LORD MYNERS, the minister in charge of the government’s assault on tax havens, has used a blind trust to conceal £250,000 of his own money in an offshore shelter.
Details of the secret holding have been obtained by The Sunday Times as G20 leaders gather in London pledging to stamp out tax abuses.
Myners transferred 500,000 of his own shares in the Ermitage hedge fund, based in Jersey, into a blind trust when he became a minister in October.
MPs described the holding as “blatant hypocrisy” and said it would undermine the credibility of Gordon Brown’s offensive on tax avoidance.
Myners will come under further pressure this week over his role in signing off a £16.9m pension pot for Sir Fred Goodwin, the disgraced former chief executive of Royal Bank of Scotland. Sir Tom McKillop, the former RBS chairman, will hand in a statement to MPs challenging Myners’s version of events.
Company documents obtained by The Sunday Times show Myners held his Ermitage shares as recently as January this year. He concealed the holding from public scrutiny by placing it in a ministerial blind trust. Ministers are not required to disclose publicly the investments transferred to such trusts. He owned the shares while overseeing price-sensitive policy decisions. During this time he met Jersey officials who now say they have “nothing to fear” from any tax haven crackdown.
Last Thursday Myners pledged tough penalties against tax havens. Downing Street officials say a key plank of the G20 summit in London this week will be to impose higher taxes on companies which do business with firms offshore.
Norman Baker, the Liberal Democrat MP, said: “Here is a minister calling for greater financial transparency and the end of tax havens while concealing his own tax haven investment. It’s blatant hypocrisy.”
Peter Luff, the Tory chairman of the Commons business and enterprise select committee, called for Myners’s resignation. “It is clear Myners is entangled in tax havens,” he said. “He should now go.”
In 2006 Myners backed the £40m acquisition of Ermitage. He was appointed chairman and had a 5% stake for which he paid £250,000.
The shares were held in his blind trust and it is believed they were quietly sold on his behalf by a private bank in the past few weeks. Ministers typically create blind trusts to avoid possible conflicts of interest over their financial affairs, but critics say they can be used as a means of concealment.
Hedge funds operating in Jersey can avoid paying corporate tax on profits and are not required to comply with the tougher regulations of the City of London. They manage more than £40 billion of funds.
Myners resigned from his business roles when he was appointed City minister. These included his chairmanship of the Guardian Media Group and his role at Ermitage.
Documents filed with the Jersey Financial Services Commission reveal that he still had a stake in the hedge fund as recently as January. His stake was the fifth largest in the company, which in 2006 was managing more than £1.5 billion of investments.
A spokesman for Caledonia Investments, which owns 40% of Ermitage, said Myners’s shares had been sold since January. He was unable to disclose the date of the sale or the amount.
Myners met Jersey government officials in December, in the course of his official review of tax havens, while still a significant shareholder in Ermitage.
Frank Walker, then chief minister of Jersey, described the meeting as “positive” and earlier this month Geoff Cook, chief executive of Jersey Finance, which promotes financial services on the island, said it had “nothing to fear” from any tax haven crackdown.
Myners has considerable expertise in offshore finance. The Sunday Times revealed last week that he helped to set up a reinsurance business, Aspen Insurance Holdings, in Bermuda in 2002. It has now emerged that in 2006 and 2007 he sold shares in the company worth nearly £1.4m.
US Securities and Exchange Commission documents show that Myners sold shares for £120,259 in September 2006. He sold a further tranche for £1,268,259 in May the following year, within days of stepping down after five years as Aspen’s chairman.
Alan Duncan, the Conservative leader of the House of Commons, said: “Myners has just not come clean. The more and more he is questioned, the more his story unravels. ”
The Treasury declined to comment on whether Myners had owned or sold shares in Ermitage. A spokesman said he had correctly disclosed his interests to his permanent secretary and paid all tax at the relevant UK rate. “[Lord Myners] is UK domiciled for tax purposes, which means all of his UK and foreign income and capital gains are taxed in the UK at the relevant rate,” said the spokesman.
Jon Ungoed-Thomas and Robert Watts
March 29, 2009
Source: The Sunday Times