Last month, openDemocracy revealed how Quadrature Capital donated £4m to the Labour Party shortly after July's election was announced in May. Labour accepted the gift just days before the campaign rules – that require weekly declarations about donations – came into force, meaning it was not made public until after the election.
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.
Now, an investigation by openDemocracy and Shadow World Investigations shows the hedge fund held shares in a range of companies linked to Israel's assault in Gaza. The findings are based on an analysis of financial documents filed with the US Securities and Exchange Commission (SEC).
Israel has killed more than 42,000 people in Gaza over the past 12 months, including at least 16,456 children, according to the local health ministry. However, some report that this death toll may be a significant underestimate, as the attacks have led to famine and disease, as well as destroying healthcare reporting systems.
In January, the International Court of Justice (ICJ) ruled that the right of Palestinian people not to suffer genocide in Gaza was plausibly under threat. Applications were later filed for arrest warrants to be issued against Israeli prime minister Benjamin Netanyahu and defence minister Yoav Gallant, alongside senior Hamas leaders.
Zack Polanski, the deputy leader of the UK Green Party, told openDemocracy there were "serious democratic questions" about Quadrature's donation to Labour.
Declaring it after the election looks "deeply cynical," he said, and "further erodes trust in our politics".
"To now find out that the company donating also has links to the F-35s currently engaged in the genocide in Gaza means that this government has serious questions to answer about the choices they're making in how they funded their campaign."
Shareholdings
Quadrature previously 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. Under US law, hedge funds such as Quadrature are only required to disclose so-called "long" positions on tradable assets, but not short positions.
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.
Lockheed Martin says it has played a "significant role" in supporting Israel's security. The company has "assisted in strengthening the IDF ground forces" as well as supplying dozens of F-35 fighter jets.
Records show that Quadrature held over $5.5m in Lockheed Martin shares in June.
Another company, Northrop Grumman, is "principal partner and teammate" on the F-35 Lightning II program and has previously worked with Elbit Systems, the Israeli arms firm, to produce components for the jets. It makes the Longbow missile system used in Apache aircraft, as well as the corvette warships that Israel has long used to enforce its naval blockade on Gaza.
Records from June this year show that more than $30m of Northrop Grumman shares were held by Quadrature, up from about $3m earlier in the year in March.
Meanwhile, Howmet Aerospace says it helps build F-35s by supplying "many of its critical parts", which are used from "nose to tail" on the jet.
Howmet Aerospace is the new name of Arconic Inc., which split into two separate firms in 2020. Arconic Inc. supplied highly flammable cladding used on Grenfell Tower, which was found to be a key reason for the intensity and spread of the fire that killed 72 people in 2017.
An inquiry into the disaster said that Arconic "deliberately concealed from the market the true extent of the danger" of using the cladding. At the time, Arconic responded saying it had never sold any unsafe products and "did not conceal information from or mislead any certification body, customer, or the public".
Records from last year also show that Quadrature had shares in Boeing, which produces so-called Joint Direct Attack Munitions (JDAMs) – equipment that turns unguided "dumb bombs" into guided munitions. According to Amnesty International, Boeing-made JDAMs have been used in at least three attacks on Gaza, which the charity said were unlawful. Boeing also produces the GBU-39 small diameter bomb, which has been described by the New York Times as "increasingly the weapon of choice for the Israeli military," linking it to two "mass casualty events" in Gaza.
Another of the firms Quadrature held shares in, Woodward Inc., produces components that are used in Boeing's JDAM kits and has been linked to an Israeli airstrike that killed 45 displaced Palestinians.
And another, Caterpillar, produces armoured bulldozers to "military specifications", and has faced accusations that they are used to clear bombed-out areas in Gaza to prepare the way for ground invasions, as well as being used to demolish Palestinian homes in the West Bank.
Oshkosh Corporation, which Quadrature also had shares in, specialises in building armoured personnel carriers, including the Eitan and Namer 1500 APCs that have been deployed in northern Gaza since at least November last year. In December, Oshkosh Corporation announced that the Israeli Ministry of Defence had placed two orders for Oshkosh Joint Light Tactical Vehicles.
However, Quadrature's largest corporate shareholding positions linked to Israel's war in Gaza is with Palantir Holdings, the controversial data processing company – with more than $72m of shares held in June.
Co-founded by billionaire Peter Thiel, who donated $1.25m to Donald Trump's 2016 election campaign, Palantir has been vocally supportive of Israeli military action. In January, it announced a "new strategic partnership with the Israeli Defense Ministry to supply technology to help the country's war effort", agreeing to "harness Palantir's advanced technology in support of war-related missions".
Although the precise details of Palantir's involvement are unknown, some have suggested the company may help with artificial intelligence used to identify military targets.
Records show that Quadrature significantly increased the value of its Palantir shares between December and March.
Export licences
Analysis by the Campaign Against the Arms Trade suggests that around £336m worth of components have been integrated into Israeli F-35 jets from UK manufacturers since 2016.
The sales are covered by a government export licence, which lists suppliers working alongside Lockheed Martin as the primary contractor.
Last month the government said it would suspend approximately 10% of all current arms export licenses destined for Israel, saying there was a "clear risk certain military exports to Israel might be used in violations of International Humanitarian Law".
But the government refused to suspend UK exports related to the F-35 program. Jonathan Reynolds, the secretary of state for business and trade, said the F-35 program has a "significant dependence on the UK, which provides unique and critical components". He added: "Due to the nature of the F-35 as an international collaborative programme, it is not currently possible to suspend licensing of F-35 components for Israel without prejudicing the entire F-35 global program."
Emily Apple, from the Campaign Against the Arms Trade, said it was "outrageous" that Labour had accepted a donation from "a company investing in the arms trade, especially one that invests in companies producing components for the F-35".
She told openDemocracy: "This donation calls into question its decision to exclude the F-35 contract from the partial arms embargo and the Labour Party's decision to prioritise the profits of arms dealers over Palestinian lives and international law."
Apple accused Labour of being "complicit in the horrendous war crimes Israel is committing in Gaza", adding: "When Labour came to power, it promised it was going to be the party of change. If it was ever serious about this commitment, then it should repay this donation."
Quadrature previously told openDemocracy that its donation to the Labour Party was not a "political" donation', but rather a "values-based donation", saying: "Quadrature remains non-partisan and apolitical."
The hedge fund said the £4m donation was made "in support of policies that will deliver climate action while also promoting social equity and economic resilience."
On its website, the company provides an insight into its choice of investments. Although Quadrature's trading is "fully automated", the company website says it has "assessed excluding" certain controversial sectors. For instance, it considered excluding oil and gas companies, but concluded the impact of its investments could be mitigated by its contributions to the Quadrature Climate Foundation, which has pledged to contribute $1bn towards climate solutions around the world.
But this has raised concerns about a conflict of interest over the government's climate policy, after it emerged that Keir Starmer's new "climate envoy" Rachel Kyte is on the advisory board of the Quadrature Climate Foundation.
In June 2023, the Guardian revealed that Quadrature Climate Foundation was run by "enigmatic billionaires" whose fund "has stakes worth $170m in fossil fuel firms," referring to Quadrature Capital Limited and its founders, Greg Skinner and Suneil Setiya. The newspaper said that Quadrature Capital held shares in 45 separate fossil fuel companies, including a $24m stake in ConocoPhillips, which the Guardian had named in 2019 as "one of the world's most polluting companies".
However, financial accounts filed with Companies House last year show that Quadrature Capital made £226m in profit, while its directors were paid up to £5.8m.
Setiya and Skinner were named as the joint 161st richest people in the UK in the Sunday Times' 2024 Rich List, with an estimated worth of £1.015bn each.
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."
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".
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