Reform UK mega-donors stir controversy

0:00This episode is brought to you by Hard Lessons, a Morgan Stanley podcast. Iconic investors like Stan Druckenmiller, John Gray and Rick Reader break down calls that worked. I knew that this stock would go up for at least two or three years and go up a lot. One's that didn't. I quite frankly thought the company could have reversed course. They didn't. And what they learned in between. When you buy everything and it goes up, it doesn't train you to be a great investor. It sees hard lessons and make all the difference. Listen to Hard Lessons, wherever you get your podcasts. Good morning from the financial times today is Friday, September 18th. And this is your FT news briefing. Venezuela is close to a golden deal. And we look at reform UK's controversial donations. Plus a soft bank data center company is under pressure because open AI has delayed its IPO. I'm Sonya Hudson in from Archfilippe Hino and here's the news you need to start your day.

1:08The Venezuelan government and the opposition are close to an agreement about the country's gold reserves. It would end a seven year long dispute over who controls the resource. And it would be one of the first concrete results from a US backed negotiation process. The deal would transfer four billion dollars of gold stored in the Bank of England to the Federal Reserve in New York. The agreement would allow the government to gain legal control over the reserves. But it couldn't immediately sell the holdings. That's according to three people familiar with the discussions. Instead, the gold could potentially be used as collateral for government borrowing. That could fund spending for things like recovery from the devastating double earthquake in June. The UK foreign office declined to comment. The Venezuelan government and the opposition also declined to comment.

2:10Reform UK is under scrutiny for its donations. The right-wing party recently received record breaking contributions from two crypto billionaires. Ben Dello and Christopher Harborn contributed a combined 72 million pounds to the movement, which was founded by Nigel Farage. The FT has now learned that Dello previously financially supported a controversial libel claim regarding alleged anti-Semitism. Here to talk about it is my colleague David Shepherd. Hi, David. Hi there. David, it's been a busy week for reform. Just very quickly get us up to speed on what's happened. On Friday night, there was a big shock in UK politics. Ben Dello, a cryptocurrency billionaire, suddenly announced that he was neting 36 million pounds to reform UK party. Just as people in UK politics were starting to get over the shock of that, suddenly Christopher Harborn,

3:12who was priors to Ben Dello, the biggest owner of two reform UK, came out and said on Saturday lunchtime, I'm matching it. Both those donations individually are more than three times larger than any we've seen before in the UK. Perhaps our American listeners might be rolling their eyes at that going 36 million. Your cheap country, what is this? So suddenly you had this huge influx of money into the upstart party and it's really shaken up Westminster this week. So Harborn was reform's previous biggest owner. Tell me about Dello and what you found from looking into him. Well, he's also backed the free speech union in the UK. And he has provided office space and sort of other facilities in Westminster itself, basically creating a hub for groups that share similar crossover and right wing views.

4:12We learned that Ben Dello provided £300,000 or more in financing to a plaintiff in the defamation case against the Jewish artist, Luke Turner. It's a complicated legal case. I think it's fair to say, Luke Turner claimed that he'd been targeted with anti-semitism online. The plaintiff's objected to the fact that he had described him as anti-Semitic. And otherwise, he decided to sue. Luke Turner counter-sued saying that he'd been a victim of harassment by these two individuals. Ultimately, the judge ruled that the defamation case did not stand up. She also ruled that Luke Turner's counter-sued didn't quite meet the high legal standard for harassment. So that was dismissed as well. Now, we should say that Turner and Dello did not provide comment for publication for this article, as well as the plaintiff that Dello supported named Nina Power.

5:14But David, can you tell us why is all this important on a broader scale? This is interesting because Dello is in the spotlight right now. It also shines a light on some of his activities around funding groups and individuals who have, in the critics' eyes, at times tested the boundaries of what is acceptable within robust democratic debate. How does this all fit in with the conversation that people are having in the UK about mega donors and reform? Chris suggests that this is an attempt by Nigel Farage in the former UK to buy the election. Mega donors have not really been a thing. Absolutely, there have been wealthy individuals that have put in a few million here, a few million there. But to see these kinds of figures come in, it's really sort of shaken up the UK political establishment. And it also comes at a time when the Labour government had been going to crack down on campaign finance.

6:19And actually, there's a bill in Parliament at the moment that would seek to restrict the amount of money coming into UK politics from British citizens who were based overseas, which, depending on what time frame you're looking at, could apply to both Christopher Harbourn and Ben Dello. Harbourn has been based in Thailand, Dello, in Hong Kong. That's the FTs, David Cheppard. Thanks, David. Thank you for having me. The commodities giant Glencore has suspended one of its senior executives. This comes in the wake of a scandal involving the company's ties to the iron or trader radiant world. Peter Hill is Glencore's head of steel making raw materials. He's been taken off his job pending the outcome of a review into the company's business with radiant world and other associated companies. That's according to a person familiar with the matter.

7:19A few days ago, radiant filed a $2 billion legal claim in Singapore against three Glencore entities. It alleged that the group kept the true nature of the company's trading arrangements out of its audited records. Glencore said the claims in the lawsuit were without merit. It also said it had evidence that these companies, quote, sent falsified invoices and contracts as well as fabricated emails. Radiant has denied any wrongdoing. The circular nature of financing in the AI industry could be coming under pressure soon. Take for example, SB Energy. It has leased out its future data centers to open AI. An open AI is also set to have a stake in SB Energy. That company is also part of legendary investor Masayoshi Sun's Softbank Empire, which is crucially one of open AI's financial backers.

8:22So what happens when open AI decides to delay its IPO, or if it's forced to slow down its technology's development? Here to talk about it is the FT's George Hammond. Hi, George. Hey, Sonja. So George, open AI was expected to IPO this year, but they have now pushed that back a little bit. What are you hearing about how that's impacting other companies in the AI space? Yeah, so open AI filed their S1 paperwork, which basically is the starting gun on a potential IPO process. They did that in June, but they have pushed that off into at least next year. And to be exact, if some woman has said that this would be an ill-advised time to go public, partly because of concerns about AI's threat to human civilization and existential risk. And basically what this does is create some uncertainty in the market, because the company is really the bell weather of AI sentiment, and it has a huge supply chain on which it relies.

9:26To create and train run its new models within that are data center operators, chip makers, distribution partners, and all of those companies are very closely watching this IPO, and in general watching Open AI's development, because their future hinges on it to a great extent. In talking to me a little bit about SP energy in particular, what exactly is the problem for that company now that Open AI is delaying its IPO? So SP energy is a fascinating company. It's very of the times. It's a data center operator and developer that's targeting an IPO at a $50 billion valuation, and they're yet to build any data centers. So they are kind of squarely in this group of companies who are exposed to Open AI's fate, partly because Open AI is the main lesser of the company's future data centers, and they also have a financial relationship which gives Open AI warrants for a stake of around

10:29$5.5 billion in the company. So they are very, very close to tied together. But there is a hedge. One part of that is that these are very long term leases. So even if there are short-term fluctuations in AI demand, there is regulation, there is a decision by the companies to slow down, the leases that Open AI has signed with SP energy cover close to 20 years. So the expectations that those leases will be made good. And if they're not, and if there is a real crisis for Open AI, then overall demand for AI is likely to mean that somebody else will step in to take the place. And we should say that SP energy and soft bank both declined to comment. But George, what does this tell us about the interconnected world of AI finance? I think it tells you that it's very, very hard to get a real value for these companies because the relationships are so overlapping and convoluted that assessing who is gaining because

11:30they have a strategic relationship versus who is gaining because there is a straightforward commercial outcome. It gets very muddy. And in SP energy's case, as I mentioned, they're kind of primary. Leaseholder on these sites is going to be Open AI. Their main chip partners in video, in video has invested into Open AI. Open AI has invested into SP energy. Soft bank has invested into Open AI. And what that interconnection means is that when one of these companies slows down, there is a risk that the rest will in chain also have to slow down. And that could compound by the fact they've had these very, very closely net relationships. George Hammond covers venture capital for the FT. Thanks George. Thank you. You can read more on all these stories for free when you click the links in our show notes. This is been your daily FT news briefing. Check back next week for the latest business news. The FT news briefing is produced by Sophia F. Med, Josh Gabbard Dwayon,

12:30Katia Cumcova, and me Sonia Hudson. Our show is mixed by Kelly Gary and Sam G. Avinco. We get help from Peter Barber, Michael Lello, David De Silva, and Gavin Coleman. Our executive producer is Toe for Foreheads. Flow Phillips is the FT's global head of audio and our theme song is by Metaphore Music. The new episode of the next five is all about CFOs in an AI world. Patrick Villanova at Blackline joins me. CFOs are inherently riskabers. We have to be very prudent when we implement AI. As does Oliobrassi at Highgate. My rule is no human owner means no go live. And Gina Gutsite at FTI Consulting. There's no excuse. You're the CFO. You're signing the name to the financial statements. Listen to the next five wherever you get your

13:33podcasts. Enjoy. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now. And how they may affect your finances and portfolio. Listen at Schwab.com slash Washington Wise.