At the risk of giving Sunny another attack of the vapours by poking a stick at the notoriously litigious, the news that the Electoral Commission have finally decided to take a good close look at Lord Ashcroft’s financial affairs is not only long overdue but if, like me, you’ve done a bit of poking around in few sets of relevant accounts, hardlycomes as much of surprise.

Before getting into this, lets throw a little background behind the issues that the Electoral Commission will be looking into, which kick off with the introduction of the Political Parties, Elections and Referendums Act 2000 (PPERA) and the new financial controls it applied to British political parties when it came to receiving donations.

So far as understanding the overiding ethos of PPERA goes, think in terms of a reversal of one of the more popular slogans of the American revolution (War of Independence), ‘No taxation without representation’. PPERA is designed to turn that on its head, hence ‘No representation without taxation’ – in order to donate money to a British political party, individuals must be registered to vote in UK elections (but for a slight wrinkle we’ll get to a minute) and companies and other corporate entities must be actively trading in the UK and, therefore, notionally liable for corporation and other business taxes.

Introducing these new controls, via PPERA, might well have put Ashcroft, the man who, according to a joke that did the rounds at the time, liked the Tories so much that he bought the party, effectively out in the cold, had William Hague not intervened in order to get Ashcroft appointed to the peerage (which is the wrinkle I mentioned earlier because, for the purposes of PPERA, the register of peers counts as part of the electoral roll) in return for unspecified undertakings that Ashcroft would be pay tax in the UK.

Since becoming a peer, the Electoral Commission’s show Ashcroft to have made personal donations into Tory coffers of around £100,000 total value (inc. non-cash donations) during 2001, since which time donations have been channelled via Bearwood Corporate Services (£4.8 million in cash and non-cash donations and £3.6 million in what appear to have been hastily arranged loans) and via Flying Lion Ltd.

Flying Lion Ltd has provided senior Tories with getting on for £200,000  ‘worth’ of private jet flights on paper, although a loophole in electoral law which allows flights by private jet to be registered at the value of a flight on a normal commercial airline, suggests that these flights may have been valued at as little as a fifth of the actual cost of providing the flight and anything from an eight to a tenth of the cost of genuine commercial charter.

There are two core issues the Electoral Commission might examine.

One is whether or not Ashcroft has lived up to the undertakings that he gave in regards to his tax affairs in order to secure his peerage. Ther question of whether or not Ashcroft actually pays any tax in the UK has been raised on several occasions. On each occasion Ashcroft appears to have refused to comment and, recently, its been left to David Cameron to put forward the assertion that Ashcroft is abiding by the undertakings given in 2000.

Whether or not he pays tax in UK is, however, only one part of the the issue for many people, as even if he does this raises the question of just exactly how much has he been coughing up to th Exchequer in return for the right to funnel several million pounds in Tory coffers in recent years. On the House of Lords register of interests, Ashcroft lists one remunerated position (Executive Chairman of the Belize registered BB Holdings Limited), six companies in which he has a controlling interest and a further six companies in which he is major shareholder.

Bearwood Corporate Services is not on the list of companies on the House of Lords register, due to its being owned by a holding company that is, itself, owned by BB Holdings Ltd, three of the remaining eleven companies appears to be registered overseas (two in Belize and one that appears to have transferred its listing from the UK’s AIM market to Sweden’s NASDAQ OMX). Based on these companies’ recent filings, accounts and annual reports, few of these eleven companies are current turning in any kind of profit and not one of them appears to paying any kind of dividend to shareholders.

So, assuming we take Ashcroft at Cameron’s word, his personal tax liabilties in the UK would appear to amount however much it is he decides to remit into the UK in order to keep up his end of the deal that Hague put forward in order to secure his peerage.

As for the donations via Bearwood Corporate Services, the Tories assertion on comes down to:

“The Conservative Party compliance unit applies two strict tests to all company donations in accordance with Electoral Commission guidance.

“They are: is the company UK-registered and is the company trading? The donations from Bearwood Corporate Services Ltd met those tests.”

However, an examination of Bearwood’s accounts appears to indicate that, beyond the almost £3,1 million donated to the Conservative Party since the beginning of 2006, most of which is registered as having provided:

“Consultancy focus groups, opinion, research, printing and related costs”

The only substantive ‘trading’ evident in the company’s accounts appears to be unspecified ‘business services’ provided to BB Holdings Ltd, although quite by whom, exactly, is anyone’s guess as unless Bearwood employs an army of elves and pays them in show buckles, figures given in its past accounts for the company’s expenditure on salaries seems to indicate that it may have only one or two actual employees, and its that issue that I strongly suspect the Electoral Commission will be probing, at the instigation of John Mann MP, in order to determine whether what seems to, possibily, be Ashcroft and Tory’s definition of trading is taking the spirit of the law just that bit of a loophole too far.

About the author
'Unity' is a regular contributor to Liberal Conspiracy. He also blogs at Ministry of Truth.
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