– Tony Blair and the £8million tax ‘mystery’ (Telegraph, Jan. 7. 2012):
Former Prime Minister Tony Blair channelled millions of pounds through a complicated web of companies and paid just a fraction in tax, The Sunday Telegraph can reveal.
Official accounts show a company set up by Mr Blair to manage his business affairs paid just £315,000 in tax last year on an income of more than £12 million. In that time, he employed 26 staff and paid them total wages of almost £2.3 million.
The accounts provide the strongest evidence yet of the huge sums generated by Mr Blair through his various activities since quitting Downing Street in June 2007.
He runs a business consultancy – Tony Blair Associates – which has deals with the governments of Kuwait and Kazakhstan among others and is a paid adviser to JP Morgan, an American investment bank, and to Zurich International, a global insurance company based in Switzerland. Mr Blair makes a further £100,000 a time from speeches and lectures while also presiding over a number of charities including a faith foundation.
Mr Blair has previously been criticised for cashing in on contacts made in Downing Street and these accounts will likely add to those concerns.
The documents also reveal that in the two years until March 31 last year, Mr Blair’s management company had a total turnover of more than £20 million and paid tax of about £470,000.
The scale of Mr Blair’s finances are shown in accounts lodged by Windrush Ventures Limited, just one of a myriad of companies and partnerships set up by the former prime minister. Windrush Ventures Ltd’s “principal activity” is the “provision of management services” to Mr Blair’s various other interests.
The accounts for the 12 months to March 31 were lodged with Companies House in the week between Christmas and New Year and made publicly available for the first time last week. Previously the accounts have contained almost no information because Windrush was classified as a small company. This time auditors appear to have been obliged to divulge more information because of the amount of money being handled.
The accounts show a turnover of £12.005 million and administrative expenses of £10.919 million, leaving Windrush Ventures with a profit of just over £1 million, on which Mr Blair paid tax of £315,000. The tax was paid at the corporate tax rate of 28 per cent.
Of those expenses, £2.285 million went on paying 26 employees at an average salary of almost £88,000. Windrush Ventures also pays £550,000 a year to rent Mr Blair’s offices in Grosvenor Square, a stone’s throw from the US embassy in Mayfair in central London and a further sum of about £300,000 on office equipment and furniture. But those costs amount to a little more than £3 million, meaning almost £8 million of “administrative expenditure” is unexplained in the accounts.
It is not known from the accounts what happened to that huge sum.
Tax specialists who have studied the accounts have told The Sunday Telegraph that the tax paid in 2010 of £154,000 and £315,000 in 2011 appears low because costs have been offset against the administrative costs, which remain largely unexplained.
One City accountant, who did not wish to be named, said: “It is very difficult to see what these administrative costs could be. It is a very large amount for a business like this. I am sure it is legitimate but it is certainly surprising.
“The tax bill of £315,000 is explained by the large administrative costs that are being treated as tax allowable.”
Richard Murphy, a charted accountant who runs Tax Research LLP and has studied Mr Blair’s company accounts, said: “There is about £8 million which we don’t know where it goes. That money is unexplained. There is no indication at all why the administration costs are so high. What has happened to about £8 million which is being offset against tax?”
There is no suggestion that Mr Blair’s tax affairs are anything other than legitimate. His accounts are audited by KPMG, one of the world’s biggest accountancy firms. Mr Blair presides over 12 different legal entities, handling the millions of pounds he has received since leaving office. Another set of companies, which are run in parallel to Windrush Ventures, are called Firerush Ventures and appear to operate in exactly the same, oblique way.
The money paid into Windrush Ventures Ltd largely comes from Windrush Ventures No. 3 Limited Partnership, which appears to be where money is deposited before being spread around other companies, ultimately in Mr Blair’s ownership. The limited partnership does not have to disclose publicly any accounts allowing its activities to remain secret.
Mr Murphy said last night: “It is in the limited partnership where things really happen. But that is the one Mr Blair keeps secret. We don’t know how much money is in the LP. It is completely hidden. The question is why is Tony Blair running such as a completely secretive organisation?”
A spokesman for Mr Blair said last night: “The Windrush accounts are prepared in accordance with the relevant legal, accounting and regulatory guidance. Tony Blair continues to be a UK taxpayer on all of his income and all of his companies are UK registered for tax purposes.”
The spokesman added that the accounts did not relate to any of Mr Blair’s charitable activities, which raised money separately as independently registered charities.
The spokesman chose not to explain what happened to about £8 million of administrative expenses.
– Blair Inc’s ‘baffling’ increase in earnings (Guardian, Jan. 7. 2012):
Accountants question transparency of financial records kept by former PM’s complex web of companies
Unemployment is rising and companies are going to the wall as the economic turmoil continues to inflict damage across the globe. But one organisation is thriving. Records recently filed at Companies House show Tony Blair Inc is going from strength to strength. They reveal that income channelled through a complex network of firms and partnerships controlled by Blair rose more than 40% last year to more than £12m. Of this, almost £10m was paid for “management services”. The money was transferred via a network of firms and financial vehicles.
Accountancy experts are questioning the arcane nature of the network’s finances, which makes it difficult to trace where its money is coming from, or where it is being spent.
Accounts for Windrush Ventures, an obscure company that operates under the trading name “the Office of Tony Blair”, suggest 2011 has been a successful year for the former prime minister. Windrush saw its turnover rise to just over £12m, up from £8.5m in 2010. Pre-tax profits rose from £729,000 to £1.1m.
The accounts reveal that the company received “remuneration of £9,837,000 in connection with management services” from a limited liability partnership ultimately controlled by Blair. In the previous year Windrush Ventures Limited received £5.2m in remuneration for providing management services. Exactly what sort of management services are provided, and how the company derives its income, are impossible to determine as the accounts do not go into detail. Blair is legitimately taking advantage of laws allowing him to limit what his companies and partnerships must disclose. “It is baffling; these accounts make remarkably little sense,” said accountancy expert Richard Murphy of Tax Research UK, a firm that scrutinises company finances. “This limited disclosure is not within the spirit of the law. ”
Public documents have disclosed that a related financial vehicle, Windrush Ventures No3 LP, received almost $2.5m (£1.6m) from the Bill & Melinda Gates Foundation in 2008 to fund projects aimed at poverty relief in Sierra Leone. A Sainsbury family charity, the Gatsby Foundation, gave £992,000 in 2010 for charitable projects in Rwanda.
A spokesman for Blair explained the grants were in relation to his Africa Governance Initiative, now registered as a separate, independent charity. He declined to comment on how much, if any, of Windrush’s income was derived from private business activities advising heads of state and global corporations. In the past year Blair has advised Nursultan Nazarbayev, Kazakhstan’s president, who is reportedly keen to win the Nobel Peace Prize. It also emerged that in 2008 Blair wrote to the then Libyan leader, Colonel Gaddafi, discussing potential African infrastructure investments he should consider. In both cases, his spokesman denied Blair was personally profiting from the discussions.
Blair has been criticised for the way his private and philanthropic activities have appeared to merge. In his role as the Quartet’s representative to the Middle East he helped persuade Israel to open up radio frequencies so a telecoms company, Wataniya Mobile, could operate in the West Bank. He also championed the development of a gas field off the coast of Gaza, operated by British Gas.
Both Wataniya Mobile and British Gas are major clients of JP Morgan, the US investment bank that pays Blair £2m a year for his role as a senior adviser. Blair said he had been unaware that both companies were clients of the bank and his spokesman stressed the deals were vital in bringing prosperity to the region.
Windrush Ventures Ltd spent almost £3m on staff, rent and other services but had total administration costs of almost £11m. “Just what is this company doing?” Murphy asked. “You would expect total costs to be around double the costs of employing staff. But in this case total administrative costs are £10.9m. That’s a very high ratio indeed.” He added: “We have no idea where this money is coming from or how it’s being spent. The structure seems designed to impose a veil of secrecy over its accounts.”
Blair has lucrative advisory roles for companies including luxury goods firm LVMH and Swiss insurer Zurich. He has undertaken work for the Kuwaiti royal family, an Abu Dhabi-based investment house and a South Korean oil firm. Much of his private business interests are thought to be channelled via another set of linked firms called Firerush Ventures. One of the firms has a licence from the Financial Services Authority allowing it to provide investment advice.
Blair’s spokesman said: “Across all of his activities there are more than 120 people employed around the world. The Windrush accounts are prepared in accordance with relevant legal, accounting and regulatory guidance. Tony Blair continues to be a UK taxpayer on all of his income and all his companies are UK registered.”