Lord Ashcroft - The story of the Tory Donor who has dodged £127 million in tax
- Adam R. Brosnan
- Oct 5, 2017
- 7 min read
Michael Ashcroft – 95th richest person in the UK – is worth a respectful £1,350,000,000, according to the Sunday Times Rich List 2017. Ashcroft has an interesting back story and appears to embody a classic story of success built upon savvy business acumen. That said, after establishing himself as a prominent figure in the city, he turned to becoming a major donor to the Conservative party. However, this Tory bank fund was not without its controversies originating from Lord Ashcroft’s non-domicile status which allows claimants to pay very little in UK income tax.
During his tenure, David Cameron was subjected to public pressures to reveal Lord Ashcroft’s tax status, but dismissed the pressure and insisted it was a private matter and therefore not admissible to the general public. This was because during the 2010 election cycle, the large donations received by the Tory campaign from Ashcroft, prompted Cameron to overlook this ethical quagmire by claiming it was his ‘patriotic duty’ to beat Labour candidate Gordon Brown. In response to this, then home secretary Alan Johnson accused the Tories of hypocritically weaponising ‘patriotism’ by allowing funding from someone he viewed as ‘basically unpatriotic’.
When the coalition government with the Liberal Democrats came into power, Ashcroft received nothing in return for his ‘generosity’ to Cameron’s campaign. The driving force behind this snub is believed to have been due to Nick Clegg’s intervention, blocking Cameron from appointing Ashcroft to a high ranking role in the new government.
Cameron later offered Ashcroft junior whip in the foreign office, to which Ashcroft replied ‘After putting my neck on the line for nearly 10 years – both as party treasurer under William Hague and as deputy chairman – and after ploughing some £8m into the party, I regarded this as a declinable offer. It would have been better had Cameron offered me nothing at all.’
Establishment quarrels aside, this ‘pay for play’ system cannot and should not be acceptable in a functioning democracy, let alone these figures feeling emboldened enough to openly discuss their disenfranchisement after failing to bribe their way into relevance.
In addition, because Ashcroft and many other non-domiciled establishment figures exploit loopholes in our taxation system, an amendment was introduced to the Constitutional Reform and Governance Bill in 2010.
The amendment requires all MPs and peers to be domiciled in the UK for tax purposes. This prompted Lord Ashcroft to surrender his status as a non-domicile resident in the UK to retain his seat in the House of Lords. However, in March 2015, Lord Ashcroft announced he was resigning his seat because his business activities did not allow him ‘to devote the time that membership properly requires’. This abrupt resignation of his seat was bizarre given his prominent interest in UK politics and thusly prompted the question - did he resign his seat to restore his non-domicile status and reduce his UK tax bill?
This question went unanswered by Ashcroft, but a document obtained by The Independent demonstrated in the week proceeding his resignation, Lord Ashcroft sold 350,000 shares in an American company netting him £7,600,000. If Ashcroft retained his peership, UK taxation law would have taken 28% of this through capital gains (£2,100,000). However, if the sale was completed at the beginning of a new financial year, he could reinstate as a non-domicile citizen and avoid this cost, as the shares were in an American company, and therefore regarded foreign earnings by the HMRC. A spokesman for Lord Ashcroft declined to comment on his tax status.
Margaret Hodge, then Labour chair of the Public Accounts Committee, said ‘It cannot be right that the system allows people to opt in and out of non-domicile status depending on their circumstances in any given year’.
While Lord Ashcroft stood down from his seat, he continues to spend hundreds of thousands of pounds on polling and owns several political websites including Conservative Home.
The Billionaire ex-Tory peer is aptly nicknamed as Britain’s ‘Pollfather’. However, it is no secret that as a House of Lords peer he ran polls and targeted marginal constituencies for David Cameron. Since he stepped down from the House of Lords, many have speculated that he was no longer beholden to the Conservatives and therefore regarded as a neutral pollster by which many believe will enable unprecedented tactical voting. This supposition of neutrality is difficult to maintain considering Ashcroft’s lifelong support of the Conservatives and even more so considering his estimated donations are said to top £10,000,000.
Ashcroft truly is an excellent pollster, but in 2005, when working in the interest of David Cameron, more controversy was born after he privately funded ‘the biggest political polling exercise in British history’.
The polls were carried out by YouGov and Populus, and estimated to have cost £250,000. However, sources told the Guardian, that the bills were paid by one of Ashcroft’s companies in Belize, which would have allowed him to dodge VAT of about £40,000.
Treasury spokesman for the Liberal Democrats told the Guardian: ‘This is quite serious. We are now not talking just about Ashcroft's non-dom status, but about systematic tax avoidance in funding Conservative party activities such as polling. How far were the Conservatives aware that Ashcroft did not pay VAT, as would have been incurred by any normal polling activity?’
In response to the allegations, a Conservative spokesperson said ‘We do not recognise this as Conservative party polling.’ For those of us not familiar with the tongue of the ruling class, this roughly translates to ‘am a bovad?’
This more recent controversy concerning the right honourable gentleman’s dubious behaviour is not new, rather, more of the same. For instance, letters published by The Guardian between Tony Blair, Lord Thomson, and William Hague in 1999/2000 demonstrate a lifelong pattern of this behaviour.
Also, in 1999, Ashcroft’s international business activities were further marred in controversy after an intelligence research specialist for the US drug Enforcement Administration (DEA) leaked Ashcroft’s name as being on their radar.
The Times – Rupert Murdoch’s attempt at a high-brow paper – printed these allegations on their front page. However, if you trust Ashcroft’s Wikipedia page, ‘later investigation by various British media sources from information released under the US Freedom of Information Act showed that at no point did the DEA personally investigate Ashcroft’.
On March 31st 2000, Ashcroft came to be successfully nominated to the House of Lords and sought legal action against The Times. After a back-and-forth between the two parties, they decided to settle the issue out of court which resulted in The Times printing a full front page retraction of its allegations ‘The Times is pleased to confirm that it has no evidence that Mr Ashcroft or any of his companies have ever been suspected of money-laundering or drug related crimes… Litigation between the parties has been settled to mutual satisfaction, with each side bearing its own costs’.
So, this leaves two alternatives: 1) The Times openly admits to lying to its readership/country 2) Ashcroft and Murdoch cut a mutually beneficial deal behind closed doors
As a true believer in the excellent service Wikipedia provides, I, like everyone else who uses the site, should check the references for credibility. The previous quote claims to reference a Guardian article that wholly exonerates the right honourable gentleman – yet provides a hyperlinked source which doesn’t seem to exist, and while ‘technically correct’, is omitting key elements of what actually happened – including high ranking Tories leaning on the BBC’s Panorama investigation into Lord Ashcroft.
Ashcroft was correct when he said there wasn’t any evidence implicating him directly with crimes and the DEA was not investigating him of doing so. However, the tax haven he controls in Belize, as with most, encourages fraud, money laundering, drugs and bribery in the area with corruptible officials.
Ashcroft began his don’t ask don’t tell business venture in the early 1990s when he bought a controlling stake in the largest local bank – the Belize Bank – and encouraged local politicians to pass laws that encourage secretive offshore financial dealings, and rewarded such officials by paying annual registration fees to the government – to us common folk, these can be referred to as bribes.
This unregulated environment created a hot bed for illegal activities such as:
The Banner Fund. Two Californians funnelled UK/US tax payers out of $6.5m
The Ricke case. US drug smugglers moved $700,000 of ill-gotten gains into Belize offshore companies – though not proven. One $25,000 was reportedly paid into the bank controlled by Ashcroft – though no evidence the bank or Ashcroft knew the money was dirty
The half-ton of cocaine. DEA arrested a trafficker linked to the Cali cartel. However, the embassy reported ‘he effortlessly escaped from imprisonment’ in 1995 – aided by incentivised officials. This fiasco ended with Washington listing Belize as ‘a major drug transit country’.
All this morally bankrupt, yet completely legal, activity began after the International Business companies (IBC) act was legislated in 1990 which allowed individuals to establish shell companies to outmanoeuvre one’s tax authority.
Due to the lack of credible government oversight during legislation, IBCs were not mandated to be audited. Therefore, fake/shell companies can declare profits without evidencing where the money came from – tax free of course – and then legally transfer the money to a bank account in their home country.
Ashcroft, however, has a different spin of events. In 1996 Ashcroft gave his interpretation of events at the US embassy. ‘Ashcroft insisted that little, if any, money laundering is conducted in Belize,’ said an embassy official.
However, for example, the aforementioned Ricke Case was not proven. This is due to the anonymous nature of IBCs. The properties were listed under ownership of several anonymous entities, of which the ownership was protected by the way the Act was legislated.
So, while Ashcroft was ‘technically correct’ that he was not being directly investigated for criminal activity, it is no secret that his bank and legislative efforts created this environment for nefarious activity.
So, in light of information discussed, it seems The Times were onto something which may not be illegal, but certainly ethically dubious.
Returning to the suggested possibility of a deal between Ashcroft and Murdoch regarding coverage of Ashcroft’s potential criminal activity, an interesting timeline of events emerges, particularly after Ashcroft’s 2004 $1,000,000 donation to the Australian ‘liberal’ party that was, and still is, backed by Murdoch. Was this the deal the two cut behind closed doors?
Ashcroft is just one of many establishment elites who exploit our archaic taxation system, to incur wealth that can objectively be viewed as stolen from UK government services such as the NHS, in order to bolster his economic and political status.
It is high time we expose these elitists and take action against ‘the few’ in the name of ‘the many’
We cannot continue to have an elitist party in government that turns a blind eye to elicit dealings and in return gets campaign donations.
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