Cabinet Ethics Probe into Johnson’s Hedge Fund Backers
Byline Times has information that the prime minister’s backing by hedge funds invested in a hard Brexit is coming under scrutiny by the Cabinet Office.
The Cabinet Office has been asked to investigate whether Boris Johnson could be in breach of the ministerial code by not declaring any financial connection to hedge fund donors who contributed substantially to his leadership election campaign.
A complaint was lodged in August with Helen MacNamara, director-general of the Propriety and Ethics Team, about Johnson’s financial connections to the bankrollers of his leadership campaign. This was before Byline Times revealed the extent of Johnson’s reliance on hedge fund donors, many of whom funded the Vote Leave campaign in 2016 which Boris Johnson paid a prominent role.
The Cabinet Office responded to Byline Times request for comment by asking for more details of the original complaint before confirming the status of the investigation. A spokesperson subsequently responded: “We don’t comment on individual cases or private correspondence.”
The public interest in hedge fund companies is highlighted by the fact that Boris was the sole Tory candidate for the leadership who fixed a firm date for Britain to leave the EU “do or die” on October 31. His main rival, Jeremy Hunt, made it clear that if a deal was near he would be prepared to extend the leaving date by a few days. From evidence lodged at the Electoral Commission, Byline Times has discovered Johnson received £375,000 from hedge fund associated donors compared to £45,000 for Hunt.
“It could be Cummings advising the PM to be extremely aggressive… It could be people who have invested billions in shorting the pound in expectation of a no-deal Brexit.”Rachel Johnson, BBC World at One
A precise date for a market-moving event such as a ‘no deal’ Brexit could be significant for hedge funds as they speculate on the fluctuation of foreign exchanges and share prices. A ‘no deal’ exit from the EU could lead to a big drop in the pound and a fall in stock values which could be highly profitable to those taking short positions.
The Prorogation Plan
Disclosures in a Channel Four documentary Tories at War on Sunday revealed that one of the hedge fund owners who contributed to Boris Johnson’s leadership campaign, Crispin Odey, appeared to be aware of a plan to ‘suspend’ Parliament in late July, the day before Johnson won the leadership contest. This was a month before the government’s plan to prorogue Parliament was leaked by the Observer.
In 2016, Odey and his partner made £350m overnight by speculating on sterling and moving in gold when the shock EU referendum result caused the pound to tumble. He had donated over £800,000 to Leave campaigns during the Brexit referendum.
In early August this year, The Times revealed that Odey Asset Management had placed £299 million in short positions on some of Britain’s biggest firms around the date for a possible ‘no deal’ Brexit.
Since then, Johnson has withdrawn the whip from 21 Tory MPs and lost control of Parliament. Though the prime minister was forced to accept the new Benn Act which could postpone the UK leaving until January 31 next year, he still refused to request an extension from the EU and by proroguing Parliament left ‘no deal’ as the most likely outcome. The decision of the Supreme Court on Tuesday to declare the prorogation unlawful has left him facing further scrutiny over his Brexit plans in the House of Commons.
During the recalled parliamentary session on Wednesday, former Attorney General Dominic Grieve observed from a “leaked document” from the current Attorney General Geoffrey Cox that “as far back as July… Prorogation was first being mooted in order to achieve a no-deal Brexit on 31 October.”
Cox confirmed that suspending Parliament was being discussed around the time Odey was interviewed by Channel 4 but said he would have resigned if this action was taken.
“It was being mooted some weeks ago that Parliament might be prorogued from the beginning of September or even earlier until 31 October,” Cox told Parliament: “I say straightaway to him that if that had been the proposition, I could not have stayed in the Cabinet while it was done.”
On Thursday the prime minister’s sister Rachel Johnson told BBC World at One that the hedge funds could be driving her brother’s behaviour or Dominic Cummings, his chief of staff.
“It could be Cummings advising the PM to be extremely aggressive…” Rachel Johnson told the BBC: “It could be people who have invested billions in shorting the pound in expectation of a no-deal Brexit.”
Under the ministerial code, ministers should neither have any financial conflicts of interest nor the appearance of any conflicts of interest.
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This article was updated at 11:40 on 27/09/19 to incorporate a statement from the Cabinet Office.