Exclusive: Alliance of Conservatives and Reformists in Europe accused of hosting luxury events of little relevance to EU

This article is more than 1 year old

This article is more than 1 year old

A European conservative group co-founded by the Tories and led by Brexit campaigner and MEP Daniel Hannan has been asked to repay more than half a million euros of EU funds following an investigation into their spending, the Guardian has learned.

In a rare negative finding touching a British political party in government, European parliament senior leaders on Monday night ordered the Alliance of Conservatives and Reformists in Europe (Acre) to repay €535,609 (£484,360) of EU funds.

The group will be denied a further €187,245, which had been withheld pending investigation. A formal demand for repayment will be issued to the Acre next week, following a decision taken behind closed doors by the parliament’s top leaders on Monday.

Hannan, who has championed Brexit for more than a quarter of a century and was Acre’s secretary-general until December 2017, is told that there are grounds to suspect a conflict of interest on his part, in leaked documents seen by the Guardian. Hannan called that conclusion “absurd” and accused investigators of making false insinuations that were “outrageous”.

The authorities suggest that the money has in some cases been used to promote events which are of limited relevance or benefit to the EU.

Among parliament’s objections was €250,000 spent on a three-day event at a luxury beach resort in Miami. While the keynote speaker was listed as former Spanish prime minister, José María Aznar, the conference had “an almost exclusively American audience”, the parliament found, with an agenda that hardly mentioned the EU.

It also questioned €90,000 spent on a trade “summit” at a five-star hotel on the shores of Lake Victoria in Kampala, where a largely British delegation met African delegates to discuss post-Brexit trade.

The “Great Lakes Trade summit” in Kampala brought together a mostly African audience to meet 20 British politicians and participants, with only three attendees from continental Europe.

According to footage on the website of Conservatives International, the conservative alliance founded by Hannan which hosted the conferences, speakers at the Kampala event included then-minister for international development, Rory Stewart and Douglas Carswell, the former Conservative MP who defected to Ukip and quit frontline politics before the May 2017 election.

Acre insisted that both events “contributed to EU awareness and focused on topics clearly pertinent to EU integration and EU policies”.

In an article published on Conservative Home, Hannan said “the reason” he visited Kampala was “to promote closer commercial links between the region and a post-EU Britain”.

But British conservative sources sought to distance themselves from Acre, an organisation they helped to create, which has been described by some party insiders as ‘“Daniel Hannan’s travel agency”.

Parliament authorities suggest that Hannan used EU funds for Acre to support other pet projects, such as his free-trade thinktank, the Initiative for Free Trade (IFT), as well as Conservatives International.

The IFT lists the Miami and Kampala events on the events page of its website, without mentioning the events received €340,000 EU funds. According to the parliament’s investigation, these events, as well as providing free advertising for IFT, form “the ground for a conflict of interests regarding M. Daniel Hannan MEP, where the IFT takes benefit from Acre services without payment”.

Hannan is the president of the IFT and served three consecutive terms as Acre secretary-general, a role he gave up in December 2017.

The financial controllers concluded that by presenting the Miami and Uganda events as Conservatives International or IFT, “Acre has misled the interested public about the ownership and authorship of the conferences”.

The parliament also objected to €108,985 spent on polling British black and Asian voters ahead of the 2017 general elections. Under EU law, EU funds cannot be used to finance national campaigns.

For similar reasons, €122,295 spent on a “UK Trade Partnerships” conference in March 2017 was judged ineligible, because the event was deemed to be promoting the UK’s economic interests.

On top of repayments to the EU budget, the group has also been asked to return €121,043 given to the Prosperous Armenian party, as large donations from foreign donors are not allowed for groups taking European funds.

A letter from the European parliament to Acre’S current president, the Czech MEP, Jan Zahradil, says that “the overlap of the functions of Mr Daniel Hannan MEP and the advantage taken by the IFT from the financial activities of ACRE could be considered as a conflict of interest”.

Making its defence in Latin, Acre said it was a victim of “fumus persecutionis”, meaning that the legal proceedings are intended to impede legitimate political activity, adding there was “an attempt to impose harsh unjustified penalties” and hinder its chances in European parliamentary elections.

In a 22-page rebuttal to the European parliament, Acre describes the parliament’s “reclassifications” of its grant money as “erroneous and abusive”, adding that it has been subject to “highly-discriminatory” actions not faced by pro-EU political groups.

Responding to specific claims, Acre said that other groups have benefited from foreign donations and national polling, making the European parliament’s findings “blatantly discriminatory” and “a violation of fundamental rights”.

It states that the UK trade conference had no link to the Tory party and brought together speakers and business from across Europe. It insists that Acre has always been clear about its ownership of the Miami and Uganda events.

Acre officials said they were taking legal action at the European court of justice and Belgian courts.

Hannan said the IFT had “never had or sought the slightest benefit from any European programme” and was “one of two dozen organisations” that participated in a conference on removing barriers to opportunity in developing nations. “​Even by Brussels standards, to try to turn that participation into an insinuation – they don’t actually allege anything – that a conflict ‘could be considered’ is outrageous.”

The “other insinuations”, he added, were “simply false” and subject to legal challenge.

A spokesman for British Conservative MEPs in Brussels declined to comment, referring questions to the Conservative Campaign Headquarters (CCHQ) in London, which did not respond.

The European parliament’s top leaders rejected the group’s defence in a closed-door meeting on Monday night. The bureau of presidents, led by the European parliament president, Antonio Tajani, agreed without discussion that Acre should repay the sum.

The Alliance for Conservatives and Reformists in Europe has had several name changes since it was founded in 2009-10, after the Conservative leader David Cameron pulled his party out of Europe’s mainstream centre-right groups. Conservative party insiders insist Acre is a separate organisation, yet Acre’s funding is largely determined by the number of affiliated MEPs, which includes the Conservatives.

• This article was amended on 20 December 2018. An earlier version suggested that funding for the Acre comes via MEPs’ allowances. In fact it comes direct from the European parliament.