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Revealed: officials raised ‘flag’ over Nadhim Zahawi’s tax affairs before he was appointed chancellor | Nadhim Zahawi

A “flag” was raised by officers over the monetary affairs of the brand new chancellor, Nadhim Zahawi, earlier than he was promoted, the Observer can reveal.

Civil servants within the Cupboard Workplace’s propriety and ethics crew are mentioned to have alerted Boris Johnson to a HM Income and Customs “flag” over Zahawi earlier than his appointment. The PM appointed him regardless of the attainable considerations over his tax affairs.

“It is extraordinary that flags had been raised forward of Nadhim’s appointment by the Downing Avenue proprietary crew,” one supply mentioned this weekend. “These kinds of considerations would cease somebody receiving an MBE or OBE. The concept he could possibly be chancellor and even prime minister is unbelievable”.

The revelation comes after a report final week within the Unbiased that Zahawi was investigated by the Nationwide Crime Company (NCA). The investigation didn’t result in any motion and there’s no suggestion of wrongdoing.

Zahawi, 55, who is about to launch his management bid on Sunday, is below mounting stress over his monetary affairs. He is without doubt one of the richest members of the cupboard and has a private fortune of greater than £100m. He now faces calls to clarify the monetary preparations of his household belief, an offshore agency, Balshore Investments in Gibraltar, which held shares price greater than £20m in YouGov, one of many nation’s main polling companies, which he co-founded.

The corporate mentioned in an announcement to the Observer this weekend: “When Nadhim Zahawi was a director of YouGov plc, his useful pursuits within the firm included shares held by Balshore Investments Ltd, a household belief of Nadhim Zahawi.” A supply near Zahawi mentioned he “doesn’t have, and by no means has had, an curiosity in Balshore Investments and he isn’t a beneficiary.”

The belief held the shares for not less than seven years after Zahawi grew to become an MP in Might 2010, incomes dividends of lots of of hundreds of kilos. He didn’t disclose the household belief on the parliamentary register of pursuits when he grew to become an MP, however has mentioned he complied with all related guidelines on monetary pursuits.

Zahawi was chief govt and a director of YouGov till 2010, and Balshore Investments disposed of its YouGov shareholdings about eight years later. It’s legally permitted to carry belongings offshore, however Zahawi is now dealing with requires larger transparency.

Richard Murphy, professor of accounting follow at Sheffield College, mentioned offshore belief constructions had been usually arrange for tax benefits and Zahawi ought to clarify its objective. He mentioned: “It is incumbent on any politician to be clear about monetary affairs. It must be disclosed who’re the beneficiaries of this belief, whether or not any cash has been distributed and what tax has been paid.”

Lord Archer
Lord Archer: Zahawi struck up a friendship with him whereas campaigning for Iraqi exiles. {Photograph}: Victoria Jones/PA

Whereas an MP, Zahawi took a second job with the oil and gasoline firm Gulf Keystone Petroleum, which has an oilfield in Kurdistan. He was paid as much as £30,000 a month and extra bonus funds, stepping down when he grew to become a minister in 2018.

Zahawi’s rise to fortune and political success is an inspiring narrative for his management marketing campaign. He was born in Baghdad to Kurdish mother and father and arrived within the UK at 9, unable to talk English. He mentioned in a speech final 12 months that the UK and its training system “took in a younger Kurdish boy with out a phrase of English and made him a cupboard minister”. He grew up close to Crowborough in Sussex, and studied chemical engineering at College School London.

He struck up a friendship with the novelist Lord Archer whereas campaigning for Iraqi exiles who wished to see the overthrow of Saddam Hussein. Archer described the younger Zahawi as a “born organizer”, telling the BBC final 12 months: “In case you mentioned ‘I want six taxis, three airplanes and a double-decker bus, all in half-hour’ he went and did it.” Archer invested in a Midlands-based clothes firm the place Zahawi labored as a gross sales govt, which made garments below license for manufacturers equivalent to the kids’s present Teletubbies. The enterprise reportedly collapsed with the lack of 100 jobs.

In 1994, Zahawi grew to become a Tory councilor for Wandsworth in south London. He was enlisted to assist in Archer’s bid to develop into mayor of London within the elections in Might 2000. Archer was compelled to drag out of the race after admitting asking a pal to offer a false alibi earlier than a libel trial. In engaged on the bid, Zahawi and one other crew member, Stephan Shakespeare, discovered typical polling was gradual and costly. They based YouGov in 2000, which pioneered internet-based analysis and has develop into one of many UK’s main polling companies. It floated on the AIM market of the London Inventory Trade in 2005.

Zahawi and his spouse, Lana Saib, 56, have constructed an intensive property portfolio, with purchases together with a London townhouse, excessive avenue properties and an industrial property.

When the Cupboard Workplace was requested concerning the “flag” raised over Zahawi, a spokesperson mentioned: “Below the ministerial code, ministers should make sure that no battle arises, or may moderately be perceived to come up, between their ministerial place and their personal pursuits, monetary or in any other case.

“The chancellor has adopted the method set out within the ministerial code and complied with these necessities to the satisfaction of the earlier unbiased advisers.”

A spokesperson for Zahawi mentioned: “All Mr Zahawi’s monetary pursuits have been correctly and transparently declared.” A supply near Zahawi mentioned he and his spouse had by no means claimed non-domicile standing.”

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