Behind the plots and schemes to achieve the hardest possible Brexit, a tangled web is beginning to emerge. PETER GEOGHEGAN investigates the figures pulling strings behind the scenes.
‘Putin’s link to Boris and Gove’s Brexit ‘coup’ revealed,’ declared a headline in the Mail on Sunday.
A few weeks ago, the pair of UK ministers had sent a secret letter to Theresa May demanding she adopt a harder line on Brexit. The Mail on Sunday alleged that a third figure had been involved in this missive – Shanker Singham, from free market think tank the Legatum Institute.
Legatum dismissed claims it had any connection with president Putin as ‘frankly laughable’. But the story has focused attention on Legatum, raising questions about why a charity funded by a Dubai-based, New Zealand-born billionaire who made a fortune in Russia has come to play such an influential role in the centre of the Government ahead of Brexit.
The connection, if any, between Putin and Legatum is debatable but there is little doubt about the strength of the personal ties that bind Legatum and the upper echelons of the Conservatives and the Brexit campaign. On his website, Brexit minister Steve Baker describes the Legatum Institute as ‘remarkable’.
Singham, chairman of Legatum’s self-styled ‘special trade commission’, has had at least seven meetings with Government ministers. Last week he met Michael Gove.
Legatum’s position on Brexit is pretty clear – no deal is better than a bad deal, or almost any deal, it seems. Writing in the Times, Singham declared that Britain could ‘maximise the benefits and minimise the disruptions of Brexit’ by leaving the EU as soon as possible and removing tariffs.
Legatum has described leaving the EU as an unrivalled ‘window of opportunity’ for the UK. The Irish border is a mere bagatelle, easily resolved by drones and ‘creative thinking’.
But many experts have called into question the think tank’s experience and raised concerns about the burgeoning influence of the group. Labour MP Ben Bradshaw recently called for the Government ‘to look at the Legatum Institute, its relationship with the Government, and the background of its founder and main funder, Christopher Chandler’. In the wake of the press interest, Liberal Democrat MP Tom Brake called on ministers to ‘distance themselves from a ‘think tank’ whose agenda is leading the UK to a disastrous no deal Brexit that would inflict permanent damage on UK families and jobs’. Many leading Conservatives have approvingly cited Legatum reports in recent months. Theresa May, then Home Secretary, was guest speaker at the think tank’s 2015 summer party.
Legatum has not always been so well disposed towards Brexit. Before the June 2016 referendum, it widely seen as a liberal, pro-EU outfit. Among those employed from its plush Mayfair offices were influential US author Anne Applebaum.
That changed in the wake of Brexit. Applebaum left after Philippa Stroud was appointed as CEO, in September 2016. The eurosceptic Baroness Stroud co-founded the Centre for Social Justice think-tank and was a special adviser to Brexiteer Iain Duncan Smith. Although a Remain voter during the EU referendum, Singham became head of a new Legatum special trade commission.
There were other personnel changes at Legatum, too. Matthew Elliot, head of Vote Leave, became a senior fellow. Toby Baxendale, who helped run Andrea Leadsom’s Tory leadership campaign, became a trustee.
Baxendale established the radical free market think tank called Cobden Centre alongside Steve Baker. The think tank’s objective, he said, was ‘to go for the jugular of the state, to cut the oxygen and the blood supply off and force it to be honest’. Among the Cobden Centre’s policies is a return to the gold standard.
In August, British-born New Zealander Crawford Falconer left Legatum’s trade commission to become chief trade negotiation adviser at Liam Fox’s Department for International Trade. The following month he made headlines when he insisted that UK regulations should be scrapped to get trade deals.
The Legatum Institute is a charity. Its lead sponsor is the Legatum Foundation, which is controlled by Chandler, a Dubai-based private hedge fund billionaire originally from New Zealand.
The foundation is registered in Bermuda and controlled by a company in the Cayman Islands. The Legatum Institute’s income has grown significantly in recent years, from £35,000 in 2012, to more than £4m in 2016, with around 90% coming from the Legatum Foundation, according to accounts filed with the Charity Commission.
Chandler and his older brother, Richard, have been described as ‘disaster capitalists’. They created a hedge fund in the 1980s after selling the family department store in Hamilton, New Zealand. They piled into Russia in the ‘shock therapy’ years when the Soviet Union’s state-run businesses were rapidly privatised.
By 1994, Sovereign Global, the brothers’ fund, was by their reckoning the largest foreign portfolio investor in Russia. By 2002 the pair were the fourth-largest investor in Gazprom, the Russian state-controlled gas company. Gazprom has links to Vladimir Putin. However, Legatum denies any of its leading figures have ever met Putin and has said: ‘One is not in cahoots with Putin merely because one owns publicly-listed shares of a Russian company.’
The Chandlers brothers have given just one press interview in the 21st century – back in 2006, in which they explained that they made money from ‘transition economies or distressed sectors where information is not easily available and standard metrics don’t apply’. The brothers split their fortunes in 2006 and went their separate ways. Under Christopher’s auspices, Sovereign turned into the Legatum Group, which now operates from a building it named Legatum Plaza in Dubai’s financial centre.
‘It is amazing how easy it is for partisan think tanks to gain charitable status and to do so while mostly funded by a single offshore donor. The Charity Commission has been pushed into investigating these kind of issues before with groups like the Taxpayers Alliance. It should be rapidly investigating Legatum and its offshore connections,’ says David Miller, from transparency advocacy group, Spinwatch.
Since June 2016, Legatum has focused on Brexit, publishing a series of reports. But trade experts have raised eyebrows at Legatum’s interventions, and the enthusiasm with which they have been met in Government. The Financial Times said Legatum’s most recent report, the Brexit Inflection Point, was ‘riddled with misconceptions large and small’. On Twitter, George Peretz, a lawyer specialising in trade law, described the proposal that the UK could become a ‘world leader’ by immediate radical deregulation of tariffs as ‘not a realistic way forward’.
Previous Legatum reports have also met disdainful responses from experts. In September, the think tank suggested it could solve the Irish border problem using drones. It also proposed the UK government ‘should consider giving a prize for technological solutions to incentivise the development of innovative solutions’. A prize to solve the Irish border problem? Publicly, politicos in Belfast politely described Legatum’s ideas as ‘highly problematic’. Privately, the language was far less restrained.
In a statement, a spokesman for Legatum said: ‘The best possible Brexit outcome for the UK would be one that sees Britain flourish. The UK must be able to strike free trade deals with the EU and nations around the world. This is the goal we are working towards.’
As well as Chandler, Legatum has received funding from British Brexit backers including major City figures. In 2015, prominent pro-Brexit hedge fund manager Sir Paul Marshall bankrolled a 12-month research programme entitled ‘A Vision for Capitalism’. The programme was run by Conservative commentator Tim Montgomerie and launched by then Chancellor George Osborne. Montgomerie is now the editor of UnHerd, a new website backed by Marshall. A spokesman for Marshall said the multimillionaire investor no longer funded Legatum.
In the wake of the Mail on Sunday story, many commentators were quick to decry the attack on Legatum. ‘No the Kremlin is not behind Legatum Institute – or Brexit,’ wrote Fraser Nelson in the Spectator. Others tweeted their agreement.
Legatum may not be a conduit for Putin, but the pro-Hard Brexit think tank has a remarkably close relationship with senior cabinet ministers. That is something that is likely to only prompt more questions about Legatum and its financial backers.