SNP: £4 million Labour election donation loophole must close

In a letter to the UK Government, Keith Brown, the depute leader of the SNP, accused Sir Keir Starmer's party of being able to "skilfully avoid" declaring the significant donation because it was made days before election campaign rules kicked in.

It follows weeks of scrutiny surrounding the donations received by senior Labour politicians. 

It is thought the £4 million contribution is the sixth largest political donations received in UK history.

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However, under electoral rules, the party was not required to declare it until the middle of September.

That is because it was made outside of tight transparency restrictions set by the Electoral Commission.

In a letter addressed to the UK Government's Justice Secretary Shabana Mahmood, seen by The Herald, Mr Brown warned the loophole should be closed to avoid making a "mockery" of funding transparency rules.

Mr Brown said: "I understand that a £4 million donation was made by Quadrature Capital on May 28 - during the one week window between the announcement of the general election (May 22) and the start of the pre-poll reporting period.

"By making this donation before this period Quadrature Capital and the Labour Party were able to skilfully avoid public scrutiny of this donation before the election took place."

Quadrature Capital has insisted the donation was "value based" and not "political".

In response to Mr Brown's letter, the Labour Party called the SNP "embarrassing", highlighting the party's Westminster leader has also been quizzed over donations.

SNP depute leader Keith Brown. (Image: PA) Political parties are normally required to publish donations every three months, however rules set by the Electoral Commission requires the information to be published on a weekly basis during a general election.

The rule, known as 'pre-polling reports' came into effect from the disillusion of the UK Parliament - May 30 - until the date of the election on July 4, with parties forced to publish details of donations worth more than £11,180.

The donation came to light earlier in September instead, more than two months after Labour's significant victory in the general election.

The SNP depute leader has also criticised the nature of the donation after it was revealed the firm is registered in London but invests on behalf of Quadrature Group, whose funds are based in the Cayman Islands.

Last year, it was reported by The Guardian that the company owned £125 million of shares in fossil fuel firms, including major polluters.

Mr Brown added in his letter: “While Quadrature Capital Ltd is registered in London, its parent company is QC Ventures – a company which is registered in the Cayman Islands, and has significant investment in fossil fuels, arms manufacturing and private healthcare firms.

“Given the nature of those investments, it is my view that it would have been in the public interest to have had knowledge of this donation prior to the election taking place.

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“The fact that there is a period of a week between an election being called, and the beginning of the pre-poll reporting period – which I understand is decided by the UK Parliament allows instances like this to happen.

“This makes a mockery of the transparency of funding rules that are put in place to ensure free and fair elections.

“This loophole needs to close – and I would urge the UK Government to pursue closing it, to ensure instances like this do not happen again.”

A Labour spokesperson said: "This is completely embarrassing for the SNP. They've written to the wrong government department.

"Rather than playing political games, the nationalists should spend more time fixing the challenges facing Scotland on its watch - from record NHS waiting lists to a stagnant economy and a growing attainment gap."

Quadrature Capital said the donation was made because the Labour Party had a "commitment to the green transition of the economy".

In a statement on its website, the firm said: "In May 2024, we came to the view that a UK Government with a commitment to the green transition of the economy would have the ability to drive change that is so urgently needed.

“Having analysed commitments set out by each party, we donated £4 million to the Labour Party, in support of policies that will deliver climate action while also promoting social equity and economic resilience.

“This was a values based donation, not a political donation, as Quadrature Capital Ltd remains non-partisan and apolitical.

“Going forward, our private giving will continue to be led by our values, and any further donations to political parties will depend on the parties’ commitments, track record and alignment with our mission for sustainable and equitable growth.”

A spokesman then told The Herald: "Quadrature does not seek to obtain a UK corporation tax advantage by establishing its funds in the Cayman Islands.

“Since the funds have historically been managed exclusively from the UK by Quadrature Capital Limited, all of the trading profits of the funds have been subject to UK corporation tax.”

The UK Government did not respond to The Herald's request for comment.

Labour also highlighted a BBC Question Time debate where Scottish Education Secretary Jenny Gilruth was quizzed over the hospitality accepted by SNP Westminster leader Stephen Flynn.

Mr Flynn has shown he accepted two tickets for the Wimbledon tennis tournament last year to the value of £1,500.

He also declared hospitality worth £350 accepted from the English Football League to watch the Carabao Cup final at Wembley in February. 

However, the SNP letter comes after the Prime Minister confirmed he would pay back around £6,000 for gifts he received.

It followed a media storm around donations made to senior Labour politicians, including the now Chancellor Rachel Reeves and Deputy Prime Minister Angela Rayner.

The news has plagued the party in recent weeks, dominating much of the party’s conference in Liverpool.

MPs are allowed to accept donations of this kind as long as they are declared, but a Downing Street spokesperson said the Labour leader would now pay back some of the gifts he received.

That includes six tickets to Taylor Swift’s Eras Tour this summer, which cost a total of £2,800.

The Prime Minister will also pay back the cost - £1,936 – of four hospitality tickets to Doncaster Races received on September 14.

He also faced strong criticism after it emerged his wife Victoria was gifted clothing worth £839 from the designer Edeline Lee. Sir Keir will reimburse the cost of the clothing rental agreement.

A Downing Street spokesperson previously said: “The prime minister has commissioned a new set of principles on gifts and hospitality to be published as part of the updated ministerial code.

“Ahead of the publication on the new code, the prime minister has paid for several entries on his own register.

“This will appear in the next register of members interest.”

The SNP has called for a separate investigation into donations senior Labour politicians, including Sir Keir, received from Lord Waheed Alli.