UK PM Rishi Sunak removes Tory party chief over tax penalty row

British Prime Minister Rishi Sunak on Sunday sacked one of his Cabinet ministers and Conservative Party chairman, Nadhim Zahawi, after he was found to have been in serious breach of the Ministerial Code.

Zahawi, who was a minister without portfolio as the chief of the governing Tory party, had faced fierce pressure in recent days to quit over questions about his finances after it emerged that he had agreed a penalty settlement with His Majesty’s Revenue and Customs (HMRC) department.

Sunak had ordered an independent investigation into the Iraqi-born former Chancellor’s tax affairs amid growing Opposition demands for him to sack Zahawi.

His independent ethics adviser, Sir Laurie Magnus, submitted his assessment on whether the HMRC settlement amounted to a breach of the ministerial code.

“When I became Prime Minister last year, I pledged that the government I lead would have integrity, professionalism and accountability at every level,” writes Sunak in his letter to Zahawi, released by Downing Street.

"Following the completion of the independent adviser's investigation – the findings of which he has shared with us both – it is clear that there has been a serious breach of the Ministerial Code. As a result, I have informed you of my decision to remove you from your position in His Majesty's government," he said.

He added that Zahawi should be "extremely proud" of his "wide-ranging achievements in government over the last five years", particularly crediting his "successful oversight of the COVID-19 vaccine procurement and deployment programme".

In the correspondence to Sunak, also released by Downing Street, Magnus said his overall judgement was that "Mr Zahawi's conduct as a minister has fallen below the high standards that, as Prime Minister, you rightly expect from those who serve in your government".

Earlier this week, Zahawi said he welcomed the investigation and looked forward to "explaining the facts of this issue" to Magnus – the UK Prime Minister's Independent Adviser on Ministers' Interests.

"In order to ensure the independence of this process, you will understand that it would be inappropriate to discuss this issue any further, as I continue my duties as chairman of the Conservative and Unionist Party," Zahawi said at the time.

The minister has insisted he "acted properly throughout" and any tax error was due to being “careless” and not deliberate.

The Opposition parties and even some members of the Conservative Party had called for Zahawi to step down as Tory chairman amid too many unanswered questions.

In his report, dated 29 January, Magnus notes: "Given the nature of the investigation by HMRC, which started prior to his appointment as secretary of state for education on 15 September 2021, I consider that by failing to declare HMRC's ongoing investigation before July 2022 – despite the ministerial declaration of interests form including specific prompts on tax affairs and HMRC investigations and disputes – Mr Zahawi failed to meet the requirement to declare any interests which might be thought to give rise to a conflict." He adds: "I also conclude that, in the appointments process for the governments formed in September 2022 and October 2022, Mr Zahawi failed to disclose relevant information – in this case the nature of the investigation and its outcome in a penalty – at the time of his appointment, including to cabinet office officials who support that process.

"Without knowledge of that information, the Cabinet Office was not in a position to inform the appointing Prime Minister."

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