Chancellor ‘wasn’t told new finance watchdog had avoided paying tax’
THE row over the tax avoidance past of the man chosen to head Britain’s City watchdog deepened last night.
Charles Randell was made chairman of the Financial Conduct Authority despite using a notorious scheme to cut tax bills.
Yesterday it emerged the boss of the headhunting firm that recommended him for the job was an investor in the same scheme, Ingenious Film Partners 2. It was also revealed that the top mandarin at the Treasury failed to tell Philip Hammond about Mr Randell’s past.
The Chancellor must approve the appointment, as the FCA is responsible for policing the Square Mile and protecting consumers from bad behaviour by bankers.
However, sources claimed that permanent secretary Sir Tom Scholar failed to reveal that Mr Randell had used a tax avoidance scheme and was forced to repay £114,000 plus interest to HMRC.
The former corporate lawyer, who made £500 an hour advising the State on banking bail-outs, admitted to being part of the scheme during his recruitment.
He discussed the matter last year with headhunters at The Zygos Partnership, which was commissioned by the Treasury to find a watchdog chairman.
Its managing partner Luke Meynell was a fellow investor in the Ingenious scheme, although it is understood he does not know Mr Randell and played no role in his recruitment, which was handled by two other staff. Zygos told the Treasury about Mr Randell’s involvement in tax avoidance, but civil servants decided it was not a major problem as he had paid the money back.
Mr Randell, 59, then raised the matter himself during his interview. The appointment process was overseen by Sir Tom and the interview panel included former Marks & Spencer chairman Robert Swannell and Baroness Sarah Hogg, an FCA board member.
The peer’s daughter Charlotte was forced to quit as chief operating officer at the Bank of England last year after it emerged that she had failed to follow conflict of interest rules – despite writing them herself. Sources last night said civil servants did not consider the tax avoidance scheme important enough to raise with Mr Hammond. The Chancellor announced Mr Randell’s appointment last month and said he was ‘delighted’.
A senior Labour MP last night said the appointment was highly damaging to the credibility of the City watchdog and called for the lawyer to step aside.
Dame Margaret Hodge, former chairman of the Commons public accounts committee, said: ‘The public needs to have complete confidence in the individuals who fill these important jobs.’
Mr Randell told MPs this week his involvement in the scheme had been an ‘error of judgment’.
However, the Treasury select committee yesterday waved his appointment through. Chairman Nicky Morgan said MPs were assured there were ‘no other aspects of his personal tax affairs that might cast his judgment into further question’. Zygos, the Treasury, and the FCA declined to comment. There is no suggestion any individual involved was engaged in wrongdoing.