The head of the UK’s tax authority defended its refusal to raid a money laundering suspect’s London headquarters — but admitted it should not have cited the company's political donations in doing so.
It was “definitely a mistake” to discuss the telecoms giant Lycamobile’s gifts to the Conservative party when declining to help French law enforcement investigate the company, Jon Thompson, chief executive of HM Revenue and Customs, told a parliamentary committee Monday afternoon. The blunder “created an opportunity for others to misconstrue the reasons and motivations for our decision”, Thompson added in a letter released Monday morning.
On April 19 BuzzFeed News revealed that an HMRC official had made reference to the donations in a letter to French officials. “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012,” the official wrote.
The disclosure has sparked outrage from MPs across the political spectrum. Chancellor of the Exchequer Philip Hammond has called it a “huge error of judgment”, and two parliamentary committees – treasury and public accounts – have promised to look into the case. Treasury chair Nicky Morgan, herself a Conservative, asked HMRC to respond to concerns that its investigations are “influenced by political donations”.
Thompson sent a letter to Morgan on Monday morning where he admitted the “mistake” but said that the agency’s decision not to grant French law enforcement’s request for a raid was not based on Lycamobile’s political donations in any way — it “was irrelevant to the decision we had taken and had no effect on that decision”. The real reason HMRC refused to help, Thompson wrote, was that the French provided “insufficient information” to justify such a raid under British law.
On Monday afternoon Thompson appeared in front of parliament’s public accounts committee, whose chair, Meg Hillier, asked him: “Are you a bit embarrassed that an email like that was leaked?”
“It’s definitely a mistake those two sentences are in there,” Thompson said. But he said HMRC’s “three-page response” to the French was otherwise “a very respectable and responsible one”, most of which was a straightforward outline of the legal hurdles they needed to clear in order to be able to raid the telecommunications giant. Thompson said that the response also offered to assist the French further with their investigation.
“Does this happen often?” Hillier asked of the reference to Lycamobile's donations. Thompson replied that he had asked HMRC's general counsel to see “if there are any systemic lessons we ought to learn”.
Thompson also criticized BuzzFeed News’ article disclosing the email, saying that it was a “significant and disgraceful distortion of the truth”. Separately on Monday he announced that his agency has begun a leak inquiry “to try and determine how HMRC’s correspondence with the French authorities entered the public domain”.
The Conservatives have accepted £2.2 million from Lycamobile — including more than £800,000 after BuzzFeed News first exposed the company’s suspicious business practices – and they have deep ties to the company.
In a statement issued after the 19 April revelations, the Conservatives said they decided two years ago to stop receiving any further money from the company. The party last accepted a donation from Lycamobile in late July 2016, a month after BuzzFeed News revealed that French law enforcement had raided Lycamobile's Paris offices, arresting 19 people.
