LABOUR are facing calls to return a “blood-stained” £4 million amid reports that it came from a tax-haven firm which stands to profit from Israel’s siege on Gaza.

OpenDemocracy reported that the Cayman Islands-registered Quadrature Capital, a hedge fund with investments in weapons firms and private healthcare, held “$121m worth of shares in a range of arms, tech and logistics firms which have all supported the ongoing military campaign”.

Reports said those firms included those involved in the manufacture of F-35 fighter jets, which Israel has been documented using in Gaza.

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The jets have proven controversial in recent weeks as the UK Government specifically refused to block F-35 parts when it took the decision to suspend 30 of the 350 arms export licences to Israel.

Labour accepted a £4m donation from Quadrature Capital, the sixth largest political donation in British history, just after the General Election was announced. The timing meant it did not have to be declared until after votes had been counted.

MP Zarah Sultana, who was suspended from Labour after voting to scrap the two-child benefit cap, called for the party to hand back the money.

“Labour took £4m from Quadrature Capital, which profits from F-35 jets bombing people in Gaza and Lebanon,” she wrote on social media.

“Meanwhile, the [UK} Government refuses to end all arms sales to Israel, including F-35 parts, making it complicit in genocide.

“Labour must return this blood-stained money.”

Israel is still carrying out near-daily strikes across the Gaza Strip more than a year into the war, and has been waging a major ground assault in the north, where it claims militants have regrouped.

Israel launched a total siege of Gaza after Hamas attacked southern Israel on October 7, 2023, killing some 1200 people, mostly civilians, and abducting around 250 hostages. Around 100 are still being held inside Gaza, a third of whom are believed to be dead.

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Israel’s retaliatory offensive has killed over 42,000 Palestinians, according to Gaza’s Health Ministry, which does not say how many were fighters but says women and children make up more than half the fatalities.

Around 90% of Gaza’s population of 2.3 million people have been displaced by the war, often multiple times, and large areas of the coastal territory have been completely destroyed.

Israel has ordered the entire remaining population of the northern third of Gaza, estimated at around 400,000 people, to evacuate to the south and has not allowed any food to enter the north since the start of the month.

The International Criminal Court’s chief prosecutor is seeking an arrest warrant for Israel prime minister Benjamin Netanyahu for war crimes including the use of starvation as a method of war.

A spokesperson for Quadrature pointed to a statement about the £4m Labour donation on their website, which claims it was “values-based” and not “political”.

They went on: “At any given time Quadrature will have long and short positions across many thousands of different stocks. Quadrature is a fully automated systematic trading firm, with investment decisions directed by computer programmes. We do not make any proactive or discretionary decisions about buying or selling shares on the basis of the underlying nature of the stocks, but rather look to correct shorter-term statistical inefficiencies in the markets in an automated way. 

“The idea that Quadrature’s trading is ‘linked to Israel’s war in Gaza’ is non-sensical. Most pension holders in the UK and most index tracker funds also own these stocks.”

The Labour Party was also approached for comment.