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UK Conservative chair Zahawi set to face investigation on tax affairs, as Sunak resists calls to sack him

Conservative Party chairman Nadhim Zahawi. (Photo Credit: AFP)

UK Prime Minister Rishi Sunak has ordered an investigation into Conservative Party chairman Nadhim Zahawi over the multimillion-pound tax dispute he resolved by paying a penalty.

Allegations against Zahawi have piled pressure on Sunak, prompting him to order the probe on Monday, after he resisted the calls for sacking the former Chancellor of the Exchequer over his tax scandal.

Although he defended Zahawi in the Commons last week, the PM said there are still questions in the conservative chairman’s case 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.

The inquiry by new ethics adviser Laurie Magnus is expected to focus on Zahawi’s ministerial declarations, but it could extend to his prior tax arrangement and whether he lied to the media.

The investigation order came after Zahawi finally admitted that he reached a tax settlement with HM Revenue and Customs (HMRC) following an “error” over a controversial multimillion-pound shareholding in the polling company YouGov.

Britain’s tax authorities ruled he had been "careless" with his declarations. However, the chairman said he had not deliberately made an error in paying less tax.

In a statement, the conservative chairman insisted he “acted properly throughout” amid concerns about the settlement, estimated at around £5 million.

“I am confident I acted properly throughout and look forward to answering any and all specific questions in a formal setting to Sir Laurie,” Zahawi said, adding that he would not discuss the issue any further while the investigation was underway.

Meanwhile, criticizing Sunak’s probe order, Labour deputy leader Angela Rayner demanded direct answers from the Government in the Commons on Monday.

“Why does the Prime Minister need an adviser to tell him that this conduct is unethical? If this isn’t a breach of the Ministerial Code, surely the code itself is wrong and it’s the Prime Minister’s job to fix it,” Rayner said.

“If the Prime Minister came clean about what he knew and when, and took responsibility for the conduct of his own Cabinet, would we need yet another investigation into another member of his top team?” she asked.

Zahawi’s tax scandal comes on the heels of another separate scandal by former Prime Minister Boris Johnson, who recommended Richard Sharp as the chairman of the BBC in return for a loan guarantee.

The Labour party has reported Johnson to the Parliamentary Commissioner for Standards. However, Johnson has denied any conflict of interest over his role in appointing Sharp while in No 10.

Similar calls for a formal probe into the former PM’s loan affair came after the Time newspaper reported on Saturday that Richard Sharp was involved in arranging a guarantor on a loan of up to £800,000 for Johnson to finance his Downing Street lifestyle in November and December 2020.

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