PM ‘sacked Zahawi without a fair hearing’
Allies of Tory chairman say Sunak rushed to remove him for political expediency
ALLIES of Nadhim Zahawi last night claimed he had been sacked by Rishi Sunak without being given a fair hearing over allegations that he had misled officials about his tax affairs.
The Prime Minister announced the Tory party chairman’s dismissal at 9am yesterday, citing the findings of a report by Sir Laurie Magnus, his ethics adviser, that Mr Zahawi had committed seven breaches of the ministerial code.
But the former minister’s allies suggest the report was rushed out for political expediency and say he was only given one 30-minute meeting to defend himself. And they said a number of key facts in his favour were not included by Sir Laurie, including that he told a senior civil servant about an HM Revenue & Customs (HMRC) investigation into his tax affairs and subsequent fine.
Mr Zahawi’s dismissal comes at a time when Mr Sunak is struggling to keep party unity, with splits over economic strategy and planning reform.
Last night Mr Sunak was warned by George Osborne, the former chancellor, that his leadership of the party was in danger of being “pulled down by scandal”, like that of Sir John Major.
Another of Mr Sunak’s ministers, Dominic Raab, the Justice Secretary, faces a separate inquiry into allegations of bullying.
Mr Zahawi, who was appointed as party chairman in October, had been facing damaging reports that he had settled an estimated £4.8million bill with HMRC while he was chancellor, including paying a penalty.
Mr Sunak initially resisted calls to sack his colleague immediately and instead stressed the need for “due process”. But the report by Sir Laurie, the Prime Minister’s independent adviser on ministers’ interests, was published only six days later, and allies of Mr Zahawi last night said that the conclusions had been rushed amid pressure on Mr Sunak to appear decisive.
In his report, Sir Laurie said that Mr Zahawi had been guilty of repeated “omissions”, citing his failure to update his register of interests until more than a year after HMRC started looking into his taxes. When Mr Zahawi reached a settlement with the taxman in August 2022, this too should have been declared, Sir Laurie said.
“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,” he wrote.
In a letter published yesterday morning, Mr Sunak told Mr Zahawi that he believed he had committed 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.”
Mr Zahawi is furious about the decision to sack him, and is considering issuing a formal response to Sir Laurie’s report, The Times reported. Allies of Mr Zahawi disputed Sir Laurie’s conclusions, alleging that he told Sir Tom Scholar, the then Treasury permanent secretary, about the HMRC investigation and the fine – something that did not appear in Sir Laurie’s report.
Sir Tom was sacked from the Treasury by Kwasi Kwarteng, Liz Truss’s chancellor, in September. Allies of Mr Zahawi say it is not clear whether Sir Tom was interviewed and that it should be easy to find out whether Mr Zahawi told him and whether this was passed on to the Cabinet Office.
They also claimed he had updated his ministerial register of interests in September, when he was appointed to the Cabinet by Ms Truss. Sir Laurie’s report said this did not happen until January.
The allies questioned why he only had one chance to set out his case to Sir Laurie in one 30-minute meeting in the Cabinet Office last Wednesday. They said Mr Zahawi had been expecting a subsequent meeting, but he was told on Saturday night that this would no longer take place.
In his reply to the Prime Minister, Mr Zahawi did not refer to the findings of the inquiry – and he did not apologise – but he did pledge loyalty, saying: “You can be assured of my support from the backbenches in the coming years.”
It comes as Mr Sunak faces pressure from allies of his predecessor, Ms Truss, who are calling on him to cut taxes in March’s Budget to promote growth.
Some supporters of Boris Johnson are also hoping for his return to Downing Street, believing that he was pushed out unfairly by Mr Sunak’s resignation as chancellor.
Mr Sunak’s Chancellor, Jeremy Hunt, is insisting that inflation must be tackled before taxes can be cut. Michael Gove, the Levelling Up Secretary, told the BBC: “Because someone commits a lapse or a sin, that shouldn’t be [taken] as an opportunity to damn an entire organisation or a way of working.”
NADHIM ZAHAWI’S allies claim he was given just 30 minutes to make his case before the independent ethics investigator over a tax affairs inquiry which had been rumbling on for more than 18 months.
The Tory chairman was removed from his post after Sir Laurie Magnus concluded that he had been guilty of a “serious breach” of the ministerial code.
Sir Laurie detailed at least seven occasions on which the code was breached and accused Mr Zahawi of repeatedly failing to act with openness and honesty.
He also revealed that talks with the HMRC about the tax bill had been going on since April 2021.
Rishi Sunak could have summarily dismissed Mr Zahawi last week when political pressure on the Prime Minister was at its highest and it first emerged that Mr Zahawi had faced a penalty for not paying the taxes he should have. Instead Mr Sunak opted for due process – allowing an investigation to take place led by Sir Laurie as the independent adviser on ministerial interests.
However, last night allies of Mr Zahawi raised questions about the process and asked why was the inquiry so short, especially as it had been expected that it would run for three weeks?
Did Mr Sunak, in fact, end up by giving in to political pressure to get rid of him early, before Sir Laurie was able to properly investigate the case?
Downing Street denies the charge, but Mr Zahawi’s allies asked why it was that he only had 30 minutes on Wednesday to put his case to the ethics adviser.
And why did the report not reflect the former chairman’s insistence that he told the top civil servant at the Treasury that he had paid a penalty when he was chancellor?
The allies believe that by acting at such speed, Mr Sunak may be guilty of having denied Mr Zahawi the chance to put his case.
One MP, Robin Walker, told the BBC at lunchtime: “I do know that he personally feels very strongly that he should be able to clear his name in this.”
The Zahawi affair has indeed moved at remarkable speed. Less than two weeks ago Mr Sunak told MPS at Prime Minister’s Questions that 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-onavon MP, having taken him “at his word” over the matter. But, three days later, Mr Zahawi corrected the record to say he had paid a penalty, and the Prime Minister was forced to act.
Last Monday, Mr Sunak asked Sir Laurie to look at the case and the pair held their first and – it now turns out – only face-to-face encounter in the Cabinet Office on Wednesday. A day later, the Thursday, Mr Zahawi attended the Cabinet away day at the Prime Minister’s Chequers country retreat.
It is understood that Mr Zahawi played only a small role in the Chequers meeting, even though ministers discussed how the party could improve its electoral position – the main job of the Tory chairman. Instead, the presentation was given to elections adviser Isaac Levido: a sign, perhaps, of the way Mr Zahawi was being sidelined.
All was then quiet until, according to Mr Zahawi’s allies, he was told late on Saturday that there would not, after all, be a second meeting with Sir Laurie.
Events then moved quickly, the public announcement of the sacking came at 9am yesterday, just as Michael Gove was sitting down to do an television interview with the BBC’S Laura Kuenssberg.
Downing Street said that Mr Sunak received Sir Laurie’s report a “couple of hours” before – refusing to put an exact time on when the email dropped.
They said the watchdog’s findings were “conclusive”, so the Prime Minister took a quick decision to sack Mr Zahawi.
“He took the view that there is no point in waiting, and transparency means it was right to publish the letter as soon as possible,” said a No10 source.
Mr Sunak rang his chairman and told him he had been sacked. No details were given on how the call went and how Mr Zahawi reacted.
The receipt of the report so early on a Sunday was particularly awkward for Mr Gove, the Levelling Up Secretary, who was doing a round of broadcast interviews at the time.
Soon after 8am, Mr Gove was interviewed by Sky’s Sophy Ridge – an interview which was broadcast at 8.30am.
Although it is understood that Mr Gove knew something was happening in the Zahawi case, he did not know what – and in the interview he gave no indication that there was going to be any movement in the case.
Next he was up in front of Laura Kuenssberg on BBC One, with the interview set to start soon after 9am.
Just before the programme went on air, Downing Street emailed political journalists with the findings of the review and the Prime Minister’s letter to Mr Zahawi, relieving him of his role.
It meant that Mr Gove could finally answer questions on his colleague’s departure, after he had been put in the picture by No10 shortly before the public announcement was made.
Questioned about the timing, the Downing Street source said: “There is no good time to do these things. We don’t make decisions on when to announce things based on who is on TV, otherwise we wouldn’t ever announce anything.”
The source denied that Mr Sunak regretted not sacking his chairman last weekend when it emerged he had not told the whole truth about the penalty he had received.
“It might have been politically more convenient but he wanted an investigation to establish the facts,” the source said. “And indeed the investigation revealed some more facts that had not been made public. Everyone can say it was obvious last week, but the Prime Minister believes in proper process.”
Around an hour after it had been announced that he had been sacked, Mr Zahawi put out his own letter, pledging support for Mr Sunak. But there was no apology, and Mr Zahawi also took the extraordinary step of criticising the press for its role in his downfall.
He singled out a headline from online Independent newspaper, which said the “noose” was tightening around his neck – even though it was The Independent which had first reported questions surrounding his tax affairs.
Now allies of Mr Zahawi are questioning whether the report tells the whole story. They told The Spectator that he did tell Sir Tom Scholar, the then Treasury permanent secretary, about both the HMRC investigation and the penalty paid. They also claim his ministerial register of interests was up to date in September, when Liz Truss appointed him Chancellor of the Duchy of Lancaster.