UK Political Donations: New Rules to Reveal Individuals Behind Corporate Gifts

The UK government is preparing to ban political donations from companies unless they reveal the identity of the individual ultimately funding the contribution, a move prompted by concerns over foreign interference in British politics and a recent case involving a former political leader accepting illicit funds.

The proposed rules, expected to be formally announced this month, stem from an independent review led by Sir Philip Rycroft, a former senior civil servant. The review was commissioned by the Labour government following the jailing of Nathan Gill, the former leader of Reform UK in Wales, for accepting bribes to advance Russian interests. The tightening of rules around corporate donations will require parties to provide information about the identity of the individual making the financial gift, according to individuals briefed on the recommendations.

Currently, UK electoral law does not require political parties to identify the shareholders or owners of a company making a donation. The forthcoming legislation, already making its way through parliament as the Representation of the People Bill, seeks to address this by mandating parties to verify that a company making a donation has a registered beneficial owner who is eligible to vote in the UK and generates sufficient revenue within the country. However, the Rycroft proposal goes further, obligating a named individual to come forward and take ownership of the donation, potentially requiring inclusion in the Electoral Commission’s register of donations.

The move is also a response to recent scrutiny surrounding a £200,000 donation to Reform UK from Interior Architecture Landscape Ltd, a design company with links to Iran-born billionaire Sasan Ghandehari. While John Richard Simpson, a church warden and conveyancer, is officially listed as the company’s controlling person, questions were raised about Ghandehari’s involvement. Nigel Farage, then a prominent figure with Reform UK, stated he was unaware of Simpson’s connection to a larger donor. IAL has maintained that its funds originated from no foreign source and that Simpson controlled the company. A lawyer representing Ghandehari asserted his family was not responsible for the donations.

The proposed changes are expected to hinder attempts by overseas entities, such as tech billionaire Elon Musk, to indirectly funnel substantial donations to UK political parties through British subsidiaries.

However, some transparency advocates argue that the proposed measures do not go far enough. Arun Advani, director of the Centre for the Analysis of Taxation (CenTax) and a professor at the University of Warwick, advocates for a complete ban on corporate donations, citing examples of Canada, and France. He argues that such a ban is the only way to prevent foreign or anonymous money from influencing British politics. A recent CenTax report found that a quarter of donor companies are opaque, making it impossible to identify their ultimate controllers, with one in every £10 donated by companies potentially originating from individuals ineligible to donate directly.

The government has indicated that the recommendations from Rycroft’s review “will be incorporated” into the ongoing electoral law bill. The review is due to be published later this month.