British Prime Minister Rishi Sunak has asked an ethics adviser to investigate Nadhim Zahawi’s tax affairs in a move that raises questions about the future of the Conservative party chairman.
Downing Street also admitted on Monday that while Sunak publicly defended Zahawi last week, the prime minister was unaware that the former chancellor had recently paid a penalty to HM Revenue & Customs, Britain’s tax authority.
The government is facing a two-pronged ethics crisis with BBC chairman Richard Sharp facing allegations that he helped Boris Johnson secure a personal loan shortly before the former prime minister recommended the appointment.
Sharp asked the broadcaster’s board on Monday to look into potential conflicts of interest, before Downing Street said it would call for an investigation into Zahawi’s tax affairs.
“Integrity and accountability are really important to me,” Sunak said.
“There are questions that need to be answered and that’s why I’m asking an independent adviser to find out everything – to investigate the matter fully and establish all the facts and advise on Nadhim Zahawi’s compliance with the ministerial code.”
He added: “I am happy that Nadhim Zahawi has agreed to this approach and has agreed to cooperate with the investigation.”
In contrast, the prime minister told the House of Commons last week that Zahawi “has dealt with this matter completely and there is nothing to add”.
A spokesman for Sunak said on Monday that the ethics adviser, Sir Laurie Magnus, had been asked to look into possible breaches of the ministerial code but said the inquiry – of unspecified length – would not be “prescriptive”. “Obviously, if they want to look at other issues as well.”
The spokesman said he did not know when Sunak first became aware that Zahawi had had a dispute with HMRC. He said he did not know whether Simon Case, the head of the civil service, was aware of the negotiations.
Zahawi said in a separate statement on Monday that he expected to explain the facts to Magnus.
“I’m confident I’m doing well throughout and hope to answer all specific questions in a formal setting for Sir Laurie,” he said.
Angela Rayner, deputy leader of Labour, said Zahawi had been chancellor at the time he was negotiating the tax settlement with HMRC: “You don’t need an ethics adviser to tell you what is unacceptable,” she said.
The announcement of the Downing Street inquiry follows the revelation that Zahawi settled a dispute with HMRC when he was chancellor last year and paid a fine as part of the settlement. Reports suggest that the total debt is around £5m.
Conservative lawmakers have cast doubt on Zahawi’s ability to remain in office amid questions over the tax settlement.
However, Sunak said that, in line with “longstanding practice”, Zahawi will remain in office while the investigation is carried out. Zahawi also expressed his determination to stay.
In a separate review conducted by the BBC, Sharp, a former Goldman Sachs banker who is set to become BBC chairman in 2021, said he wanted to ensure “all the appropriate guidelines” were followed.
The Sunday Times reported that Sharp was involved in arranging a guarantor for an £800,000 loan to Johnson in 2020.
“We have many challenges at the BBC and I understand that this kind of harassment is not welcome,” Sharp said in the statement, adding that he agreed with the BBC’s senior independent directors that the board’s nominations committee would look into the matter. when they next meet and, “in the interest of transparency”, publish their conclusions.
Sharp denies wrongdoing. He said he had established indirect contact – through the Cabinet Office – between Johnson and Canadian businessman Sam Blyth, who provided the loan.
“I’m not involved in making loans or managing collateral, and I’m not managing financing,” Sharp said.
Johnson told Sky News on Monday that the incident “makes no sense” and that Sharp “doesn’t understand my personal finances”.
“This is just another example of the BBC losing its footing,” added Johnson.
Meanwhile Britain’s commissioner for public appointments, William Shawcross, announced on Monday that he would review the process that led to Sharp’s appointment as BBC chairman.
Shawcross said he intended “to review this competition to assure me and the public that the process was carried out in accordance with the government’s code for public appointments” and in a manner that was “fair, open and appropriate”.