(Bloomberg Opinion) -- There are no more sensitive topics in British politics than Brexit, tax avoidance and Russian interference. A Molotov cocktail of all three has catapulted businessman Arron Banks to a notoriety he could only have dreamt of when he started his campaign to leave the European Union.
On Tuesday, Banks’s campaign group and his company Eldon were fined for breaking data-privacy laws: More than 1 million emails sent to Leave.EU supporters contained marketing for his insurance firm. But that’s not the most interesting part of the controversy: The Electoral Commission suspects he wasn’t the true source of the 8 million pounds ($10.46 million) he donated to the Brexit campaign. The National Crime Agency has now opened its own investigation.
The case has become a flashpoint in the Brexit era. Both sides have lost their cool — Banks’s supporters see the probes as politically motivated; his detractors view them as a sign the vote was unfairly won and that a second referendum is necessary. In a combative interview with the BBC, Banks dismissed questions about his campaign financing as an attempt to undermine Brexit.
But Banks is receiving far more attention than his role in Brexit warrants. We’ve lost sight of what’s actually at stake: the integrity of the democratic process and the level of transparency and accountability post-Brexit Britain will demand of its businesses.
A brash outsider, Banks became the biggest donor in British politics after he defected from the Conservative party to Nigel Farage’s U.K. Independence Party in 2014. When former Tory leader William Hague dismissed Banks as “somebody we haven’t heard of,” the insurance broker promptly increased his 100,000-pound donation to Farage’s group to 1 million pounds.
But the self-described Bad Boy of Brexit was far from the leading force in the referendum: After losing the battle to be designated the official Leave campaign in the referendum, Leave.EU had to play second fiddle to the official Vote Leave campaign fronted by Boris Johnson and Michael Gove.
While Johnson and Gove spoke to middle-class conservatives, dwelling on the issue of sovereignty, Banks took a leaf from Donald Trump’s playbook and went hard on immigration. He targeted working class voters in the industrial north and Midlands who had seen wages stagnate and jobs displaced by globalization. What Banks’s campaign lacked in experience and polish, it made up for in grass-roots activism and social-media savvy. Brexit won big in the North and Midlands, regions that will be hardest hit by it too.
Had Banks not entered the fray at all, one could argue the outcome of that vote would still have been in favor of leaving the EU, maybe by the same 52-48 margin. The Electoral Commission put a 7 million-pound spending limit on the main campaign organizations. Even then, Remain had the edge: It had the full force of the business lobby — and an additional 9 million pounds of government-funded pamphlets.
The Remain effort fell short not because of cheating or outside interference, but because of poor messaging and a failure to recognize voter concerns. Leave’s message of taking back control — simple, emotive, intuitive — was more effective than a Remain message that relied on expert estimates of the economic costs of leaving. In that sense, the allegations about Banks are the least convincing reason offered to hold a second referendum.
That doesn’t mean unpicking the financing of the Leave.EU effort and any other irregularities isn’t important. Banks has been coy about his companies, his wealth and meetings he had at the Russian embassy in the run-up to the referendum. His own finances are opaque.
Questions about the source of the funds that Banks put into Brexit vote speak to fears that campaigns are easily corrupted, that foreign — especially Russian — influence is rife, and that despite the crackdown on tax evasion and tax avoidance strategies in the wake of the Panama Papers, it is still too easy to build a web of offshore constructs that no government can get to the bottom of. These are all valid areas of inquiry.
But unpicking them won’t be easy. Banks’s web of holdings — from insurance to interests in diamond mines, a lobbying company, and a Bristol-based jewelry firm — are extensive and far from transparent. The Electoral Commission suspects that the money for the Leave.EU campaign came not from Banks’s Rock Services Ltd., but from parent Rock Holdings, which is registered on the Isle of Man so barred from making political donations. He dismissed the fine, blaming it on “a technical accounting issue which is heavily in dispute.”
Banks has repeatedly denied Russian money played any part of the Brexit campaign. But it’s not hard to understand why the questions about influence-seeking persist. He initially denied all but a single boozy lunch with the Russian ambassador and then later acknowledged more meetings. The Observer reported they had documents showing yet more meetings took place between Russian officials and the Leave.EU team before and in the two months after the vote.
That’s hardly a smoking gun. But it’s all about context. The Brexit campaign obviously took place before U.S. investigations into Russian interference in the 2016 presidential elections. It preceded the poisoning of the Skripals in Salisbury by Russian agents. And it came before a U.S. Senate report lent credence to the idea that there was Russian meddling in the Brexit vote (though, interestingly, didn’t find it was primarily on one side or another). So there is understandably heightened concern.
Yet whatever one thinks of Banks or Brexit, this is not firm ground on which to rebuild public confidence in elections, government or business — and Britain needs all three. The various investigations must be allowed to run their course before we can draw conclusions.
Banks’s case is a test for the post-Brexit U.K., a country that wants to encourage entrepreneurialism but also burnish its reputation as a rules-based society whose democratic institutions can’t be undermined by outside influence. So far, it’s only shown how febrile Britain’s politics have become.
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Therese Raphael writes editorials on European politics and economics for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.
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