A Tory superdonor is making millions of pounds from defence contracts handed out by the government in an example of “corporate welfare”, Novara Media can reveal.
Christopher Harborne, the lead shareholder of little-known defence giant QinetiQ, has made at least £15.5m in political donations since 2001 – £1.8m to the Conservatives and the rest to the Reform Party (formerly the Brexit Party).
The financier and businessman who repeatedly features in the Panama Papers leak, also set a record in November last year when he donated £1m directly to former Prime Minister Boris Johnson according to the electoral commission, reportedly the largest amount ever donated to any individual politician.
QinetiQ has previously faced controversy, having secured contracts from the Ministry of Defence (MoD) worth billions. Critics have questioned the link between big money political donations and massive government contracts.
But how has this arrangement been working out for Harborne? Pretty well, it seems.
Company accounts reviewed by Novara Media reveal that the Thailand-based serial investor earned £4.4m in income from QinetiQ dividends last year alone.
Government data also reveals that of its £9.82bn revenue over the last decade, the company made £5.67bn from contracts awarded by the MoD – 58% of its total revenue.
This is bound to raise further questions about government subsidies for the arms trade. Recent research by think-tank Common Wealth discovered that arms giants were “supported by the state in a way no other sector is” through government handouts.
That support covered as much as 90% of private defence firms’ research and development budgets, which they use to develop products that they then sell to the MoD at a profit.
The firms have then made record payouts to private shareholders, while making billions of pounds of weapons sales to members of the Gulf Cooperation Council nations Gulf dictatorships like Saudi Arabia and the UAE.
Professor Anna Stavrianakis from the University of Sussex, an expert on the global arms trade, warned that the findings were a “story of corporate welfare and the further erosion of British democratic politics.”
“The British state uses taxpayers’ money to subsidise QinetiQ, and then pays the company billions of pounds for its services, generating huge dividends for QinetiQ’s shareholders,” Stavrianakis added. “British taxpayers are in effect paying for wealthy individuals to exercise influence over British parliamentary politics.”
QinetiQ used to be the publicly-owned research arm of the MoD before it was privatised back in 2006. Since then, the firm has become a gold mine, paying out over £500m to shareholders in the last decade.
In fact, it has proved so profitable for shareholders that within two years it is expected to have paid out more in dividends than the MoD sold it for. That lack of value for money was actually predicted by government auditors just a year after the Blair government chose to make the move, who argued that “greater proceeds could have been secured” for taxpayers.
A spokesperson for QinetiQ told Novara Media: “We are proud of the role we play protecting lives by serving the national security interests of our customers.
“We work with numerous democratically elected governments including those in our core markets of the UK, US and Australia. In addition to supporting national security, QinetiQ delivers many positive economic and social contributions to the UK as a result of the investments we make in R&D, highly skilled jobs and our supply chains.
“Defence and security is a tightly regulated industry and we are committed to the highest standards of ethical conduct in all that we do. We do not make donations to UK political parties or comment on any donations our significant shareholders might choose to make.”
The MoD did not respond to a request for comment.
Andrew Kersley is a journalist.