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Sensemaker: Who Pays the Piper?

Sensemaker: Who Pays the Piper?

What just happened

Long stories short

  • The first satellite mission launched from the UK failed after technical difficulties. 
  • Brazil arrested more than 1,500 people involved in storming government buildings. 
  • The Philippines said it would import 21,000 tonnes of onions after they became almost three times more expensive per kilo than chicken.

Who Pays the Piper?

Britain’s MPs have declared almost £5 million in earnings over this parliament without disclosing their end clients, the Westminster Accounts reveal.

Nearly 50 MPs registered income from intermediaries such as speaker bureaus and consultancies without declaring who ultimately paid for their time. John Whittingdale, Sir Keir Starmer and Andrew Mitchell are among the parliamentarians who have declared large sums while shielding their source.

So what? The ability of MPs and peers to stick to the letter of transparency rules while violating their spirit reflects a fundamental flaw in the system designed to keep UK politics clean. Saying a payment is transparent doesn’t make it so. 

There are plenty of other ways of rendering transparency opaque:

  • MPs can decline to reveal the contents of paid speeches or say who showed up to listen.
  • They can invoke lawyer-client privilege even when it doesn’t automatically exist (see below).
  • They can take donations from companies they know nothing about (see yesterday’s Sensemaker).
  • They can sit on all-party parliamentary groups that sometimes obscure the sources of their funding and disguise their funders’ true agenda (see tomorrow’s).

But the use of third parties as an anonymity buffer between MPs and clients outside parliament warrants a closer look. The buffers can be grouped by MP type:

Lawyer MPs. Some MPs who are also lawyers and who continue to work as lawyers claim professional rules prohibit them from disclosing their clients. Not so. The Solicitors Regulation Authority said no such rules exist and that it is only a client’s express request for anonymity that would stop disclosure.

Sir Keir Starmer recorded £40,990 for legal advice given during this parliament, before he became Labour leader. Conservative MP Fiona Bruce earned more than £711,000 through her company, Fiona Bruce Solicitors, without naming any clients on her register.

Investor MPs. Other MPs worked for investment funds without disclosing how their advice affected companies’ weightings in the funds’ portfolios or whether they were making investment decisions about these firms. 

Before he became a foreign office minister, one of seven investment management roles taken on by the Conservative MP Andrew Mitchell was to introduce new business to an emerging markets fund for commission payments. But he had no obligation to declare the business itself, which is the ultimate source of the commission payment. Mitchell said he received no commission payments from the fund as “we didn’t get into any particular deals”. 

Speaker MPs. Paid speaking engagements are common among MPs, but many only declare the speakers’ agency they are contracted to and so obscure both the audience and content of their speeches.

Former prime minister Theresa May, the highest earning MP, has earned over £2 million on the speaker circuit since the 2019 election. Clients for her speeches include the American Speakers’ Bureau, which keeps the content of what is discussed and who is paying to attend under wraps. 

Generally useful MPs. The Conservative MP John Whittingdale was paid up to £1,000 an hour for two speeches on ‘UK customer issues’ and ‘the UK economy’ in November 2021 and January 2022 by AlphaSights, a company that provides businesses with access to experts.

Whittingdale, Minister of State for Media and Data until September 2021, declared 15 separate payments from AlphaSights between 2017 and 2019.

An ex-AlphaSights employee said that experts sign a terms of engagement which legally prohibits them from disclosing the identity of the end client to a third party. Whittingdale did not respond to multiple requests for comment.

OK / not OK? 

  • “Clearly, registering a third party through whom significant services were provided to a particular client without registering the relationship with that client would not satisfy the requirement of transparency at which the registration system is aimed.” Daniel Greenberg, incoming parliamentary standards commissioner
  • “My impression is that current disclosure obligations are relatively superficial… it does not really get beyond the top layer. Given how easy it is to set up shell companies and to obfuscate funding sources, I do not think that that goes far enough.” Alison Giles, director of security at Parliament
  • “As public officials [MPs] are in a privileged position to be able to influence the laws of the land. If they want to take outside employment, they must be full and open about who’s paying them. If that’s an administrative burden, they shouldn’t take the job”.  Steve Goodrich, Transparency International 

The register of interests was set up in the mid-70s and made more detailed after the Committee for Standards in Public Life was set up in 1996. As a window on money in Westminster, it needs constant cleaning.


CAPITAL ECONOMY, BUSINESS AND FINANCE

Cap fits

Whisper it, but the G7 price cap on Russian oil might be working. It was mocked when introduced last month because at $60 per barrel it was higher than the price at which most Russian crude was already trading. But the point was to drive down net Russian oil revenues by halting G7 purchases and giving non-G7 behemoths like India and China an opportunity to demand lower prices. They seem to be doing just that. Urals crude was trading at $38 per barrel at the end of last week, which is much lower than the roughly $55 level at which the Russian government breaks even. A big reason is the long distances between Baltic ports and Russia’s new (unscrupulous) customers in Asia means high shipping costs, so Russia has to offer ever steeper discounts to compete. Oilprice.com says Putin will retaliate with new price cap countermeasures next month, but that grinding sound could be the gnashing of his teeth. 


TECHNOLOGY AI, SCIENCE AND NEW THING

Chinese H2 clean-up

First, China took control of the global solar panel market by mandating mass production and lowering prices to a point no one else could match. The same may be about to happen with electrolysers. These are used to split water into oxygen and green hydrogen whose importance as a clean alternative to gas in heavy industries like steel and cement has been thrown into stark relief by Russia’s war. Bloomberg NEF says 40 per cent of all electrolysers are made in China; they beat western alternatives on price if not efficiency; and supply will need to be 90 times higher than now to meet demand by 2030. What an otherwise thorough report doesn’t say, perhaps because you can assume this kind of thing these days, is that the global supply of expensive metals and critical minerals used in electrolysers – titanium, platinum, iridium, scandium, yttrium – is already largely controlled by Russia and… China.


The 100-year life health, education AND GOVERNMENT

Jagged little pills 

In 2022, Pfizer supplied a few thousand courses of Paxlovid to China, usually prescribed for mild to moderate covid cases. In December and early January, that rose to millions of courses, according to Albert Bourla, Pfizer’s chief executive, as cases skyrocket across the country (an official in Henan province said yesterday that nearly 90 per cent of the local population of 100 million had been infected as of January 6). A single box of Paxlovid is selling for up to 50,000 yuan ($7,313), according to local reports, up from an original price of 2,000 yuan. The drug is currently covered by China’s health insurance scheme but this ends at the end of March amid apparently heated discussions over pricing – state media yesterday accused Pfizer of trying to profit from China’s covid battle. Beijing is also picking fights elsewhere: it suspended issuing short-term visas for South Koreans this morning in retaliation for Seoul’s restrictions on Chinese travellers over covid concerns.  


Our planet CLIMATE AND geopolitics

The battle for Lützerath

Climate activists have pledged to fight “for every tree, for every house, for every metre” in the tiny village of Lützerath in western Germany, as bulldozers move in to expand a nearby coal mine. The land around and under Lützerath is rich in lignite, one of the dirtiest forms of coal that is burned at nearby power plants. The mine is due to close by 2030 – but, following Russia’s invasion of Ukraine, the utility company RWE says Germany needs the coal now to maintain its energy security. Environmental groups disagree, saying keeping the mine open will make it impossible for Germany to meet its commitments under the Paris climate agreement. Activists have taken over the village – now owned by RWE and empty of its original inhabitants – with forcible evictions due to begin from today. 


CULTURE soCIETY, IDENTITY AND BELONGING

No more Noma

Noma, one of the world’s best restaurants, will close its doors for regular service from the end of next year. Its founder says the entire business model for fine dining is unsustainable. Noma has topped the World’s 50 Best Restaurants list five times, but will instead become a food laboratory, organising occasional pop-ups and serving customers in Copenhagen when they have “enough new ideas and flavours”, according to a statement. Currently, pilgrims pay at least $500 for the restaurant’s multi-course tasting menu; René Redzepi, who opened Noma in 2003, says that it is still too difficult to operate and pay workers a fair wage (it started paying interns last October). “We have to completely rethink the industry,” Redzepi told the NYT. “This is simply too hard, and we have to work in a different way.”


Thanks for reading. Please tell your friends to sign up, send us ideas and let us know what you think. Email sensemaker@tortoisemedia.com.

Paul Caruana Galizia

@pcaruanagalizia

Additional reporting by Giles Whittell and Jessica Winch.

Photographs Getty Images

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The reporters on the Westminster Accounts, a major collaboration with Sky News, were Paul Caruana-Galizia, Phoebe Davis, Luke Gbedemah, Sebastian Hervas-Jones, Alice Horrell, Barney Macintyre, Katie Riley, Guy Taylor, Jeevan Vasagar and Joe White.


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