Long Before British Vote, Financiers Weigh In
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Version 0 of 1. LONDON — No political party in Europe has done more for hedge funds and bankers in recent years than the British Conservatives. And the party has been well rewarded for it. Hedge fund managers have been writing eye-popping checks to the Conservative Party before the British election on Thursday. And with no campaign finance limits for party donations, there is little to hold them back. More than $2.3 million has come since last year from Michael Hintze, an Australian billionaire who lives in London, where he founded the hedge fund CQS. Michael Farmer, another hedge fund manager, has donated roughly $2.2 million over the same reporting period, and far more in the last decade. Stanley Fink, who once ran the Man Group and has been party treasurer, has donated $1.3 million since the 2010 election, records show. While the concentration of wealth in American elections is legendary, with the Koch brothers alone vying to spend as much as the major political parties in the 2016 presidential cycle, the British system is not exactly egalitarian either. So little attention is paid to small donations that political parties are not even required to keep records of donations less than 500 pounds, or about $768. Nearly 70 percent of the donations reported by the Conservative Party since the beginning of last year came from donors or groups that gave $100,000 or more, according to an analysis of campaign finance records. That compared with nearly 60 percent for Labour, the main opposition party, with a large proportion of its large donations coming from labor unions. But the data is inherently flawed, since parties are not required to officially disclose their records of donors who give less than roughly $11,000 in a calendar year. The Conservatives declined to provide a full list of their donations. The Labour Party provided an overview of its 2014 fund-raising, saying that its members contributed a little more than a third of the roughly $51 million the party took in last year, and 27 percent came from labor unions. The two largest parties are running close in the polls, but neither is expected to be able to form a government on its own. The election is likely to plunge the country more deeply into the multiparty politics and coalition governments that are common in Continental Europe. And crucial roles could be played by more strident parties, like the Scottish National Party, which wants Scotland out of Britain, or the U.K. Independence Party, which wants Britain out of the European Union. British elections are less engulfing than those in America, because the campaign season is shorter and television and radio advertising are banned. But money plays a familiar role in each system. In the United States, federal campaign finance laws severely limit what corporations or individual donors can contribute to favored candidates. But those limits are defied by so-called soft money donations to outside groups that support political candidates, or by bundling donations from individual donors. In Britain, by contrast, the wealthy can simply donate vast sums directly to political parties. Each country has its particular rewards. In the United States, the president can invite you to stay in the Lincoln Bedroom or name you an ambassador. In Britain, you can be made a lord, like Mr. Farmer, who was nominated last year for a peerage by David Cameron, the Conservative prime minister. Mr. Fink joined the House of Lords in 2011. Britain’s Conservative-led government has been battling both at home and in Brussels on behalf of hedge funds and other financial interests. In Britain, it scrapped a “stamp duty reserve tax” aimed at some investment funds, saving the industry more than $200 million a year. In the European Union, it waged a court battle against curbs on short-selling, resisted ceding authority to European banking regulators and fought a proposed tax on financial transactions. It also fought, albeit unsuccessfully, a move by Brussels to cap bonuses paid to bankers. Boris Johnson, the silver-tongued Conservative mayor of London, called it “possibly the most deluded measure to come from Europe since Diocletian tried to fix the price of groceries across the Roman Empire.” The Labour Party has assailed the Conservatives over ties to finance, calling the party “the political wing of the hedge fund industry.” Not so long ago, defending the financial industry was a fully bipartisan effort in Britain, which has one of the world’s most important financial centers as its capital. Tony Blair, the former Labour prime minister, and Gordon Brown, his chancellor of the Exchequer and successor as prime minister, have been blamed by many for “light touch” regulations that left Britain’s banks exposed during the financial crisis. Mr. Blair, who left office in 2007, now is an adviser for JPMorgan Chase, among many other endeavors. “The U.K. defends the financial industry because they have a big financial industry, like Poland defends the coal industry,” said Nicolas Véron, a senior fellow at Bruegel, a Brussels-based policy and research group. “That’s true of any government.” But Labour has tacked left under Ed Miliband, its current leader, in keeping with the politics of inequality. “Between ’92, and especially in ’94 when Blair took over, until the crash, Labour was totally aligned with the financial industry,” said Jonathan Hopkin, a professor in the government department at the London School of Economics, adding, “Labour lost the election after the crash and new leadership came in that first of all rejected that political strategy.” Of Mr. Miliband, he said: “I don’t expect he’s going to get any job offers when he leaves Parliament.” Labour has also rattled the rich with proposals like a plan to end the government’s antiquated practice of allowing many wealthy Britons to avoid taxes on foreign income and assets by claiming they are “non-domiciled.” People who claim the status are known as non-doms and can do so if their fathers — not their mothers — were born abroad or if they have lived abroad. Aline Nassif, a spokeswoman for the Conservative Party, said, “We’ve gone further than any previous government to tackle aggressive tax avoidance and evasion.” She also said that her party had taken steps to restrict the ability of hedge funds to cut their tax bills by switching currencies and had raised capital gains taxes. The Conservatives have criticized Labour’s relationship with its largest donor, the Unite union, and its boss, Len McCluskey, saying they “buy Labour’s policies, choose Labour’s leader and pick Labour’s candidates.” The European Union is also an issue for some. Many hedge fund managers are not fans of the union and its rules, though the business community at large in Britain supports membership. In an interview last year, Crispin Odey, one of London’s most prominent hedge fund managers, said, “I would rather we were out of Europe.” “It’s just a product of so many compromises between executives, and Europe seems to have it in for the City,” he added, referring to the name used for London’s financial center. While the Conservative Party has promised to have a referendum on staying in the union, some Conservative stalwarts like Mr. Odey have been wooed by the hard line of the U.K. Independence Party. Campaign records show Mr. Odey gave nearly $33,000 to the U.K. Independence Party in April and June of last year, but then gave nearly $15,000 to the Conservatives in October. Not every hedge fund manager is anti-Labour. Martin Taylor, who runs Nevsky Capital, recently contributed more than $900,000 to Labour. “This may seem a bit odd to many people,” he said in a recent op-ed in The Independent, adding, “I believe very strongly that everyone should contribute to society and those who are lucky enough to earn a lot more should contribute more than others.” |