The Conservative Party chairman Nadhim Zahawi tried to stop The Independent exposing that he was being investigated over his tax affairs by threatening to sue if we published.
Mr Zahawi, who was chancellor at the time, repeatedly said he had paid “all due taxes” and would take legal action if we reported that he had been investigated.
The Independent ignored his threats and published two reports, detailing how Mr Zahawi had faced inquiries from the Serious Fraud Office, the National Crime Agency and HMRC.
Mr Zahawi did not sue or complain to this newspaper – and has now reportedly paid a penalty of more than £1m to HMRC in a settlement worth almost £5m in total.
In an extraordinary exchange before The Independent broke the story that he was being investigated last July, Mr Zahawi repeatedly threatened legal action:
• When asked about the NCA inquiry, he responded: “100% I will take legal action.”
• When questioned about the HMRC probe, he responded: “I will take legal action.”
• When pressed for an answer, he responded: “I have responded to you. I repeat I will take legal action.”
The Independent first reported that Inland Revenue experts were investigating Mr Zahawi’s tax affairs on 6 July after a secret inquiry by the NCA in 2020.
That inquiry was codenamed “Operation Catalufa” – after a species of ray-finned fish, orange in colour found in deep waters in the Pacific known as Popeye Catalufa. The NCA inquiry was said to involve its International Corruption Unit.
Whitehall officials were told Mr Zahawi had not been informed because investigators were “trawling for information”. The NCA inquiry did not lead to action against Mr Zahawi.
On 9 July, The Independent reported officers from the Serious Fraud Office had investigated his financial affairs. The investigation had been passed to HMRC – controlled by the Treasury for which Mr Zahawi, as chancellor, was responsible. A Whitehall source said the tax investigation was “unresolved” at that time.
Then-prime minister Boris Johnson and home secretary Priti Patel and the Cabinet Office had all been informed.
Since the recent report that Mr Zahawi has agreed to pay millions to HMRC, he has been in hiding and refused to answer questions about the matter.
Last July, when we published our two stories, The Independent asked Mr Zahawi detailed questions.
Tory leadership contender Nadhim Zahawi claims tax investigation ‘a smear campaign’
In view of his refusal to respond following the recent reports, and amid growing pressure on him to do so from Labour and others, The Independent has decided to publish in full its correspondence with Mr Zahawi before our report on 9 July.
Asked now by The Independent to explain why he had said he would take legal action before our reports last July, Mr Zahawi did not respond.
Read the full exchange below:
Mr Zahawi, we have had it confirmed that your finances were investigated by NCA going back to 2019 (and are informed) they raised this matter with senior Whitehall figures.
Can you respond?
Can you give details?
Did you inform PM and Treasury of this when you accepted the job of chancellor?
Does this affect your ability to do your new job as chancellor?
Can you give assurances that you have paid all due UK taxes and obeyed all financial laws and regulations?
There was no such investigation by NCA. I have paid all due taxes and obeyed all financial laws and regulations.
We have spoken to a senior source who was approached by the NCA about it formally in 2019.
I would know if the NCA had investigated me. Right?
Are you adamant that the NCA never told you? Our source has a very clear memory of being approached by them formally and told they were looking at your finances.
100% I will take legal action. I can confirm that the NCA never approached me/told me anything ever in my career.
We have spoken to someone who was involved in the matter. There definitely was an NCA inquiry.
We are reliably informed it was the International Corruption Unit of the NCA (and it) started in 2020. SFO also involved. (We understand that) Whitehall figures were informed at the time (and that) Boris Johnson was aware.
Was it raised with you by him or anyone else when he appointed you chancellor? Has it ever been raised with you?
Have you been informed since taking over as chancellor that NCA and HMRC have been investigating your tax affairs?
You said yesterday you did not know about this. Are you certain?
Are you aware that Boris Johnson, Priti Patel and Cab Office were briefed on this in 2020?
How can a chancellor take charge of tax when he has been investigated for possible tax avoidance? We believe the investigation is still live.
Can you respond?
We plan to (publish) a story stating that the NCA SFO and HMRC have all been involved in investigating your finances/taxes since 2020. And that they briefed No 10, Cab Off and Home Off on this. We have had this information confirmed.
Can you reply to the following?
Has the HMRC now informed you of this?
Doesn’t it present a conflict of interest?
Will you make your tax declarations public?
I will take legal action.
We have asked you straightforward questions based on reliable information on the grounds of a clear public interest.
Can you respond please?
I have responded to you. I repeat I will take legal action.
It is normal practice to ask a politician for a response to serious questions in the public interest so it can be weighed up prior to publication. It is reasonable to expect a considered reply.
We have also established that HMRC inquiry into your tax affairs was carried out by their tax fraud investigators and that the investigation is unresolved.