On the 21st of April 2017 the Electoral Commission (EC), the independent body which oversees elections and regulates political finance in the UK, released a statement confirming they had “begun an investigation into Leave.EU’s EU Referendum spending return.”

Leave.EU is a limited company created by UKIP donor Arron Banks, who is currently listed as the main shareholder with Companies House, to campaign for Britain’s exit from the European Union in the 2016 referendum.

While Leave.EU applied to the Electoral Commission to be the designated official campaign, this was awarded to Vote Leave and an application for judicial review of the decision was never followed through.

“reasonable grounds to suspect that potential offences under the law may have occurred”

The Commission’s press release stated their decision “followed an assessment which concluded that there were reasonable grounds to suspect that potential offences under the law may have occurred. The investigation is focused on whether one or more donations – including of services – accepted by Leave.EU was impermissible; and whether Leave.EU’s spending return was complete.”

On clarifying the release with the press office, a spokesperson said “we don’t comment on ongoing investigations,” but they were happy to explain that “a service would be a donation in kind.”

They could not give a timeframe for the investigation “due to complexities in these cases” and said they are unable to “speculate on sanctions if a finding was [subsequently] made, as this varies on a case by case basis”. The spokesperson recommended referring to the Enforcement Policy on their website, which gives more detail on offences and sanctions.

“We will not be cooperating any further with the commission”

The EC’s powers to investigate offences are granted under the Political Parties, Elections and Referendums Act 2000, known as PPERA, rather than under their statutory supervisory powers. The policy is clear that the EC will only use the PPERA powers as a last resort, and that it is a criminal offence to fail to comply with, obstruct, or provide false information to such an investigation.

On the Commission’s publication confirming the commencement of an investigation, Mr Banks made his own statement. “Today’s announcement is politically motivated and the timing is intended to cause maximum damage just before the general election. We will not be cooperating any further with the commission and we will see them in court.”

Banks had been set to stand as the UKIP candidate in Clacton-On-Sea following the resignation of the party’s only MP Douglas Carswell but withdrew on the 24th of April 2017.

The Electoral Commission spokesperson said there is “no comment to be made on the response of Mr Banks.”

“Documents exclusively seen show a significant level of detail in the allegations made to Electoral Commission”

Member of Parliament for Aberavon, Stephen Kinnock, welcomed the investigation which appears to relate to the ‘donation in kind’ of services by psychometric data specialists Cambridge Analytica.

According to other reports, Kinnock wrote to the Electoral Commission in March, citing concerns the “market rate for a donation of this kind could amount to hundreds of thousands of pounds” and that “any substantial additional spending between 15 April last year and the referendum on 23 June would have pushed Leave.EU over the spending limit for the regulated period. They were allowed by law to spend up to £700,000 but according to the accounts they filed they spent £693,000.”

Cambridge Analytica was used by the successful Trump campaign in the US Elections and the British-born CEO, Alexander Nix, has previously stated this earned the company $15 million dollars from this campaign alone.

It is known that, also in March, Mr Kinnock voiced his concerns in writing to the Special Crime and Counter-Terrorism Division of the Crown Prosecution Service. He has not, as yet, been reachable for comment.

Documents exclusively seen show a significant level of detail in the allegations made to the Electoral Commission, specifically relating to the donation of services by Cambridge Analytica.

“In a February Newspaper interview with The Observer, Andy Wigmore, the director of communications for Leave.EU, stated that Cambridge Analytica were “happy to help” with their EU referendum campaign but that they had not “employed” them. However this appears to run contrary to previous claims made by both Leave.EU and Cambridge Analytica.”

“In a now deleted post on their website titled The science behind our strategy, Leave.EU stated that: “Cambridge Analytica are world leaders in target voter messaging. They will be helping us map the British electorate and what they believe in, enabling us to better engage with voters. Most elections are fought using demographic and socio-economic data. Cambridge Analytica’s psychographic methodology however is on another level of sophistication.”

“And in November 2015, PR Week reported the following comments from Cambridge Analytica’s development programme editor: “Cambridge Analytica director of programme development Brittany Kaiser, who will be spending time split between the UK and US in the coming months, was speaking today (Wednesday) at a press conference hosted by Leave.EU. She later told PRWeek that the firm had been approached by the campaign several months ago, but only started working with it more recently. She said the firm’s team of data scientists and analysts, some of whom were based full-time in the UK, would be enabling targeted messaging by “understanding why certain things worry people…probing why people care about a certain issue.””

The documents point out that “the market rate for a donation of this kind could amount to hundreds of thousands of pounds, based on the previous experience of referendum campaigns and political parties for such analytical tools. Yet Leave.eu have not declared this donation-in-kind at any point in their returns to the Electoral Commission.”

The Commission guidelines specifically define a donation as money, goods, or services which is given towards campaign spending without charge or on non-commercial terms and has a value of over £500.

The documents state “neither Cambridge Analytica, as a US company, nor Robert Mercer, as a US citizen, fit the Electoral Commission’s list of permissible donors…there is no record that this donation was returned within 30 days as required”.

Robert Mercer, an American Billionaire and Trump campaign donor is reportedly linked to the psychographics company.

In their ‘expert paper on splitting campaign spending’, the Electoral Commission sets out the circumstances in which the costs of services might need to be divided, which includes items used before or during the regulated period of a referendum. They highlight that campaign groups must make an honest, factual assessment of the proportion of costs to be attributed to their overall expenditure.

The documents specify the identification of this as a serious concern:

“In his interview with the Observer, Mr Wigmore states that the service provided by Cambridge Analytica were Leave.eu’s most “potent weapon…because using artificial intelligence, as we did, tells you all sorts of things about that individual and how to convince them with what sort of advert. And you knew there would also be other people in their network who liked what they liked, so you could spread. And then you follow them. The computer never stops learning and it never stops monitoring.””

“Given his stated views on the importance to their campaign of the service which was provided free of charge by Cambridge Analytica it seems inconceivable that the donation was not split and partially included in their returns for expenditure during the regulated period.”

The document states that Leave.EU only became a permitted participant in the referendum on the 15th of February 2016, and so would not have legally been allowed to hold and use the full electoral register for referendum purposes prior to that date.

The documents also refer to US election consultants Goddard Gunster being employed by Leave.EU and states “this service has not been included in their returns as an item of split spending.” Again, the Leave.EU ‘the science behind out strategy’ page is cited:

“While Cambridge Analytica will be helping with the data, Goddard Gunster, who have fought some of the most contentious referendum campaigns all over the world (with a success rate of over 90%) will be helping us turn that data into a comprehensive strategy. Working alongside them will be Ian Warren, an expert on the issues that matter to people on lower incomes.”

The regulated referendum period began on the 15th of April 2016 and the limits on expenditure came into force for the designated official campaigns – the lead campaigns were given higher spending limits of £7 million. The document makes a number of assessments of potential over-spending by the official Vote Leave campaign but there is no current indication of an investigation by the Electoral Commission.

They only open formal investigations where there are reasonable grounds and where the offence is in the public interest.”

At this early stage, there is no reason to believe anyone has been arrested, summonsed, or charged in relation to the Leave.EU investigation and the Commission have refused to confirm or deny this though they were asked directly.

In terms of enforcement, the EC may either force compliance of parties with a contempt of court order or prosecute. They can also issue a Stop Notice requiring an individual or organisation not to begin, or to cease their activity. In addition, in the case of impermissible or unidentifiable donations or loans being involved, the Commission may also apply for forfeiture.

Prior to an investigation being launched, an assessment is made by the EC and – according to their policy – they robustly dismiss the investigative option without credible evidence. They only open formal investigations where there are reasonable grounds and where the offence is in the public interest.

The formal sanction structure is simplistic and consists of a sliding scale:

1. A fixed monetary penalty of £200

2. A variable penalty between £250 and £20,000

3. Compliance and Restoration notices (which set out what not to do and how conduct must be managed, or force the party to restore ‘the position’ to what it would have been before the offence).

4. An Enforcement Undertaking (a binding agreement to conduct matters in a specified fashion).

The Electoral Commission has been instrumental in the current electoral fraud investigations arising from the 2015 General Election, however, these cases are with the Crown Prosecution Service for charging decisions and no further detail is available at this time.

Looking at another recent case, reported by the Commission on the 19th of April 2017, it is possible to gain insight into sanctions and financial scales in a more comparable case to the non-party Leave.EU group.

Greenpeace and Friends Of The Earth worked as campaign groups during the 2015 General Election. Following an EC investigation, Greenpeace was fined £30,000 for incurring over £111,000 in campaign-related expenditure. Friends Of The Earth were fined a further £1,000 for a £24,000 campaigning spend in conjunction with Greenpeace.

Mr Wigmore has not yet replied to a request for Leave.EU’s official response and their press inbox is no longer monitored.