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British Government Backs Down Over Ashcroft's Belizean Company

by Jason Gorringe, Tax-News.com, London

31 December 2001


Reports last week in tax-news.com that UK Minister Clare Short had called off her International Development Department vendetta against Lord Ashcroft, the controversial businessman, and his Belizean interests were confirmed when a person close to the Belize government said Britain had indicated it no longer wanted action against him. "The Ashcroft matter has been put on one side," he said. "The British government is no longer pressing that."

The Government had attempted to coerce the Belizean authorities into withdrawing tax exemptions given to Michael Ashcroft's main holding company, Carlisle Holdings, by threatening not to forgive any of the country's debt under its international debt relief programme. But the International Development Department said on Thursday: "The decision on whether or not to maintain the existing tax exemptions for public investment companies is for the government of Belize, although we have encouraged them to ensure that at least no further public investment companies should be created."

A parallel battle over Carlisle subsidiary Belize Telecommunications, the monopoly supplier in Belize, also appears to have gone Ashcroft's way: after a bitter argument at a cocktail party last year, the British High Commission in Belize began to use alternative telecommunications links. On Thursday 27th December the Foreign Office announced that the High Commission had resumed its use of Belize Telecommunications for international calls in May. Announcements the government would like to conceal are often made, like this one, on days when no-one is likely to notice.

According to the Financial Times, Ms Short was obliged to back down when Michael Beloff, a leading QC, warned that the Belize government might be vulnerable to legal action if it abolished the tax exemptions enjoyed by two 'public investment' companies in the country. They are Carlisle Holdings and Sonisa, a financial services group.

The Belizean Government had shown great reluctance to withdraw tax exemptions given to major investors in the country. Last week, a spokesman for Lord Ashcroft, who has claimed in the past that Ms Short's actions have constituted a 'Get Ashcroft' campaign, criticised the withdrawal of debt relief: 'The government is punishing Belize - a country hit by two hurricanes - by refusing to allow any relief from debt. This dog in the manger attitude is just punishing the people of Belize because the government would not agree to Britain's demands,' he said.


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