Rishi Sunak orders ethics adviser to investigate Zahawi’s tax affairs

UK prime minister Rishi Sunak has asked his ethics adviser to investigate the tax affairs of Nadhim Zahawi in a move that raises questions about the future of the Conservative party chair.

The government is confronting an ethics crisis on two fronts with BBC chair Richard Sharp facing allegations he helped Boris Johnson secure a private loan shortly before the former prime minister recommended his appointment.

Sharp asked the broadcaster’s board on Monday to review any potential conflicts of interest, just before Downing Street said it had asked for an investigation into Zahawi’s tax affairs.

“Integrity and accountability is really important to me,” Sunak said.

“There are questions that need answering and that is why I have 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 added: “I am pleased Nadhim Zahawi has agreed that approach and has agreed to fully co-operate with that investigation.”

By contrast, the prime minister told the House of Commons last week that Zahawi had “already addressed this matter in full and there’s nothing more that I can add”.

But Downing Street’s announcement of an investigation followed revelations on Friday and over the weekend that Zahawi settled a dispute with the HMRC tax authority while chancellor of the exchequer last year and paid a penalty as part of the settlement.

Reports suggest the total settlement was about £5mn.

Conservative MPs have raised doubts about Zahawi’s ability to remain in post given the mounting questions about his tax settlement.

However, Sunak said that, in line with “longstanding practice”, Zahawi would remain in post while the ethics adviser Sir Laurie Magnus investigated.

In the separate review under way at the BBC, Sharp who is a former Goldman Sachs banker and who became BBC chair in 2021, said he wanted to ensure “all the appropriate guidelines have been followed”.

The Sunday Times newspaper reported that Sharp was involved in arranging a guarantor for a loan of £800,000 to Johnson in 2020. 

“We have many challenges at the BBC and I know that distractions such as this are not welcome,” Sharp said in the statement, adding that he agreed with the BBC board’s senior independent director that the nominations committee of the board will look at the matter “when it next meets and, in the interests of transparency, publish the conclusions”.

Sharp denied any wrongdoing. He said he facilitated indirect contact — via the Cabinet Office — between Johnson and the Canadian businessman Sam Blyth, who underwrote the loan.

“I was not involved in making a loan, or arranging a guarantee, and I did not arrange any financing,” Sharp said.