How the IEA teamed up with US donors to push for environmental deregulation post-Brexit

In the ballroom of the Hyatt hotel in Sarasota, Florida, the head of the UK’s most influential think tank made an urgent plea for donations for a new international trade unit he was establishing in London.

The top priority of the Institute of Economic Affairs’ (IEA) trade unit would be to push for a sweeping, deregulatory trade deal with the US, its director-general Mark Littlewood said.

The next day, at the Cornell Club in Manhattan, Littlewood told an audience of businessmen and libertarian campaigners that Brexit offered the opportunity to “shred” EU regulations and appealed for their help. Speaking at a conference, Littlewood later described his 13-stop US tour as “lucrative”.

In the following months, Unearthed established that the IEA is working with US donors to capitalise on the opportunity presented by Brexit in order to radically alter the rules and regulations that govern how we consume products in the UK.

A six-month investigation, which included undercover meetings in Washington, Copenhagen and London, found that those who have pledged money to the IEA include those with US agribusiness interests who hope to profit from a trade deal that scraps EU restrictions on US products, such as chlorinated chicken and hormone-reared beef.

In London the IEA’s trade unit, led by controversial trade expert Shanker Singham, has established itself at the heart of the campaign for a hard Brexit, advising senior Brexiteer ministers and developing close links with Jacob Rees-Mogg’s powerful European Research Group (ERG), a faction of backbench MPs.

Singham advocates dropping the EU’s precautionary principle, which underlies many rules on food and the environment.

The government has said there will be no weakening of environmental or food safety standards after Brexit. But Theresa May’s Chequers deal, which attempted to make part of this assurance a formal part of the UK’s negotiating stance, met a furious parliamentary backlash led by the ERG, as pro-Brexit MPs insisted the deal would prevent the UK from signing trade deals with the rest of the world.

During a series of conversations at a conference in Copenhagen, the head of an Oklahoma-based think tank revealed he has agreed to raise thousands of dollars for the IEA, principally from donors with agribusiness interests.

Michael Carnuccio, CEO of the E Foundation for Oklahoma, told an undercover reporter that his pitch to potential IEA donors was Singham’s political access and influence: “If they don’t know them, then we just explain they’re the free market organisation that is the private sector trade advisor right now through working in that capacity with Shanker, so they have the access, they have the influence.”

Carnuccio said that the partnership between the IEA and the E Foundation includes a proposal to target the constituencies of MPs using a US political tactic called “bracket and smother”; a model trade deal to be signed by the governor of Oklahoma and Liam Fox; and a trip to Oklahoma by leading Brexiteer MPs where they would eat chicken to try and improve the image among British shoppers of chlorine-washed chicken.

Funding the ‘brain’ of hard Brexit

The IEA does not disclose the identity of its donors, meaning that it is not known who else funds Singham’s work. In a statement, the IEA said that it has not received funding from US sources for its work on trade, but Carnuccio told Unearthed that the money raised by the E Foundation will be transferred later this year.

At a breakfast meeting in Tulsa in February, Carnuccio organised for Littlewood to address a group of potential donors, including agribusiness tycoons. “Mark starts talking about how to get a free trade agreement done, what I need in the United States is I need some partners and I need a big media push on the May government and others… in the UK,” Carnuccio told an undercover reporter.

According to Carnuccio, some of those present went on to set up a specialised membership organisation, the Bison Club, made up mainly of donors from the agricultural and, to a lesser extent, energy industry, which he said planned to raise $250-400,000 to cultivate post-Brexit trade.

The E Foundation also secured a commitment from its supporters – including energy and agribusiness interests – to donate $35,000 to the American Friends of the IEA to support Singham’s work. Carnuccio said the Oklahoma partnership offered US businesses the opportunity to play a role in Brexit.

He told an undercover reporter: “If you’re looking for a way to invest resources in the US, to where there’s a tax deduction for the resources and there’s anonymity between it, that will get the resources deployed in the United Kingdom in a way that gets as much influence as close as possible and at the same time, creates a conversation and groundswell, we have the system already set up, that’s what we’re doing.”

In a separate conversation, Littlewood said: “On this particular project, as it stands at the moment, Mike’s raising the money and I’m spending it.”

An IEA spokeswoman said the Bison Club was “entirely fictitious”, adding: “We do not recognise the figures mentioned of $250,000-$400,000.”

She confirmed Littlewood toured the US seeking donations for the IEA’s trade team, but said the events were “attended by private individuals rather than businesses – indeed no businesses were met.”

The E Foundation released a statement saying: “The conversations supported the E Foundation’s purpose to explore global business and research opportunities. The informal conversation enlightened us on possible mutually beneficial endeavours in the future between United Kingdom and Oklahoma.

“Any suggestions the conversations were about something other than constructive business and research pursuits would be completely misguided.”

Open doors

In May, Carnuccio and Oklahoma businessman and E Foundation board member Tucker Link visited the IEA in London, where they developed plans for a model trade agreement between the UK and the state of Oklahoma.

Shanker Singham’s political access was vital to the trip’s success: he arranged for Carnuccio and Link to meet peers at the House of Lords and to be guests of honour at a parliamentary meeting of the ERG, where Carnuccio described addressing an approving crowd and watching the MPs count votes of no confidence in Theresa May.

Littlewood said: “In the room… it was pushing at totally open doors, because that wing of the government just utterly wants some positive noises from elsewhere on planet Earth.”

Singham arranged for then-Brexit minister Steve Baker – who resigned earlier this month alongside his boss David Davis in protest at the Chequers agreement – to meet the visitors at the IEA’s headquarters. He also took them to meetings with senior trade officials at the Foreign Office and Department for International Trade.

“I’m telling you, that dude has access,” Carnuccio said.

He compared Singham to George Clooney’s well-connected “fixer” character in the movie Michael Clayton: “Shanker is like that but for trade and economics and everything else, they all just seem to call him or want to talk to him to, like, figure out how to get things done.”

An aide to Baker said: “Any suggestion – or implication of the same – that Mr Baker would attend meetings because ‘access’ to him was being sold is entirely false.”

She added: “On the occasion you refer to, Mr Baker met US Republicans in his political capacity to discuss trade relations between the two countries.”

When Unearthed suggested the IEA had provided access for potential donors representing vested interests to the heart of government, an IEA spokeswoman said: “The better inference is that prospective donors and a fellow think tank see benefits and mutual interests in making the case for free markets and prosperity in which we all have a vested interest.”

Memorandum of Understanding

At the DIT, where Carnuccio and Link met with Oliver Griffiths, director of capability, they discovered “that department is looking for a state to do like a pilot programme with,” Carnuccio said.

Littlewood and Carnuccio discussed bringing Todd Lamb, a member of the E Foundation’s advisory council who was running to be Oklahoma’s governor, to the UK for a ceremony  with trade secretary Liam Fox in which they would sign a memorandum of understanding, to be drafted by Singham.

“In fact, in the meeting at the Department of Trade, the guy from Trade that said we need to get an MOU started… he turned to Shanker and he said, ‘Can you help send us some language? Can you help put this together?’” Carnuccio said.

Littlewood told an undercover reporter: “We’ll get two governments to sign it. But go and ask Governor Lamb who’s writing it. Governor Lamb wants Singham’s draft, Fox wants Singham’s draft.”

He described the agreement as a template for the future US-UK trading relationship. “We can’t sign a trade deal, but we can sign the memorandum of understanding of what the trade deal will look like,” he explained. Agricultural regulations would be among the top priorities.

“It’s not legally binding… But that obviously has political force,” Littlewood said. He hoped other states would want MOUs of their own, creating pressure on Congress for a full free trade deal.

The plan, he explained, was to create the impression that other nations were queuing up to sign a free trade deal with the UK. “The big problem is the US saying, once you [the EU] and the UK have worked out what the fuck you’re doing, give us a call,” said Mark Littlewood, director-general of the Institute of Economic Affairs (IEA).

“And we’re saying no, no, no – you’ve got to come into this clusterfuck and say we want a deal… the nightmare is the rest of the world waits.”

In the end, Lamb lost the Republican primary contest.

A DIT spokesman said: “A meeting between DIT officials and US business representatives earlier in the year did not result in any binding actions, and no memorandum of understanding was discussed.”

An IEA spokeswoman said the IEA had not done work at the request of civil servants, but it is working on a “draft trade agreement” using Oklahoma as a case study. It said the E Foundation had offered to help fund the agreement, but the IEA believed “individuals rather than companies would be the primary supporters.”

The MOU was aimed at “furthering public understanding”, she added.

The IEA is a charity, which limits the type of political activity it can be involved in. In 2016 its trustees assured the regulator, the Charity Commission, that it does not engage in “policy engineering” or campaigning beyond its mission of educating the public about economics. This was according to a response the commission wrote following a complaint about the IEA from Andrew Purkis, a former Charity Commission board member.

But Purkis told Unearthed IEA’s work in support of a US-UK free trade deal appeared to be “a campaign which is not designed to improve public levels of information, not balanced and neutrally presented, and which actually has a specific policy goal which is motivating it”.

An IEA spokeswoman said: “We are confident that the IEA is acting in accordance with Charity Commission regulations. The IEA’s mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.”

‘Bracket and smother’

Carnuccio also outlined plans for a campaign that would apply pressure on individual MPs by targeting their constituencies, using a tactic he called “bracket and smother”:

“Mark [Littlewood] and his team will be able to tell us… this Member of Parliament, he needs work, this one’s good, we’ll micro-target his district, right. We’ll pepper him with social media, with grassroots swell, and then, with the national publications.”

“We call that strategy, bracket and smother… it’s the idea that like, if you’re a Member of Parliament and we’re trying to target you, when you go home and you go to like your grocery store or you go to the restaurant or anything else, all the people there have been hit… with these messages when you walk in the door and either say you’re a great guy or you’re an ass,” he continued.

In a later phone conversation, Carnuccio said he was familiar with the tactic from US politics, and the IEA would lead on the campaign in the UK: “In terms of the actual tactical what’s on the ground and going there, you know, I’m in Oklahoma, they’re in London… they’ll direct that, they’ll know that.”

An IEA spokeswoman said of “bracket and smother”: “We have no record of this.”

The campaign targeting MPs would be part of a wider plan to challenge EU opposition to chlorinated chicken and hormone beef: “I mean, it’s strategic communications to say that cows are not happy in the United States coz of their hormones or that chlorinated chicken is killing people all over the world or something,” Carnuccio said.

“We quickly figured out that we’re gonna have to have some level of marketing, advertising, communications strategy that is going to impact the consumer in the UK but also from more of a political pressure standpoint, it will challenge the narrative that the EU has always had,” Carnuccio continued.

Carnuccio said leading Brexiteer MPs would come for a three-day trip to Oklahoma, where they would tour a chicken farm and eat chicken in front of the cameras to help persuade British shoppers US products were safe to eat. Carnuccio claimed that then Brexit minister, Steve Baker, was working with Singham to identify which MPs to take, and was keen to come.

“They wanted to look at chicken because chlorinated chicken is a big question and how does it work. They wanted to look at a cow-calf operation, you know, the whole question about GMOs, right,” said Carnuccio.

An IEA spokeswoman said the plan to eat chicken for the cameras was “really a bit of a joke”.