Starmer’s ‘Whisperer’ Brings Connections, Complications From Past

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(Bloomberg) — The Prime Minister’s “business whisperer” Varun Chandra has been putting his extensive contacts book to use at the Labour party conference this week, meeting corporate networkers who hope to have the ear of the new government. 

Chandra has been popular, getting stopped for chats outside in the Liverpool rain, while on the sidelines of business events people waited their turn to speak to him. 

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Keen to avoid public profile, Chandra told business leaders behind closed doors he would try to be their interface with the government. Some attendees were impressed by his enthusiasm, though cautious about some of his more dramatic pledges and his ability to bring about cross departmental co-operation, according to several people who spoke to him. 

As a banker turned consultant with long-time Labour ties, Chandra brings much to the role of Keir Starmer’s special adviser on business. But his previous role in charge of Hakluyt, a consultancy that does not disclose its clients, and his ongoing financial ties to that firm, pose an added complication for a government that’s promised to work with the private sector to spur economic growth, while vowing to rebuild trust in public institutions.

Point Person

Chandra, 39, gave up running Hakluyt shortly after the election in July and has already developed a reputation among civil servants as the “business whisperer” who can communicate effectively between corporations and the premier, one person said. 

He has sat in on a series of meetings between international business figures such as JPMorgan Chase & Co.’s Jamie Dimon, Chancellor Rachel Reeves and Starmer. He is the consummate networker, according to several people who have met him, all of whom asked not to be named discussing private conversations.

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Previous governments have brought in similar figures, such as businessman Gerry Grimstone who was investment minister under Conservative Prime Minister Boris Johnson and, most recently, Franck Petitgas, who was a special adviser like Chandra, working for Rishi Sunak after spending three decades at Morgan Stanley. 

These appointments come with the added complication of ensuring the new official severs ties with their previous companies, to avoid any potential conflicts of interest. 

While in opposition, Labour criticized the appointment of Dominic Johnson, a former business partner of former Conservative MP Jacob Rees-Mogg, for taking the role of investment minister. Johnson, the Conservatives’ former vice-chairman, was dubbed a “crony party donor” by Labour. 

Now, Labour is searching for its own investment minister after the favored candidate decided against making costly changes to his own business ties. There are just weeks to go before an international investment summit in London it says is a key opportunity to showcase the UK. 

Meanwhile, the government is facing intense scrutiny over revelations that Labour donor Waheed Alli, who paid for clothes for the premier and his wife, was granted a pass to enter Downing Street and advised on public appointments. Starmer has said he will no longer accept free clothes and Alli subsequently lost his pass to Number 10.

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Stake Sale

For Chandra, the move to government means giving up his stake in Hakluyt. He owned at least 454,000 ordinary shares in the company, or under 5% of this class of stock, filings as of the end of last year showed. Their value would have been above £7.2 million at the time of a share issue Hakluyt carried out in May 2023, according to the filings.

Hakluyt has agreed to buy his stake at a fixed price over time, meaning he won’t benefit from any potential increase in its value. This is a standard process Hakluyt uses when employees with equity leave, according to several people familiar with the matter.

Chandra also co-founded and retains a stake in the firm’s investment arm, Hakluyt Capital. The fund raised about $50 million earlier this year to invest in promising startups. They will be helped by Hakluyt’s “unrivaled network” to “navigate tricky regulatory challenges, reach decision-makers at potential customers, build relationships with senior advisers,” according to a statement on its website. 

Chandra is selling his stake in Hakluyt Capital but finding a buyer quickly is difficult, one person said. He is not eligible to make further investments in the business. 

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Outside interests by special advisers must be signed off by the prime minister’s chief of staff, according to the government’s code of conduct. The current chief of staff, Sue Gray, who previously served as the government’s director general of propriety and ethics, has indicated to other potential appointees that she would take a hard line on such arrangements, according to one person familiar with the process.

At Big Four accountancy firms, there is a practice of partners having to exit their financial interests immediately if they go into government, two people said. But there have been other arrangements — some previous special advisers with business interests have been allowed by the government to keep shares in trusts.

Hakluyt and the government did not comment on how long it would take to purchase Chandra’s shares. A person familiar with the matter said he would not be able to take them back if he leaves his government role before their ownership is transferred.

“Varun Chandra worked for Hakluyt, a global strategic advisory firm, until July 2024, when he left to take up a role in 10 Downing Street,” a spokesperson for Hakluyt said. “Upon his departure, all due process was followed in accordance with our strict compliance protocols and standard equity policy. Varun is no longer involved in Hakluyt’s business.”

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Discretion Valued

Chandra grew up in South Shields, near the city of Newcastle in the north east of England, with parents who had migrated from India. He never had to be told to do homework as a child as he was so inspired by his parents’ example of hard work, he told a podcast made by his former firm. 

After winning a place at a selective state school and going to Oxford University, Chandra worked briefly for Lehman Brothers before it collapsed in 2008 and then, in his early 20s, was hired by former Labour Prime Minister Tony Blair’s organization. 

He spent “five and a half years flying around the world meeting presidents, prime ministers, billionaires and people running businesses,” he told the podcast. He joined Hakluyt in 2014 and rose to be its managing partner five years later. 

Chandra took charge of a company that has sought to shift out of the shadows in recent years. Hakluyt was created in 1995 by a group of former MI6 intelligence officers and named after the sixteenth century geographer Richard Hakluyt. Its client list is not public but its website says it advises around 40% of the world’s largest corporations by market capitalization, and more than three quarters of the top 20 private equity firms by assets under management. 

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These customers “value its discretion and independence of thought,” Hakluyt said in its annual report, which also disclosed £26 million of operating profit on revenue of £113 million in the year through June 2023. The firm has about 170 employees and the highest-paid — thought to be Chandra — earned about £2 million. The company’s stock was valued at about £150 million based on the price of the share issue in May 2023, though this could vary in subsequent share sales.

Part of the company’s success is through tapping a network of “several thousand well-connected individuals” to help with particular situations, Chandra told the Financial Times in a 2021 interview. Hakluyt has a reputation for charging high fees, which can be three times as much as rivals’ charges, according to two people.

Hakluyt’s roster of board members shows off its deep business ties. Its main board is chaired by former Conservative minister Paul Deighton, while its international advisory board includes John Bell, chairman of the Bill and Melinda Gates Foundation’s Global Health Advisory Board; Vindi Banga, partner at private equity firm Clayton, Dubilier & Rice and chairman of UK Government Investments; and Ratan Tata, chairman emeritus of Tata Sons. 

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Because of the Tata connection, Chandra did not get involved in the government’s recent bailout of the group’s Port Talbot steelworks, one person said.

The advisory board of Hakluyt Capital includes Matt Clifford, chair of the UK’s Advanced Research and Invention Agency who was asked by Peter Kyle, secretary of state for science, to lead a project on how AI could help deliver growth. 

Political Access

Labour’s ambitions in government — which include creating a national wealth fund, setting up publicly-owned GB Energy and overhauling the country’s planning system to unlock widescale building — chime with Chandra’s track record.

But to be useful to the government, Chandra will inevitably deal with businesses and people who were clients at Hakluyt, given its broad reach into policy, regulation and every major business sector, people said. 

Hakluyt, meanwhile, has previously supported senior figures now in government. The firm helped Kyle, when he was shadow science secretary, by paying £2,759 for a driver during a visit the west coast of the US in February, according to his register of members’ financial interests. According to his social media from the time, he met senior figures from Microsoft Corp., Amazon Web Services and the Gates foundation.

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As well as Bell’s connection at Gates, Sandi Peterson, a director at Microsoft, is on the international advisory board. Hakluyt would not comment on whether Kyle met the company’s clients on the trip.

Hakluyt also paid £2,411 for Darren Jones, chief secretary to the Treasury, and his wife to attend an event in May called the Hakluyt Forum, the register says. Hakluyt also did not comment about whether Jones met clients of the firm. 

Andre Spicer, executive dean at the Bayes Business School in London, said it was notable how little money was required to gain access to politicians in the UK. 

“Links between the government and industry are a good thing, giving access to technical skills and to capital,” Spicer said. However, there needs to be “transparency and some sort of boundaries.”

A spokesperson for the Cabinet Office said the department “has a thorough process on declarations of interest for special advisers to ensure any conflicts of interest are properly managed and mitigated, including through recusals where appropriate.”

“While we do not usually comment on individuals, Varun Chandra resigned from his position at Hakluyt and has made all relevant declarations as part of this process,” they added.

—With assistance from Philip Aldrick and Dinesh Nair.

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