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Nadhim Zahawi and Crowd2Fund: Tory chair played secret active role in offshore-linked lender [1]
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Date: 2023-01
Nadhim Zahawi is more closely connected to an offshore-linked company at the centre of a tax row than has been publicly admitted, new evidence suggests.
The Conservative minister registered internet domain names for Crowd2Fund Limited shortly after Gibraltar-based Balshore Investments took a 50% stake in the peer-to-peer lending start-up in 2014.
Zahawi has denied being the beneficiary of Balshore, which is controlled by his parents. But a trawl of internet registration records has revealed that the Tory Party chair and former chancellor played an active role in the business it co-owned, registering more than a dozen domain names and continuing to own one of them until after he was made a minister.
His involvement with establishing Crowd2Fund’s online presence, uncovered in a joint investigation by openDemocracy, SourceMaterial and The Times, raises further questions over the extent of his links with Balshore.
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“This new information demonstrates that there’s been a total lack of transparency on Zahawi’s part about his true involvement with this organisation,” said Alistair Graham, former chair of the Committee on Standards in Public Life.
Fleur Anderson, Labour’s shadow paymaster general, said the revelations raised questions about Zahawi’s ministerial declarations.
“Nadhim Zahawi was actively involved in the operations of this company, going as far to register and hold its web domains in his own name, yet apparently failed to declare any actual or perceived conflict of interest while serving as a minister. There are questions not just about his complex web of financial affairs, but about his ministerial declarations and potential conflicts of interest,” she said.
Zahawi has reportedly paid £5m to HMRC to settle an outstanding tax dispute, including a 30% penalty.
HMRC took issue with Zahawi gifting his shares in YouGov, the UK polling giant he co-founded, to Balshore Investments.
Crowd2Fund was set up by Chris Hancock, the brother of Zahawi’s political ally Matt Hancock, and has benefited from political decisions. It was, for instance, one of ten companies selected to take part in a Treasury and Department of International Trade programme aimed at giving fintech businesses the chance to profit from the Australian market.
Crowd2Fund also benefited from deregulation in 2016 when the government promoted “innovative” tax-free financial products, which Crowd2Fund sells.
Zahawi did not disclose his work for Crowd2Fund on the MPs’ register of interests, yet has used Parliament to advocate for the wider peer-to-peer lending industry.
Chris Hancock did not respond to our questions but told the Guardian in 2017 that Zahawi wasn’t involved “hands on” in the company. Several months after that article, however, Zahawi was still active on the company’s behalf, registering yet another website – crowd2fund.uk – in his own name.
Zahawi’s parents were only listed as Crowd2Fund Ltd’s “persons of significant control” in June 2022, a few weeks before he left his post as education secretary to become chancellor.
One of Zahawi’s most significant moves in his brief period as chancellor was to introduce legislation to further deregulate financial services. He claimed the Financial Services and Markets Bill would “unleash growth” by replacing EU laws with “agile” regulation for the UK.
Peer-to-peer lenders, like Crowd2Fund, raise money from consumers to lend to businesses through an online exchange. Crowd2Fund was at the forefront of offering what it calls “Innovative Finance ISAs”. Unlike traditional ISAs, crowdfunding investments are not protected if things go wrong.
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[1] Url:
https://www.opendemocracy.net/en/dark-money-investigations/nadhim-zahawi-crowd2fund-balshore-investments-conservative-chair/
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