IN THE commercial district of Belize City, a tax haven and former British
colonial outpost, are the offices of the company Stargate Holdings.
Virtually unheard of in the UK, this secretive firm is revealed this weekend
as one of the Conservative party’s biggest donors.
Stargate has channelled £6m to the UK in the past three years, a large chunk
of which appears to have ended up in the Conservative party accounts. The
offshore company appears to have alighted on a lawful scheme that
circumvents the banning of foreign donations to British political parties.
The 5,200-mile trail from the market square in Belize City to Conservative
party headquarters in Westminster is documented in hundreds of balance
sheets, share registers and donations records seen by The Sunday Times. All
the signs point to it being orchestrated for one man: Lord Ashcroft, the
billionaire deputy chairman of the Conservative party.
When Tony Blair came to power in 1997, he pledged to outlaw foreign donations
in a drive to make party funding more transparent. The Conservatives faced
criticism over a number of controversial donations, including gifts from
Octav Botnar, the former boss of Nissan UK who died in 1998; Asil Nadir, the
Cypriot businessman who fled Britain after his Polly Peck group failed; and
Ashcroft, who was under scrutiny for his overseas donations because he was
based in a tax haven.
Responsible for the party’s polling and marginal seat strategy, Ashcroft is
now one of the most feared and powerful figures in Cameron’s modern and
largely voter-friendly party. He is an intriguing character. Partly brought
up in Belize where his father was posted as a civil servant, he made his
first fortune from a cleaning company he bought in his twenties with a
£15,000 loan.
He has a passion for collecting Victoria Cross medals. A generous donor to the
Conservatives, Ashcroft, who still has extensive business interests in
Belize, was appointed party treasurer in 1998. He was initially blocked for
a peerage, but was made a peer in 2000 on the condition that he would become
resident in the UK and hence start paying British taxes.
To this day he has not said whether he has honoured that pledge. Ashcroft’s
political donations in recent years can be tracked by the records of the
Electoral Commission, the watchdog created to maintain the probity of the
electoral system.
He was last listed as an individual donor in April 2002, but has since given
through Bearwood Corporate Services Ltd (BCS), a small British company which
he is said to control. While Michael Howard was Conservative leader, BCS
gave £950,000, largely channelled to constituencies.
When Cameron took the helm, the donations increased significantly and have
totalled about £3.1m since the end of 2005, including donations in kind. BCS
is now the party’s biggest corporate donor. The money is matched by power.
Described by one lunch companion as possessing a somewhat unsettling
presence and “the most intimidating stare you’ve ever seen”, Ashcroft now
presides over a small fiefdom at Conservative central office. He sits on the
party’s management board and keeps tight control over campaigns in target
marginal seats.
So where has all the BCS money come from? Three years ago, Ashcroft described
BCS as a “small merger-broking business” and said it was run by a loyal
employee, Lyn Austen. But when contacted last week, Austen said he no longer
worked for the company and that its corporate merger business had been sold.
He said BCS was controlled by Ashcroft.
BCS’s current registered office is that of its auditors, BDO Stoy Hayward in
Ocean Village, Southampton, a water-front complex built in the late 1980s.
Stuart Lisle, head of tax at BDO Stoy Hayward, was unable to say where BCS
operated, who worked for it and the nature of its business. He cited client
confidentiality. It is a legal requirement that any British company that
donates to a political party must be “carrying on” business. It is unclear
what the trade of BCS now is or how it generates any revenue from this
country.
BCS’s accounts, however, reveal a key source of its wealth since Cameron’s
rise to power, and it comes from overseas.
According to the accounts for the year ending March 2006, the company received
£4.79m in cash in exchange for shares during that year, which were bought by
its holding company Bearwood Holdings. Bearwood Holdings had got that money
from an issue of its shares, which it had sold to Astraporta UK for £5.54m.
Astraporta, in turn, had apparently got the money from Belize, selling
shares to Stargate Holdings in Belize for £6m in two transactions in October
2005 and March 2006.
It is a complex sequence of deals, but the thread of money appears to run from
Stargate Holdings in Belize City to the heart of Tory finances. This was not
denied by Ashcroft or the Conservatives last week.
Richard Murphy, a chartered accountant who reviewed the accounts for The
Sunday Times last week, concluded in a six-page report: “It appears that
funds subscribed for new capital [in BCS] were used wholly or mainly to
finance payments to the Conservative party.
“The capital did come indirectly, but very obviously, from Stargate Holdings
in Belize in what was a clear, coordinated and planned action, most of it
taking place on one day [March 29] in 2006.”
Tax is unlikely to have been paid on the money from Belize when it came into
the country via the share subscriptions. BCS is also unlikely to have paid
significant tax because it has made significant losses in the past three
years, largely due to the political donations.
It is thought to have only two employees.
Astraporta increased its share capital to £25m in March 2006, but has only
sold £6m of shares to its parent company, Stargate. It means another £19m
could potentially be brought into the UK if required to help boost Tory
funds as the party approaches the general election.
It is believed that Stargate Holdings is controlled by Ashcroft, but in Belize
last week a Sunday Times reporter was unable to obtain any public
information regarding its shareholders, business activities or annual
turnover. Stargate’s registered address is shared with the Belize Bank,
owned by Ashcroft’s company BB Holdings.
The disclosure over the Belize funds will put pressure on Cameron to make a
clear statement on whether Ashcroft is resident in the UK. He has previously
said he has been given assurances on this matter, without clarifying whether
Ashcroft is domiciled in the country for tax purposes.
The exact reason for the BCS scheme is unclear, but it may have been seen by
Ashcroft as a tax-efficient means of giving significant funds to the party.
There is no suggestion any laws have been broken.
Ashcroft’s spokesman said the BCS and the businessman had complied with all
legal requirements. He would not comment on whether Ashcroft was resident in
the UK and paying tax.
An Electoral Commission spokesman said it was unable to comment on the BCS
donations or whether the rules were sufficiently robust unless it received a
complaint.
A Conservative party spokesman said: “The Conservative party compliance unit
applies two strict tests to all company donations in accordance with
Electoral Commission guidance. They are: is the company UK registered and is
the company trading?
“The donations from Bearwood Corporate Services Ltd Limited met those tests
and were therefore legal and permissible.”
Additional reporting: Joe Lauria in Belize and Natasha Vashisht
Controversial donations
- February to May 2005: financier Michael Brown, 42, who has since been
charged with money laundering and fraud offences, donated £2.4m to the
Liberal Democrat party via his company 5th Avenue Partners Ltd.
- March 2006: cash for honours: police launched investigation after it was
revealed 12 businessmen secretly loaned Labour nearly £14m. Four of them
were subsequently nominated for honours. Nobody was charged.
- September 2006: the Conservatives faced calls to disclose the identity of
backers of the Midlands Industrial Council, which had donated more than
£950,000 to MPs and party funds. The party eventually published a full
list of the council’s 22 members. They included Robert Edmiston, who was
interviewed in the cash-for-honours inquiry, and Sir Anthony Bamford the JCB
businessman.
- November 2007: David Abrahams, a Newcastle-based property tycoon, was
revealed to have made donations worth more than £650,000 to the Labour party
through intermediaries, in breach of electoral law. The Crown Prosecution
Service is still considering whether to take action. January 2008: John
Lyon, the parliamentary standards commissioner, launched an investigation
into George Osborne, the shadow chancellor, after complaints that £500,000
in donations were not declared on the MP’s register of interests, although
they had been disclosed to the Electoral Commission. Lyon concluded that the
Conservatives had acted in good faith in trying to interpret the rules.
The money trail
Stargate Holdings, Belize City Acquires shares in Astraporta UK 2005-6: £6m
Astraporta UK Buys shares in Bearwood Holdings 2005-6*: £5.54m
Bearwood Holdings Buys shares in Bearwood Corporate Services 2005-6*: £4.79m
Bearwood Corporate Services Money paid to the Conservative party since
March 2006: £2.9m
*Other funds used to pay off loans or other liabilities
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