Nadhim Zahawi, the beleaguered former chancellor and current chair of the Conservative party, is under pressure to reveal the source of about £30m of unsecured loans made to his wife’s UK property company.
The loans were used to finance parts of a large UK property portfolio, reported last year as worth about £100m, and were declared in company accounts which span a period from 2017 to 2021 but give no information about who the lenders are.
The calls for greater transparency are the latest request for the former chancellor to explain how his family’s fortune has been managed, after he became embroiled in a mounting controversy over his tax affairs that prompted the government to launch an ethics investigation.
Accounts show just under £30m has been provided as unsecured loans to a company called Zahawi & Zahawi, which has paid £60m for a property portfolio that includes commercial and retail premises in London, Birmingham, Brighton and Walton-on-Thames in Surrey.
Zahawi & Zahawi was formed in 2010 when it was owned jointly by the MP and his wife, Lana Saib, before he transferred his 50% shareholding to her when he became a junior minister in January 2018.
Zahawi, whose tax affairs have been referred to the independent adviser on ministerial standards, said he was confident he had acted properly throughout, adding: “In order to ensure the independence of this process, you will understand that it would be inappropriate to discuss this issue any further, as I continue my duties as chairman of the Conservative and Unionist party.”
Zahawi is battling to save his political career after he admitted reaching a tax settlement with HM Revenue and Customs (HMRC) following an “error” over capital gains from the sale of shares in YouGov.
The former chancellor has faced scrutiny on a tranche of shares in YouGov, the polling company he co-founded, which were held by a Gibraltar company, Balshore Investments, and sold for about £27m between 2006 and 2018. It was estimated by the thinktank Tax Policy Associates he may have avoided £3.7m in capital gains tax on the sale of these shares.
Dan Neidle, a tax lawyer and founder of Tax Policy Associates whose work initially raised awareness of the Zahawi family finances, said: “The fact that an MP’s family can receive £30m of unsecured loans I find incredible. Those loans could be from Elvis for all we know. But it is a fact that a person or persons unknown has loaned the Zahawi family £30m and we don’t get to know who.”
Prem Sikka, a Labour member of the House of Lords and an emeritus professor of accounting at the University of Essex and the University of Sheffield, added: “There has been no explanation in the accounts of who provided these loans. Given the concern over Mr Zahawi’s tax affairs we now need further clarity. The ethics adviser should be looking at these matters too.”
The loans in question were not secured against any assets, according to the accounts. Most property loans are secured against the building itself, and the name of the lender is often declared in the Land Registry or at the UK corporate registry, known as Companies House.
Zahawi & Zahawi currently owns 17 property titles, according to Land Registry records, including three buildings acquired for about £19m in central Wimbledon during 2016, that include the site of a NatWest bank and an office block; the Guildhall Buildings in Birmingham that have been converted into office space and were acquired for £12m in 2019; and a £6.3m retail unit in Cambridgeshire bought in 2021 that is the site of a Co-op supermarket.
The commercial properties are separate from the couple’s personally held residential properties, held in Zahawi’s and Saib’s names, which include a £13.75m home bought a decade ago in a Belgravia crescent. The family also owns a livery and riding school complex in Warwickshire.
In the Zahawi & Zahawi accounts for the year to June 2018, the loans increased by just over £12m to nearly £27m. The most recent filings show a further £3m was loaned by June 2021, after Zahawi had handed over control of the company to his wife and was in his third role as a junior minister, overseeing the Covid-19 vaccines deployment.
Saib also owns two further property companies, set up in 2018.
According to the most recent Companies House filings, £8.74m of director loans have been advanced to Zahawi Brierley Hill, which owns a retail site and land, plus £3.34m of director loans provided to Zahawi Wantage, which owns land.
The sole director is Saib, but there is no further disclosure on the source of the funds.
A spokesperson for Zahawi repeated a previous statement on the affair, when Zahawi said: “I welcome the prime Minister’s referral of this matter to the independent adviser on Ministerial Standards. I look forward to explaining the facts of this issue to Sir Laurie Magnus and his team.
“I am confident I acted properly throughout and look forward to answering any and all specific questions in a formal setting to Sir Laurie.
“Because of this, you will understand that we will not be giving further comment.”
The spokesperson added Zahawi had stood down from all of his outside interests upon becoming a minister, in line with the ministerial code.
She did not respond to a request for comment from Saib.