Here’s what the law says a political party has to do with donations:
(1) A donation received by a registered party must not be accepted by the party if –
(a) the person by whom the donation would be made is not, at the time of its receipt by the party, a permissible donor; or
(b) the party is (whether because the donation is given anonymously or by reason of any deception or concealment or otherwise) unable to ascertain the identity of that person.
If a donor is not “permissible” – or if you don’t know who the donor is – you can’t accept the donation. Permissible donors – very broadly – are individuals on the electoral register or others carrying on business in the United Kingdom.
But there’s a loophole. The law also says you can “disregard” a donation so long as it is not for more than £500.
These points are important because of what we know about how the Brexit Party has set out to raise money.
You can see here that the maximum amount the Brexit Party’s website invites you to donate is £500. And although the website seems to contemplate you might donate more than £500, neither I nor a colleague could work out how to donate more than £500 by PayPal (the main tool they use to collect donations) using the link.
On top of this, it is striking that (as this piece explains) the Brexit Party seems deliberately to have chosen to receive minimal information about its donors – merely asking for a donor’s PayPal account or bank card details.
Meanwhile, it is disputed whether the Brexit Party’s website actually received the amount of traffic needed to produce £1,500,000 from 60,000 people in the first nine days of its existence.
And all of this raises very real questions.
Why would you cap donations at £500? Why would you choose not to collect hugely valuable data on who your donors are? And what is the explanation for the huge sums of money apparently flowing into the coffers of the Brexit Party with minimal web traffic?
It’s not easy to answer these questions. But one explanation – a plausible one – is that the set-up is designed to enable donors to atomise, break up, large donations into sums of £500 or less and for the Brexit Party not to be confronted with the inconvenient evidence about its donors.
So how does the law operate in that situation?
If you are a political party which receives a donation of £500,000, for example, your legal obligations are to check whether the donor is permissible and if they are not, or if you don’t know who the donor is, to refuse the donation.
And that obligation doesn’t seem to me to change if you receive that donation in the form of a thousand and one payments of £499.50.
The primary object of the law – to be found in sections 50, 54 and 56 of the Political Parties, Elections and Referendums Act 2000 – is to prevent the receipt of impermissible donations. And the way Parliament has sought to achieve this is by placing the onus on the political party that receives the donation to make sure it is permissible.
It seems to me there is a strong argument that a political party can only “disregard” the source of donations of £500 or less only if it has the information necessary to show that the disregard applies. This information would include, in particular, (1) that a payment of £500 or less is not part of a larger donation and (2) if it is, that it knows who the donor is. This information might be rather difficult for the Brexit Party to gather if it had, as is suggested, deliberately chosen to receive only limited information.
The law is in sections 56 and 58 of the Political Parties, Elections and Referendums Act. If you can’t verify the identity you have to return the donation to the donor, PayPal or the Electoral Commission. If you don’t, your Treasurer is guilty of an offence. And a magistrates court can on the application of the Electoral Commission order the forfeiture of the donation.
It is also an offence to facilitate, whether by “concealment or disguise or otherwise” the making of donations by impermissible donors.
But here’s the thing.
People donate, and political parties ask for donations, and political parties spend those donations because they know that spending influences the political process. And if a court later finds someone guilty of an offence in connection with spending unlawful donations, that doesn’t undo the influence those unlawful donations have today.
This point is especially compelling where an election will influence an irreversible event: here, Brexit. To protect the will of Parliament that wealthy foreigners should not be able to influence our political process, it is necessary to act now.
There seem to me to be very good reasons to investigate – and we must hope the Electoral Commission does so promptly.
Jolyon Maugham is a barrister and Director of the Good Law Project. He is an investor in Scram Media.
Commenting on reports about the Brexit Party’s ability to ensure donations received via its website are from a permissible source, an Electoral Commission spokesperson said:
“The Brexit Party, like all registered political parties, has to comply with laws that require any donation it accepts of over £500 to be from a permissible source. It is also subject to rules for reporting donations, loans, campaign spending and end of year accounts. We have already been talking to the party about these issues.
“As part of our active oversight and regulation of these rules, we are attending the Brexit Party’s office tomorrow to conduct a review of the systems it has in place to receive funds, including donations over £500 that have to be from the UK only. If there’s evidence that the law may have been broken, we will consider that in line with our Enforcement Policy.”