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Brexit party at high risk of accepting illegal funds, says watchdog Brexit party at high risk of accepting illegal funds, says watchdog
(32 minutes later)
Nigel Farage’s fledgling political party is at high risk of receiving and accepting illegal donations, a watchdog has concluded.Nigel Farage’s fledgling political party is at high risk of receiving and accepting illegal donations, a watchdog has concluded.
The Electoral Commission visited the headquarters of the Brexit party in May and studied the way in which the party takes gifts through online payment systems including PayPal.The Electoral Commission visited the headquarters of the Brexit party in May and studied the way in which the party takes gifts through online payment systems including PayPal.
A report released on Wednesday has concluded that the “fundraising structure adopted by the party leaves it open to a high and ongoing risk of receiving and accepting impermissible donations”.A report released on Wednesday has concluded that the “fundraising structure adopted by the party leaves it open to a high and ongoing risk of receiving and accepting impermissible donations”.
The party, which won 29 seats in last month’s European elections, could face penalties unless it overhauls its fundraising system to ensure all donations above £500 come from the UK, as the law requires.The party, which won 29 seats in last month’s European elections, could face penalties unless it overhauls its fundraising system to ensure all donations above £500 come from the UK, as the law requires.
The report comes as concerns grow about the possible influence of foreign governments in UK politics.The report comes as concerns grow about the possible influence of foreign governments in UK politics.
The commission’s director of regulation, Louise Edwards, said it was legitimate for any political party or campaigner to adopt a fundraising strategy that focused on raising small sums through online payment systems.The commission’s director of regulation, Louise Edwards, said it was legitimate for any political party or campaigner to adopt a fundraising strategy that focused on raising small sums through online payment systems.
Under the Political Parties, Elections and Referendums Act 2000 (PPERA), which governs donations to political parties, any contribution of more than £500 must come from a UK-based individual or company.Under the Political Parties, Elections and Referendums Act 2000 (PPERA), which governs donations to political parties, any contribution of more than £500 must come from a UK-based individual or company.
Contributions of £500 or less are, somewhat confusingly, not considered to be “donations”. This means political parties are not required to keep records of the names and addresses of people making such payments.Contributions of £500 or less are, somewhat confusingly, not considered to be “donations”. This means political parties are not required to keep records of the names and addresses of people making such payments.
However, it is an offence to attempt to evade the controls on donations, for instance by donating more than £500 via multiple small payments.However, it is an offence to attempt to evade the controls on donations, for instance by donating more than £500 via multiple small payments.
No, except if the amount is £500 or less, because that would not technically be considered a donation. An Electoral Commission spokesperson said: “An overseas individual can give an amount under £500.”No, except if the amount is £500 or less, because that would not technically be considered a donation. An Electoral Commission spokesperson said: “An overseas individual can give an amount under £500.”
There are concerns that the UK’s pre-internet electoral law is not fit for purpose and vulnerable to manipulation by foreign actors. In 2018, the commission recommended that methods used by businesses for risk assessment and customer due diligence should be used to prevent foreign money from influencing elections.There are concerns that the UK’s pre-internet electoral law is not fit for purpose and vulnerable to manipulation by foreign actors. In 2018, the commission recommended that methods used by businesses for risk assessment and customer due diligence should be used to prevent foreign money from influencing elections.
In February 2019, a parliamentary committee called for the government to urgently modernise electoral law, in particular the absence of rules governing online political advertising.In February 2019, a parliamentary committee called for the government to urgently modernise electoral law, in particular the absence of rules governing online political advertising.
“Our visit to the Brexit party has enabled us to make specific recommendations to the party that will support it to meet its legal responsibilities when it comes to receiving funds,” she said. “Should it fail to meet those responsibilities, this will be considered in line with our enforcement policy.”“Our visit to the Brexit party has enabled us to make specific recommendations to the party that will support it to meet its legal responsibilities when it comes to receiving funds,” she said. “Should it fail to meet those responsibilities, this will be considered in line with our enforcement policy.”
Donations of £500 or above must be made by a “permissible donor” under UK law – someone who is listed on the electoral register or a company registered in the country which is “carrying on business”. Parties have 30 days to return donations if they are unsure of their origin.Donations of £500 or above must be made by a “permissible donor” under UK law – someone who is listed on the electoral register or a company registered in the country which is “carrying on business”. Parties have 30 days to return donations if they are unsure of their origin.
The Brexit party said gifts of £25 or less accounted for 90% of its total funding during the EU election campaign. It raised more than £2m from small donors, thousands of whom paid £25 each to become registered supporters.The Brexit party said gifts of £25 or less accounted for 90% of its total funding during the EU election campaign. It raised more than £2m from small donors, thousands of whom paid £25 each to become registered supporters.
Amounts below £500 do not have to be declared to the commission, but some critics – among them the former PM Gordon Brown – have said there is no way of telling whether those smaller amounts come from British or foreign sources, and that the system may be being abused.Amounts below £500 do not have to be declared to the commission, but some critics – among them the former PM Gordon Brown – have said there is no way of telling whether those smaller amounts come from British or foreign sources, and that the system may be being abused.
Brown suggested the party was getting around the declaration rules by accepting many untraceable donations directly through PayPal and without a requirement to give details of the donor.Brown suggested the party was getting around the declaration rules by accepting many untraceable donations directly through PayPal and without a requirement to give details of the donor.
Critics are concerned that an individual or a foreign power could make many small payments to a party, each less than £500, with no legal requirement for any details to be submitted.Critics are concerned that an individual or a foreign power could make many small payments to a party, each less than £500, with no legal requirement for any details to be submitted.
The commission said parties had a legal duty to check every payment they obtained online to ascertain the source of the donation and not to accept any that they were not entitled to. They should request as much information as possible to ensure all money was from a permissible source, it said.The commission said parties had a legal duty to check every payment they obtained online to ascertain the source of the donation and not to accept any that they were not entitled to. They should request as much information as possible to ensure all money was from a permissible source, it said.
Asked about the issue during the campaign, Farage said the party’s website “says very clearly, do not donate unless you are on the electoral roll or eligible to vote”.Asked about the issue during the campaign, Farage said the party’s website “says very clearly, do not donate unless you are on the electoral roll or eligible to vote”.
Labour and the Conservative also have the option to donate via PayPal on their websites, but the main parties claim they have safeguards in place which allow them to check the permissibility of donors.Labour and the Conservative also have the option to donate via PayPal on their websites, but the main parties claim they have safeguards in place which allow them to check the permissibility of donors.
Labour and Liberal Democrat credit card systems require the donor’s address to match the billing address. The Conservative party requires donors and members to pay through either its own card system or as a registered PayPal user.Labour and Liberal Democrat credit card systems require the donor’s address to match the billing address. The Conservative party requires donors and members to pay through either its own card system or as a registered PayPal user.
The Brexit party, which Farage founded four months ago, is fundraising so it can run a full slate of candidates in the next general election. It came second to Labour in last week’s Peterborough byelection, pushing the Tories into third place.The Brexit party, which Farage founded four months ago, is fundraising so it can run a full slate of candidates in the next general election. It came second to Labour in last week’s Peterborough byelection, pushing the Tories into third place.
Farage has vehemently denied claims that Leave.EU received funds from foreign donors, and has called for reform of the commission.
In a statement, the Brexit party said the commission had confirmed its method of fundraising was legitimate. “They haven’t found any examples of infringement of Electoral Commission rules,” it said.In a statement, the Brexit party said the commission had confirmed its method of fundraising was legitimate. “They haven’t found any examples of infringement of Electoral Commission rules,” it said.
“However, we are grateful that they have made some helpful suggestions to reduce future risk as we fundraise, and we will be working to embrace those recommendations as soon as practicable and possible and in the timeframe set out.”“However, we are grateful that they have made some helpful suggestions to reduce future risk as we fundraise, and we will be working to embrace those recommendations as soon as practicable and possible and in the timeframe set out.”
Brexit partyBrexit party
Nigel FarageNigel Farage
Party fundingParty funding
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