Revealed: No 10 advisor involved in AI policy has financial interests in AI

Varun Chandra left an MI6-linked consultancy to join Starmer’s government, but he still has a stake in its AI-backing investment fund

One of Keir Starmer’s senior aides held top-level meetings on AI policy, despite personally holding a stake in a $50m investment fund that has backed several AI firms, openDemocracy can reveal.

Varun Chandra was appointed as No 10’s business and investment adviser in July, leaving behind his previous role as chairman of Hakluyt & Company, a strategic advisory firm.

But openDemocracy has learned that Chandra still has a stake in Hakluyt’s AI-backing investment fund, according to Companies House documents. The firms backed by the fund include one with a multi-million pound NHS contract. 

After the election, one of the government’s first acts was to launch a review into AI policy to identify how the technology can drive economic growth. 

The review was led by Matt Clifford, a venture capitalist and well-known figure in the AI and broader tech investment sector, who sits on Hakluyt Capital’s advisory board. 

Chandra and Clifford co-chaired a meeting with the heads of major AI companies in Downing Street on 15 August this year, despite Chandra having no publicly stated role in the review.

Since Chandra took up his role in Downing Street, Bloomberg has reported that Hakluyt has agreed to buy back his shares in the company at a fixed rate over time. This is understood to be a fairly standard arrangement for senior consultants and business figures entering government. 

But apart from holding these shares in Hakluyt & Company, Chandra still holds a stake in an investment fund he helped set up while at Hakluyt. 

According to financial documents – and confirmed by Hakluyt – he is a partner in an entity called Hakluyt Capital I Pooling LP, although the value of his stake is unknown. The fund has made investments in a series of companies valued at over $50 million, including several AI companies.

openDemocracy understands that Hakluyt is not aware of any attempts by Chandra to sell his stake. 

Downing Street declined to comment on Chandra’s continued stake in the fund, with a source saying only that all interests have been declared and will be made public in due course.

Upon leaving the firm in July, Chandra said: “I have every confidence that the fund will go from strength to strength, continuing to support the leaders of some of the world’s most dynamic and innovative companies.”

A month prior, Hakluyt Capital had announced seven of the eight portfolio companies it had invested in. They included health tech firm Viz.AI, which already holds a multi-million-pound contract with the NHS, and security company Calypso AI. On its website, Hakluyt Capital says it will use its vast network of contacts to help its portfolio companies “navigate tricky regulatory challenges,” and “reach decision-makers at potential customers”.

‘Well-connected’

Hakluyt was founded in 1995 by former MI6 agents and gained a reputation as a ‘retirement home for spies’. 

The firm is now keen to play down its connections to the ‘spooky world’, but an internal briefing note prepared by civil servants for the Conservative government last year says that Hakluyt “has established a network of operatives throughout the world who provide it with intelligence on commercial or political issues”. 

The note, which openDemocracy obtained under the Freedom of Information Act, states: “Operatives used by Hakluyt include embassy staff, former spies, reporters, and ‘well connected’ government and corporate people. A significant number of their employees are alleged to be recruited from the ranks of former agents of the British intelligence services.”

In February last year, Hakluyt spent several thousand pounds on transport for Labour MP Peter Kyle while he was in Silicon Valley, where he publicly met senior figures from companies including Google, Amazon and Oracle.

Kyle is now the secretary of state for science, innovation and technology – and was responsible for appointing Matt Clifford to lead the government’s AI policy review. 

Although he declared his travel costs as an in-kind donation, Kyle did not declare his attendance at a discreet dinner event organised by Hakluyt, which openDemocracy revealed earlier this year. When questioned by openDemocracy, Kyle and Hakluyt both refused to say whether the AI companies Hakluyt has investments in were present at this event. 

Downing Street sources claim that neither Kyle nor his advisers have met with Hakluyt Capital’s portfolio companies since the election. However, Hakluyt would not say whether they had been present at any meetings before this, including at the February 2023 dinner organised by the firm. Labour and Kyle’s team declined to comment.

‘Afterthought’

Civil society organisations have raised concerns about the potential risks associated with AI, describing the technology’s benefits and use cases as “greatly overstated” by tech firms. 

Mariano delli Santi, legal and policy officer at Open Rights Group, told openDemocracy that the interests of AI companies and investors don’t necessarily align with those of society, adding that AI technologies can be costly to develop, implement and maintain.

“Public money spent in buying AI products and services will be taken from the same pot that could be used to fund public services. This will involve very delicate trade-offs that ought not to be discussed only with the companies which will cash in taxpayers' money.”

Delli Santi also believes the government is focusing too much on engaging with businesses in the sector when it comes to developing policy and regulation, which he fears could lead to serious risks being overlooked.

“Of course, businesses should be included in the policy-making process,” he said, “but industry has their private interests, which don’t necessarily align with the interests of society at large. So, if you’re allowing industry to feed into this process without hearing the contradictory or opposing view of civil society, independent experts and public interest organisations, you end up with an unbalanced or incomplete picture, painted by some very self-interested companies.”

Delli Sante added: “That’s a very clear risk in the field of AI, which is a technology whose benefits and capabilities are greatly overstated, and whose risks are routinely downplayed or misrepresented by the companies who are selling these products.

‘Shadow lobbying’

Government special advisers like Chandra are not required to publish a list of their meetings in the same way that ministers or senior officials are. This lower standard of transparency for special advisers means the only way such meetings are disclosed are if a minister or senior official is present, because a list of these meetings is published by each government department several months later, or if the attendees choose to disclose it on social media or elsewhere. 

Parliament’s Public Administration and Constitutional Affairs Committee last year recommended amending the rules so special advisers’ meetings are published. But the previous government rejected this proposal, and a Downing Street source has now suggested to openDemocracy that the current rules for special advisers are adequate. 

Rose Whiffen, senior research officer at Transparency International UK, said: “Strengthening disclosure rules so meetings with special advisers, like those with permanent secretaries, are publicly disclosed, would provide the public with a clearer understanding of the forces shaping government decisions.

“The current loophole that allows them to meet with outside organisations without the need for public disclosure means all too often lobbying happens in the shadows.”