LAST UPDATE | 23 Jan 2023
UK PRIME MINISTER Rishi Sunak has ordered an investigation into Nadhim Zahawi as the Tory party chairman faced growing calls to quit after paying a penalty to resolve a multimillion-pound tax dispute.
Sunak today asked new ethics adviser Laurie Magnus to assess whether the former chancellor breached the ministerial code with the HMRC settlement.
Sunak said the minister, who is defying Labour demands for his resignation, would stay on during the inquiry, launched as a series of scandals mounted.
The UK Prime Minister told broadcasters: “Integrity and accountability is really important to me and clearly in this case there are questions that need answering.
“That’s why I’ve asked our independent adviser to get to the bottom of everything, to investigate the matter fully and establish all the facts and provide advice to me on Nadhim Zahawi’s compliance with the ministerial code.
“I’m pleased that Nadhim Zahawi has agreed with that approach and has agreed to fully co-operate with that investigation.”
An Zahawi ally said this morning that the former chancellor “absolutely” will not be quitting in the face of growing pressure over his settlement, estimated to be around £5 million.
Sunak has been urged by Labour to sack Zahawi, whom he brought back into a Cabinet-attending role after entering No 10.
The Prime Minister faces questions about the appointment as his promise of a premiership of “integrity” was thrown into disarray by a series of scandals.
A source close to Zahawi did not answer questions on the penalty but said: “He is absolutely not resigning.”
Zahawi has insisted his “error” over shares in the YouGov polling company he co-founded was “careless and not deliberate” .
The BBC was told that Zahawi did pay a penalty – reported by the Guardian to be around 30% – taking the total estimated settlement to around £4.8 million (€5.46 million).
The broadcaster confirmed the dispute was resolved while Zahawi was chancellor, between July and September, and ultimately the minister in charge of HMRC.
Labour has called for Zahawi to be sacked and for Sunak to “come clean” on what he knew about the minister’s tax affairs when he appointed him party chairman.
Elsewhere, Scottish First Minister Nicola Sturgeon has called for Zahawi to step down from his role.
“I think his position … is untenable. I think he should resign his current position as chair of the Conservative Party,” Sturgeon told reporters today.
“I would think he should resign his post, and if he doesn’t do so, rather than kicking it into the long grass and instructing an inquiry – as the Prime Minister has done this morning – I think the Prime Minister should remove him from office,” Sturgeon added.
A challenging weekend for Sunak began when police fined him for failing to wear a seatbelt as he filmed a social media clip from the back of a moving car.
The Sunday Times then reported that BBC chairman Richard Sharp helped Boris Johnson secure a loan weeks before recommending him for the role.
Zahawi sought to end questions about his tax affairs by releasing a statement saying questions were raised about his tax affairs when he was being appointed chancellor.
“Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation,” he said.
“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.“
Johnson was prime minister when he appointed Zahawi chancellor and the shadow of his leadership continues to raise challenges for Sunak.
The Sunday Times reported that Sharp helped secure Johnson an £800,000 (€911,000) loan weeks before the then-prime minister recommended him for the role.
Labour is demanding an investigation into the appointment of Sharp, a Tory donor.
Sharp told the Sunday Times he had “simply connected” people and there was no conflict of interest.
Johnson’s spokesman dismissed the report as “rubbish” and insisted his financial arrangements “have been properly declared”.
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