK told openDemocracy: “When the public see political parties relying on such large sums of money in donations from private sources, it understandably raises questions as to in whose interest politicians are working and can give the impression our democracy is for sale.
“More must be done to take this kind of big money out of politics. The new government should commit to introducing caps on individual donations to tackle this problem [and] restore public trust in how our democracy functions.”
Green Party co-leader Zack Polanski told openDemocracy that the donation shows Labour now “stands for multi-millionaires and billionaires over our working-class communities”.
Polanski said: “Far from being the party in service of working people, Starmer’s Labour Party seems indebted to the bankers and bosses who profit from pillaging our public services and our planet.
“Simply ‘following the rules’ and declaring donations isn’t enough to cast aside the doubts that the main parties have their loyalties tested by big donors. It’s time to implement strict rules on funding political parties, including a cap on how much any individual or business can donate to politics. Elections should be won by the people with the best ideas, not the parties with the biggest donors.”
Registered in the Cayman Islands
Quadrature Capital has a diversified share portfolio worth around $6bn, according to records filed with the US Securities and Exchange Commission (SEC) last month.
After its donation was made public last week, the firm shared a statement on its website.
It said: “In May 2024, we came to the view that a UK government with a commitment to the green transition of the economy would have the ability to drive change that is so urgently needed. Having analysed commitments set out by each party, we donated £4m to The Labour Party, in support of policies that will deliver climate action while also promoting social equity and economic resilience.
“This was a values-based donation, not a political donation, as Quadrature Capital Ltd remains non-partisan and apolitical. Going forward, our private giving will continue to be led by our values, and any further donations to political parties will depend on the parties’ commitments, track record and alignment with our mission for sustainable and equitable growth.”
Last year, the Guardian reported that despite donating to environmental charities through its climate foundation, Quadrature had holdings in fossil fuel companies worth more than $170m. The paper highlighted three holdings in particular with major polluters: ConocoPhillips, Cheniere Energy and Cenovus Energy.
openDemocracy’s analysis of the firm’s latest SEC filings shows that Quadrature has since increased its holdings in Cenovus, which was this year fined millions for an oil spill that released 250,000 litres into the Atlantic Ocean. Quadrature has scaled back its holdings with the other two firms but has taken up a major $67m stake in ExxonMobil, one of the largest oil and gas producers in the world.
Among Quadrature Capital’s other investments, its largest holding is in Apple, valued at $231m, and among its 10 largest holdings are other ‘bluechip’ stocks like Amazon, Shopify and Costco.
Quadrature also maintains significant holdings in the arms manufacturers Northrop Grumman ($31m) and Lockheed Martin ($6m); US private healthcare companies such as UnitedHealth ($31m) and HCA Healthcare ($16m); some of the largest asset management companies like Blackstone ($22m) and KKR ($7m), who potentially stand to benefit significantly from Labour’s plans to utilise private investment for infrastructure; and tech firms, including Palantir ($71m) and Oracle ($8m).
UK accounts filings for the firm show profits before tax of more than £230m in the financial year ending 31 January 2023, but paid corporation tax of only £5.3m. As is noted in the accounts, had the firm paid the standard rate of UK corporation tax of 19% during that period, this would have amounted to more than £43m.
The UK-based fund paid out £343m in wages last year – an average of £3m for each of its 113 employees – while back in 2021 one of its founders was eyeing a luxury central London penthouse valued at around £110m, according to a report by Bloomberg that cited “two people with knowledge of the transaction”.
openDemocracy can reveal that Quadrature was last year acquired by QC Ventures, a company registered in the Cayman Islands, which is now the 100% shareholder in the firm.
The Cayman Islands is a well-known tax haven, and the transparency requirements for companies registered there are much less than in the UK and most other countries.
Documents obtained by openDemocracy show that when QC Ventures was established in the Cayman Islands back in 2018, its directors were three senior directors at Quadrature and a corporate services provider based in Cayman.
Speaking in the Commons in July, Labour’s foreign secretary David Lammy pledged to tackle individuals and companies taking advantage of offshore tax havens “with full vigour”.
He added: “We were concerned that parts of the last government were turning a blind eye to these issues. I hope to come forward with further proposals in the coming weeks.”
When openDemocracy contacted Quadrature to ask about the donation and the acquisition by QC Ventures, a representative of the firm directed us to the statement on the company’s website. They also said the decision to set up a holding company based in the Cayman Islands to acquire Quadrature was not motivated by, or related to, taxation.
Robert Palmer, director of Tax Justice UK, said that “any company moving to a tax haven like the Cayman Islands has questions to answer” as the islands are “notorious for a lack of transparency and for ultra-low taxes”.
“Ultimately governments need to make sure that everyone is paying their fair share in tax, especially when public services are desperately in need of investment and we need to fund the transition to a greener economy,” he said.
Fran Boait, co-executive director at Positive Money, said: “In taking large donations from financial firms registered in tax havens, we have to question what influence the sector is getting in return.
“Labour’s plans to continue the previous government’s deregulation of the City of London are particularly concerning, especially when it has been shown that an oversized financial sector hinders rather than helps the rest of the economy.
“Labour should be looking at how to weaken the power of big finance in our democracy and economy. Right now it seems they are doing the opposite.”
Downing Street chief of staff, Morgan McSweeney, in Downing Street, central London, ahead of the visit today of President Zelensky, October 10, 2024
