How are Corporate Offenders Exerting Political Influence in the UK? (Part I)

January 20, 2023

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

A white man and a white woman are shown looking at each other as they go through a revolving door.
Source: John Howard / Getty Images

This month, Sky News and Tortoise Media launched a new database that makes it much easier for the public to track how corporate money interacts with politicians, parties and all-party parliamentary groups (APPG). The ‘Westminster accounts’ have revealed that MPs have earnt £17.1m on top of their salaries since the last election.

Some of the biggest offenders in the Violation Tracker UK database are paying out thousands of pounds in earnings to MPs. Banks and other financial institutions with poor track records of corporate regulatory compliance are providing some of the largest incomes. Deutsche Bank, HSBC, JP Morgan Chase, Citigroup, Aviva and Goldman Sachs have paid out millions in fines for financial offences.

Some of the worst misconduct includes Deutsche Bank, HSBC, Citibank and JP MorganChase who were involved in the Forex scandal of 2013, which exposed at least a decade of collusion between major banks to manipulate foreign exchange markets for financial gain at the expense of their clients.

The following year Deutsche Bank, Barclays, Citigroup, JP MorganChase and the Royal Bank of Scotland were implicated in the manipulation of the London Interbank Offer Rate (LIBOR). In 2017 HSBC was handed a £63 million fine for failures to address weaknesses in its anti-money laundering processes after it was fined a record-breaking $1.9billion in the US for laundering money for Mexican and Colombian drug cartels. Then Chancellor of the Exchequer, George Osborne, lobbied the US government to drop criminal charges against the bank.

The Westminster accounts reveal that both current chancellor of the exchequer Jeremy Hunt and former chancellor Sajid Javid as well as Labour MP Jess Phillips have been paid by HSBC to give speeches at events. None of these speeches have been made public. Jess Phillips has tweeted positively about HSBC in the past and none of these MPs have criticized HSBC for its regulatory infringements, nor commented on HSBC’s recent secretive fossil fuel loans or open banking breaches. A similar case for Aviva, which has accumulated over £33 million in penalties for financial offences. In January 2022, Aviva donated to a charity at Labour MP Stella Creasy’s request as payment for her giving a speech; in June, Creasy praised Aviva at an All Party Parliamentary Group meeting.

Former prime minister Theresa May has been paid £2.5 million for corporate speaking engagements since 2019, including for repeat financial offenders Deutsche Bank and JP MorganChase. Alongside Labour MP David Lammy, Theresa May has also made thousands of pounds from speaking at events hosted by accountancy firms Deloitte and PricewaterhouseCoopers, which have paid out millions in fines for accountancy fraud. Even the chair of the Commons standards committee, Labour MP Chris Bryant, has taken money from corporate regulatory offender Goldman Sachs.

These speeches are just the tip of the iceberg when it comes to the relationship between recidivist financial institutions, consultancy firms and politicians. Twenty percent of prime minister Rishi Sunak’s cabinet and almost a third of all non-executive directors of government departments formerly worked in the financial sector. Eighteen non-executive directors held roles at management consultancies. In the recent reading of the Financial Services and Markets bill, which will roll out a new era of de-regulation, 45 peers in the House of Lords, all of whom have ties to the financial sector, spoke in its favour.

Many of the companies linked to these politicians have large corporate rap sheets. Sunak himself was a former Goldman Sachs employee, Sajid Javid a former senior managing director at Deutsche Bank. Javid perhaps provides the most egregious example of the ‘revolving door’ between government and companies with a history of financial misconduct. Having left Deutsche Bank to become an MP, Javid held a series of ministerial offices then rose to the position of chancellor of the exchequer. He then resigned as chancellor and took up a role at JP MorganChase whilst still an MP, before becoming health secretary.

Clearly far more scrutiny is required when it comes to the ways in which companies with poor track records of financial misconduct exert political influence through the hiring of MPs and the ‘revolving door’ between financial institutions, consultancy firms and top government roles and positions. It seems unlikely that we will see an end to recidivism when companies that continually break regulatory laws are so integrated with government ministers and parliamentarians.