The Electoral Commission wrote back to Mullin on Wednesday saying companies had no obligation to disclose loans and it had seen no evidence of any breachers of the Political Parties, Elections and Referendums Act (PPERA), which governs the rules on donations.

“As we have not been presented with evidence that a breach of PPERA has occurred, we will not be taking further action in this matter," it stated.



BuzzFeed News has also independently analysed the claims made in the letter and by The Canary using public records filed at Companies House, and found the claims as stated don't stack up.

IPGL is a major Tory donor

One aspect of the story is definitely correct: Records kept by the Electoral Commission show IPGL has donated a total of £4.3 million in cash, prizes, and other contributions to the Conservative party and its MPs – including £20,000 to Theresa May's 2016 campaign for the party leadership.

The company donated far more to the party's 2010 election war chest than to the 2015 contest, but has made contributions every year since, including this year.

IPGL was not in financial distress in 2008 and 2009

It is true that IPGL lost money in 2008 and 2009 – it lost £22 million in 2008 and £57 million in 2009, largely due to the effects of the financial crisis. However, that's not the same as being in crisis: If a company is at serious risk of not lasting through the year, its directors and its auditors are required to note this concern.

There was no such concern flagged in the accounts for the company in either of those years – and it did indeed survive the financial crisis. The company was highly profitable before the crisis, turning a profit of £34 million in 2007, and returned to profit by 2010, when it made £40 million.

This is where the timing of the donations becomes significant: IPGL donated £688,000 to the Conservatives in its 2008 financial year, and £471,000 in 2009 – the two years in which it made a loss. The donations the next year – the financial year ending in 2010, when IPGL was once again making a profit – totalled £1.03 million, taking in the crucial pre-election period for the Conservatives.

Even in the loss-making years, these donations were small compared with IPGL's revenues, which were £100 million in 2008 and £120 million in 2009.

The company – and its ultimate controller, Michael Spencer – also owned assets worth hundreds of millions of dollars, which serves as collateral for money it borrowed during its loss-making period, meaning lending to it, even as it lost money, was a relatively low-risk proposition for banks.

IPGL did borrow money from HSBC – but it paid it back

This gets us to the big matter: the loans. Did IPGL borrow money from HSBC for the purposes of donating it to the Conservatives?

When companies take out a mortgage or a similar secured loan, they are required to make a note of this "charge" at Companies House. These records for IPGL show the company took out multiple secured loans from HSBC – the earliest began in 2003, the latest began in 2013.

Over the critical two-year period referred to in The Canary's article, IPGL did indeed borrow from HSBC – the company consolidated most of its other borrowings into a £200 million loan, over three years, secured against shares in the company and other companies it owned.

The loans had a commercial interest rate of around 3% above LIBOR. The accounts say the terms of the loan "changed materially" in IPGL's favour over its previous borrowings.

Crucially, though, over the period of 2008 to 2010, IPGL was actually paying this money back to HSBC, rather than drawing more. By the time the company filed its 2008 accounts it had reduced total borrowing from £352 million to £250 million, and by February 2010 it had paid back more than £80 million of its HSBC loan.

However, the records also show all of these charges were "satisfied", or paid back. This is absolutely crucial with regard to the allegations being made about HSBC and the company: The Canary's theory relies on the loans from HSBC to IPGL being unusual – they weren't – and on the loans not being repaid. Neither of these things is true.

IPGL currently has only one charge it hasn't satisfied – meaning it has one secured facility – and it is with Barclays Bank.

This does not mean it is definitely not the case that money from HSBC's loan was among that used for a donation – in the same way that if an individual with a HSBC bank account donated to a party from their overdraft, you could argue that money was actually HSBC's – but neither The Canary nor Mullin nor other bloggers have offered any evidence for any knowing collusion between IPGL and HSBC.



IPGL or its parent company have made profits in most of the years following 2010 (though it recorded a loss in 2016), meaning the company generates plenty of money of its own to donate as it wishes.

It's also not clear why HSBC or IPGL would have even wanted to get involved in such a complex backdoor means of donating. Michael Spencer, who controls IPGL, is a vocal Conservative supporter – who was caught in a cash-for-access scandal in 2012 – and a multimillionaire well able to donate in his own right. HSBC, as a UK company, would also have been eligible to donate to the Conservatives directly if it so wished (the company does not make political donations).

BuzzFeed News contacted IPGL and HSBC for comment on the story. IPGL declined to comment, while HSBC said it was unable to comment on individual clients.