A secretive group that donated £130,000 to Labour and claimed to be “merely a platform for people” is in fact funded by property developers, the Observer can reveal.
The firm behind a £200m project to build a skyscraper in Birmingham and three other developers are behind the West Midlands Breakfast Club, which gave money to Labour in February.
The “breakfast club” – an unincorporated association with no legal status – had previously refused to name its funders and failed to declare details to the elections watchdog.
In July, after questions about its backers, the group’s coordinator, Stephen Goldstein, said they included a “cross section of businesses in the West Midlands”. He said the donors were “people that connected with each other from across the communities”, adding, “there’s nothing machiavellian about it”.
Now the Observer can reveal the club gets most of its funding from four property developers with business interests in the region, including luxury apartments and student lets. Court Collaboration, which is leading the One Eastside skyscraper development, gave £40,000 to the club and is its biggest financial backer. The others include three property firms that each gave £20,000: Corbally Holdings, Garrison Group Holdings and Prosperity Wealth and Developments.
The Breakfast Club is understood to have donated to the central Labour party to help the campaign of Richard Parker, who beat Tory candidate Andy Street to become West Midlands mayor in May after standing on a pledge to build more social housing.
It raises questions about secrecy and loopholes in political finance rules. The WMBC is an unincorporated association – an informal group without a legal status that is not required to publish accounts or disclose its funding sources unless they meet a certain threshold.
Labour has criticised the Conservatives for taking “shady” donations through the groups, which campaigners warn can be a conduit for impermissible or opaque funds. The Electoral Commission said it was worried about “weaknesses” in the rules that mean unincorporated associations were “not required to ensure that those who donate to them are permissible donors”.
The developers had not previously been linked to the donation and their identities remained hidden throughout the mayoral and general elections. While £100,000 of the £130,000 donation can now be traced to the property firms, the source of the remaining £30,000 is still not known. This is probably because unincorporated associations only have to declare the names of funders that give more than £11,180 in a year.
Steve Goodrich, research director at Transparency International, said it was a “transparency black hole”. “We still don’t know where a decent chunk of money to this unincorporated association has come from. This might be someone who’s seeking planning permission at the local level or to curry favour with those they’re supporting to run for office. Without this information we can’t judge whether something malign is afoot,” he said.
Labour has promised a revolution in housebuilding, announcing major planning reforms to help deliver a manifesto pledge to build 1.5m homes in five years and “get Britain building again”. In the West Midlands, Parker has said he is committed to doing “all we can” to “streamline planning processes” to boost investment.
The ties to the property firms were only revealed after the Electoral Commission intervened, with the WMBC registering as an unincorporated association five months late and failing to meet the legal deadline for declaring its funders.
Under political finance rules, unincorporated associations must register with the Electoral Commission within 30 days if they make political donations above £37,270. The WMBC did not register until August despite donating to Labour in February, the Electoral Commission said.
The group was also four months late in declaring the names of the companies that had given it money. It should have reported gifts received from the four property firms within 60 days but did not do so until August.
The donation also raises questions about a potential conflict of interest for the West Midlands mayor. As chair of the West Midlands Combined Authority, Parker is not involved in individual planning decisions but oversees investment and priorities in the region. He has committed to a “revolution” in housebuilding and publicly backed projects he likes.
Under devolution reforms announced by the government last week, mayors will get new development management powers, similar to those exercised by the mayor of London, including the ability to call in planning applications of strategic importance.
The WMBC’s largest donor, Court Collaboration, has several ongoing projects in Birmingham targeting luxury markets. They include the £200m project to build a 51-storey, 155m skyscraper with 667 build-to-rent apartments. Of those, 20 are expected to be “affordable housing”, available at 20% below market rate. The company’s co-director Anthony McCourt lives in Indonesia and manages an “overseas investor base”.
Another backer, Garrison Group, is working on a project to build four housing blocks with 546 homes and 710 student beds. It has close ties to Sama Investment Group, a residential developer and investor with offices in Dubai, Doha and Riyadh. Sama has seven live projects in the West Midlands, including a student accommodation project approved earlier this month.
Prosperity Wealth and Development and Corbally Holdings, which both gave £20,000 to the West Midlands Breakfast Club, also have developments planned or in progress in the region. None of the companies responded to requests for comment. A political source said there had been “a total lack of transparency”.
Details of the donation come as Labour faces mounting pressure to tighten political donations loopholes after Elon Musk suggested he could donate $100m (£78m) to help Reform UK in the next election. Foreign donations are supposed to be banned but loopholes – such as unincorporated associations – exist. Jess Garland from the Electoral Reform Society said: “We need to urgently improve transparency requirements.” The Ministry of Housing, Communities and Local Government said work to tighten the rules was ongoing.
The West Midlands Combined Authority, which Parker leads, failed to respond to requests for comment last week.
Decisions made by the board of the WMCA, which encompasses seven local authorities, are subject to scrutiny and legal frameworks.
Labour said the donations, though registered late, were all within the rules. It said the delay in declaring the funding was a matter for the West Midlands Breakfast Club, which did not respond to requests for comment. Parker declined to comment. A source close to him said: “It should obviously go without saying that the mayor would not let whether someone is or is not a donor to the Labour party influence decision making.”
The WMBC’s website – which previously contained just a logo, email address and phone number for Goldstein – has now been replaced with a near-identical site for a group called “West Midlands Connect”. A company has been registered with that name, with Goldstein as its director.
Goldstein, a local businessman who is an active director of 44 firms, including property companies, previously told the Telegraph he was responsible for coordinating the WMBC but not the donations. He said he could not share the members’ identities without their permission.
Goldstein owns Malvern House, an office space that was also used as Parker’s mayoral campaign office. He described Parker as a friend and said the WMBC was “set up primarily to support … to have a platform for Richard prior to getting elected”, so he could “talk to people that were not necessarily members of the Labour party, just interested people, that wanted to hear from him”.
