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.
Lady Barbara Judge. Photo: Newscast Online Limited / Alamy Stock Photo
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 and Gordon Brown. 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 said Judge "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.
Vice.Com, 21.07.2018
