Nadhim Zahawi is facing calls to quit as an MP after being sacked from Government by the Prime Minister after he was found to have committed a ‘serious breach’ of ministerial rules.
The Tory chairman’s exit comes as a result of a furious row over his tax affairs after he was revealed to have paid a penalty to HMRC as part of a tax bill.
The sum handed over to the tax authorities by Mr Zahawi is reported to be at least £4.8million, including a £1.1million penalty.
The revelation Mr Zahawi paid a penalty to HMRC forced Rishi Sunak – who is claimed to be ‘livid’ at the controversy – to this week order an investigation by his ethics adviser, Sir Laurie Magnus.
Sir Laurie has now ruled against Mr Zahawi for failing to properly disclose the tax dispute when he was appointed to various Government roles.
He outlined seven breaches of ministerial rules by Mr Zahawi in a damning four-page report.
Mr Sunak was today told by a Tory ex-minister he’s been left looking ‘weak’ by the ‘extremely toxic’ saga and for failing to have fired Mr Zahawi sooner when his tax penalty first came to light.
Nadhim Zahawi has been sacked from Government by the Prime Minister after he was found to have committed a ‘serious breach’ of ministerial rules
Mr Zahawi was lambasted by the PM’s ethics adviser for failing to properly disclose the tax dispute with HMRC when he was appointed Chancellor last July
The dramatic culmination to the row over Mr Zahawi will come as a huge blow to the PM, who is due to mark his first 100 days in No10 this week
In a letter to Mr Zahawi today, Mr Sunak said the departing Tory chairman had committed ‘a serious breach of the ministerial code’
In full – the PM’s letter to Nadhim Zahawi
Dear Nadhim,
When I became Prime Minister last year, I pledged that the Government I lead would have integrity, professionalism and accountability at every level.
That is why, following new information which came to light in recent days regarding your personal financial arrangements and declarations, I asked Sir Laurie Magnus, the independent adviser on ministers’ interests, to fully investigate this matter. You agreed and undertook to co-operate fully with the inquiry.
Following the completion of the independent adviser’s investigation – the findings of which he has shared with us both – 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.
As you leave, you should be extremely proud of your wide-ranging achievements in Government over the last five years. In particular, your successful oversight of the Covid-19 vaccine procurement and deployment programme which ensured the United Kingdom was at the forefront of the global response to the coronavirus pandemic.
Your role was critical to ensuring our country came through this crisis and saved many lives. And as the Conservative Party Chairman, you have undertaken significant restructuring to Conservative Campaign Headquarters and readied us for important work in the coming months.
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.
I know I will be able to count on your support from the backbenches as you continue to passionately and determinedly serve your constituents of Stratford-on-Avon and represent the many issues and campaigns you are dedicated to. Thank you for your service to this and previous governments.
Yours sincerely,
Rishi Sunak
Michael Portillo, who served in John Major’s Cabinet, told GB News that Mr Sunak ‘must have been kicking himself all week that he decided to refer this to an investigation rather than going with a decision straight away’.
He added the row had done ‘terrible damage’ to the Government.
Labour today attempted to pile the pressure on Mr Sunak over the scandal, with deputy leader Angela Rayner and party chair Anneliese Dodds writing to the PM to demand he ‘come clean’ about what he knew and when.
Opposition MPs were also calling for Mr Zahawi to quit Parliament entirely and resign as MP for Stratford-on-Avon.
After being sacked by the PM, Mr Zahawi today pledged his support to Mr Sunak from the back benches of the House of Commons.
But he also lashed out at media coverage of his tax scandal and offered an apology to his family for ‘the toll this has taken on them’.
The dramatic culmination to the row over Mr Zahawi will come as a huge blow to the PM, who is due to mark his first 100 days in No10 this week.
Mr Sunak is also continuing to face questions over the fate of Deputy Prime Minister Dominic Raab, who is subject to an ongoing investigation into ‘bullying’ claims.
The PM pledged to lead a Government with ‘integrity, professionalism and accountability’ when he took office in October.
He has also been left embarrassed after telling MPs earlier this month that the row over Mr Zahawi’s tax affairs had been addressed ‘in full’ – before being forced to order Sir Laurie’s inquiry.
Sir Laurie’s findings left Mr Sunak with little choice but to fire Mr Zahawi from his Cabinet.
In the damning four-page report to the PM, the adviser revealed that Mr Zahawi initially failed to declare he was subject to an HMRC probe when he was appointed Chancellor by Boris Johnson in July last year.
This was a role that put him in charge of Britain’s tax system and, Sir Laurie said, could have led to claims of a possible conflict of interest.
Sir Laurie also lambasted Mr Zahawi for failing to disclose that the tax investigation had ended with him paying a penalty when he was later appointed to other Cabinet roles by Liz Truss, in September, and then Mr Sunak, in October.
In further criticism, Sir Laurie condemned Mr Zahawi for failing to correct his past denial that HMRC were investigating his tax affairs until this month.
In a letter to Mr Zahawi today, Mr Sunak wrote: ‘Following the completion of the independent adviser’s investigation – the findings of which he has shared with us both – 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.’
The PM added Mr Zahawi should be ‘extremely proud’ of his ‘wide-ranging achievements’ in Government over the past five years, including his spell as vaccines minister during the Covid pandemic.
‘Your role was critical to ensuring our country came through this crisis and saved many lives,’ Mr Sunak said.
‘And as the Conservative Party chairman, you have undertaken significant restructuring to Conservative Campaign Headquarters and readied us for important work in the coming months.’
Sir Laurie Magnus, the PM’s ethics adviser, concluded that Mr Zahawi showed ‘insufficient regard’ for ministerial rules
In a letter to the PM, Mr Zahawi pledged his support to Mr Sunak from the back benches of the House of Commons. But he also lashed out at media coverage of his tax scandal
In full – Nadhim Zahawi’s reply to the PM
Dear Prime Minister,
Thank you for your kind words. It has been, after being blessed with my loving family, the privilege of my life to serve in successive Governments and make what I believe to have been a tangible difference to the country I love.
I arrived in this country fleeing persecution and speaking no English. Here, I built a successful business and served in some of the highest offices in government. I believe that in no other country on earth would my story be possible. It reaffirms my belief in the greatness and compassion of our nation.
I take particular pride in two achievements in government. First, the vaccine rollout. This saved huge numbers of lives. It is also what has allowed us to move beyond Covid and get our economy and society moving again. I believe there are wider lessons for government in the success of this programme. Policy making and delivery are normally treated as two separate processes. In the vaccine rollout, they were combined, and I think that accounts for why it worked so well. If we could apply this model to other parts of government, I believe it could have transformative results.
The second was my role in the mourning period for Her Late Majesty Queen Elizabeth II. Those days, that celebration of her life of service represented so much of what is best about our country. I was honoured that as Chancellor of the Duchy of Lancaster I could help ensure that everything went smoothly and that as many people as possible could pay their respects and tributes to our longest serving monarch.
I am concerned, however, about the conduct from some of the fourth estate in recent weeks. In a week when a Member of Parliament was physically assaulted, I fail to see how one headline on this issue ‘The Noose Tightens’ reflects legitimate scrutiny of public officials. I am sorry to my family for the toll this has taken on them.
You can be assured of my support from the backbenches in the coming years. Your five priorities are the right priorities, and I will do whatever I can to help you deliver them.
Yours,
Rt Hon Nadhim Zahawi MP
In his reply to the PM, Mr Zahawi thanked Mr Sunak for his ‘kind words’ and said it had been the ‘privilege of my life to serve in successive governments and make what I believe to have been a tangible difference to the country I love’.
He also pledged his support to Mr Sunak from the Commons’ backbenches ‘in the coming years’ and in delivering on the PM’s priorities.
But Mr Zahawi also lashed out at media coverage of the row over his tax affairs as he made a reference to a recent alleged assault on former health secretary Matt Hancock.
‘I am concerned, however, about the conduct from some of the fourth estate in recent weeks,’ Mr Zahawi added.
‘In a week when a Member of Parliament was physically assaulted, I fail to see how one headline on this issue ‘The Noose Tightens’ reflects legitimate scrutiny of public officials.
‘I am sorry to my family for the toll this has taken on them.’
Asked why Mr Sunak hadn’t sacked Mr Zahawi sooner, when it was first revealed he paid a penalty to HMRC, Cabinet minister Michael Gove said that ‘due process matters’.
The Levelling Up, Housing and Communities Secretary told the BBC’s Sunday with Laura Kuenssberg programme: ‘As ever it’s always important to make sure that all the facts are investigated fully and properly.
‘That is why Sir Laurie Magnus was given the opportunity to do so, why he’s concluded as he did, and why the Prime Minister has acted as he did.
‘As a general rule I think it is important when allegations are raised that they are investigated promptly.
‘But also we shouldn’t rush to judgment before there’s been that investigation.
‘And again the specific issues of an individual’s tax affairs are ones that require, in circumstances like this, a cool forensic analysis, and that is what Sir Laurie provided.’
Mr Gove was also pressed on whether the PM should have carried out more checks before appointing Mr Zahawi as Tory chairman in October.
‘To the best of my knowledge, I’m absolutely sure, that there was no alert that was given to either Rishi or indeed to Liz Truss,’ he replied.
‘So, again, Westminster will always have rumours, speculation, speculative reporting.’
Mr Gove later insisted that Mr Zahawi should not resign as MP for Stratford-on-Avon.
‘I don’t think Nadhim should resign as an MP, absolutely not,’ he told Times Radio.
Could Boris Johnson become the new Tory chairman?
Senior Tory MP Jacob Rees-Mogg today backed Boris Johnson to replace sacked Nadhim Zahawi as Tory chairman.
The ex-business secretary hailed the former prime minister for having ‘all the right attributes’ to fill Mr Zahawi’s role.
‘He is charismatic, he rallies the troops,’ Mr Rees-Mogg told GB News of Mr Johnson.
‘He’s a sort of fully-loaded Conservative. So I think that type of personality would be a very good one for a party chairman.’
But Mr Rees-Mogg admitted it was unlikely that Rishi Sunak would appoint Mr Johnson to his Cabinet due to their past differences.
He added: ‘The former PM and the PM are inevitably not going to be the closest of political allies, just under the circumstances of the summer.’
Mr Portillo later told GB News that Mr Zahawi’s departure was a ‘terrific blow’ for the Govermment and Mr Sunak.
He said: ‘I think Nadhim did distinguished work, for example, during the vaccinations campaign.
‘But people hate the idea of a senior minister who is filthy rich, not paying the taxes up front. This is extremely toxic with the public.
‘The second thing about this is that obviously Rishi has been accused by some people of pursuing natural justice too far, and that he wanted to go through all the proper processes. In a way this is very commendable.
‘But this thing has been in the headlines now for days and days and days and it’s been doing terrible damage to the Government. And to him and to the party.
‘I think he did have an opportunity to get rid of him earlier. So I think the PM will face some criticism for having taken so long it’s been fortunate
‘It pains me to say this, but I think on the whole it makes Rishi look weak. I think he must have been kicking himself all week that he decided to refer this to an investigation rather than going with a decision straight away.’
Responding to Mr Zahawi’s sacking this morning, Ms Rayner – Labour’s deputy leader – said: ‘This hopelessly weak Prime Minister has been dragged kicking and screaming into doing what he should have done long ago.
‘Rishi Sunak shouldn’t have needed an ethics adviser to tell him that Nadhim Zahawi’s position was untenable, but instead he continued to prop up the man he appointed to Cabinet.
‘He must now come clean on the advice he was given about that appointment in the first place and why he apparently ignored the warnings.
‘The Conservatives have neither the interest nor the ability to clean up politics.’
Senior Labour MP Chris Bryant, the chair of the Commons’ Standards Committee, called for Mr Zahawi to resign as MP for Stratford-on-Avon.
He told LBC Radio: ‘He probably should. I think voters will find it very hard to understand why he’s sticking around.’
The Liberal Democrats demanded a ‘proper independent inquiry’ into the matter and also called on Mr Zahawi to quit Parliament entirely.
‘Rishi Sunak has finally acted after spending days defending the indefensible on Nadhim Zahawi,’ the party’s deputy leader Daisy Cooper said.
‘It should never have taken him this long to act.
‘Sunak’s first 100 days in office have been tarnished by endless Conservative sleaze and scandals.
‘Serious questions remain about what Sunak knew about Zahawi’s tax affairs when he appointed him.
‘We need a proper independent inquiry to establish the facts and hold the PM to account.
‘Given this was a serious breach of the ministerial code, Nadhim Zahawi must also do the right thing and resign as an MP.
‘He has shown he is unfit to serve in Cabinet and unfit to serve the people of Stratford-on-Avon.’
How Nadhim Zahawi’s tax scandal unfolded
April 2021
Sir Laurie said HM Revenue and Customs (HMRC) interactions with Mr Zahawi over the tax issue began in April 2021, when he was a business minister.
June 2021
Mr Zahawi and his advisers met with officials from HMRC in June 2021, according to Sir Laurie.
The ethics adviser said: ‘Mr Zahawi has told me that he had formed the impression that he and his advisers were merely being asked certain queries by HMRC concerning his tax affairs.’
July 5, 2022
Mr Zahawi becomes Chancellor of the Exchequer.
According to Sir Laurie’s findings, after his appointment Mr Zahawi completed a declaration of interests form, but it ‘contained no reference to the HMRC investigation’.
‘A later form acknowledged (by way of an attachment) that Mr Zahawi was in discussion with HMRC to clarify a number of queries,’ Sir Laurie added.
July 9, 2022
The Independent reports that HMRC officials were investigating Mr Zahawi and his tax affairs.
The Observer newspaper also reports that a ‘flag’ was raised by officials about the financial affairs of the Tory MP before he was promoted to the high-profile role that included responsibility for HMRC.
July 11, 2022
In an interview with Sky News, Mr Zahawi said that he was being ‘smeared’.
‘I was clearly being smeared. I was told that the Serious Fraud Office, the National Crime Agency, HMRC, were looking into me.
‘I’m not aware of this. I’ve always declared my taxes – I’ve paid my taxes in the UK,’ he said.
July 15, 2022
Mr Zahawi received a letter from HMRC, which according to the account he provided to the investigation much later, changed the then-Chancellor’s view.
The ‘impression that he and his advisers were merely being asked certain queries by HMRC concerning his tax affairs’ had ‘persisted until he received a letter from HMRC on 15 July 2022 (dated 13 July)’, Sir Laurie said of Mr Zahawi’s account of the matter.
The ethics adviser said that after the letter, Mr Zahawi updated his declaration of interests form, acknowledging that his tax affairs were under investigation, but ‘provided no further details other than the statement made previously that he was clarifying queries’.
‘An HMRC investigation of the nature faced by Mr Zahawi would be a relevant matter for a minister to discuss and declare as part of their declaration of interests,’ he said.
August to September 2022
Mr Zahawi and HMRC resolved that tax was owed and a penalty should be applied, with a resolution ‘in principle’ in August, and a ‘final settlement’ signed in September, according to the ethics adviser.
And Sir Laurie added: ‘Mr Zahawi failed to update his declaration of interest form appropriately after this settlement was agreed in principle in August 2022.’
Mr Zahawi was replaced as Chancellor when Liz Truss became prime minister on September 6, moving to the Cabinet Office.
October 2022
Mr Zahawi ‘failed to disclose relevant information’ about the investigation and his penalty during the appointments process for new roles in Government in September and October, according to the ethics adviser.
Sir Laurie said: ‘Without knowledge of that information, the Cabinet Office was not in a position to inform the appointing prime minister.’
January 14, 2023
The Sun on Sunday reported that Mr Zahawi had agreed to pay several million pounds in tax to settle a dispute with HMRC.
A spokesman for the Conservative Party chairman said that his taxes were ‘properly declared’, that he ‘has never had to instruct any lawyers to deal with HMRC on his behalf’, adding that ‘Mr Zahawi’s taxes are properly declared and paid in the UK’.
January 16, 2023
Mr Zahawi submitted his declaration of interests form in relation to his role as minister without portfolio and Conservative Party chairman, and included detail of the outcome of the HMRC investigation, according to the independent ethics adviser.
But Sir Laurie added: ‘At the time of my investigation this declaration was under consideration by the permanent secretary and had yet to be submitted onward to me for consideration.
‘Given the seriousness of this matter, I would have expected Mr Zahawi to attend to his submission much more rapidly and… to have notified Cabinet Office officials at the time of his appointment.’
January 18, 2023
The Prime Minister and Downing Street defend Mr Zahawi over the allegations.
At Prime Minister’s Questions, Mr Sunak said the Tory chairman ‘has already addressed this matter in full and there’s nothing more that I can add’.
Downing Street said Mr Sunak had full confidence in the Stratford-on-Avon MP, having taken him ‘at his word’ over the matter.
January 20, 2023
The Guardian newspaper reported that Mr Zahawi paid a 30 per cent penalty as part of the dispute, with estimates that he paid £4.8 million in total.
January 21, 2023
Mr Zahawi admitted paying a settlement to HMRC after a ‘careless and not deliberate’ tax error related to his father’s shareholding in YouGov.
He said that when he set up the YouGov polling company in 2000, his father took founder shares.
‘Twenty-one years later, when I was being appointed Chancellor of the Exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet Office at the time,’ he said.
‘Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error.
‘So that I could focus on my life as a public servant, I chose to settle the matter and pay what they said was due, which was the right thing to do.’
Mr Zahawi said the matter was resolved and ‘all my tax affairs were up to date’ by the time he became Chancellor of the Duchy of Lancaster last September.
January 23, 2023
Mr Sunak ordered an investigation by his new ethics adviser into Mr Zahawi.
The PM acknowledged that ‘clearly in this case there are questions that need answering’.
January 25, 2023
Mr Sunak was grilled by Labour leader Sir Keir Starmer about Mr Zahawi during Prime Minister’s Questions.
Mr Sunak told the Commons that while it would have been ‘politically expedient’ to sack the Tory chair, ‘due process’ meant that the investigation into his tax affairs should be allowed to conclude.
He also acknowledged that he had not been given the full picture of Mr Zahawi’s tax affairs when he told MPs that the senior Conservative had given a ‘full’ account.
January 28, 2023
Downing Street denied reports that Mr Sunak received informal advice in October that there could be a reputational risk to the Government from Mr Zahawi and his tax affairs.
The Observer newspaper, citing sources, said that Government officials gave the new Prime Minister informal advice as he drew up his Cabinet in October regarding the risks from the HMRC investigation settled only months earlier.
A Number 10 spokesperson said: ‘These claims are not true.’
January 29, 2023
Mr Sunak sacked Mr Zahawi as Conservative Party chairman after the ethics inquiry found a ‘serious breach’ of the ministerial code.
Sir Laurie’s four-page report found that the Mr Zahawi had shown ‘insufficient regard for the general principles of the ministerial code and the requirements in particular, under the seven Principles of Public Life, to be honest, open and an exemplary leader through his own behaviour’.
In full – The PM’s ethics adviser’s damning report on Nadhim Zahawi’s tax row
Dear Prime Minister,
Introduction
1. You have asked me to review the circumstances and facts concerning certain tax affairs of the Rt Hon Nadhim Zahawi, Minister Without Portfolio, and that I assess these circumstances in the context of Mr Zahawi’s obligations under the ministerial vode.
2. This report sets out relevant facts that I have established whilst respecting Mr Zahawi’s right to taxpayer confidentiality. It provides my assessment of the minister’s conduct under the ministerial code, both in terms of its specific provisions and its overriding principles.
3. I should acknowledge that the Minister Without Portfolio has provided his full and open co-operation in assisting with my inquiries. I am also grateful for the assistance I have received from officials at HM Revenue & Customs (HMRC) and the Cabinet Office.
Scope of work and areas of inquiry
4. The matter under review concerns the fact that Mr Zahawi was the subject of an HMRC investigation that resulted in a determination that tax was owed and that a penalty should be applied, falling into the HMRC category of ‘lack of reasonable care’. Mr Zahawi and HMRC have confirmed to me that this matter was resolved in principle in August 2022 with a settlement agreement signed in September 2022.
5. The technical detail of HMRC’s investigation and their determination is outside my scope. I have focused on Mr Zahawi’s handling of the matter in light of his responsibilities as a minister who is subject to the provisions of the ministerial code. The ministerial code makes clear that ministers are expected to ‘maintain high standards of behaviour and to behave in a way that upholds the highest standards of propriety’, observing the Seven Principles of Public Life and having an ‘overarching duty… to comply with the law and to protect the integrity of public life’.
6. As well as considering the above overarching obligations, I have considered three specific areas under the Code:
i) How the existence of an ongoing HMRC investigation was declared by Mr Zahawi with reference to his obligations under chapter 7 of the ministerial code (up to August 2022).
ii) How the settlement of the HMRC investigation was declared by Mr Zahawi (from August 2022), and in particular in relation to his current role as Minister Without Portfolio.
iii) The accuracy of public statements made by Mr Zahawi in relation to the matter, in view of his obligations under the ministerial code to be open and honest.
Findings
Declarations of ministerial interests
7. The ministerial code sets out that ‘ministers must ensure that no conflict arises, or appears to arise, between their public duties and their private interests’. All ministers are subject to an extensive and rigorous framework, designed to provide clear guidance on how interests are declared and handled. This includes a requirement that ministers complete declaration of interests forms (which include questions about the status of their tax affairs), ensuring these are kept up to date at all times, and also discuss potential conflicts and other relevant matters on an ongoing basis with their permanent secretary. Ministers are also expected to disclose any relevant issues, including those which might give rise to possible conflicts, during the process of their appointment to any ministerial role. As a minister of long standing, Mr Zahawi has operated within this framework over a significant period and should be familiar with its requirements.
Declaration of interests – HMRC investigation
8. With Mr Zahawi’s agreement, I have met with HMRC and received some details, including the timing, of his interaction with them. This commenced in April 2021 and included a meeting which he and his advisers attended with them in June 2021. Mr Zahawi has told me that he had formed the impression that he and his advisers were merely being asked certain queries by HMRC concerning his tax affairs, and that this impression persisted until he received a letter from HMRC on 15th July 2022 (dated 13th July). The principle of taxpayer confidentiality continues to apply. However, on the basis of the confidential information to which I have had access, including correspondence between HMRC and Mr Zahawi personally, I consider that an individual subject to the HMRC process faced by Mr Zahawi should have understood at the outset that they were under investigation by HMRC and that this was a serious matter.
9. I consider that an HMRC investigation of the nature faced by Mr Zahawi would be a relevant matter for a minister to discuss and declare as part of their declaration of interests. I would expect a minister to inform their permanent secretary and to seek their advice on any implications for the management of their responsibilities. I would likewise expect a minister proactively to update their declaration of interests form to include details of such an HMRC process.
10. After his appointment as Chancellor on 5th July 2022, Mr Zahawi completed a declaration of interests form which contained no reference to the HMRC investigation. A later form acknowledged (by way of an attachment) that Mr Zahawi was in discussion with HMRC to clarify a number of queries. Only following receipt of HMRC’s letter received on 15th July 2022 (dated 13th July), did Mr Zahawi update his declaration of interests form to acknowledge that his tax affairs were under investigation, but he provided no further details other than the statement made previously that he was clarifying queries.
11. Given the nature of the investigation by HMRC, which started prior to his appointment as Secretary of State for Education on 15th September, 2021, I consider that by failing to declare HMRC’s ongoing investigation before July 2022 – despite the ministerial declaration of interests form including specific prompts on tax affairs and HMRC investigations and disputes – Mr Zahawi failed to meet the requirement (at paragraph 7.3 of the ministerial code) to declare any interests which might be thought to give rise to a conflict.
Declaration of interests – settlement of tax matter and penalty
12. Following an in-principle agreement in August 2022, in September 2022 Mr Zahawi and HMRC reached a final settlement of his tax investigation. As Mr Zahawi has intimated in his public statement of 21st January 2023, the settlement included a penalty applied on the basis of ‘carelessness’ which, in this context, according to the HMRC compliance handbook, indicates an individual’s failure to take ‘reasonable care’ in relation to their tax affairs.
13. As set out at paragraph 11, I consider that Mr Zahawi should previously have declared the fact of the investigation. The subsequent fact that the investigation concluded with a penalty in relation to the tax affairs of a minister also requires declaration and discussion. It is a relevant interest which could give rise to a conflict, and particularly so in the case of HM Treasury ministers and the Chancellor of the Exchequer, who has responsibility for the UK tax system. As a result of my inquiries, I conclude that Mr Zahawi failed to update his declaration of interest form appropriately after this settlement was agreed in principle in August 2022. It was not until mid-January 2023 (see paragraph 16) that details of the earlier HMRC investigation and its outcome were declared.
14. I also conclude that, in the appointments process for the governments formed in September 2022 and October 2022, Mr Zahawi failed to disclose relevant information – in this case the nature of the investigation and its outcome in a penalty – at the time of his appointment, including to Cabinet Office officials who support that process. Without knowledge of that information, the Cabinet Office was not in a position to inform the appointing Prime Minister.
15. Taken together, I consider that these omissions constitute a serious failure to meet the standards set out in the ministerial code.
16. Mr Zahawi informed me that on 16th January 2023 he submitted, to his permanent secretary, his declaration of interests form in relation to his current role as Minister Without Portfolio, to which he was appointed on 25th October 2022, and that in that form he included detail of the outcome of the HMRC investigation. At the time of my investigation this declaration was under consideration by the permanent secretary and had yet to be submitted onward to me for consideration. Given the seriousness of this matter, I would have expected Mr Zahawi to attend to his submission much more rapidly and, as stated in paragraph 14 above, to have notified Cabinet Office officials at the time of his appointment.
Public statements
17. On 10th July 2022, following media speculation, Mr Zahawi made a public statement. He said: ‘There have been news stories over the last few days which are inaccurate, unfair and are clearly smears. It’s very sad that such smears should be circulated and sadder still that they have been published.
‘These smears have falsely claimed that the Serious Fraud Office, the National Crime Agency, and HMRC are looking into me. Let me be absolutely clear. I am not aware of this. I have not been told that this is the case.
‘I’ve always declared my financial interests and paid my taxes in the UK. If there are questions, of course, I will answer any questions HMRC has of me.’
18. Mr Zahawi has told me that at the time of this statement, he was under the impression that he was answering HMRC’s queries, but that he was not under investigation. As set out in paragraph 8, I consider that an individual subject to the HMRC process faced by Mr Zahawi should have understood that they were under investigation by HMRC and that this was a serious matter.
19. Under section 1.3(d) of the ministerial code, ministers have a duty to ‘be as open as possible with Parliament and the public’. Whilst this duty clearly does not extend to disclosing personal tax information, it does include a general duty to be accurate in statements to ensure a false impression is not given or maintained.
20. Mr Zahawi did not correct the record until 21st January 2023, when Mr Zahawi’s public statement indicated that he had reached a settlement with HMRC following an investigation. I consider that this delay in correcting an untrue public statement is inconsistent with the requirement for openness.
Conclusion
21. The general principles of the ministerial code are very clear. Paragraph 1.1 states, ‘ministers of the Crown are expected to maintain high standards of behaviour and to behave in a way that upholds the highest standards of propriety’. Paragraph 1.3 states, ‘The ministerial code should be read against the background of the overarching duty of ministers to comply with the law and to protect the integrity of public life. They are expected to observe the seven principles of public life’. One of the Seven Principles of Public Life is leadership, which requires that holders of public office should not only exhibit the principles in their own behaviour but also actively promote and robustly support the principles.
22. A minister of the Crown has a responsibility to lead by example, demonstrating not just compliance with the ministerial code, but being an exemplar for integrity in public life. This means upholding high standards of propriety in their conduct as citizens and being actively conscious of possible conflicts between their private interests (financial or otherwise) and their ministerial responsibilities. Paragraph 7.2 of the ministerial code states that, ‘It is the personal responsibility of each minister to decide whether and what action is needed to avoid a conflict or the perception of conflict’.
23. I consider that Mr Zahawi, in holding the high privilege of being a minister of the Crown, has shown insufficient regard for the general principles of the ministerial code and the requirements in particular, under the seven principles of public life, to be honest, open and an exemplary leader through his own behaviour. I want to commend Mr Zahawi for his willingness to assist with my inquiry. I also fully appreciate the pressures faced by ministers as they address the complex issues of government and the difficulties they encounter in balancing the demands of their personal lives and their ministerial responsibilities. These factors, however, cannot mitigate my overall judgement that 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.
Yours sincerely,
Sir Laurie Magnus CBE
From arriving in Britain as a Kurdish refugee to becoming Chancellor (via making a ‘f*** load of money’ as a ‘Del Boy’ businessman): The rise – and now political fall – of Nadhim Zahawi
By Martin Robinson, chief reporter, and Greg Heffer, political correspondent
Nadhim Zahawi’s political rise was extraordinary given he arrived in Britain, aged nine, in the 1970s as a Kurdish refugee from Iraq fleeing Saddam Hussein.
He went on to make a fortune founding polling firm YouGov and building a £100million property portfolio.
The 55-year-old Tory MP has previously been compared to Del Boy from Only Fools and Horses and a contestant trying to impress Lord Sugar on The Apprentice.
Friends have said that Mr Zahawi’s ‘real blood and passion was politics’ – but before being elected as MP for Stratford-Upon-Avon in 2010 he dedicated himself to making a ‘f**k load of money’.
Another friend in Parliament said: ‘He’s a sort of lovable wheeler-dealer type’, adding there is ‘a bit of Del Boy about him’.
Nadhim Zahawi is married to wife Lana (pictured in June 2021) and they have three children
A younger Mr Zahawi is pictured in his flat in Brompton, West London, with designer Broosk Saib in a flat he bought from Dutch supermodel Karen Mulder
But it was not always plain sailing for the married father-of-three in his business career.
An early venture as a young entrepreneur – selling Teletubbies clothing at the height of the show’s fame – went bust and backers, including former Tory grandee Jeffrey Archer, lost their money.
But he would become one of the richest politicians in the House of Commons after he helped found YouGov with friend Stephan Shakespeare, having studied chemical engineering at University College London.
In 2002 he took a gamble on ITV’s Pop Idol – the biggest show on TV at the time – that would make him even more money in a story friends use to explain his mindset in business and now politics.
Before the final between Will Young and Gareth Gates, the pundits were convinced that it would be Gates that would romp home.
But YouGov polling said otherwise, and he put thousands of pounds on Will Young to win, which he did, allowing the Chancellor to beat the bookies and pundits and makes a fortune.
Former YouGov head of political research Joe Twyman told Politico: ‘It tells you a lot about him. He really believed what we were doing was right, he was willing to take the risk, he enjoyed the showmanship and the fun of it all — but also he wanted to make f*** load of money.’
Not only did Mr Zahawi win the bet, he also used it to push YouGov’s credibility and three years later he is said to have made £5.7million when it floated.
The success of the UK’s Covid jabs rollout, which Mr Zahawi oversaw as vaccines minister, later led to Mr Zahawi’s promotion to the Cabinet
Former YouGov president Peter Kellner (right) has said Mr Zahawi would have made a ‘perfect’ contestant for TV game show The Apprentice
Mr Zahawi has been described in the past as a calculated risk-taker.
‘He isn’t reckless. He makes sure the odds are in his favour before he makes a bet’, the insider said.
Former YouGov president Peter Kellner has said he would have made a ‘perfect’ contestant for TV game show The Apprentice, if the show starring Lord Sugar had existed in the 1980s and 1990s.
‘He was very sharp and shrewd in business terms’, he said.
He added it was no surprise Mr Zahawi was a success as vaccines minister during the Covid pandemic because ‘in a sense, the vaccine job is like an Alan Sugar challenge writ very large’.
Mr Zahawi was privately-educated at King’s College School in West London and University College London where he studied chemical engineering.
He became MP for Stratford-on-Avon in 2010 – the first Kurdish Iraqi to be elected to Parliament.
His first Government role was as children’s minister from January 2018 to July 2019, during which time he attended the controversial Presidents Club Ball.
He was said to have been given a dressing down by the chief whip after complaints of sexism and harassment at the all-male gathering for the business elite.
He was appointed business and industry minister in Boris Johnson’s Government, before taking on the role of vaccines minister in November 2020.
The success of the UK’s Covid jabs rollout saw Mr Zahawi promoted to the Cabinet as Education Secretary in September 2021, when he replaced the embattled Sir Gavin Williamson.
After Rishi Sunak’s dramatic resignation as Mr Johnson’s Chancellor in July last year, Mr Zahawi stepped in as Treasury chief.
It was, ultimately, this appointment that led to his downfall.
Mr Zahawi in 2004 after being knocked off his moped on Albert Embankment – before the moped was given a parking ticket
Mr Zahawi kisses Boris Johnson’s wife Carrie at the 2019 Conservative Party Conference in Manchester in September 2019
Mr Zahawi walks through the Birmingham Conference Centre with then prime minister David Cameron in 2010
Father-of-three Mr Zahawi pictured in October 1996 when he was a businessman
Although he ended up only being Chancellor for two months, until Liz Truss replaced Mr Johnson as PM, his move to No11 coincided with scrutiny of his tax affairs.
An investigation by Mr Sunak’s ethics adviser, Sir Laurie Magnus, has now found Mr Zahawi made no reference to an HMRC investgation into him when he took over as Treasury chief.
Sir Laurie also criticised Mr Zahawi for failing to make proper disclosure of his tax dispute – or the fact he paid a penalty to HMRC – when he was subsequently appointed Chancellor of the Duchy of Lancaster by Ms Truss in September, or Tory chairman by Mr Sunak in October.
Prior to his ministerial career, during the MPs expenses scandal, Mr Zahawi was forced to apologise for claiming taxpayers’ money to heat his stables on his Warwickshire estate.
He has also previously faced scrutiny over his second jobs, before entering Government.
He was appointed chief strategy officer at Gulf Keystone Petroleum in 2015 and reported outside earnings which were the equivalent of an annual salary of £765,000.
He received a salary of £20,125 a month, for working between eight and 21 hours per week.
In addition to that, he received a string of bonuses between January and June 2016, adding up to £78,246.38, plus a payment of £52,325 made in September 2015 for 210 hours work, backdated to July last year.
Previously, Zahawi acted as an adviser to Afren, another oil company that went under in 2015.
