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Saturday, March 06, 2010

The party of tax havens?

Meanwhile, the Times has further news that will add to the grief felt by the Tory Party over the Lord Ashcroft affair.

They say that Conservative Party’s last general election campaign was partly financed with a £750,000 loan from an offshore haven:

The money originated with a company based in the secretive tax shelter of Belize. The law bans overseas businesses from making gifts to British political parties but there is nothing to stop them lending cash in this way.

The offshore corporation is registered at the same address in the Central American state as the banking headquarters of Lord Ashcroft. The money was directed into a successful “target seats campaign”, which slashed Tony Blair’s majority, ensuring the defeat of 25 Labour and Liberal Democrat MPs and candidates.

They go on to report:

Until now, the location of the ultimate source of the money used at the 2005 election has not been known. Donations totalling nearly £850,000 were paid to constituency parties through a company called Bearwood Corporate Services, then based in Wokingham, Berkshire. Lord Ashcroft declared in the House of Lords register of interests on Monday that he controls that entity.

This donor business was a modest operation run by one man and his secretary. The Electoral Commission has found that it produced too little cash from trading to source such large gifts. Accounts filed at Companies House show that a British-based parent company, Bearwood Holdings, borrowed £750,000 from a lender called Sierra Investments Ltd during 2003-04.

During the same period, Bearwood Holdings gave £750,000 to Bearwood Corporate Services in exchange for 36,669 extra shares in the company. It already owned the subsidiary outright.

Bearwood Corporate Services began pouring cash into local constituency parties, mostly marginals. Election law forbids cash being given to parties by anyone other than individuals on the electoral roll or British-registered companies. It is an offence to enter into any arrangement to conceal or disguise the source of a gift.

The Times has traced Sierra Investments to the offshore company register in Belize, a Caribbean tax shelter where Lord Ashcroft has joint citizenship and bases part of his business empire. Companies like Sierra pay little or no taxes and are protected, with no disclosure of any information except the founding date and registered agent. Sierra’s agent is Belize Bank, established by Lord Ashcroft at 60 Market Square, Belize City.

There is no mention of Sierra Investments on Lord Ashcroft’s entry in the Lords’ register, which lists companies he controls or in which he owns significant shareholdings. The Times asked Lord Ashcroft about Sierra. His solicitors, Harbottle & Lewis, responded: “The fact that one event happened after another is no evidence at all that the two are causally connected.”

Let us hope that if the Tories ever get into power that they will stamp out the funding of political parties in this way. After all, Labour hasn't.
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