Jowell Distances Herself From Husband As Another Financial Scandal Rocks New Labour

by Robert Lee, Tax-News.com, London

07 March 2006

Despite winning the support of Labour MPs in the Commons yesterday, speculation persists over the political future of Tessa Jowell, the embattled Secretary of State for Culture in the cabinet of Prime Minister Tony Blair, as more details emerge about the financial affairs of her husband David Mills, a commercial lawyer who is alleged to have received a substantial bung from Italian Prime Minister Silvio Berlusconi after he was cleared of bribing tax officials.

However, it is not just the allegations of a GBP350,000 "gift" from Berlusconi to Mills in the wake of a corruption trial in the late 1990s that threatens Jowell's ministerial career and the reputation of an increasingly scandal-tainted government, but what she knew of her husband's alleged attempt to cover his tracks by laundering the gift through a series of offshore entities, hedge funds and loans secured on their London property, loans to which Jowell put her signature to - twice.

Although Mills insists that his business relationship with Berlusconi began in about 1989, the barrister turned commercial lawyer is reported to have had business dealings with the Italian leader as far back as 1980 when he began setting up a number of offshore entities, some of which were used for the purchase and sale of film rights for Berlusconi's growing media empire.

However, the current controversy dates back to 1997 when, it is alleged, Mills mislead an Italian court to help get Berlusconi acquitted in a trial where the future Prime Minister had been accused of bribing tax officials to obtain favourable audits for his companies.

Mills is said to have helped out Berlusconi in court again in 1998 when the British lawyer allegedly failed to declare what he knew about Berlusconi's business dealings. Then, in 1999, Mills received the now infamous gift which, according to media reports, originated from an account in the Bahamas. It was this that set off a train of events which has now led to calls for Jowell to resign and threatens to reduce Blair's already flagging popularity ratings ahead of May's local elections.

With the gift invested in an offshore hedge fund, Mills and Jowell decided in 2000 to remortgage their London home, valued at more than GBP400,000, using the money to invest in another hedge fund. Just weeks later, the couple cashed in their stake in this fund and paid back the mortgage.

Since the scandal broke Jowell has insisted that she did nothing wrong by putting her signature to the mortgage papers and has pleaded ignorance of her husband's complex financial affairs - perhaps a plausible excuse given newspaper reports suggesting that Mills tended to keep his affairs from even his closest family.

At the weekend the couple announced that they were to separate; Jowell's colleagues and confidants have reportedly cited an irrevocable breakdown in trust between the two. However, it is thought that the final straw in their marriage was Mill's claim to the financial authorities in Dubai that he had, through his wife's standing as a secretary of state, the backing of Prime Minister Blair in relation to the investigation by the Italian authorities.

Nonetheless, despite the separation, the speculation over Jowell's role in her husband's financial affairs is refusing to die down. While the Prime Minister has publicly backed Jowell, a loyal Blairite, and a cabinet office investigation has cleared her of breaching the ministerial code of conduct, the affair has prompted some unwelcome questions about the financial affairs of government ministers. Indeed, when questioned by the Daily Telegraph, only two members of the Labour cabinet were willing to reveal whether they had offshore accounts - one of whom was Chancellor of the Exchequer Gordon Brown who responded that neither he nor his wife had any assets held offshore.

Moreover, the affair is likely to bring accusations of hypocrisy from, on the one hand those who are suffering at the hands of the government's crackdown on tax avoidance, particularly through offshore accounts, and on the other from Labour's traditional working class support, and it is questionable whether Jowell will still be in office come May.

Recommended