Long stories short
- California police arrested a 67 year-old man after the state’s second mass shooting in three days.
- Pakistan suffered a nationwide blackout leaving nearly 200 million people without power.
- Burkina Faso’s military government told French troops to leave the country.
- Everton sacked Frank Lampard after nine defeats in 12 Premier League games.
Cabinet shaker
Six months ago Nadhim Zahawi was in the running to be the UK’s prime minister. He’s still in cabinet, but fighting for his political life after being made to pay nearly £5 million in back taxes plus a seven-figure penalty. And there’s more: Tortoise has established that a company with close ties to Zahawi’s family failed for six years to comply with transparency laws designed to stamp out money laundering.
So what? The Zahawi affair exposes many of the failings of a party used to power and a prime minister who finds it hard to read the room.
- Zahawi was Chancellor of the Exchequer at the time he paid the penalty, in charge of the government department investigating his taxes.
- The signs are he wasn’t straight with Rishi Sunak or the public about his situation at the time.
- He’s now Conservative Party chairman.
- The breach of transparency laws by the Gibraltar-based company linked to his family is described by one expert as a “huge gap”. If deliberate, it’s a criminal offence.
Sunak is under mounting pressure to fire Zahawi but has bought time by ordering an investigation by his ethics advisor. One source says the PM toyed with sacking his party chairman late last week but was told “ignore it and it will go away”. Sunak is an ex-banker fond of detail to help him make decisions – but plenty of detail is already lying in plain sight:
2000 – Balshore Investments Limited Gibraltar acquires a 42.5 per cent stake in YouGov, a new polling firm founded by Zahawi and Stephan Shakespeare. Zahawi takes no shares himself. Balshore is instead held by a trust controlled by his parents.
2005 – According to Balshore documents a loan to Zahawi from YouGov is repaid via a deduction from a dividend due to Balshore.
2009 – YouGov’s annual report calls Balshore “the family trust of Nadhim Zahawi’s family”.
2017 – Balshore is listed at Companies House as a “person of significant control” (PSC) of Crowd2Fund, a person-to-person lending firm, although the documents are backdated to April 2016.
2018 – Balshore’s stake in YouGov is sold for an estimated £27 million.
2020 – Balshore’s listing as a PSC of Crowd2Fund is removed from Companies House documents. This amendment is also backdated to 2016.
2022 – Nadjat Al Zahawi and Hareth Nadhim Al Zahawi, Nadhim Zahawi’s parents, are named as PSCs of Crowd2Fund, with the same address in Gibraltar as Balshore. That same month Asoz Rashid, son of the Iraqi president Abdul Latif Rashid, becomes a company director alongside Hussain Qaragholi, who also has links to the Kurdistan Regional Government. Both are investors in Crowd2Fund.
The timeline shows how i) Balshore disguised the Zahawi family connection to Crowd2Fund for six years, from 2016 to 2022, despite rules requiring PSCs to be transparent all the way up the ownership chain; and ii) Balshore realised a handsome profit from the sale of its YouGov stake – on which it appears the tax due wasn’t paid in full until Her Majesty’s Revenue and Customs pursued it.
A spokesperson said last night that Zahawi “does not own Balshore, nor is he a beneficiary of it,” adding: “HMRC agreed with Nadhim’s accountants that this was the case, and any suggestion to the contrary is entirely untrue.”
But Zahawi has never denied that Nadjat Al Zahawi and Hareth Nadhim Al Zahawi are his parents; nor that he co-founded YouGov with money from his father.
Balshore’s apparent failure to comply with transparency laws is an especially bad look given
- the Conservatives’ long-running push, launched by David Cameron, for greater transparency from shell companies in offshore jurisdictions;
- the government’s separate struggle to convince voters about the propriety of an £800,000 line of credit set up for Boris Johnson when he was PM with the help of a man Johnson soon afterwards named as chairman of the BBC; and
- Sunak’s peculiar decision to reappoint Dominic Raab to the cabinet last year, despite an ongoing investigation into claims of bullying.
Graham Barrow, an anti-financial crime consultant, told Tortoise Balshore’s filings at Companies House “leave a huge gap of six years when, despite Balshore owning 40 per cent of Crowd2Fund, no declaration of the underlying owners of Balshore has been made, as required by UK law”. Barrow said these requirements were a central plank of government efforts to disrupt corruption and transnational organised crime.
But this is government by a party 12 years in power, used to insisting its members follow the rules that apply to everyone else regardless of evidence to the contrary. Zahawi says his unpaid tax was “careless”. Will whoever really controls Balshore offer the same excuse for being so coy for so long?
CAPITAL ECONOMY, BUSINESS AND FINANCE
Zero sun?
Europe’s worriers were right. The gigantic American clean energy package known misleadingly as the Inflation Reduction Act (IRA) is encouraging delegations from individual US states to tour Europe luring clean energy investors with promises of tax breaks and other incentives backed by Uncle Sam. Georgia and West Virginia sent their governors to Davos and they’re using the trip for investor recruitment on the side. So are teams from Michigan and Ohio, the FT reports. This is exactly what Macron and Brussels warned would happen as the IRA came into force: nearly $400 billion of federal pump-priming pulling private sector money west. But the worriers are surely wrong as well. Who said clean energy investment was a zero-sum game? Why can’t European investors taking advantage of US incentives take advantage of European ones too? Or was Mark Carney winging it in Glasgow when he said $130 trillion was out there looking for a role in the energy transition? Genuine questions all.
TECHNOLOGY AI, SCIENCE AND NEW THING
Why not Bing it?
Could the nice people behind ChatGPT help Microsoft challenge Google in search? Microsoft is investing billions – possibly around $10 billion – in OpenAI, whose ChatGPT software can produce serviceable poetry and prose from nothing more than a text prompt. Microsoft seems to think the non-profit research company could also help it beef up its Bing search engine, which for years has been a poor cousin to Google used by almost no one. Reuters says Microsoft is already using OpenAI tech in its Bing algorithms, and that the industry is talking about it as a potential Google rival for the first time in years. How generative AI could change search is a mind-bending question with, presumably, mind-bending answers. OpenAI was co-founded by Elon Musk, who doesn’t control it but did give it $10 million in 2016.
The 100-year life health, education AND GOVERNMENT
Bye Bye Baby
Japan’s prime minister has wondered publicly if his country “can continue to function as a society”. The problem: a low birth rate and an ageing population. The solution, according to Fumio Kishida, is to encourage young Japanese to have more children. If past attempts by successive governments are anything to go by, even the threat of societal collapse won’t be enough to turn the demographic tide. There is much more at play than just a reluctance to, as previous campaigns have urged, “go home and multiply”. Japan’s economy has been stubbornly sluggish since the 90s. Combine that with the cost of putting children through school, punishing work hours, society-wide hostility to immigration and a persistent patriarchal structure that leaves women facing the bulk of childcare – and it’s little surprise the country has been brought to the brink. Must read: the BBC’s Tokyo correspondent Rupert Wingfield-Hayes’ insightful farewell letter to Japan.
Our planet CLIMATE AND geopolitics
Renewables are us
Two graphs in this revelatory and mildly upbeat survey by the MIT Technology Review tell you everything you need to know about the potential of renewable energy to save the planet. One shows China’s carbon emissions from fossil fuels, trebling since the turn of the century. The other shows the carbon intensity of Chinese growth, falling by 40 per cent in the same period. The first is a big reason to worry that the world will sail past 1.5C of warming into a hellish droughtscape of crop failure and climate migration. The second is a big reason to believe China when it says it’ll pass peak carbon by 2030. For the record, the US, EU, Russia and Japan have already peaked. Not every graph is heading in the wrong direction.
CULTURE soCIETY, IDENTITY AND BELONGING
Nato on my mind
Sweden’s bid to join Nato has become even more fraught. On Saturday, an activist burned a copy of the Koran outside the Turkish embassy in Stockholm, drawing condemnation from the Turkish government but also from the opposition and wider public. Sweden, which has strong free speech protections, granted approval for the protest in advance – although senior ministers were quick to condemn the act. It wasn’t enough: yesterday, Recep Tayyip Erdogan, Turkey’s president, said Sweden should not expect his support in its Nato bid. Finland, which applied with Sweden to join the alliance, said this morning that Turkey was unlikely to make a decision until after elections on 14 May.
Thanks for reading. Please tell your friends to sign up, send us ideas and let us know what you think. Email sensemaker@tortoisemedia.com.
Catherine Neilan
@CatNeilan
Giles Whittell
@GWhittell
Additional reporting by Jessica Winch and Phoebe Davis.
Photographs Getty Images
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