Arms dealing hedge fund was Labour’s biggest ever donor

Martin Shipton

Serious concerns have been expressed about the Labour Party’s finances following the publication of accounts that confirm its biggest ever donation came from a hedge fund that stood to gain from Israel’s war in Gaza.

An investigation by the openDemocracy media platform shows that the Quadrature Capital hedge fund, which donated £4m to Labour shortly after last year’s general election was announced, held $121m worth of shares in a range of arms, tech and logistics firms which have all supported the ongoing military campaign.

They include companies that help make Israeli F-35 fighter jets, which have been used in devastating airstrikes on a “humanitarian zone”.

Owned via the Cayman Islands tax haven, Quadrature Capital’s donation was the sixth-largest donation in British political history, and the largest single donation the Labour Party has ever received.

The investigation findings are based on an analysis of financial documents filed with the US Securities and Exchange Commission (SEC).

Quadrature has claimed that its SEC filings do not give a full picture of which firms it holds shares in at any given time. The company claims to make automated trades based on statistical models, without necessarily holding investments for prolonged periods. However, the SEC filings do provide periodic snapshots of its corporate shareholdings, including on three separate dates in December 2023, March 2024 and June 2024.

On average across the three reporting dates, the hedge fund held $121m of shares in companies that have supplied arms, tech or logistical support to Israel’s military efforts in Gaza.

They include Lockheed Martin, Boeing, Caterpillar, Howmet Aerospace, Northrop Grumman, Oshkosh Corporation, Palantir and Woodward Inc.

Responding to openDemocracy, a spokesperson for Quadrature said its investment decisions were “fully automated” and dismissed the idea that its trading was linked to Israel’s war in Gaza.

“By that logic, most pension holders and most index tracker funds also own the stocks that you cite. At any given time Quadrature will have long and short positions across many thousands of different stocks.”

SEC disclosures

They said that shares are not held for “any significant duration of time”, adding: “We maintain both short and long positions in each sector simultaneously, aiming for roughly equivalent values between them. SEC disclosures only show our long positions on the US portion of our book, while our short holdings and our non-US holdings are not disclosed. This, on top of the fact that the SEC filings you cite are only a snapshot of our book four times a year means that it misrepresents our investment activities and paints an incomplete and inaccurate picture of our trading.”

The spokesperson went on to say that Quadrature “does not seek to obtain a UK corporation tax advantage by establishing its funds in the Cayman Islands”.

They said that the hedge fund’s £4m donation to Labour was a “values-based donation, not a political donation, as Quadrature Capital Ltd remains non-partisan and apolitical,” claiming that the money was given “in support of policies that will deliver climate action while also promoting social equity and economic resilience”.

Esther Giles, an economist by education and a public finance accountant by profession, has analysed the Labour Party’s financial position as revealed in its newly published accounts for 2024, which have just been made public in the party’s annual report for 2025.

Writing for the Labour Hub website, Ms Giles states: “These are the [party’s] most astonishing set of accounts yet.

“In 2024 the Labour Party reported a deficit of £3.76m compared with a deficit of £0.85m in 2023. Behind this figure is a dramatic increase to (specifically individual and corporate) donations of £22.9m and an increase to running costs of £6.2m. Campaign costs were their highest ever at £27m.

“Crucially, net assets are at their lowest level since 2014, being just £2.4m.

This is very low compared with running costs of £52m.

“Individual donations, at £14m (cash donations) are higher than ever previously reported. During the Blair-Brown years, individual donations were up to £8m (in 2005, the year of Blair’s election for his third term).

“The highest three cash donors contributed £6.7m. David Sainsbury, Martin Taylor and Garry Lubner deserve special mention.

“Sainsbury has donated a total of £32m cash to political parties since 2010. Of this, £10.2m was to Labour and £11.7m to the Conservatives. In 2023 he donated to both Conservative (£10.2m) and Labour (£3m). In 2024 he donated only to Labour.

“Martin Taylor made his single largest donation (£2.8m) to Labour in 2024 and has given a total of £3.9m. Gary Lubner has stated that he wants Labour in power for a long time and has donated £6.5m to Labour up to 2024.”

“Meanwhile corporate donations at £10m “are very materially higher than ever previously reported. The top corporations donating are Quadrature and Ecotricity.

“Quadrature is a trading company which trades in arms. Its donation of £4m was the largest single donation in political history but was not declared until after the election.

“Overall expenditure was £94.5m – its highest ever by far. Its campaign spending was also the highest ever (£27m), as were running costs.

* Staff related costs increased by £3.2m, having increased by £4.3m in the previous year, and are now at the highest level ever. Finance, IT and comms costs increased by a further £1.4m having increased by £1.5m in the previous year.

* The number of staff employed in December 2024 was 194, below the average for the year, suggesting substantial staff reductions following the election. There were redundancy costs of £1.8m.

* Building and premises decreased by £1.8m compared with 2023.

* Admin costs total £2.2m – the same as the previous year. We don’t know what is included in this figure.

* Senior management costs increased further to £1.35m. In 2020, senior management costs were £0.53m.

“Membership and affiliate income now covers only 45% of running costs, indicating increased dependency on non-recurrent sources [meaning there has been a big drop in membership].

“The party has succeeded in expending its revenue income streams away from dependence on membership and affiliate income. However, this income cannot be relied upon from year to year as the variation in corporate and individual donations year by year demonstrates.

“The balance sheet is not strong, with net assets covering less than a month’s running costs (using 2024 year-end figures).

“So, the overall picture is one of dramatic expansion and funding and electoral success, but a precarious balance sheet and overwhelming and unprecedented reliance on individual and corporate funding.”

‘Extremely sad’

A Welsh Labour source said: “These latest revelations about the state of our party’s finances are extremely sad. Increasing reliance on wealthy individuals including arms dealers are not what the public expect Labour to be about. People at the top of the party seemed shocked with the reaction to the gifts from Lord Ali [including article of clothing for Keir Starmer and his wife], as if they didn’t understand that voters expect Labour to be different.

“This is what happens when you narrow your support base: we lose members and of course we are losing voters as well. This has been accompanied by falls in donations from unions, particularly Unite the Union. Members and Unions hand over their money because they want a better country and better rights for working people. What do arms dealers want when they hand over their money?”