The Labour Party’s largest-ever donation came from a Cayman Islands-registered hedge fund with shares worth hundreds of millions of pounds in fossil fuels, private health firms, arms manufacturers and asset managers.

While the £4m donation by Quadrature Capital is the sixth-largest in British political history, it is noteworthy not just for its size, but also its timing, Electoral Commission records suggest Labour received the donation in the one-week window between former prime minister Rishi Sunak announcing the general election and the start of the pre-poll reporting period in which all political donations over £11,180 had to be published weekly, rather than the quarterly norm. This means that despite being made on 28 May, Quadrature’s generous donation was published by the Electoral Commission only last week, more than two months after Labour won the election.

Neither the Labour Party press office nor No 10 have responded to the timing of accepting this donation, so was it intended to minimise scrutiny and critical coverage during the general election?

Paul Holden, an investigative journalist and author of The Fraud, a forthcoming book on Starmer’s leadership, commented that the donation’s timing fits the Starmer project’s pattern of delaying the disclosure of potentially sensitive or controversial political donations. He said: “Sir Keir Starmer and the organisations close to him have an unfortunate history of reporting donations in controversial ways. During his bid to become leader of the Labour Party, Starmer refused to contemporaneously publish details of who had donated to his leadership campaign. His rivals, Rebecca Long-Bailey and Lisa Nandy, agreed to share details of their donors in real-time, which they published. Starmer, however, decided only to declare his donations via his MP’s register of interests, which created a significant lag between when Starmer accepted his donations and when they were made public.”

“Labour members, as a result, had no idea at the time of voting that Starmer had been funded with large donations from the likes of wealthy millionaires like Martin Taylor and Sir Trevor Chinn and Baron Waheed Ali; the latter now at the centre of the furore about Starmer’s acceptance of gratuities.”

Holden also referred to a fine issued by the Electoral Commission to the Starmerite think tank Labour Together in 2021 for its failure to declare donations worth more than £800,000 – including £730,000 received while it was under the directorship of Starmer’s key adviser and No 10’s director of political strategy, Morgan McSweeney. The party has received more than £8m from businesses or people linked to the financial industry since Starmer became leader in 2020 and now boasts two multi-million-pound donors from the world of hedge funds; Quadrature and Taylor, who has managed several billion-dollar funds over his career.

While Quadrature had not donated to Labour before May, one of its senior employees has contributed significantly to the party under Starmer. Daniel Luhde-Thompson, a strategic adviser at the firm, has given the party more than £500,000 this year, according to the Electoral Commission.

Transparency campaigners have warned Quadrature’s huge donation raises questions about what the financial sector is getting in return.

Rose Whiffen, senior research officer at Transparency International UK recently said “When the public see political parties relying on such large sums of money in donations from private sources, it understandably raises questions as to in whose interest politicians are working and can give the impression our democracy is for sale. More must be done to take this kind of big money out of politics. The new government should commit to introducing caps on individual donations to tackle this problem [and] restore public trust in how our democracy functions.”

Registered in the Cayman Islands

Quadrature Capital has a diversified share portfolio worth around $6bn according to records filed with the US Securities and Exchange Commission (SEC) last month.

The Cayman Islands is a well-known tax haven, and the transparency requirements for companies registered there are much less than in the UK and most other countries. When QC Ventures was established in the Cayman Islands back in 2018, its directors were three senior directors at Quadrature and a corporate services provider based in Cayman.

Speaking in the Commons in July, Labour’s foreign secretary David Lammy pledged to tackle individuals and companies taking advantage of offshore tax havens “with full vigour”.

He added: “We were concerned that parts of the last government were turning a blind eye to these issues. I hope to come forward with further proposals in the coming weeks,” however its all went very quiet on that pledge.”

Robert Palmer, director of Tax Justice UK, said that “any company moving to a tax haven like the Cayman Islands has questions to answer” as the islands are “notorious for a lack of transparency and for ultra-low taxes”.

“Ultimately governments need to make sure that everyone is paying their fair share in tax, especially when public services are desperately in need of investment and we need to fund the transition to a greener economy,” he said.

Fran Boait, co-executive director at Positive Money, said: “In taking large donations from financial firms registered in tax havens, we have to question what influence the sector is getting in return.”