November 5, 2018 / 3:47 PM / 11 days ago

The 8 million pound hole in Brexit: smoking gun or damp squib?

LONDON (Reuters) - Britain’s serious crime agency has started an investigation into Brexit backer Arron Banks over the source of 8 million pounds ($10.4 million) in loans to groups including Leave.EU which campaigned to leave the European Union.

FILE PHOTO: Arron Banks and Andy Wigmore, who ran the Leave.Eu pro-Brexit referendum campaign, arrive to give evidence to the Digital Culture Media and Sport Parliamentary Committee in London, Britain, June 12, 2018. REUTERS/Simon Dawson/File Photo

WHY DO WE CARE?

Banks has said the investigation is part of an attempt to undermine Brexit. He has repeatedly insisted that the money came from him and that no Russian funding was involved.

But if criminal offences or foreign funding are proven, that could cast doubt on the legitimacy of the whole Brexit vote.

The groups that received the loans ran emotive publicity campaigns to persuade people to vote to leave the EU - and the final result was close. In the June 23, 2016 referendum, 17.4 million voters, or 51.9 percent, backed Brexit while 16.1 million, or 48.1 percent, backed staying in the bloc.

WHAT IS THE INVESTIGATION ABOUT?

The focus is 8 million pounds in loans provided to Leave.EU and Better for the Country Limited (BFTC), which Banks controls and which ran Leave.EU’s campaign.

Britain’s Electoral Commission asked the UK National Crime Agency to investigate Banks after saying it suspected the insurance entrepreneur was “not the true source” of the loans.

It also said it had grounds to suspect that the loan arrangements had involved Banks’ Rock Holding Limited, which was incorporated in the Isle of Man, a self-governing British crown dependency that is not part of the United Kingdom.

British law mostly bans companies from outside UK from making such political donations.

The Electoral Commission said it suspected criminal offences were committed, specifically relating to the transactions which led to the 8 million pounds being paid into BFTC’s bank account.

WHAT DOES BANKS SAY?

Banks said the money was his and came from his UK-incorporated Rock Services insurance firm and was generated from insurance business written in the UK.

He has said that the Electoral Commission’s issues about Rock Holdings are based on a misunderstanding about its status - that it is a holding company that owns Rock Services and did not itself provide the loans.

“Rock Holdings is a company I own and control and I’m a U.K. tax payer, no Russian or foreign money has ever come into it,” he told Reuters.

Banks, who was pictured with Donald Trump and leading Brexiteer Nigel Farage outside a gilded elevator soon after Trump’s 2016 U.S. presidential election victory, said he welcomed the inquiry.

“I am confident that a full and frank investigation will finally put an end to the ludicrous allegations leveled against me and my colleagues,” he said.

RUSSIAN LINKS?

After the announcement of the investigation, Damian Collins, chair of the British Parliament’s Digital, Culture, Media and Sport Committee, said it is unclear where Banks got the 8 million pounds.

Collins’ committee said Banks had misled it over the number of meetings he had with the Russian embassy in London.

Banks said at the time that he had no business interests in Russia and had done no business deals in Russia. Russia has denied any involvement in Brexit.

FILE PHOTO: Gerry Gunster (L), a Washington-based strategist hired by the Leave.EU campaign, speaks as he sits with Arron Banks, a British businessman, during a Leave.EU news conference in central London, Britain November 18, 2015. REUTERS/Stefan Wermuth/File Photo

WHAT NEXT?

It is unclear how long the National Crime Agency’s investigation will take. The United Kingdom is due to leave the EU on March 29, at 11:00 p.m. London time.

($1 = 0.7688 pounds)

Reporting by Guy Faulconbridge; Editing by Andrew Heavens

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