Arron Banks is now the focus of a criminal investigation which could unfold into a grave political scandal

Arron Banks, the ‘bad boy’ insurance tycoon, was the financial powerhouse behind the Leave.EU referendum campaign.

The biggest individual donor in British political history, his apparent generosity – at least £8million – helped deliver a Brexit victory; the greatest seismic shift in post-war British life.

But two years on there is a further superlative which could still be attached to his name.

Banks is now the focus of a criminal investigation which could unfold into a grave political scandal.

One which involves the illegal undermining of UK democracy as well as the EU by agents of a state which is hostile to both.

Leave.EU was founded by Banks in 2015. He said it would campaign for Brexit ‘outside the Westminster Bubble’.

How far outside the SW1 postcode his Leave.EU donations were originally sourced – Vladimir Putin’s Kremlin and his oligarch allies loom large in this story – is now the business of the National Crime Agency.

Banks denies any wrongdoing.

Indeed he has always been bullish towards those who have accused him of being a Russian ‘straw man’.

His critics are sore Remainer losers, he insists; his Twitter feed is headed with the injunction ‘Get Over It.’

Sceptical MPs have been treated by him with public contempt and he is appealing the Electoral Commission’s decision earlier this year to fine the Leave.EU campaign for overspending.

In truth the watchdog has enforcement powers akin to those of a toothless chihuahua – a view shared not least by its former chief executive who resigned last month.

But having found ‘reasonable grounds to suspect’ the tycoon was not the legal ‘true source’ of the £8million loans he made to Better For The Country – the company which ran the Leave.EU campaign – and that he could have committed multiple other suspected criminal offences, the commission has passed the case on to the National Crime Agency.

Far from being toothless the NCA, founded to fight serious and organised crime, is the investigatory equivalent of a great white shark.

And there is much for its agents to explore, little of which is mundane.

Banks’s known Brexit money trail stretches from diamond mines in southern Africa via companies in the offshore tax havens of the Isle of Man and Gibraltar, to the coffers of Leave.EU.

Mr Banks and former UKIP leader Nigel Farage at a party together in 2014

But the NCA will no doubt explore further, delving behind the opaque network of his offshore companies.

This will include allegations of Russian-orchestrated business ‘sweeteners’ which involved Banks being offered a cut of gold mines in Siberia, Armenia and Guinea.

These inducements were reportedly made to him at the start of the Brexit campaign.

Such questions would not be asked if Banks – who claims a fortune of £100million – was indisputably a member of the global super-rich.

He is undoubtedly wealthy. But for the last 12 months his ability to give away such a large sum of cash to the Brexit campaign has come under scrutiny.

He has said his fortune was built on a raft of business successes. Critics – and yes many of them are pro-Remain campaigners – argue that the figures simply don’t stack up.

His four diamond mines in South Africa and Lesotho – a region where he has spent considerable time since 2014 – are said to be ailing if not moribund, for example.

His insurance companies have owed millions; his bank on the Isle of Man was performing ‘poorly’; his stake in a law firm was far smaller than advertised.

One investigation calculated the money he had supposedly donated to the Brexit campaign constituted half of his lifetime’s total earnings, which did not make sense.

Official action has been slow in coming, if not apathetic.

Mr Banks with his Russian wife Katya (centre) and his mother-in-law

The Mail understands that in early 2016 the then home secretary Theresa May declined a request by one of the security services to investigate Banks.

The topic was simply too explosive in the run up to the referendum.

The Mail has also seen a letter which Ben Gummer MP, at that time minister for the cabinet office, wrote to the Labour MP Ben Bradshaw in February 2017.

It was in response to Mr Bradshaw’s expressed fears of external interference in the referendum campaign.

‘I can assure you there is no evidence or reasonable grounds for suspicion concerning foreign interference in UK elections or the EU referendum,’ wrote Mr Gummer.

‘I am confident that there is negligible risk of a foreign government or agency being able to influence the operational delivery of electoral events in the UK.’

Until 2017, stories about Russian influence on Mr Banks extended no further than the fact he was married to Ekaterina Paderina, with whom he has had three children. Miss Paderina, his second wife, originates from the Urals.

But there were whispers behind the scenes at Westminster.

In early 2017 Banks demanded an apology from a Tory MP who, he claimed, told key figures in the team of President Trump – with whom Banks is close – that he had ‘improper relations’ with the Kremlin.

A number plate reading 'MI5 SPY' on Mr Banks' purple Range Rover

Then, in the summer of 2017 Banks announced he expected to be called to give evidence to the US Senate about alleged ties between the Kremlin, Brexit and Trump’s presidential campaign.

That autumn saw Mr Bradshaw go on the attack in the Commons, following the publication of a detailed examination of Banks’s fortunes by the Open Democracy website which questioned his professed wealth.

Mr Bradshaw called for an official investigation into Banks’s true worth and the use of ‘dark money’ in the referendum campaign.

The following month the Electoral Commission began its investigation.

While this was ongoing, a number of highly damaging allegations appeared in the press concerning his close ties with senior Russian officials.

In June this year the Observer said it had seen leaked emails which suggested multiple meetings between Banks and figures linked to the Russian government, from November 2015 when Leave.EU launched its Brexit campaign, to last year.

Far more contact than Banks had previously admitted.

Of particular importance was the role of the Kremlin’s London ambassador Alexander Yakovenko, who at their first meeting treated Banks and his business associate Andy Wigmore to a ‘six-hour boozy lunch’ at his residence.

What is the law on political donations? Donations to electoral candidates and political campaigns are governed by the Representation of the People Act 1983. The act gives a list of 'permissible donors' which include: An individual registered on a UK electoral register, including overseas electors.

A Great Britain or Northern Ireland registered political party UK-registered companies, trade unions or building societies.

A UK-based unincorporated association that carries on business or other activities in the UK. What isn't allowed: The law is that loans and donations to registered campaigners can only come from certain permissible sources, which essentially excludes overseas or foreign funding

The Isle of Man is considered as being outside the UK because it is a British Crown dependency so donations via there are not allowed either Advertisement

The leaked documents suggested that the day after the Leave.EU launch Banks and Wigmore visited the Russian embassy and were introduced by the ambassador to a Russian businessman with ‘extensive business interests in Russian gold mines’.

The Britons were reportedly offered the chance to invest in a scheme which would see the merging of six Russian gold firms into a £6.2billion conglomerate.

Russia has the second largest gold reserves in the world.

The mining amalgamation went through in early July 2016.

A week later Banks tweeted: ‘I am buying gold at the moment & big mining stocks,’ though it is unclear if his purchases were linked to Russia.

Other leaked emails suggested a proposed financial tie-up with the Russian diamond firm Alrosa.

The question is, why would the Russians be so anxious to enrich an obscure British businessman?

In the wake of these allegations Banks and Wigmore came out fighting. It proved an extraordinary spectacle.

Days after the newspaper revelations the pair appeared before the House of Commons culture select committee which was ostensibly investigating fake news – much of which originated from Russian troll factories.

During their three-hour interrogation Banks was flippant, combative and dripping with disdain for his inquisitors.

Of the fake news claims made against Leave.EU, Banks said: ‘We certainly weren’t above leading journalists up the country path, making fun of them; same with politicians.’

He added: ‘We were running a campaign deliberately aimed at making fun of people.’

When questioned about ties with Russian officials Wigmore claimed his initial contact was at the Ukip conference at Doncaster racecourse in 2015 when, as a diplomat accredited to the small central American state of Belize, he discussed the banana industry with someone from the Russian embassy.

Wigmore said it was he who instigated the conversation which led to him and Banks dining at the ambassador’s residence.

They thought it would be ‘nice’ for Banks’s Russian wife.

Asked whether Leave.EU was funded by Russia, Wigmore replied ‘nyet’ - Russian for ‘no’.

Banks told the committee that while he had met the gold magnate he had no business interests in Russia – ‘too risky’.

He had however given a telephone number for President Trump’s transition team to the Russian ambassador .

It was the ‘only thing’ of significance that came out of the meetings – ‘because the Russians wanted to get hold of the transition team’.

The grilling ended abruptly when Banks and Wigmore simply walked out. ‘We’ve got places to be, I’m afraid,’ Banks told the MPs.

‘I really have to insist. I was told a certain time and we’ve got a lunch appointment that I don’t want to be late for.’ The committee was not impressed.

Damian Collins, the its Tory chairman, said last night: ‘Arron Banks and Andy Wigmore have misled the committee on the number of meetings that took place with the Russian embassy and walked out of the committee’s evidence session to avoid scrutiny of the content of the discussions with the Russian embassy.’

He added: ‘From the emails that we have seen, it is evident that Arron Banks had many meetings with Russian officials, including the Russian Ambassador, Alexander Yakovenko, between 2015 and 2017.

‘The meetings involved discussions about business deals involving Alrosa, the Russian diamond monopoly, the purchase of gold mines, funded by Sberbank, the Russian-state bank, and the transferring of confidential documents to Russian officials.

'Mr Banks seemed to want to hide the extent of his contacts with Russia... Mr Wigmore is a self-confessed liar and, as a result, little significance can be attached to anything that he says.

'It is unclear whether Mr Banks profited from business deals arising from meetings arranged by Russian officials.

‘We understand that the National Crime Agency is investigating these matters. We believe that they should be given full access to any relevant information that will aid their inquiry.’

Last month in a committee room at the House of Commons before a cross party audience including former home secretary Amber Rudd and Stephen Kinnock MP, the Atlantic Council think-tank launched a report titled ‘Democracy in the Crosshairs: How Political Money Laundering Threatened the Democratic Process’.

Arron Banks figured heavily in the paper which stated: ‘When weaponised by hostile states with billions of dollars in offshore centres and large, efficient intelligence services, money laundering poses a grave threat to democratic integrity.

‘This includes: the use of opaque offshore centres to obscure funds’ origins, the use of fabricated business transactions to transfer funds or covertly enrich individuals and... the co-opting of “straw men” who count as permissible donors.

Neil Barnett, one of the report’s authors, said last night: ‘The NCA’s initiation of a criminal investigation into Arron Banks and his various companies and groups is long overdue.

‘It has been apparent since 2016 that Banks has nowhere near the necessary wealth to donate about £8million. When invited to explain the origin of the funds he has offered various conflicting stories, before settling on “my bank account”.

'The law forbids donations from impermissible donors, and only an investigation with legal powers can uncover the truth. Everyone who values democratic integrity should be pleased today.’

During his ill-judged select committee appearance, Banks declared: ‘I like to think I’m an evil genius with a white cat that controls the whole of western democracy but clearly that’s nonsense.’ Typical Banks.

But the new allegations won’t be so easily dismissed.

This week against a background of heightened tension with the Kremlin, the largest Nato exercise since the Cold War has been taking place in Norway.

The frontline of the new hostilities is no longer the preserve of soldiers and tanks, however.

Eight million pounds is a small price to pay for a military superpower for the break-up of the EU, a rival alliance.

The question is, who’s paying? Arron Banks insists it is him alone.