The Institute of Economic Affairs is facing two official investigations after it emerged that the thinktank offered potential US donors access to UK government ministers as it raised cash for research to promote free-trade deals demanded by hardline Brexiters.
The Charity Commission announced on Monday that it had opened a regulatory compliance case into the IEA on the basis of concerns about its political independence. Whitehall’s lobbying tsar, Alison White, also said she will examine whether the free market thinktank should be registered as a lobbyist.
The two investigations were announced following an undercover investigation by Unearthed, an arm of Greenpeace, which found that in May the IEA arranged for US donors who pledged to donate £35,000 to have a private meeting with Steve Baker MP, when he was Brexit minister. Its director Mark Littlewood was also covertly filmed promising introductions to ministers for an investigator posing as a representative of a US farming investor who was considering donating to the IEA.
A spokesman for Baker said that any suggestion he would attend meetings because “access” to him was being sold was entirely false and that Baker “met US Republicans in his political capacity to discuss trade relations between the two countries”.
Lobbyists are expected to list their clients and any contact with ministers or senior civil servants. The IEA, which is an educational charity, does not routinely declare its donors, which are known to include tobacco, oil, alcohol and gambling companies or associations.
It also emerged on Monday that the casino industry donated £8,000 to the IEA after it published a report calling for more casinos. The National Casino Forum confirmed it checked facts from the report and an internal document seen by the Guardian suggests the forum had agreed to fund the report as a way of getting its message across through the IEA.
The IEA said industry does not have “any sway or influence on the conclusions we come to in our research”. It said no one outside the thinktank saw a draft of the casino report or made any changes prior to publication.
The thinktank’s director, Mark Littlewood, had previously told Unearthed’s undercover investigator that a donor could fund and shape “substantial content” in research reports commissioned by the IEA, that would support calls for a free-trade deal between the UK and the US.
The investigation by the Charity Commission raises questions about the IEA’s charitable status which means it enjoys tax breaks on its £2.3m annual expenditure. Charity regulations state that “an organisation will not be charitable if its purposes are political”.
A Charity Commission spokeswoman said the allegations raised by the Unearthed investigation and reported in the Guardian were “of a serious nature”.
“Educational charities can play an important role in informing the public,” she said. “The law is clear, however, that they must do so in a balanced and neutral way. There are clear rules for charities regarding political activity that form a key part of both charity law and public expectations.”
The commission has powers to examine the IEA’s internal financial records, legally compel it to provide information and ultimately to disqualify trustees. The IEA denies it has breached charity law.
“We do not act in donors’ interests, except to the extent that they have an interest in pursuing free trade and free markets,” a spokeswoman said, adding that the thinktank makes “independent editorial decisions and then seeks funding ... It is surely uncontroversial that the IEA’s principles coincide with the interests of our donors.”
Jon Trickett, the shadow Cabinet Office minister, alleged the IEA “engaged in extensive lobbying and controversial political campaign activity in pursuit of specific policy goals, which go well beyond the scope of its objects as an ‘educational’ charity”.
A former board member of the Charity Commission, Andrew Purkis, also said the regulator should be worried that the IEA’s director told undercover investigators that the thinktank was “in the Brexit influencing game”.
Speaking on BBC Radio 4’s Today programme on Monday, Littlewood denied any breach of regulations and said: “We want politicians to listen to us. I don’t apologise for that.” When asked whether the IEA was sufficiently unmindful of the interests of its donors, he said: “We have to find people with whom we have synergy. We have to raise money from companies, individuals, foundations.”
The IEA said it was “spurious to suggest that the IEA is engaging in any kind of ‘cash for access’ system”.
ProfileThe Institute of Economic Affairs
Show
The Institute of Economic Affairs was established in 1955 by admirers of the free-market economist Friedrich Hayek. Its mission involves “analysing and expounding the role of markets in solving economic and social problems”.
In July it launched a £50,000 prize for ideas about harnessing the free market to solve the UK’s housing crisis. It is established as an educational charity and does not have to declare its donors, although it is widely known to have been backed by tobacco, alcohol and oil companies, among others. It publishes reports, and organises conferences and dinners that are often attended by government ministers as well as donors. It has a high media profile, regularly supplying spokespeople to TV news channels.
Last year it spent £2.3m on its activities, which include distributing a magazine about economics to thousands of A-level students.
Its trustees include Patrick Minford, a pro-Brexit economics professor who supported Margaret Thatcher, and the hedge fund billionaire and Conservative party donor Sir Michael Hintze.
The Charity Commission investigated the IEA in 2016 after an earlier complaint by Purkis. At that time, the regulator concluded: “The only sponsored research IEA accepts is from individuals or trusts who do not have a vested or commercial interest in the topic … [and] the sponsorship only goes as far as suggesting topics, not the contents of the paper.” It also said the IEA’s trustees assured the commission that the thinktank did not engage in “policy engineering” or campaigning.
Responding to the Greenpeace investigation, Purkis said: “Offering donor access to ministers is a practice more closely associated with commercial lobbying/PR companies or raising funds for political parties rather than charities, but charity fundraisers do quite frequently offer donors access to their patrons and celebrity supporters.
“The more serious aspect for the Charity Commission may be the focus on influencing current policymaking in a particular direction, whether directly or via donors with access, which is not what educational charities should be doing. Littlewood talks about the IEA’s ‘ideological position’, which to some may suggest a closed world view that the IEA is trying to promote. Educational charities should not be promoting an ideology.”
He continued: “The reference to donors being able to influence ‘substantial content’, though not conclusions, adds to the worries that the public’s trust and confidence in charities as existing solely for the public benefit can be endangered if charity reports are perceived to be ‘substantially influenced’ by big donors – who may represent particular private interests and whose identity, in the case of IEA, is often secret.”