Allowing big companies to pump money into political campaigns in an attempt to keep legitimate candidates out of office – that is how democracy will die if we let it.
I have uncovered disturbing evidence that it is happening.
The board of NEX, a city trading company run by former Tory Party treasurer Michael Spencer, decided it didn’t much like the fact that five Liberal Democrat candidates – including Dr Vince Cable – had supported the “Remain” campaign during the EU referendum.
So, in an effort to ensure that they didn’t get elected to Parliament during the recent general election, it used NEX shareholders' money to funnel £5,000 to each of their Tory opponents, understood to be sitting MPs with slim majorities over their Lib Dem challengers.
While the company is sparing about the details, we know this because to comply with the law it had to declare that it had made the payments. This it did in its AGM circular. Ain’t the rule of law grand. “The board felt it extremely important that the UK Government had a clear mandate for the country to negotiate the best possible deal for the UK, following the decision to leave the European Union, in order to ensure that the position of London as the financial centre of Europe is maintained,” it declared. “The board believes that these donations were in the best interests of the company and its shareholders.”
Now, it’s bad enough that wealthy individuals use their fortunes in an attempt to influence the political process, as Spencer has done through his investment company IGPL.
It subverts the principle of one man one vote when individuals are allowed to use their financial clout to do this, but at least they’re using their own money.
The NEX board, however, used other people’s money. It called on funds that belonged to NEX shareholders.
Most companies long ago ceased the practice of using their investors' cash to make political donations of any kind.
They correctly recognised it wasn't their place to be making political decisions on their investors' behalf.
Their job was to focus on returns.
In breaking with that consensus, NEX’s directors have arrogantly decided that they know better, which would have been bad enough.
But in this case their actions went beyond simply donating a bunch of money to a political party they liked the look of to use for campaigning purposes.
They sought to directly interfere in individual constituency elections where they disliked the views of the candidates put up by one particular party. They thus made their company a political actor. And they made their shareholders political actors by default too.
If you save through a pension or an ISA there’s a strong chance that means you. I have index tracking funds, so I'm pretty sure it means me.
As such NEX's directors have made me personally complicit in what I view as the subversion of the democratic process. Words don't begin to express how angry that makes me feel.
Worse still, we shareholders were told when the company was trading as ICAP that while the directors were seeking the authority to make donations or incur political expenses of up to £100,000, they didn't plan to use it.
The authority, they said, was being sought “because of the broad definitions of political donations and political expenditure” contained within the law. "The directors have no present intention to make political donations," they intoned.
Until the election changed their minds.
The best of it is this: Theresa May’s vision of a “hard Brexit” has already done more damage to London's financial centre, in whose interests NEX's directors said they were acting, than perhaps even the financial crisis.
Her decision to quit the single market, and abandon the passport arrangement that allows financial firms to sell their services across the bloc, has sparked a mass exodus of business.
City banks, insurers, and others, have been falling over each other to establish new EU hubs in Frankfurt, Dublin, Paris. Functions that used to be carried out in London are moving there, at the cost of thousands of jobs.
Given that, how the NEX board can say that trying to keep Lib Dems out was in the interests of the City of London is beyond me. It calls into question the directors' decision making.
What they did was not, of course, illegal. But it was disgraceful. If its directors have any sense of decency, they should refund their shareholders out of their own pockets.
It won’t make what they did right. But it would at least be a start.
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