Revealed: UK's Head of 'Tax Simplification' Is Helping Set Up a Tax Haven

A government tax adviser and one of Theresa May’s “business ambassadors” are helping to create a tax haven in Kazakhstan. 

Chancellor Phillip Hammond’s advis­er on “tax sim­pli­fi­ca­tion” is help­ing the auto­crat­ic President of Kazakhstan launch a finan­cial “cen­tre” that crit­ics view as a new tax haven, VICE can reveal. One of Theresa May’s “Business Ambassadors” is involved in the same deal.

Angela Knight, a for­mer Tory MP, has been head of the Treasury’s Office for Tax Simplification since 2015, when George Osborne gave her the job, charg­ing her with “sim­pli­fy­ing the UK tax system”.

Since February, Knight has been Deputy Chairman of the Astana Financial Services Authority in Kazakhstan. Her job is to help this board reg­u­late the “Astana International Financial Centre” (AIFC), a tax haven being set up by the President of Kazakhstan.

This comes after VICE revealed that for­mer Tory min­is­ter Francis Maude also took a job with the AIFC, despite the fact that British involve­ment in the AIFC is both­er­ing tax and anti-cor­rup­tion cam­paign­ers. Existing tax havens like Jersey or Bermuda already have prob­lems with “dirty mon­ey”, tax eva­sion and mon­ey laun­der­ing. Kazakhstan, a Central Asian coun­try neigh­bour­ing Russia, has been ruled by President Nursultan Nazarbayev since 1990, and is known for its cor­rup­tion. There are no free elec­tions, and Nazarbayev’s oppo­nents have been impris­oned or tor­tured. The chances that the AIFC will also have to bat­tle dirty mon­ey prob­lems seem pret­ty high.

The fact that a key Treasury tax advis­er is help­ing run a Kazakh tax haven rais­es ques­tions over how seri­ous­ly the Conservative gov­ern­ment takes its promis­es to crack down on tax avoidance.

VICE asked the Office for Tax Simplification if there was any con­flict of inter­est in Knight’s Kazakh job. A spokesper­son said, “The appoint­ment to the Astana Financial Services Authority was ful­ly declared, con­sid­ered appro­pri­ate, and entered on Angela Knight’s reg­is­ter of inter­ests. The role in Kazakhstan involves advis­ing the Kazakh author­i­ties on how to improve their gov­er­nance and finan­cial regulation.”

The spokesper­son defend­ed the AIFC, say­ing the Kazakh tax haven was being set up to meet inter­na­tion­al reg­u­la­to­ry stan­dards. Knight’s role on the Kazakhstan board is to bring respectabil­i­ty to the AIFC; the board’s duties include “fos­ter­ing and main­tain­ing con­fi­dence in the AIFC’s finan­cial sys­tem and reg­u­la­to­ry regime” and pre­vent­ing “dam­age to the rep­u­ta­tion of the AIFC”.

But Knight’s own record around finan­cial scan­dals is poor: she was Chief Executive of the British Bankers Association (BBA) from 2007-12. In that time, the BBA ran a key lend­ing rate called Libor, which might ring a bell when com­bined with the word “scan­dal”. During her tenure as head of the BBA, Libor was manip­u­lat­ed in one of the biggest scan­dals of the finan­cial cri­sis, which led to sev­er­al banks being fined bil­lions of pounds. Under Knight, the BBA also tried to stop banks being forced to refund mil­lions of cus­tomers for mis-sold PPI insurance.

Knight is not the only per­son con­nect­ed to British pol­i­tics involved in the deal. The Chairman of AIFC is Lady Barbara Judge; she is a “busi­ness ambas­sador” for Theresa May, a role she also held under David Cameron. Announcing her appoint­ment, the Astana International Finance Centre boast­ed of her role as a UK busi­ness ambas­sador. They also empha­sised that Judge is chair of the Institute of Directors, one of the UK’s biggest busi­ness organisations.

However, one month after join­ing the Astana International Finance Centre, Lady Judge had to resign from the Institute of Directors after an inves­ti­ga­tion accused her of using racist and sex­ist lan­guage and bul­ly­ing. In a record­ed con­ver­sa­tion, Judge com­plained about her staff, say­ing, “The prob­lem is we have one black and we have one preg­nant woman, and that is the worst com­bi­na­tion we could pos­si­bly have. No, two blacks and one preg­nant woman. I could­n’t believe it!” Judge refut­ed the alle­ga­tions, but resigned from the job.

American-born 71-year-old Judge began her career in the US. She has lived in the UK since the 1990s and has had many com­pa­ny roles, in the UK and abroad. She is no stranger to scan­dal. Judge was a direc­tor of Massey Energy, a US Mining cor­po­ra­tion, from 2008 to 2010. She resigned five days after an explo­sion at a Massey mine in West Virginia killed 29 min­ers. Don Blakenship, the Chief Executive of Massey, was jailed for a year for “con­spir­ing to wil­ful­ly vio­late mine safe­ty” over the explo­sion. Lady Judge faced no legal action, but American Unions called for her to resign from the Institute of Directors and all oth­er boards because of what they call “her fail­ures as a board mem­ber and mem­ber of the Environmental, Safety, and Public Policy Committee at Massey Energy, an American com­pa­ny, dur­ing the trag­ic explo­sion that killed 29 miners”.

Lady Judge was also involved in a mas­sive finan­cial scan­dal at the start of her career. In 1992, Judge (then named Barbara Thomas) had to pay $51,000 to set­tle a law­suit accus­ing her of putting “improp­er pres­sure on reg­u­la­tors” to help a financier who served four years in prison for fraud.

Judge worked for Charles Keating, a US banker who was involved in the col­lapse of a “Savings & Loan” – the US equiv­a­lent of a build­ing soci­ety. When Keating’s “Lincoln Savings & Loan” col­lapsed under dubi­ous loans, it cost the US gov­ern­ment over $3 bil­lion in bailouts. Keating was pros­e­cut­ed and impris­oned. Barbara Judge was also named in law­suits brought against Keating and his asso­ciates. One law­suit saidJudge “played a cen­tral role” in the scan­dal and “exert­ed improp­er pres­sure on fed­er­al reg­u­la­tors on behalf of Keating”.

Judge paid £51,000 to set­tle the case in 1992. She lat­er said that, “There was an oppor­tu­ni­ty to set­tle with­out lia­bil­i­ty, and I decid­ed to do that rather than face high­er and high­er costs, and because the case could have gone on for a long time.”

VICE asked the Astana International Financial Centre if Lady Judge was a good Chairman for their reg­u­la­to­ry board, giv­en her involve­ment in the scan­dals at the Institute of Directors, Massey Energy and the Savings & Loans issue. It did not respond. VICE asked the Department for Trade about her role as a busi­ness ambas­sador. It said that her role, along with all oth­er Business Ambassadors, is under review.

@SolHughesWriter

CORRECTION, 26th July 2018: This arti­cle pre­vi­ous­ly said that Lady Barbara Judge was also a “busi­ness ambas­sador” under Gordon Brown. This was incor­rect as she was first appoint­ed to the role by David Cameron. We are hap­py to cor­rect the error.

Revealed: UK’s Head of ‘Tax Simplification’ Is Helping Set Up a Tax Haven