SPECIAL INVESTIGATIONFirm Behind Giant Channel Cable Project is Owned by Former Soviet Oil Men and is Generous Conservative Donor
The Aquind Interconnector project could be ‘dangerous’ and ‘completely against the national interest’ a Conservative minister has warned
The Government has delayed its final planning decision over a major international infrastructure project, which one of its own ministers has described as potentially “dangerous” and “completely against the national interest”.
Aquind Limited, the British company behind the project, has donated more than £365,000 to the Conservative Party in recent years, despite never having generated a penny in turnover.
Byline Times does not suggest any wrongdoing by Aquind nor its owners, Viktor Fedotov and Alexander Temerko, but donations of this size can create possible conflicts of interest for politicians and ministers who benefit from them. Two ministers have already had to recuse themselves from the planning decision.
The Aquind Interconnector is a set of giant cables that would be laid along the bed of the English Channel, connecting the British and French electricity grids.
Business Secretary Kwasi Kwarteng now has until 21 October to decide whether to grant development consent for the project or not. Last week, he postponed the original deadline of 8 September, in order to request further information from Aquind.
When built, the interconnector will enable excess power to be traded between the two countries, potentially lowering electricity bills and reducing wasted renewable energy.
Under the proposed plans, the cables would come ashore at Eastney Beach, running 11 miles north underground, through the length of Portsmouth and up to Lovedean substation. Portsmouth is the most densely populated place in Britain outside of London.
Earlier this month, the Paymaster General Penny Mordaunt, who is the Conservative MP for Portsmouth North, wrote to Kwarteng reiterating her longstanding opposition to the project. She said: “It is at best a highly flawed, poorly consulted, and unwanted scheme. At worst… it is also a dangerous one and completely against the national interest.”
A spokesperson for Aquind described Mordaunt’s letter as “wholly unsubstantiated” and “not borne out by the detailed evidence prepared by Aquind in the application process”.
Mordaunt also referred to an earlier letter, sent to Aquind by Kwarteng’s ministry, asking the company to resubmit its proposal “excluding those elements which relate to commercial telecommunications”.
Fibre Optic Cable Link
The installation of fibre optic cables has always been an essential part of the project, as they will be used to transmit operational data and monitor the condition of the main electricity cables.
Aquind has also always seen an opportunity to monetise the data cables. In the first planning documents submitted to the Business Secretary, in October 2018, it stated: “Spare strands of fibre may be leased to third parties for commercial telecoms purposes.”
The recent focus on the fibre optic cables highlights a curious parallel between the Aquind Interconnector and one of Russia’s biggest-ever infrastructure projects – which was mired in allegations of fraud.
The two are linked by Aquind’s majority shareholder – 74-year-old Viktor Fedotov.
The Eastern Siberia-Pacific Ocean oil pipeline system was built to facilitate the export of Russian crude oil directly to the Asia-Pacific markets. It belongs to the Russian state-owned oil pipeline monopoly, Transneft, which built it at a total cost of more than £6 billion.
As the Bureau of Investigative Journalism previously reported, Fedotov was the chairman of two Russian companies – VNIIST and IP Net SPb – which together made more than £80 million for nothing, during the first stage of construction.
In July 2007, IP Net SPb won a contract worth more than £227 million for the installation of telecommunications infrastructure – including fibre optic cables – which would run alongside the full length of the enormous oil pipeline’s first stage. Fedotov’s company received an advance payment of more than £44 million from Transneft.
It was later reported by the leading Russian business newspaper Kommersant that all £44 million disappeared into the bank accounts of IP Net SPb’s Cypriot parent company, using a scheme involving bank deposits and promissory notes.
In late 2007, Transneft was forced to cancel the contract with IP Net SPb – which had not yet completed any of the work – and open legal proceedings to recover the missing funds. This proved unsuccessful since IP Net SPb was forced to declare bankruptcy.
These allegations are supported by official documents compiled by Transneft and leaked in 2010 by Russian activist Alexei Navalny. The documents – internal audits into the process of awarding contracts – were prepared at the behest of the Accounts Chamber of the Russian Federation (Russia’s equivalent to the Audit Office) and precipitated a criminal investigation spanning three years. Ultimately, no charges were brought.
Conflicts of Interest for Politicians
The close ties between Aquind, its directors, and the UK’s Conservatives are well-documented.
In addition to the more than £365,000 Aquind has donated to the party since May 2018, its then parent company, Offshore Group Newcastle, donated a further £475,000 between 2012 and 2015.
Alexander Temerko – who has been an elected vice-president of the Cities of London and Westminster Conservative Association for more than five years – is also a director and minority shareholder of Aquind. He has personally donated more than £730,000 to the Conservative Party, taking the combined total of Aquind-related donations close to £1.6 million.
The generosity of Temerko and his company has caused complications for the Government. So far, two ministers have had to recuse themselves from the process of deciding whether to grant planning permission for the project.
On 30 July 2018, the Conservative Party accepted a £12,000 donation from Temerko. On the same day, the Department for Business, Energy and Industrial Strategy announced that the Aquind Interconnector would be treated as a ‘nationally significant infrastructure project’. There is no evidence to suggest a causal link between these two facts.
The project would not normally have qualified, but the then Business Secretary Greg Clark used his discretionary power to grant Aquind’s proposal this status – which allowed it to bypass normal planning requirements and cut local government in the affected areas out of the process; in this instance: Portsmouth City, Havant Borough, and East Hampshire District councils, all of which are “united in their agreement that the interconnector is not wanted locally”.
Instead, the application process has been overseen by the Planning Inspectorate, which is tasked with advising the Business Secretary on the matter.
Alok Sharma was appointed Business Secretary in February 2020. During only his second week in the job, Sharma shared a table with Temerko and his fellow Aquind director, Kirill Glukhovskoy, at the Conservatives’ annual Black and White fundraising ball. The company paid £12,000 for the table, having donated another £10,000 to Sharma’s constituency of Reading West only a few months earlier.
Subsequently, just two months after his appointment, Sharma had to recuse himself from any involvement in the planning process, due to fears over a potential conflict of interest.
In July this year, Energy, Clean Growth and Climate Change Minister Anne-Marie Trevelyan revealed that she too had recused herself.
When asked in the House of Commons by Labour MP Catherine West what national security assessment has been conducted “given that the project is sponsored by an oligarch who has donated £1 million to the Conservative Party”, Trevelyan said that she was “unable to answer” any questions on the matter “because I have recused myself from all matters to do with the Aquind interconnector because Northumberland Conservatives received some funds from one of the owners of the company”.
Other Close Ties to the Conservative Party
Another Conservative MP who benefitted from Alexander Temerko’s political generosity was James Wharton, the former MP for Stockton South, who received £25,000 in donations between 2013 and 2016.
In August 2017, months after Wharton had lost his seat, the Advisory Committee on Business Appointments (ACOBA) gave its blessing to his appointment as “a part-time, paid, strategic advisor” to Aquind Limited. ACOBA is an advisory body aimed at preventing a ‘revolving door’ between law-makers and the private sector. A few months prior to the decision, it was branded a “toothless regulator” by the House of Commons’ Public Administration and Constitutional Affairs Committee.
Wharton went on to become the campaign manager of Boris Johnson’s successful bid for the Conservative Party leadership and was rewarded by the now Prime Minister with a life peerage. In September 2020, he took up a seat in the House of Lords as Baron Wharton of Yarm, and – according to his LinkedIn profile – remains in his role advising the board of Aquind.
Wharton is not the only Conservative lord with ties to Aquind.
For more than a year, Lord Martin Callanan sat alongside Temerko on Aquind’s board of directors, until the end of June 2017. In February 2020, the day after Alok Sharma was made Business Secretary, Lord Callanan was appointed as Minister for Business, Energy and Corporate Responsibility, in the Department for Business, Energy and Industrial Strategy.
This meant that a former director of Aquind was now a minister in the department responsible for the final planning decision on its proposed subsea cable.
In March 2020, Aquind made its first donation to a political group in the European Parliament when it gave €18,000 (£15,175) to the European Conservatives and Reformists Party group. Lord Callanan was the chairman of the group for three years until he lost his seat in the 2014 election.
A spokesperson for the Department for Business, Energy and Industrial Strategy told Byline Times that “neither Minister Trevelyan nor Lord Callanan will have any role in the [Aquind Interconnector] decision”.
Kwasi Kwarteng replaced Sharma as the Business Secretary in January this year. In April, he and Lord Callanan oversaw the royal assent of the National Security and Investment Act 2021 – legislation which seeks to address “national security risks arising from the acquisition of control over certain types of entities and assets”.
Byline Times asked the Department for Business, Energy and Industrial Strategy if Kwarteng wanted to comment on his colleague Penny Mordaunt’s fears that the Aquind Interconnector might be “dangerous” and “completely against the national interest”.
A spokesperson said: “All applications for development consent are dealt with by the department in line with Government Propriety Guidance, and are assessed on a case-by-case basis. The Government takes national security issues very seriously, especially in relation to Critical National Infrastructure, but we are unable to comment on specific issues.”
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Transneft, the Russian state-owned oil pipeline monopoly that oversaw the Eastern Siberia-Pacific Ocean oil pipeline project, did not respond to Byline Times’ request for comment.
A spokesperson for Aquind told Byline Times: “The Examination of the Development Consent Order application is the most comprehensive and overarching planning consent process in the UK. The process is managed by an independent Examining Authority, which provides recommendations to the Government. All political donations made by Aquind have complied with the relevant legislation and can be viewed on the Electoral Commission website.
“The statements made by Penny Mordaunt MP in this letter are wholly unsubstantiated and are not borne out by the detailed evidence prepared by Aquind in the application process. As a part of the Development Consent Order application, Aquind undertook a comprehensive environmental impact assessment. Aquind has proposed measures to avoid, mitigate or compensate for any environmental impacts identified in this assessment.
“The project is an essential part of national infrastructure work necessary to meet the UK’s target of net-zero emissions of greenhouse gases. Further, the project will help reduce wholesale electricity prices, improve the security of energy supply and will facilitate the integration of intermittent renewable generation, which otherwise could be curtailed. The Government, which Penny Mordaunt MP is part of, actively supports building more interconnectors and identified in its Energy White Paper that at least 18GW of interconnection capacity is needed by 2030.
“Fibre optic cables are an essential part of the interconnector which are required for control and monitoring purposes. Potential lease of the spare fibre capacity for commercial purposes is a very small part of the business but with the growing global demand for additional bandwidth, there is a clear benefit to Aquind Interconnector providing additional cross-border fibre optic capacity and connectivity, while at the same time avoiding potential harm to the environment that would be associated with installing a dedicated commercial marine fibre optic cable.”