The Dark Money That’s Corrupting Politics Is a Twist on an Old Story
The corruption of British politics by corporate “dark money” is part of a global phenomenon. But we can’t make sense of that trend without recognizing that capitalist oligarchies have always sought to undermine genuine democracy.
From the “rotten boroughs” of the early nineteenth century to the “Cash for Honours” scandal of the 2000s, patronage, nepotism, and grift have always been part of British political culture. But in recent years, the problem of corruption in UK public life seems to have intensified — or, at least, become more visible.
According to journalist Peter Geoghegan, in his best-selling new book, Democracy for Sale, this shift reflects the growing “Americanization” of British politics. Anonymous donors hold sway over the major parties, the Conservatives in particular; dark money has pushed radical fringe agendas into mainstream debate; lies and disinformation are now common currency among Westminster legislators.
Geoghegan sees Brexit as a tipping point. His research into dark money was sparked by a £435,000 donation made during the 2016 referendum and channeled through the Democratic Unionist Party in Northern Ireland in order to bypass campaign spending limits in the rest of the UK. The payment was eventually traced back to the Constitutional Research Council, an obscure Eurosceptic outfit and so-called unincorporated association with almost no physical or digital footprint.
The donation exposed Britain’s unique susceptibility, by European standards, to political manipulation, Geoghegan argues. “The referendum and its aftermath revealed something fundamental and systemic,” he writes. “A broken political system that is ripe for exploitation again and again and again.”
Taking Back Control
Democracy for Sale focuses on the internal politics of the Conservative Party, and Geoghegan builds a compelling profile of secrecy on the British right. The European Research Group (ERG), a hard-line pro-Brexit caucus of Tory MPs inside the House of Commons, refuses to publish its members’ register or reveal its list of donors. The Institute of Economic Affairs (IEA), an influential libertarian think tank with close ties to Boris Johnson’s government, won’t confirm which companies sponsor its research or where it gets its money.
Both organizations, Geoghegan claims, have been instrumental in pushing the case for a no-deal Brexit as part of a broader “Anglosphere” strategy aimed at deregulating the UK economy and pivoting Britain, politically and culturally, toward the United States. Their goal, he says, is to marketize the NHS and place Britain at the center of a neoliberal trading bloc formed, chiefly, of English-speaking countries.
Although lobbying groups in the UK aren’t obliged to disclose their funding sources, some information about how the IEA is financed has leaked out over the years. “Tobacco manufacturers, the gambling and off-shore financial services industries, and Big Oil have all donated,” Geoghegan writes. “The think-tank, which has published numerous papers disputing man-made climate change, has accepted funding from BP every year since 1967.” Between 2008 and 2018, the organization raised more than £1.3 million in America: “US donors include the Koch-backed Donors Trust and the conservative Chase Foundation of Virginia.”
Geoghegan argues that Britain’s lurch toward a no-deal exit from the EU is emblematic of the way private interests now assert themselves, US-style, at the highest levels of the country’s legislative process:
British politics is comparatively low-spending, especially when set against the US. But there is plenty of evidence that the American model of hidden finance and clandestine influence has crossed the pond.
All of this is possible because of the astonishing weakness of campaign finance regulation in the UK. The maximum fine the British Electoral Commission can levy on those caught breaking the rules is £20,000 — a tiny sum by international standards — and parties can easily bypass spending caps by splitting their resources between different campaign vehicles.
What’s more, the commission, a longtime bête noire of Britain’s billionaire-owned, right-wing press, is chronically ill-equipped to monitor politics in the era of social media disinformation. “The election regulator has around 140 staff,” Geoghegan notes. “Facebook employs roughly 3,000 in London alone.”
The World’s Laundromat
Geoghegan’s deep and detailed investigation produces some fascinating flashes of insight. During the 2019 general election, the Tories poured at least £500,000 worth of anonymous funds into Labour-held, Brexit-supporting constituencies throughout Northern England and the Midlands. Some of that cash, he establishes, came from companies linked to the “Midlands Industrial Council” — “a mysterious [clique] of Conservative business interests formed in the late 1940s to oppose Clement Attlee.”
The 2019 contest, which resulted in an eighty-seat majority for the Tories, was in fact riddled with dark money and dirty tricks. Shortly before voting took place, on December 12, the Coalition for Reforming Political Advertising, an independent fact-checking service, found that 88 percent of Conservative Facebook ads contained false or misleading information, compared to just 7 percent of Labour ads.
The Tory campaign was bolstered, in the weeks leading up to the vote, by the emergence of around half a dozen Facebook groups pushing an aggressive anti-Corbyn agenda. The groups — which sported nondescript names like “Parents’ Choice” and “Working4UK” — weren’t directly funded by the Tories but had been set up by activists associated with the Johnson government. Their existence went largely unnoticed by some of Britain’s most prestigious reporters, including the BBC’s Laura Kuenssberg and ITV’s Robert Peston, who chose instead to regurgitate fake news stories about Labour peddled by Tory press officers.
The peculiarities of Britain’s financialized growth model also feature in Geoghegan’s critique. On the one hand, the City of London’s status as a global financial laundromat makes it easy for the superrich to channel untraceable funds into Britain through a convoluted network of offshore accounts and dummy corporations. On the other, the UK financial sector is relatively open about its links to the Tories: the Conservatives have received £50 million from London-based banking elites over the past decade, including £18 million from five of the country’s wealthiest hedge fund managers.
Notably, a number of prominent Brexit advocates stash their wealth in British offshore tax havens. Aaron Banks, for instance, who loaned £8.1 million to Nigel Farage’s Leave.EU campaign, co-owns a bank on the Isle of Man, a UK Crown Dependency. Robert Edmiston, a billionaire car dealer and ex-Tory Lord who donated £850,000 to Vote Leave, has investment interests in the former British colony of Malta. These pseudo-imperial ties help fire the post-Brexit delusions of “Empire 2.0,” Geoghegan suggests.
Contradictions of Brexit
It’s not hard to see why Democracy for Sale has proved to be so popular with the most Europhile elements of Britain’s commentariat. Geoghegan isn’t immune to liberal tropes. He consistently hints at the notion of Russian interference in the EU referendum, for instance, without drawing any concrete conclusions of his own. And his narrative sometimes feels like an elaborate detour around the structural causes of the UK’s current political impasse.
Nonetheless, the book succeeds in two crucial respects. First, it explains how Britain was brought to the brink of a no-deal Brexit, despite the fact that the bulk of British voters oppose a no-deal Brexit, which threatens to undermine the living standards of working-class people throughout the country. If, as now seems likely, the Brexit transition period ends in January without a formal trade deal having been reached between London and Brussels, UK electors will have the relentless lobbying efforts of the “Anglosphere” right — in the form, notably, of the ERG and the IEA — to thank for that.
Second, Geoghegan highlights the nagging contradiction at the heart of both Brexit (to the extent that it represents a coherent political project) and the Conservative Party under Johnson’s leadership. Libertarianism is a minority pursuit in the UK. Its chief commitments — to privatization, labor market deregulation, and a radically minimized state — may be popular among narrow sections of the British political class, but the UK public at large, including a sizable chunk of the Tory electorate, remains decidedly unconvinced.
Indeed, polling indicates majority support in Britain for increased taxes on the ultrarich, the nationalization of key industries, and enhanced worker representation on company boards.
The Leave campaign was acutely conscious of this in 2016, which is why it placed immigration controls and the NHS at the center of its public messaging and couched Brexit in the language of English national sovereignty and democratic revival. And yet, as Geoghegan shows, for a significant number of Conservatives, Brexit was always primarily about “liberating” Britain from the constraints of European social legislation and opening the UK public sector up to foreign capital.
Faced with the twin challenges of Brexit and COVID-19, Johnson is trying to hold these conflicting tendencies together inside his fractious right-wing coalition. The Tory chancellor Rishi Sunak — widely seen as a potential successor to Johnson — has been pushing for tax rises, pay freezes, and spending cuts to offset Britain’s rapidly inflating coronavirus debts. The prime minister, meanwhile, having repeatedly pledged to invest in UK public infrastructure, is keen to avoid a fresh round of austerity. His ability to do so may determine how long the Tories keep the aforementioned “red wall” seats wrenched from Jeremy Corbyn’s Labour Party last December.
The irony for hard-right Brexiteers, as Richard Seymour pointed out in 2018, is that most major businesses in Britain want to remain part of the European single market. This is particularly true of the City of London, which stands to lose its central status in the European financial hierarchy after being stripped of its EU trading rights.
And even without the coronavirus recession, the hit to UK GDP from a no-deal Brexit will almost certainly make further expansive state intervention in the economy necessary, rendering the Hayekian fantasies of the ERG and IEA irrelevant, at least for a while.
To that extent, Brexit has been a disorienting, as well as an invigorating, experience for the British right. With the no-deal Brexit cliff edge looming, the Tories find themselves caught between the expectations of their nationalist base, the demands of international finance, centered around the Square Mile, and the niche ideology of a small but powerful band of libertarian backers.
These tensions will intensify as the economic impact of coronavirus deepens and Johnson’s approval ratings shrink in line with his botched response to the public health crisis.
Geoghegan’s analysis is less convincing in other respects. In an effort to close the “revolving door” that exists between dark money donors and UK legislators, he proposes a slate of new regulations: heavier fines for those caught breaking political finance rules, a ban on donations from individuals based outside the UK, forcing political parties and think tanks to publish the names of major donors, and significantly reducing the size of permissible donations.
Such reforms might limit the scale of corporate power in British politics, and perhaps make it more transparent, but they wouldn’t eliminate it: the rich would still have a clear advantage in the battle for political access.
Nor would they address the many legal and “legitimate” ways in which the private sector buys clout at Westminster. In 2008, barely twelve months after resigning as prime minister, Tony Blair landed a part-time job with JP Morgan, cushioned by an estimated salary of £500,000 per year. In 2018, former Liberal Democrat leader Nick Clegg — the junior partner in David Cameron’s post-crash austerity coalition — relocated to Silicon Valley, where he became vice president of global affairs at Facebook.
Both appointments were above board according to the Westminster rule book. Neither would have happened without the appointees’ extensive political contacts and experience.
COVID-19 has furnished the UK government with new opportunities for institutional grift and cronyism. According to research by the Good Law Project, a London-based NGO, Whitehall has awarded more than £1 billion in contracts to companies run by “friends and donors” of the Conservative Party since the start of the pandemic in March.
This figure includes £133 million for Randox Industries in exchange for coronavirus testing and £640,000 for polling work by the consultancy firm Hanbury Strategy. Owen Paterson, a former senior Tory cabinet minister, is an advisor at Randox, while Hanbury was cofounded by Paul Stephenson, a prominent Vote Leave campaigner and ex-Tory media strategist.
Again, there is no suggestion of illegality here, only of a political structure built to enrich Westminster insiders at the expense of the public and with minimal parliamentary scrutiny. In total, the Tories have handed £10 billion worth of coronavirus contracts to private companies over the past six months without a process of competitive tendering.
From Diagnosis To Cure
Beyond urging campaigners to look more closely at how the British right funds itself, Geoghegan doesn’t have much to offer the country’s Left by way of radical solutions to Britain’s democratic crisis. But then, Democracy for Sale isn’t a manifesto: Geoghegan is trying to demonstrate how easy it is, in an ostensibly open society, for elite groups to frame political debate according to their own interests and ideological whims. He does that very effectively.
The deeper question, not answered by Geoghegan, is whether it’s possible to take money out of politics in a capitalist democracy. One option is to nationalize the structures of political representation. State funding for political parties would be an improvement but not a panacea. France and Germany both have public subsidies for electoral candidates, yet neither country is exempt from political corruption scandals. In Britain, funding reform would be seized on by the Conservatives to break Labour’s financial links to the unions.
Moreover, as Geoghegan himself concedes, the current composition of the House of Commons means that there is virtually no chance of Britain’s campaign finance laws being changed in any remotely progressive way. “The biggest obstacle to meaningful democratic reform is the political class itself,” Geoghegan writes:
As long as politicians think disinformation wins elections, dirty habits are unlikely to change . . . funding politics through anonymous donations seems to come at little political or reputational cost.
This is surely correct. The Conservatives have an obvious stake in maintaining the status quo and Labour, now under the centrist control of Keir Starmer, is attempting to win back the millionaire donors who fled during the Corbyn era. For the foreseeable future, private finance will continue to flow freely through the UK electoral system.
Ultimately, Geoghegan’s premise — that British politics is becoming more “American,” that is, vulgar, polarized, and corrupt — seems like an unnecessary distraction. Contrary to the prelapsarian belief of mainstream British liberals, corruption at Westminster predates the Brexit controversy and will most definitely outlast it.
Still, by charting the relationship between the Conservative Party, anonymous donors, and dark money, Geoghegan has delivered a striking overview of class power in the UK. Here is a country vividly available to the highest bidder.