Breaking: Nadhim Zahawi sacked as Tory chairman after tax probe finds he breached rules seven times

The crispy lettuce wins again! – Owl 

Rishi Sunak has sacked Nadhim Zahawi as chair of the Conservative party after an investigation found he was guilty of a “serious breach” of ethics rules.

Hugo Gye, Paul Gallagher 

Sir Laurie Magnus, the Prime Minister’s independent adviser on ministerial interests, concluded that the minister had repeatedly failed to be open and honest about his tax affairs.

Mr Zahawi was first probed over his taxes by HMRC in April 2021, Sir Laurie revealed – more than a year earlier than was previously known.

But the minister did not tell civil servants about his discussions with the authorities at the time, and publicly denied being under investigation.

After he became Boris Johnson’s final Chancellor in July last year and HMRC stepped up its investigation, Mr Zahawi did inform civil servants about the probe.

But he did not tell Whitehall officials, Liz Truss or Mr Sunak that he had agreed to pay a £1m penalty to settle the dispute over his taxes, meaning that neither of the incoming prime ministers knew the full details at the time they reappointed him to their Cabinet.

In his four-page report into Mr Zahawi, Sir Laurie concluded that the minister had not declared his financial interests properly and had made inaccurate public statements on the issue.

He told Mr Sunak: “Mr Zahawi’s conduct as a minister has fallen below the high standards that, as Prime Minister, you rightly expect from those who serve in your Government.”

On Sunday morning the Prime Minister wrote to Mr Zahawi saying: “It is clear that there has been a serious breach of the ministerial code. As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.”

He praised him for his ministerial work, in particular overseeing the Covid-19 vaccines rollout, and added: “It is also with pride that I, and previous Prime Ministers, have been able to draw upon the services of a Kurdish-born Iraqi refugee at the highest levels of the UK Government. That is something which people up and down this country have rightly valued.”

In his response, Mr Zahawi did not apologise for his conduct but pledged to continue supporting the Prime Minister from the back benches. He took a swipe at the press, complaining about one news outlet’s headline which said “the noose tightens” in reference to his chances of professional survival.

Seven breaches of the ministerial code

April 2021: HMRC commences its investigation of Mr Zahawi’s tax affairs, which includes a meeting with him and his tax advisers in June 2021. Mr Zahawi, who was a business minister at the time, told Sir Laurie Magnus, the prime minister’s ethics adviser, he was under the impression he was “merely being asked certain queries”. Sir Laurie says he should have understood it was a “serious matter”, informed his permanent secretary, and disclosed it in his ministerial declaration of interests.

September 2021: Mr Zahawi was promoted to education secretary by Boris Johnson. He did not declare the ongoing HMRC investigation into his tax affairs, “despite the ministerial declaration of interests form including specific prompts on tax affairs and HMRC investigations and disputes,” Sir Laurie says.

5 July 2022: After he was appointed chancellor, Mr Zahawi completed another declaration of interests form, which again “contained no reference to the HMRC investigation”. Only after receiving a formal letter from HMRC on 22 July did he fill in a “later form” acknowledging that he was “in discussion” with HMRC, in an attachment.

10 July 2022: After a number of press reports about his tax affairs, Mr Zahawi said publicly: “There have been news stories over the last few days which are inaccurate, unfair and are clearly smears.” He did not correct the record until earlier this month. Sir Laurie says the delay in correcting an “untrue public statement” is a breach of the ministerial code.

August 2022: Mr Zahawi reached an in-principle agreement with HMRC, while he was still chancellor, including a penalty. He finally settled the following month. Sir Laurie found that this fact “requires declaration and discussion” and is ”a relevant interest which could give rise to a conflict”, particularly for a treasury minister.

September 2022: Liz Truss appointed Mr Zahawi to the role of chancellor of the Duchy of Lancaster. Again, he failed to declare the HMRC investigation or the penalty he had agreed to pay.

October 2022: Mr Zahawi was handed the job of chair of the Conservative party by Rishi Sunak. Yet again, he did not make a declaration about his tax affairs nor declare the fact he had received a penalty for tax avoidance.

Mr Zahawi, who has been MP for Stratford-upon-Avon since 2010, had said that HMRC concluded there had been a “careless and not deliberate” error in the way the founders’ shares, which he had allocated to his father, had been treated.

He had also insisted he was “confident” he had “acted properly throughout”.

Labour accused Mr Sunak of being too slow to act. The fact that Mr Zahawi had paid millions to HMRC was first reported a fortnight ago, and it emerged a few days later that the £5m payment included a payment for an error which the minister said was “careless and not deliberate”.

The Liberal Democrats said that given the seriousness of the breach, Mr Zahawi should “do the right thing and resign as an MP”. The party’s deputy leader Daisy Cooper said: “He is unfit to serve in Cabinet and unfit to serve the people of Stratford-on-Avon.”

But Levelling Up Secretary Michael Gove rejected the call. Speaking to Times Radio, Mr Gove said: “I don’t think Nadhim should resign as an MP, absolutely not.”

More questions on EDDC’s involvement in the DCC LADO meetings regarding John Humphreys

A correspondent writes:

Having read your very useful summary of the Humphreys investigation, I have a number of questions regarding the officer or officers of EDDC who participated in the LADO meetings.  It is impossible to say whether one person attended all meetings or different officers attended different meetings.

My questions are as follows:

1.  How was the initial contact made with EDDC about the LADO meetings and who was it with?  Did that officer delegate someone to attend the meeting(s) or attend themselves?

2.  Once the officer(s) who attended these meetings knew of the allegations, what was their duty at EDDC, given that there were safeguarding issues and legal issues involved?  

3.  If they were senior officers, to whom did they report the information from these meetings? What action (or inaction) was subsequently decided upon?

4.  Was the Monitoring Officer at the times of the LADO meetings made aware of the meetings?  If not, why not?  If so, who did the Monitoring Officer inform?

“Monitoring Officer:

It is the role of the Monitoring Officer to report on matters they believe to be illegal or amount to maladministration, to be responsible for matters relating to the conduct of councillors and officers and, to be responsible for the operation of the council’s constitution. They are often, but not always, the head of legal services in a local authority.”

5.  Section 1.2 of the EDDC constitution (Standards for Officers)  states:

You must report to the appropriate manager any wrong doing or legal, or ethical, breaches of procedure. Alternatively, you can use the procedure outlined in the Whistleblowing Policy.

Did anyone do this and to whom?

6.  The report states that JH allegedly blackmailed an adult member of the gay community.  If the identity of this person was known, was that person connected in any way to EDDC?

So many questions, no answers.