UK leader fires party chairman over tax bill allegations

By MIKE FULLER and JILL LAWLESS
Associated Press

LONDON (AP) — British Prime Minister Rishi Sunak fired the chairman of the governing Conservative Party on Sunday for a “serious breach” of ethics rules in failing to come clean about a tax dispute.

Sunak had faced days of pressure to sack Nadhim Zahawi amid allegations he settled a multimillion-dollar unpaid tax bill while he was in charge of the country’s Treasury.

The prime minister acted after a standards probe found Zahawi had breached the ministerial code of conduct. It said he had failed to disclose details of his dispute with tax authorities and the fact that he had paid a penalty.

In a letter to Zahawi, Sunak said he had been forced to act to keep his promise that his government “would have integrity, professionalism and accountability at every level.”

Zahawi had acknowledged the tax dispute but argued his error was “careless and not deliberate.”

In his response to Sunak, Zahawi pledged to support the prime minister as a backbench lawmaker and made no reference to the ethics inquiry. He attacked the media — which first revealed his whopping tax bill, reported at almost 5 million pounds ($6.2 million) — and claimed some reporting did not reflect “legitimate scrutiny of public officials.”

Zahawi headed the U.K. Treasury from July to September 2022 in the final months of Prime Minister Boris Johnson’s tenure, and was appointed Conservative Party chairman when Sunak took office in October.

Sunak has vowed to restore order and integrity to government after three years of turmoil under predecessors Johnson – brought down by ethics scandals – and Liz Truss, who quit within weeks after her policies rocked the U.K. economy.

Last week he asked the government’s standards adviser, Laurie Magnus, to investigate Zahawi’s tax affairs and said he would wait for the results before acting.

In a report released Sunday, Magnus found Zahawi had shown “insufficient regard” for the requirement “to be honest, open and an exemplary leader through his own behavior” in public life.

The investigation into Zahawi by HMRC, the U.K’s tax office, centered around the sale of some 27 million pounds ($33.4 million) in shares in YouGov, an opinion polling firm he co-founded. The probe began in April 2021, but Zahawi did not declare it when he was appointed Chancellor of the Exchequer more than a year later.

The Magnus report found there should have been an understanding from the outset that the matter was serious. It said this was not reflected in public statements given by Zahawi, until he confirmed on Jan. 21 that a settlement had been reached.

Zahawi said Sunday it had been “the privilege of my life” to serve in government. The 55-year-old, who came to Britain as a child refugee from Iraq, was vaccines minister in the first year of the coronavirus pandemic, and later served a nine-month stint as education minister.

The Zahawi episode was a test of the authority of Sunak, who is grappling with a staggering economy and a deeply divided Conservative Party. Standards inquiries are also underway into Johnson — over claims he secured a loan with the help of a Conservative donor who was later appointed chairman of the BBC — and Deputy Prime Minister Dominic Raab, who faces allegations he bullied staff.

The stories are fuel for opponents who accuse Sunak — a former investment banker who is married to the daughter of an Indian billionaire — of leading a government of the wealthy that is out of touch with the struggles of ordinary people.

Last year, it was revealed that his wife Akshata Murthy didn’t pay U.K. tax on her overseas income, including 11.5 million pounds a year in dividends from Infosys, the Indian IT company founded by her father. The practice was legal, but it looked insensitive at best at a time when Sunak — who was then the U.K. Treasury chief — was raising taxes for millions of Britons.

Housing Secretary Michael Gove said Sunak had shown integrity in waiting for the facts before firing Zahawi.

“The electorate will have a chance to pass judgment,” he told Times Radio. “I hope and believe that by the time of the next general election, people will have seen that Rishi Sunak is someone who is deeply moral, deeply public spirited, and committed, above all, to public service.”