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Explainer: The 8 million pound hole in Brexit - smoking gun or damp squib?

Reuters  |  LONDON 

By Guy Faulconbridge

(Reuters) - Britain's serious crime agency has started an investigation into Brexit backer Arron Banks over the source of 8 million pounds ($10.4 million) in loans to groups including Leave.EU which campaigned to leave the


Banks has said the investigation is part of an attempt to undermine Brexit. He has repeatedly insisted that the money came from him and that no Russian funding was involved.

But if criminal offences or foreign funding are proven, that could cast doubt on the legitimacy of the whole Brexit vote.

The groups that received the loans ran emotive publicity campaigns to persuade people to vote to leave the EU - and the final result was close. In the June 23, 2016 referendum, 17.4 million voters, or 51.9 percent, backed Brexit while 16.1 million, or 48.1 percent, backed staying in the bloc.


The focus is 8 million pounds in loans provided to Leave.EU and Better for the (BFTC), which Banks controls and which ran Leave.EU's campaign.

asked the UK to investigate Banks after saying it suspected the entrepreneur was "not the true source" of the loans.

It also said it had grounds to suspect that the loan arrangements had involved Banks' Rock Holding Limited, which was incorporated in the Isle of Man, a self-governing British crown dependency that is not part of the

British law mostly bans companies from outside UK from making such political donations.

The said it suspected criminal offences were committed, specifically relating to the transactions which led to the 8 million pounds being paid into BFTC's


Banks said the money was his and came from his UK-incorporated Rock Services firm and was generated from business written in the UK.

He has said that the Electoral Commission's issues about are based on a misunderstanding about its status - that it is a holding company that owns Rock Services and did not itself provide the loans.

"is a company I own and control and I'm a U.K. tax payer, no Russian or foreign money has ever come into it," he told

Banks, who was pictured with and leading Brexiteer outside a gilded elevator soon after Trump's 2016 U.S. victory, said he welcomed the inquiry.

"I am confident that a full and frank investigation will finally put an end to the ludicrous allegations levelled against me and my colleagues," he said.


After the announcement of the investigation, Damian Collins, of the British Parliament's Digital, Culture, Media and Sport Committee, said it is unclear where Banks got the 8 million pounds.

said Banks had misled it over the number of meetings he had had with the

Banks said at the time that he had no business interests in and had done no business deals in has denied any involvement in Brexit.


It is unclear how long the National Crime Agency's investigation will take. The is due to leave the EU on March 29, at 11:00 p.m. time.

($1 = 0.7688 pounds)

(Reporting by Guy Faulconbridge; Editing by Andrew Heavens)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, November 05 2018. 21:27 IST