Foreign Office Memo Exposes Political Campaign Against Ashcroft

by Jeremy Hetherington-Gore, Tax-News.com, London

18 June 2001

Two weeks ago, during the UK election, Britain's International Development Minister Clare Short chose her moment just two days before the poll to attack Tory treasurer Lord Ashcroft's tax free status in Belize. In a series of calculated 'leaks', she let it be known that after the election she would press Belize to rescind the tax-privileged status of his companies there. Her argument was that Britain should not have to cancel debt repayments due from Belize if it is consciously allowing tax to go uncollected.

This specious piece of electioneering sacrificed the interests of the population of Belize to the narrow political interest of the Labour party. Now the discovery of a previously secret Foreign Office memo suggests that the entire Ashcroft 'affair' has been a deliberate political 'dirty tricks' campaign mounted by Clare Short and other Government ministers, aimed at undermining the Tories.

The memo was obtained by Michael Ashcroft's lawyers under the provisions of the Data Protection Act, and is from Timothy David, Britain's High Commissioner in Belize, to his masters in London. "To deny the decision (to suspend debt relief) had anything to do with Ashcroft renders it, in my view, even less intelligible," David wrote in December 1999. "There remain some difficult issues, which cause doubts in relation to the commitments to pro-poor policy. Some of these were highlighted at the time of the recent controversy over Mr Michael Ashcroft."

Clare Short had suspended debt relief to Belize and ordered an investigation into whether its tax system was harming the local poor. "We have no interest whatsoever in Michael Ashcroft," she said. "Our concern is with the poor of Belize."

Ashcroft has holdings in Belize and benefits from the country's system of tax reliefs, although they are no better or worse than those in many other Caribbean jurisdictions. But as Tory party treasurer and a major benefactor of the party, Ashcroft is a natural target for Labour.

Ashcroft's lawyers had requested material from the Foreign Office, the Department for International Development, the Department of Trade and Industry and the Cabinet Office. The material sent back was heavily censored, with some documents containing simply one word, such as "Belize". 'National security' (what else!) was given as the reason for the cuts, but it's easy to imagine that ministers suppressed politically-embarrassing material about Ashcroft.

Gerald Howarth, Tory MP for Aldershot, said this weekend that he would demand a parliamentary inquiry unless ministers could give "satisfactory" answers about the campaign against Ashcroft and the censorship of papers relating to him.

KPMG's report on Belize has just been submitted to Clare Short (after having been sent back once because it 'didn't specifically address the question of Lord Ashcroft's companies') and debt relief to Belize remains suspended. Ashcroft accused Short yesterday of victimising the state's poor to get at him.

"They [the people of Belize] are stigmatised by the actions of the UK government which the international community interprets as indicative of a wider malaise within the administration of the country," he said. "If the Labour party wants to pick a fight with me, it should do so at a time and in a place when poor and innocent people do not stand in the way."

The adverse publicity suffered by Ashcroft is thought to be a significant factor in his decision to step down as treasurer. Although he now lives in Florida and the UK, he started to run his international financial empire from Belize in the early 1990s. He holds dual UK and Belize nationality. His replacement is likely to be Scottish multi-millionaire Irvine Laidlaw, who lives in Monaco. At least Monaco doesn't owe any money to the British Government; but no doubt they'll find some other way of picking on it.

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