After an 18-month investigation, the Electoral Commission has finally published its report into donations to the Conservative Party by Bearwood Corporate Services (BCS), a company owned by its billionaire Deputy Chairman Michael Ashcroft.
The Daily Telegraph, Daily Mail and BBC News claimed the report ‘cleared’ Mr. Ashcroft and a Conservative Party spokesman said it proved donations from BCS were entirely legitimate. Well, is this true? Let’s take a look…
Scope of investigation
First, it’s important to remind ourselves of the narrow scope of the investigation.
It addressed three questions:
- Was BCS a permissible donor?
- Were the donations correctly reported as coming from BCS (rather than BCS standing as agent for someone else, i.e., Michael Ashcroft)?
- Did the Conservative Party fulfill its compliance duties, in particular its duty to be certain who the donor was before accepting the donations?
Second, we should remember the Electoral Commission has very ‘limited powers’ – a fact acknowledged by its chair Jenny Watson.
During the investigation, the Commission could only force ‘regulated entities’ to hand over documents (in other words, the Conservative Party). It had no powers over BCS, Michael Ashcroft… or anyone else for that matter.
While the Commission acknowledged BCS and Mr. Ashcroft provided some information voluntarily, it could not ascertain whether they handed over ‘all potentially relevant information.’
Now for the report itself.
Despite limited powers, the Commission concluded:
1. BCS met the permissibility requirements for making political donations.
To qualify as a permissible corporate donor under the Parties, Elections and Referendums Act 2000, a company must be registered at Companies House; be incorporated within the UK or another EU member state; and be ‘carrying on business’ in the UK at the time the donation is made.
Significantly, however, the Act fails to define ‘carrying on business’.
The Commission therefore decided to interpret the term ‘broadly,’ in line with other ‘areas of law.’
To carry on business, the report states ‘a company need not be actively trading;’ it need only ‘engage in business transactions, such as employing staff or paying for business facilities.’
Since BCS has employees and business premises in the UK, the Commission said it satisfied this criteria.
Interestingly, however, the Commission noted that BCS donations were not funded ‘wholly’ from trading activity.
A significant chunk came via a complex inter-company share purchase scheme originating in Belize.[Continued in Part 2]
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