27 Jul 2018

Long Read: The Arron Banks allegations

The full Channel 4 News investigation into the man who bankrolled Brexit – and his African diamond mine empire.

Buried in a stash of police files in South Africa, secret documents reveal a series of extraordinary allegations.

It’s a tale of diamonds, guns and Russian cash.

And – if the claims are to be believed – they could shed light on how British campaigners fought for the Brexit vote in 2016.

Central to the Leave.EU campaign was Arron Banks, a millionaire businessman who pumped millions of pounds into the movement.

But now, an investigation by Channel 4 News has revealed astonishing claims about Mr Banks’ business activities – and where he is alleged to have got his Brexit money from.

Reading like a crime thriller, Mr Banks himself is quoted described the story as “Wilbur Smith meets Cecil Rhodes on steroids”. But he has failed to answer some of the serious questions about the allegations.

Many of the claims originate from his former business partner, Chris Kimber. The pair fell out, and are now fighting a bitter legal battle.

As a result of this dispute, a cache of remarkable documents has come to light. They include the allegation that Mr Banks sought financial help from Russia – specifically from the country’s state diamond company, Alrosa.

Another accusation relates to claims of trading in illegal diamonds. And Mr Banks has been forced to deny the allegation that he bribed an African politician to get a licence to prospect for diamonds.

Incredibly, the documents contain the claim the business tycoon planned to provide “mercenary support” – “if need be” – in order to keep this same politician in power.

Mr Banks strenuously denies the allegations.

Who is Arron Banks?

The Bristol-based tycoon is a close ally of Nigel Farage and was the biggest financial donor to the Brexit cause.

During the EU referendum campaign in 2016, Mr Banks and his companies pumped millions into the Leave.EU campaign.

In fact, reports say that the combined total of cash, loans and services was the biggest political donation in British history.

But questions about the origins of his money and business connections have plagued him ever since.

In his book about Brexit, Mr Banks said he met the Russian Ambassador for a “six-hour boozy lunch” in November 2015.

But leaked emails obtained by the Sunday Times appeared to show that – in fact – he was in regular contact with Russian officials, including discussions about business opportunities.

The Observer later revealed that Leave.EU staff had met Embassy officials as many as 11 times ahead before the Brexit vote, and in the two months after.

MPs have now urged police to launch an “in-depth forensic look into the Kremlin connection”.

Mr Banks called himself one of the “Bad Boys of Brexit”, and has admitted that he’s not above trying to “lead people up the garden path”.

But where does his cash come from? And what is the nature of his relationship with Russia?

Mr Banks grew up in Africa and made his name by running insurance companies. But he has often also talked about the diamond mines he owns in southern Africa as a source of his wealth.

The countries of South Africa and Lesotho are known for their lucrative diamond mining industry. In fact, earlier this year, miners in Lesotho discovered what’s believed to be the fifth-largest diamond ever found.

But the hunt for gems can be financially risky.

Channel 4 News travelled to the southern Africa, on the hunt for the hidden gems of Arron Banks’ business empire.

Diamonds, Guns and Russian Cash

The mysterious tale of Arron Banks’ diamond hunt is laid out in allegations made by Chris Kimber, his former business partner.

They are contained in a statement he made in 2017, held by a special investigative unit within South Africa’s police, known as the South African Hawks.

Channel 4 News has confirmed that the Hawks are currently investigating these allegations.

According to this statement, the millionaire businessman was in discussions in 2015 with Alrosa, the Russian state diamond company.

“Arron Banks was in discussion with Alrosa, the Russian state diamond producer and he had made certain promises to them,” it says. “The most important was that Arron Banks was to prove to Alrosa the quality of diamonds produced…”

“…He was further due to meet representatives, in London, in November, where he would be obliged to show them the quality of the production.”

The statement adds further detail to comments made by another of Mr Banks’s former business associates, James Pryor. He was recorded by the BBC saying that Mr Banks had sought investment from Russia – though he later denied it.

But the statement he gave to the police goes further. Not only does it allege that the Russians wanted proof of diamond production from Newlands mine in South Africa; but, alleges that, as the mines were under-producing, Mr Banks’ solution to the problem was to acquire diamonds from elsewhere.

His former business partner claimed to the police: “It was decided by Arron Banks that diamonds would be acquired from third parties for export […] I was later to find out that Arron Banks…was involved in illicit diamond buying in various African countries.”

Responding to this, Mr Banks told Channel 4 News that all the allegations against him are “ludicrous”, and that he “had genuine concerns about the sanity and mental health of the editorial team responsible for the reports which the programme has broadcast.”

A month before Mr Kimber had made his allegations, Mr Banks had submitted a sworn affidavit to the Hawks accusing Mr Kimber of failing to supply 4,000 carats of diamonds, and fraudulently issuing an invoice.

The police, meanwhile, told us an investigation has been escalated to police head office in Pretoria.

But Mr Kimber has told police that diamonds were not Arron Banks’ only ambition in Lesotho. He also alleges it was “…his grand plan to somehow gain a foothold whereby he would be able to not only control diamond flow, but also other aspects of the economy”.

Back in 2013 and 2014, Mr Banks fostered a close links with the National Party in Lesotho. In particular, he became friends with John Maseribane, a cabinet minister in the coalition government.

But in August 2014, Mr Maseribane was forced to leave the country because of an attempted military coup.

According to an allegation made to the police, Mr Banks wanted him back in power – and was prepared to offer mercenary support for Mr Maseribane.

When Channel 4 News interviewed the minister, he denied the allegation.

Responding to the questions, he said: “Why are you pursuing this when I humbly ask requested you to close this chapter? Now you are touching on another military what I don’t know– ”

The reporter asked: “Did he ever offer you mercenary support?”

“I came back to Lesotho supported by SADC not any mercenaries,” Mr Maseribane said.

He was asked again: “So he didn’t offer you any military support, that is fantasy, is it?”

“Go back to your research, there were no mercenaries,” the minister said, adding: “We never discussed these issues.”

Channel 4 News has seen no evidence of any mercenary activity. However, an exchange of emails between Mr Banks and his associates discussed setting up a military training camp and buying semi-automatic weapons, stun grenades and pistols.

The emails refer to setting up a shooting range or training camp. Including this email from Arron Banks himself:

“Think it would be nice to set up at newlands where there is plenty of space also deters criminals … providing real live targets if they try to rob the mine !”

In a statement, a Hawks spokesperson said: “There is an inquiry we are looking into. But we are also mindful of a civil matter which is ongoing concurrently. We are not at liberty to divulge the stage of the investigation. We can confirm it has been escalated to the head office from the province. We will make an announcement once the investigation is complete.”

The bribery allegation

The relationship between Arron Banks and John Maseribane, the Lesotho cabinet minister, runs even deeper.

Emails seen by Channel 4 News appear to show how Mr Banks personally arranged for thousands of pounds to be paid to the politician – before the government issued him with a licence for mining diamonds.

One payment was paid in cash, while and another was transferred, from Mr Banks’ personal Barclays wealth account, to a private account in South Africa. In total, they amounted to ZAR 330,000 (GBP 19,000).

When Channel 4 News interviewed Mr Maseribane, he did not deny he had received the payments. Instead, he claimed that Mr Banks had provided him with financial support, including during his 2012 election campaign. Both Mr Banks and Mr Maseribane deny that the payments constituted a bribe.

The bribery allegation stems from 2013 and 2014, while Mr Maseribane was a cabinet minister. During this time, Mr Banks was applying – through Mohokare Mining – for a government licence to prospect for alluvial diamonds at the Sebapala site.

Channel 4 News has seen a series of emails between Banks and his associates which lay out payments made to Mr Maseribane in 2013..

The emails raise serious questions about whether these payments were intended to facilitate Banks’ obtaining of a prospecting licence in Lesotho. He strongly refutes this.

On 13th December 2013, Mr Banks emailed Mr Maseribane, saying: “The money for both purposes will be ready for collection by moss next week.”

Banks was then copied into a series of emails on 18th December, 2013, in which a cash payment of ZAR50,000 to Mr Maseribane, is facilitated via Mr Maseribane’s daughter, Moss.

The emails also discuss a further payment (ZAR 280,000) which needs to be paid to the minister. When an associate of Mr Banks suggests that Mr Banks transfers the money from a UK bank account, he replied: “I prefer to deliver the cash…”.

On 24th December, Moss Maseribane then emailed Mr Banks and others saying: “Looking forward towards a fruitful business relationship this coming year.”

By the 30th December 2013, an associate emailed Mr Banks to say that Mr Maseribane would prefer the further ZAR 280,000 to be transferred into “his South African account”, and provided the bank account details.

Later that day, Mr Banks emailed his personal bankers, requesting an “immediate transfer” of “280K SARand” to that very bank account.

Then, on 16th February 2014, Moss Maseribane emailed Mr Banks to say: “My father had meeting with the minister of minings and our application has been approved.”

Banks’ reaction to this was: “Finally – now the fun begins !!!”

An associate sent Mr Banks an email, on 5th June 2014, regarding a licence which will allow his Mohokare Mining company to prospect in Lesotho for two years. The email read: “at long last………..one more for the mining portfolio”.

It is an offence under the Bribery Act 2010 to offer, promise or give any financial advantage to induce or reward a person to perform a function or activity improperly. It is also an offence to offer, promise or give any financial advantage to a foreign public official in order to obtain or retain business, or an advantage in the conduct of business.

Both men deny that the payments constituted a bribe.

Mr Maseribane told Channel 4 News: “We’ve got a long way… me and Arron. We can talk, we can look at other options of investing in Lesotho. He was very… an influential person in terms of finding how he could also become a economic advisor for Lesotho…”

“Yes, Arron supported my party. Because I am a politician and I am running Basotho National Party. They supported me for 2012 elections. Yeah.”

When asked if he meant financial support, he said: “Financial support, t-shirts, marketing. And also my policy conference, he supported my policy conference.”

Mr Maseribane claimed the emails discussing Mr Banks’s mining licence were not connected to the payments and denied he was involved with the issuing of the licence.

He said: “I just wanted to know how far his application was, like, you know. It’s normal. To ask how far you are..? I am aware because I am a friend of Arron, but I am not his partner.”

He told the reporter: “Arron was part of the family. He’s a friend, he was a friend to me. Please man, can you respect my friendship with Arron?!”

Asked if Mr Banks was paying him to lobby for a prospecting contract, he said: “No, I do not think that was the motive.”

Channel 4 News has now established Banks’s former business partner, Chris Kimber, has told South African police he was the middle man on cash payments involving the Minister’s daughter.

“I thought nothing of these payments until I was asked to pay an amount in excess of R500,000,” he said.

The Sebapala mine

Channel 4 News travelled to Banks’ Sebapala Mine in Quting, Southern Lesotho.

It’s a small operation, employing just 18 people. Workers on the site said they are paid approximately ZAR 2000 (about £100 a month) and the local community suffers from extreme poverty. Many have no access to basic utilities like electricity.

According to some employees of Mr Banks, they have never heard of diamonds being recovered from the mine in the three years since it has been operational. And now they have been told the site will close in August 2018.

Meanwhile, the woman who owns the land where the mine is situated told Channel 4 News that Mr Banks has paid her no money to mine her land. Instead, he compensates her for that work with 13 sacks of maize meal a year.

She is separately employed and paid by Mr Banks as a general worker at the mine.

But the Lesotho Minister of Mines, Hon Keketso Sello, said the deal constituted a “daylight robbery” and did not amount to fair compensation.

Despite the state of the Lesotho diamond mine, Mr Banks has made a number of claims about it.

For instance, in September 2017 an article appeared in the pro-UKIP “Economic Voice”,  which claimed that a “significant find” had been made at his Sebapala mine.

“THIS IS AN IMPORTANT DISCOVERY,” the article said. “The diamonds found have been identified as the same quality and price per carat as ‘Letseng’ diamonds ($2,000 per carat).”

In a statement given to the publication, Mr Banks claimed: “This is another important development for Lesotho’s future economic growth, spearheading the revival of the kingdom’s diamond industry.

“We are confident the mine will generate important royalties for the economy, which we will continue to distribute through our ongoing program of philanthropy in Lesotho via www.lovesavestheday.org.uk.

“The area around the latest find has already produced some of the world’s most beautiful and clear stones, and judging by our initial exploration I am confident it won’t be too long before we find similar large diamonds.

“Our aim now is to invest heavily in the future development of the mine and ultimately the Lesotho economy.”

But, contrary to his statement that he intends to “invest heavily in the future development of the mine”, the workers say they’ve been told that operations at the Sebapala mine will cease in August 2018.

So what about the “significant find” in Mr Banks’ Lesotho mine?

The gems are currently being held by the Ministry of Mining in Lesotho, and were tracked down by Channel 4 News.

Reaching into a small safe, the Commissioner of Mines, revealed just five small stones. He said they amounted to a total of 12 carats and were valued at less than $3,000.

Asked about Mr Banks’ claims in the Economic Voice, the Commissioner said: “That is a pure lie… the stones are small… for the quality of diamonds you would normally expect for a find in Lesotho I wouldn’t call it significant.”

Arron Banks told Channel 4 News: “Our mining activities in Lesotho were restricted to one licence where we have undertaken exploration work rather than full scale mining, we have made a small number of high quality alluvial diamond finds and we continue to assess the viability of mining in Lesotho. The purpose of an exploration licence is to establish whether diamonds are present in the area and then for alluvial traps.

“We absolutely refute the allegation that payments made to Mr Masirebane were made for granting of any licences. We have made four such applications for licences in Lesotho all of which are outstanding, two years after the original applications, for the very reason we would not prepared to make such payments.

“We met Mr Thesele Masirebane, who was the minister for Women and equalities , who promoted a number of charitable projects in Lesotho including Women’s empowerment and a group called the Lesotho Federation of Lady Business women.

“We financed a project to create a co-operative chicken farm in Lesotho and a number of micro projects that would employ women in their own cooperative businesses. The funds went directly to the Women’s group and not via the BNP or Mr Masirebane.

“I also donated £100,000 to “Sentbale”, to a charity formed jointly by the King and Prince Harry to help AIDS orphans in the country.

“We donated under R2M [£107,0000] to help “Thesele Masirebane” and his work in Lesotho and were pleased to do so, given his commitment to women’s empowerment and poverty issues in the Kingdom, far from hiding this association we attended a rally in Maseru where we were publicly thanked in front of the crowd. This was reported in “the Times” at the time. We are proud of the work we did in Lesotho!…”

Help from Russia?

Additional papers, seen by Channel 4 News, reveal a further allegation concerning Mr Banks’ links to Russia.

Months before detailed newspaper reports emerged about his relationship with Russian officials, a cache of documents had already been filed in a South African court.

The filed claim that the Brexit-backing businessman turned to Russia to seek financial help for his diamond mines.

The allegation was made by his former business partner in an answering affidavit and relate to 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.

The documents allege that 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].”

The statement claims that Mr 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,” it says. “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 allege that far from being lucrative, the mines were struggling to even pay wages. An email dated 13 April 2015, and sent to Mr Banks from his business partner, stated:

“We are currently running approximately R4.5 million in the red, of which approx R1.75m are creditors,” it says. “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,” he said. “Both mines are operating normally under new more successful management.”

Mr Banks continued: “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”.

However, 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’ 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.”