Sunak orders ethics probe into tax affairs of party chairman

The Prime Minister on Monday announced that he will ask his ethics advisor to look into a multimillion-pound tax dispute which Nadhim Zahawi resolved by paying a penalty.

Downing Street yesterday insisted that Mr Sunak retained confidence in the cabinet minister, and suggested that he did not know about the penalty when he defended Mr Zahawi in the House of Commons.

It comes as the public appointments watchdog declared that it will investigate the selection of BBC chairman Richard Sharp amid concerns over his role in helping Boris Johnson secure a loan.

No 10 said the inquiry by new ethics adviser Sir Laurie Magnus will focus on Mr Zahawi’s ministerial declarations, but it could extend to his prior tax arrangement and whether he lied to the media.

The investigation could also include claims Mr Zahawi falsely told officials he had not exchanged WhatsApp messages with Conservative former prime minister David Cameron about Government loans for Greensill Capital before it emerged they were deleted.

Mr Sunak has defied Labour demands to sack the minister, who insisted that he had “acted properly throughout” amid concerns about the settlement, estimated at around £5 million.

Launching the investigation, the Prime Minister acknowledged “clearly in this case there are questions that need answering”.

“That’s why I’ve asked our independent adviser to get to the bottom of everything, to investigate the matter fully and establish all the facts and provide advice to me on Nadhim Zahawi’s compliance with the Ministerial Code,” he told broadcasters during a visit to a Northampton hospital.

“I’m pleased that Nadhim Zahawi has agreed with that approach and has agreed to fully co-operate with that investigation.”

Mr Zahawi was understood to have paid a penalty – reported by the Guardian to be around 30 per cent – during the time he was chancellor under Boris Johnson between July and September.

Mr Zahawi’s tax affairs was one of two scandals Mr Sunak was dealing with relating to Mr Johnson’s period in No 10, with BBC chairman Richard Sharp reportedly helping the then-prime minister secure a loan of up to £800,000.

Mr Sunak distanced himself from both allegations, saying the chairman’s appointment was made by “one of my predecessors”, while saying he was not leading the country at the time Mr Zahawi was appointed chancellor.

William Shawcross, the commissioner for public appointments, yesterday said that he is to review the way competition for the BBC post was run to ensure it was in compliance with Whitehall rules.

Earlier, Mr Sharp insisted he was “not involved in making a loan or arranging a guarantee” for the then-prime minister, but acknowledged the row is a “distraction” for the broadcaster.

He told BBC staff members his role was merely to “seek an introduction” for Sam Blyth, who reportedly acted as guarantor for a loan to Mr Johnson, “to the relevant official in Government”.

He said: “This matter, although it took place before I joined the BBC, is a distraction for the organisation, which I regret. I’m really sorry about it all.”

Mr Johnson, who was responsible for Mr Sharp’s appointment, dismissed the allegations as a “load of complete nonsense”, insisting that Mr Sharp had no knowledge of his personal finances.