UK Government Advisor Revealed to Hold Stake in Controversial AI Investment Fund

Key Takeaways

• The U.K. government’s Special Adviser on Business and Investment Varun Chandra owns a stake in an AI investment fund.
• Chandra was previously a managing partner at Hakluyt Capital.
• The revelation by Open Democracy has raised questions about the government’s ties to Hakluyt.

When the current U.K. government came into power earlier this year, one of its first moves was to launch an AI policy review to identify how the technology can drive economic growth.

However, that review has come under scrutiny for its apparent ties to the strategic advisory firm Hakluyt & Company, whose venture capital arm Hakluyt Capital is a prominent AI investor.

Business Consultancy Staffed by Former Spies and Diplomats

Hakluyt & Company is no ordinary consultancy. Founded in 1995 by former MI6 officers, it has built a reputation for discreet intelligence-gathering and strategic advice for corporate clients. 

The firm’s unique edge comes from its staff—many of whom are former spies and diplomats with deep knowledge of international affairs.

Describing the firm’s recruitment strategy in 2012, The Evening Standard wrote : “Spies preparing for retirement are approached discreetly in St James’s clubs and asked if they would like some lucrative freelance action to top up their pensions.” 

Prominent board members include seasoned British diplomat and former Ambassador to Turkey Sir Walter Prendergast and Andrew Mitchell, who served several ministerial roles under the previous government.

According to Bloomberg , in 2023 the Labour Party brought in Hakluyt to help it court the U.K. business community ahead of this year’s election. And as revealed by Open Democracy on Saturday, Oct. 12, the party appears to have maintained a connection with the firm since entering government.

UK Government Retains Hakluyt Advisors

In July 2024, just two weeks after the new took power, Science Secretary Peter Kyle commissioned an “Action Plan to identify how AI can drive economic growth.”

The review was led by Matt Clifford, a prominent AI investor who sits on Hakluyt Capital’s advisory board.

Kyle’s history with Hakluyt embodies the kind of backroom elite networking it excels at. In 2023, the firm helped finance a trip to Silicon Valley during which Kyle met senior executives from Google, Amazon and Oracle.

While there is no indication of any impropriety relating to Clifford’s role in developing the AI Action Plan, the alleged involvement of another Hakluyt advisor has raised eyebrows.

Government Advisor Caught in Controversy

Varun Chandra was Hakluyt’s managing partner between 2019 and 2024 when he left the firm to become Prime Minister Keir Starmer’s Special Adviser on Business and Investment.

To avoid creating a conflict of interest, Hakluyt agreed to buy back Chandra’s shares in the company at a fixed rate over time once he took up his new post–a standard arrangement for business figures who enter government.

However, according to Open Democracy Chandra still holds a stake in an investment fund he helped set up while there.

Adding to concerns of potential impropriety, despite Chandra having no publicly stated role in the review he reportedly co-chaired an Action Plan with Clifford that was attended by the heads of major AI companies.

Transparency Concerns

Hakluyt has invested in startups such as Rippling and Viz.ai that generate significant revenue from public sector contracts. This raises serious concerns about the transparency of the process by which the government decides how to spent money on AI. 

“Public money spent in buying AI products and services [involves] very delicate trade-offs that ought not to be discussed only with the companies which will cash in taxpayers’ money,” commented Mariano delli Santi, legal and policy officer at Open Rights Group.

“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 organizations, you end up with an unbalanced or incomplete picture, painted by some very self-interested companies,” he added.