How are corporate offenders exerting political influence in the UK? (Part II)

January 25, 2023
By Maia Kirby

This is the second part of a two-part blog piece taking a closer look at how companies who break UK regulatory law exert political influence.

Sports stadium near a building that looks like a casino.
Source: Entain’s website

While gifts and benefits are not as lucrative for MPs as jobs, they still provide a means for recidivist companies to improve their reputations and potentially protect them from further scrutiny.

One of the many ways in which corporations donate to politicians is through the funding of parliamentary assistants. Natwest, the most penalised financial institution in Violation Tracker UK, paid for one of its junior lobbyists to work for Labour MP and shadow business secretary Jonathan Reynolds to lead on ‘stakeholder management’ last year, as reported in a piece by openDemocracy this week.

PricewaterhouseCoopers, an accountancy firm with repeated offences, have similarly funded members of staff for the Labour Party. This is not a new phenomenon. PricewaterhouseCoopers reportedly gave £600,000 to the Labour Party in the form of analysts, as did KPMG, another accountancy firm with a long corporate rap sheet, before the practice was briefly ended during Jeremy Corbyn’s leadership of the party. Both the Liberal Democrat Party and the Conservative Party have also received secondments from the ‘big four’ accountancy firms, who together do most of the audit work for the largest corporations and conduct lobbying work for some of the worst corporate offenders.  

One of the benefits of in-kind corporate donations to politicians is in networking. Little gifts, in the form of tickets to events, create opportunities for companies with poor track records of regulatory compliance to schmooze. Lloyds bank, which has been fined a total of £468 million for financial violations since 2010, gave tickets to the exclusive Chelsea Flower Show to shadow chancellor Rachel Reeves, chair of the treasury select committee Harriet Baldwin, and shadow secretary to the treasury Tulip Siddiq. The treasury select committee oversees the work of the Financial Conduct Authority (FCA), which has fined Lloyds back around £450 million since 2013.

The most fined company in the Violation Tracker UK database, Airbus, has gifted tickets to Conservative MP Rob Roberts, who represents the constituency where its Broughton plant is based. Meanwhile companies with large government contracts, and repeated offences, are also donating. Serco, which has been found guilty of fraud and multiple labour standards violations, donated office space worth £19,000 to Tory MP Ranil Jayawardena.  

Companies in some of the most regulated industries are donating to multiple MPs. Gambling giant Entain, which has accrued more than £9 million in penalties for gambling industry violations, has given thousands each to over a dozen Conservative MPs and some Labour MPs. Diageo, a multinational alcoholic beverage company with over a million pounds worth of environmental violations, has also handed over gifts to several Tory parliamentarians. Links between the current Labour frontbench and the gambling industry have been subject to scrutiny before.

Companies with the worst track records are also choosing to sponsor party conferences. John Strafford, who runs the Conservative Campaign for Democracy, reportedly described the 2022 Conservative Conference as having been ‘taken over by the big fat cat sponsors and the big financial people’. One of the corporations present was Capita, which sponsored an event on Education; it has a total of 33 violations for employment-related offences. Drax, which also sponsored the Labour Party business conference, has paid out total penalties of over £25 million for energy market violations. The Labour Party, which under the previous leadership banned multinational fast-food giant McDonald’s from sponsoring the 2016 conference due to its poor record on trade unions, reported receiving £200,000 from corporate sponsorship of its 2022 conference. Amongst sponsors of its 2022 business conference were the recidivist companies HSBC and energy firms SSE and SGN. 

There are many ways in which corporations exert political influence. The Westminster accounts make it easier to track which firms are donating to parties or employing MPs, but far more transparency is required when it comes to the sponsoring of party conferences, think tanks, and the revolving door between certain industries and holding office. Recent scandals such as VIP lanes for covid services, opaque tendering processes for government contracts, plans to further deregulate the city, and the increasing role of private business in the public sector show that we have a government and parliamentary system that are heavily integrated with corporate interests.

Violation Tracker is just one of the ways that we can hold politicians and corporations to account to create better standards in public life.

You can follow Violation Tracker UK on Twitter @VT__UK (note: there are two underscores).