Government ministers are resisting calls to block Elon Musk from donating to Nigel Farges’s Reform Party.
Pressure is building for the government to introduce measures limiting the amount a foreign national can donate to political parties through UK companies.
The calls come after Musk met with Nigel Farage at Donald Trump’s Mar-a-Lago resort in Florida, last week.
It has been reported that the world’s richest man is considering putting his financial muscle behind Farage and his fledgling party.
Musk could donate as much as $100million (£80million) to help build up Reform into a political machine capable of overthrowing Labour at a general election.
Farage confirmed that ‘the issue of money was discussed’ and said there would be ‘ongoing negotiations on that score’.
However, anxiety at Westminster has intensified, and there are worries that an attempt to push through rules targeting Musk may give Farage the ammunition to attack those in power and claim they are sabotaging him.
As a foreign citizen, Musk cannot donate directly to a political party in Britain. But a loophole in election laws means he could give an unlimited sum via one of his companies based in the UK.
Mr Farage said the South African-born entrepreneur, who has emerged as Donald Trump’s right-hand man, viewed Labour and the Conservatives as a ‘uniparty’, adding that he ‘left us in no doubt that he is right behind us’.
On Tuesday the Electoral Commission confirmed it is pushing ministers to tighten the law to limit companies to donating only funds that are generated in the UK.
After the announcement Farage branded the political finance watchdog, ‘establishment stooges’.
Farage said: ‘Never mind peerages for donations or the millions given to them by foreign businessmen via UK companies in the past. This old order needs to be swept away.’
One source said that ministers were not looking to change the rules regarding donations in an effort to block Musk, The Guardian reports.
They said that the main parties would stop Reform by ‘defeating their arguments rather than changing the rules to stop them’.
David Anderson KC claimed that Labour must tighten donation rules, he said: ‘The lax rules on business donations leave the door open for foreign money and proceeds of crime being channelled into politics via UK-registered shell companies.’
He added that Labour promised in their manifesto to ‘protect democracy’ and that trust in politicians is now ‘dangerously low’.
Chief executive of the Electoral Commission Vijay Rangarajan said: ‘It’s crucial that UK voters have trust in the financing of our political system, so they need to see how parties and campaigners are financed and how they spend that money at elections.
Mr Rangarajan said officials were ‘discussing proposals with the Government’.
Downing Street said it was examining reform of electoral law, but it was not a priority for the latest session of Parliament.