How the Chairman of the Governing Conservative Party Became Sunak's Biggest Dilemma

After an independent tax investigation concluded that the governing Conservative Party had committed a serious breach of the ministerial code in Britain, Nadhim Zahawi was recently sacked from his party and government positions, according to Sky News.

Zahawi, who worked in Iraq after the US–British invasion, accompanied senior Kurdistan Regional government members in their meetings with British officials, including Boris Johnson.

According to what was published by the Financial Times last week, Zahawi is also accused of obtaining at least $1.6 million from interests in the Kurdistan region due to his close relations with the Barzani family.

Pressure has mounted on Zahawi after accusations that he settled a multimillion-dollar unpaid tax bill while in charge of the Treasury during a period of political turmoil in Britain last year.

The Independent revealed last week that the tax problems of the Conservative Party leader, which caused a sensation in Britain, are the first real test for Rishi Sunak since his election as prime minister last October.

After 13 years in power, the Conservative Party has been plagued by many scandals related to conflict of interest issues, especially in recent years, which has sparked accusations of corruption by their main competitor (the Labour Party), which is leading significantly in opinion polls.

 

Ministerial Breach

After a week of controversy and criticism, the British Prime Minister, Rishi Sunak, on January 29, 2023, fired the head of the Conservative Party, Nadhim Zahawi, from his position in the government, as a minister without a ministerial portfolio, based on an independent investigation into his tax affairs.

The Independent quoted Zahawi as saying that the British tax authorities concluded that he was careless in his announcements, but he did not intend to make a mistake or pay less tax, which came after a report was issued stating that he had paid a bill of $6 million to the British HM Revenue and Customs, including a 30% fine for not settling the correct amount at that time.

The taxes were related to the possession of shares in the global opinion polling company YouGov, which Zahawi co-founded in 2000 before he became a member of Parliament, according to the newspaper.

It stated that the dispute was resolved between July and September 2022, when Zahawi was Minister of Finance in the government of former Prime Minister Boris Johnson.

Then, with Sunak’s arrival in Downing Street at the end of October 2022, Zahawi became the Conservative Party chairman and a minister without portfolio in the government; at a time when Sunak announced that he did not know that Zahawi had previously paid a tax penalty after a new wave of allegations of financial irregularities in the ruling party undermined Sunak’s promise of impeccable management.

On January 23, 2023, the British Prime Minister assigned his independent advisor on government ethics, Laurie Magnus, to investigate whether Zahawi had breached ministerial law in relation to the millions of pounds he had to pay in settling a dispute with the tax authorities.

Sunak stated in a letter to Zahawi: “After completing the investigation of the independent consultant who informed me and you of its results, it is clear that a serious breach of the ministerial code has occurred.”

“Therefore, I inform you of my decision to remove you from your position in His Majesty’s government,” he added.

The case of Zahawi’s tax evasion was raised for the first time with his appointment as Finance Minister in Johnson’s government, succeeding Rishi Sunak, but Johnson, who was struggling to stay in office, ignored the case at the time. However, Zahawi became the focus of the first major scandal against Sunak, who had promised integrity and accountability, a few months later.

It is noteworthy that Sunak himself had been scrutinized over the tax arrangements of his wife, Akshata Murty, the daughter of an Indian billionaire.

Last year, Sunak and Murty appeared on the Sunday Times Rich List of the 250 richest people in the UK, and the newspaper estimated their combined net worth at $826 million.

It emerged last year that Murty had non-domicile status in the UK, meaning she could legally avoid paying UK tax on her foreign earnings from her family’s Infosys business group.

 

Corruption and Scandals

Reports of Zahawi’s multi-million-pound settlement shocked British tax officials, many of whom are struggling to survive amid a cost-of-living crisis.

His sacking also came as Sunak’s government, which is facing decades-high inflation and a wave of public sector strikes, is trailing poorly in opinion polls ahead of the expected 2024 election.

As for the reactions of the parties opposing the Conservative Party to this scandal that shook the ruling party, some of them indicated that the scandals that affected Boris Johnson’s tenure continued during Sunak’s reign, according to what the BBC reported on January 29, 2023.

Labour leader Keir Starmer said Sunak, who took office pledging integrity, professionalism, and accountability at all levels, should have dismissed Zahawi when the allegations were first reported this month rather than trying to buy time by launching an investigation.

In turn, Labour MP Bridget Phillipson said that the scandal had exposed Sunak as a weak leader, adding that “the stench of corruption still hangs around the Conservative Party.”

Kirsty Blackman of the Scottish National Party said: “The UK government is riddled with corruption and scandal. The only way Scotland can escape is by becoming an independent country.”

Meanwhile, Liberal Democrat Deputy Leader Daisy Cooper called on Mr. Zahawi to go a step further and resign as an MP.

 

Rich Politician

Nadhim Zahawi was born in 1967 into an influential Kurdish family. His grandfather was a central bank governor in the 1960s, and his signature appears on Iraqi banknotes.

His family immigrated to Britain to escape Saddam Hussein’s regime and settled in Sussex, southeast England.

In 2000, Nadhim became involved with another person in the opinion polling and market research services company YouGov, which achieved success and became influential in Britain.

Zahawi remained its chief executive until 2010, the year he entered the British Parliament as a Conservative MP for the Stratford-on-Don constituency.

The British Parliament at that time was still reeling from the impact of the huge expenses scandal that some deputies were demanding, and Zahawi quickly became embroiled in that scandal, as it turned out that he demanded the expenses of supplying his stables with electric power, but he later apologized and returned the sums paid to him.

Despite his foray into politics, Zahawi continued his career as a businessman, holding the position of Chief Strategy Officer at Gulf Keystone, which was managing the Shaikan oil field, one of the largest fields in the Kurdistan region.

He remained in this position from 2015 to 2017, so Zahawi received from Gulf Keystone $1.6 million for his services throughout that period.

Zahawi is considered one of the richest politicians in the British Parliament, and his wealth is estimated, according to the Express newspaper, at about $123 million.

Zahawi assumed his first ministerial portfolio in Theresa May’s government, who appointed him Parliamentary Under-Secretary of State for Children and Families in 2018, and then became Parliamentary Under-Secretary of State for Business and Industry in Boris Johnson’s government in 2019.

In the midst of the Coronavirus crisis in 2020, Johnson appointed him as Parliamentary Under-Secretary of State for COVID-19 Vaccine Deployment, and in 2021 he became Secretary of State for Education until he was appointed Chancellor of the Exchequer on July 5, 2022.

After Johnson’s resignation and Liz Truss assuming the presidency of the British government, Zahawi was appointed Chancellor of the Duchy of Lancaster, Minister for Intergovernmental Relations and Minister for Equalities, but he did not remain in that position for long, with her resignation from her position quickly.

Sunak, who assumed the premiership last October, had appointed Zahawi as chairman of the Conservative Party and Minister without Portfolio, and attending cabinet meetings was among the requirements of his job.

Nadhim Zahawi intends to publish his memoirs later this year, entitled A Boy from Baghdad: My Journey from Waziriyah to Westminster, according to the Financial Times on January 24, 2023.

“The last chapters of the biography may need to be completely rewritten in light of the recent developments that made the man the biggest dilemma facing the government of Rishi Sunak,” the newspaper added.

 

The Conservatives in Crisis

In the same context, Jim Pickard, chief political correspondent at the Financial Times, asked in an opinion article on January 29, 2023, about Sunak’s ability to overcome the era of malfeasance by conservative MPs.

The next looming controversy involves Dominic Raab, Deputy Prime Minister, Lord Chancellor and Secretary of State for Justice, who faces serious bullying allegations, which he denies.

The writer pointed out that the scandals involving Boris Johnson, who announced in July the decision to step down from the post of prime minister after the rebellion of the Conservative Party MPs, still cast a shadow.

Johnson, who is an MP, is due to be summoned soon to televised hearings as the Privileges Committee investigates whether he lied to MPs about the case of civil servants attending parties in Downing Street during the Covid-19 lockdown, according to the article.

The committee, which has a Conservative majority but is chaired by veteran Labour MP Harriet Harman, is looking into whether Johnson deliberately misled Parliament.

“If the committee finds that Johnson has contempt of Parliament, he may be removed from the House of Commons. If he is suspended for more than 10 days, a motion of no confidence can be presented and a possible by-election can be held,” Pickard explained.

Zahawi’s case is not the first problem that Sunak faces, as the Minister without Portfolio, Gavin Williamson, had previously submitted his resignation in November due to allegations of bullying his colleagues, which raised questions about the prime minister’s choices after only weeks of taking office.

The minister’s resignation came on the back of accusations that he sent threatening letters to MPs and former colleagues. British newspapers reported at the time that ministers accused Williamson of bullying.

The Conservative government is also under pressure over the appointment in 2021 of Richard Sharp as chairman of the BBC, since shortly before his appointment, this former banker played the role of go-between to help Johnson secure a loan while he was in Downing Street.

The British government presidency defended itself against any accusations of nepotism, and asked the government commissioner responsible for public appointments to review Sharp’s recruitment process, to see if it had been marred by any defect.