20 Jul 2018

Exclusive: Court documents claim new Arron Banks links with Russia

Documents filed in a South African court by Arron Banks’ former business partner allege he sought funds from Russians.

Brexit backing businessman Arron Banks sought financial help for his diamond mines from Russia, according to claims made in South African court documents obtained by Channel 4 News.

The documents were written and filed months before recent newspaper revelations of his multiple contacts and meetings with Russians.

The claims, made by his former business partner and contained in a sworn affidavit, were presented to the high court in Kimberley.

The court papers, obtained by Channel 4 News, relate to a civil action between Mr Banks’s diamond company, Distribution Rocks, and its partner firm, Supermix. Distribution Rocks is suing Supermix for failing to pay in excess of ZAR 7m he claims is owing to him.

They allege Mr Banks travelled to Russia and discussed Russian investment in his mines, which were struggling financially.

The statement of his former business partner says: “I was finally made aware in October [2015] that in truth, Banks had been dealing with Russians who contemplated investing in the mines…. I was informed by Banks that he had travelled to Russia and discussed with them the diamond opportunities as well as gold mining opportunities in Russia. He further indicated that he would be meeting with the Russians again during November [2015].”

He also claims in the documents that Banks raised money from investors for the mines, but instead put the funds into the Brexit campaign and other interests.

“Throughout the early part of 2015 Arron Banks was promising the imminent arrival of these funds. Construction of operation on the mine sites continued in expectation of the funds, however these funds were not forthcoming.”

“It has recently become apparent that the funds were in fact raised but were used by Arron Banks in other interests that he has including but not limited to the his participation in the funding of Brexit.”

The court documents paint a picture of alleged financial issues at the three mines near Kimberley in South Africa in 2014 and 2015. Newlands mine, thought to be the most productive, appears to have failed to hit its production target, while the other two mines, Blaauwbosch and New Elands required significant investment in order to reach full capacity.

An email dated 13 April 2015 and sent to Mr Banks from his business partner reveals the mines were losing money and struggling to pay wages.

“Further to our discussion on Wednesday. We are currently running approximately R4.5 million in the red, of which approx R1.75m are creditors…. This month we will require a further R1.3 million to see us through the month, including salaries. Obviously we will have sales in early May, however we still need to see the month through.”

The documents also claim that Arron Banks planned to raise money from investors by issuing a bond.

The affidavit states: “During the latter part of 2014 further funding was required for the various businesses. Banks advised that he had various funding options open to him, one of which was to create a financial instrument (a diamond bond) whereby £4 million and $5 million would be raised for the capitalization of the business and the other was through a loan from Southern Rock, another Gibraltar headquartered insurance company belonging to Arron Banks and/or STM Life, also of Gibraltar, over which Arron Banks exerted significant influence, although he was not the majority shareholder.”

A prospectus for the bond, seen by Channel 4 News, promised an “exciting opportunity”.  It stated that after the investment, Newlands Mine could make profits averaging $7,000,000 per annum, while Blaauwbosch was predicted to make $10,000,000 each year. The bond documents have since been removed from the internet.

Mr Banks told Channel 4 News that the bond was considered in 2015, but never went ahead.

“Every mining group in the world raises funds via equity or bonds to fund their activities to suggest otherwise is false….Both mines are operating normally under new more successful management.”

“The proposed bond was considered in March 2015 , 2 months before the general election & 12 months before the date of referendum was announced by David Cameron.

“In the end, we did not proceed with the bond raise or any form of external fund raise.

“Unless I was mystic meg it would have been impossible to know that I would be involved in the referendum campaign or that it would even take place ! …

“The notion that Brexit was funded by the Russian’s is risible and just part of the continuing attacks on anyone involved with Brexit…”

“The other evidence Channel 4 have provided is from a court filing by a former business partner responding to our claim of damages.

“We deny in full all of his allegations & would comment that since he is being sued for considerable damages he is hardly a reliable witness.

“I have had no business dealings with any Russian investors through any of my businesses…”

Finally, Mr Banks dismissed the Channel 4 News report as “Fake news”.

The claims of Russian involvement were included in the affidavit, which was filed in the court in Kimberley on the 28th of February 2018, months before The Sunday Times and others revealed Mr Banks had had more extensive contact with Russians than he had previously admitted.

Damian Collins MP, the Chair of the DCMS Select Committee who called Mr Banks to give evidence to the Committee told Channel 4 News: “I think the allegations throw a completely different light on Arron Banks’s relationship with the Russians.

“The papers suggest that he was actively seeking investment with the Russians. He was actively seeking to do deals to support his mining interests in South Africa.

“This all happened before his famous ‘boozy lunch’ with the Russian ambassador. So the Russians knew that Arron Banks needed money and he was looking to them for it.

“Now I think he has to explain once again whether anything came of these meetings and discussions, and why he didn’t tell us when he was in front of the committee about these other meetings as well. It was clearly very material to his interests.

“There is also this issue of the bond he sought to raise. Now some people would say that if he is so rich that he can afford to spend millions of pounds on Brexit, why does he have to go running around the world trying to raise money through a bond issue to support his mining interests? So where does Arron Banks’s money really come from?

“I think this throws up yet more questions about the nature of his businesses, where the money has come from to pay for Brexit, given that a number of his businesses, by different reports, didn’t seem to be making much money at that time. He has clearly got to go to finance his businesses from outside, so where did the money come from that enabled him to spend so much money on Brexit? And what is the full extent of his contact with the Russians during this time to discuss business opportunities, and what came of them? There is clearly a lot more to this that Arron Banks let on when he came in front of the committee.”