With the first of the Panama Papers were released the main media focus was on the implications for foreign political leaders, specifically the leaders of the Chinese Communist Party, the Prime Minister of Iceland, and Vladimir Putin. However over the last few days the focus has shifted to the Conservative Party. Although the current media circus is on protests demanding David Cameron resign and the horse-race politics from different political parties, the Panama Papers also revealed that the Conservative Party itself is bankrolled by individuals that avoid tax. The hypocrisy of Cameron may be a headline-grabber in the short-term, but it is the revelations about Tory Party donors that I think will have a more lasting impact.
Let’s get the headline stuff out of the way first. David Cameron has been implicated in a tax avoidance scheme. The details are focussed around the tax affairs of Cameron’s father who owned a fund that enabled people to avoid tax. At first I believed this to be a massive red-herring as you can’t transfer the sins of the father onto the son, but his admission of holding shares in this company changes that. When accused to hypocrisy Cameron’s defence, after repeatedly changing his story, was that he did hold shares in Blairmore, the fund operated by his father, but he didn’t avoid tax personally and that he sold the shares before he became Prime Minister.
I’m not going to pretend that I’m a financial expert so if those more knowledgeable than me say that he didn’t avoid tax then that’s fine. The actual criticism is that Cameron has deliberately used tax avoidance as an issue to garner support from the wider public. Perception is what matters in politics, and if people perceive that Cameron’s activities, even if they were totally legal, were ‘shady’ then he will be deemed as being hypocritical. Also on the second point Cameron gives, if people believe that what you did in this case was shady, it doesn’t matter if you sold the shares before you became Prime Minister, because he’s said that this kind of financial pissing about, for want of a better phrase, was immoral.
Now that we’ve dealt with the stuff about Cameron, we can turn to the stuff that really does the Tories damage. Since the revelations many Tory donors and some former Conservative politicians have shown to be heavily involved in these schemes. Let’s take one example.
David Rowland is a businessman who have given the Conservative Party around £3 million over his career. Rowland is a shareholder in literally dozens of offshore companies, and other members of his family have held shares and property in entities registered in the British Virgin Islands. One such company is Blackfish Capital which in 2009 bought a division of Kaupthing, the collapsed Icelandic bank. This division, upon it acquisition, had its banking operations restructured and merged with Banque Havilland, which is based in Luxembourg and is named after Rowland’s house.
This story, as the Panama Papers have shown, is not atypical. There are other Tory donors that have similar tax arrangements which are much more complicated. How can the Tories claim the moral authority when it comes to clamping down on tax evasion when the party is bankrolled by people who exploit these rules? The answer is that they can’t
Cameron’s tax affairs are largely a storm in a tea-cup, as if he did resign (which is incredibly unlikely) the Tories can easily find another leader. What will really do damage to the Tory brand in the long term is the perception of the party being in league with big businesses seeking to pay their workers poor wages whilst avoiding tax. Obviously to us on the Left this idea of the Tories representing the wealthy and the powerful is not especially ground-breaking stuff, but these revelations have the ability to challenge the Tories’ own narrative of working for the benefit of the common-man.
From reports I have read Mossack Fonseca, the firm where this leak came from, is the fourth or fifth biggest Panamanian company that engages in these sorts of activities. If 11.5 million documents were leaked and show systematic hypocrisy at the centre of the Conservative Party, what are the three bigger Panamanian firms are hiding?