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The Corruption of New Labour: Britain’s Watergate?


John Simkin
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This scandal has encouraged political commentators to start questioning Blair’s relationship with people like Silvio Berlusconi. Many people have found it strange that a leader of a left of centre political party should develop such a close friendship with two right-wing political leaders such as Berlusconi and Bush. Of course, it makes sense if Blair is indeed a right-wing leader (as I believe he is). It also makes sense if the three men are also involved in a corrupt relationship.

It has been recently revealed that David Mills, the husband of the Cabinet Minister, Tessa Jowell, provides advice on how millionaires can avoid paying tax. It is alleged in the Italian courts that Mills accepted a £350,000 bribe from the Italian prime minister Silvio Berlusconi. This money was then used to pay off part of a £480,000 mortgage taken out by Mills and Jowell on their home.

The route of this money is very interesting. In December, 1999, Mills received a £350,000 cheque from Berlusconi. After ping-ponging through at least seven accounts in the Caribbean, Gibraltar and Switzerland, it ended up in a hedge fund in New York. In November, 2000, Mills and Jowell take the money from the hedge fund to pay off their Kentish Town mortgage.

Mills denies the money was from Berlusconi and was in fact a gift from another Italian businessmen, Diego Attanasio. The problem for Mills is that Attanasio denies this and was in fact in prison at the time this gift of money was given (Mills has never explained why Attanasio should have given him £350,000).

The other problem for Mills is that he has already told the truth to his accountant, Bob Drennan. In February, 2004, Mills wrote to his accountant and told him that Mr B (Berlusconi) had given him a gift of “$600,000” as a result of evidence he had given in court on behalf of Berlusconi: “I had been able to give my evidence (I told no lies, but I turned some very tricky corners, to put it mildly) had kept Mr. B out of a great deal of trouble that I would have landed him in if I had said all I knew.” Bob Drennan reported Mills to the National Criminal Intelligence Service, as he suspected his client of being involved in illegal activities. Under the Proceeds of Crime Act, Drennan would have been breaking the law if he had not done this.

This information was eventually passed to Fabio de Pasquale, the chief prosecutor in the Silvio Berlusconi case. He then asked for Mills to be extradited to Italy. Instead of that happening, the Home Office passed this “extremely sensitive information” to Berlusconi.

It also has to be remembered that Tony Blair and Silvio Berlusconi take holidays together in Italy. These take place in Berlusconi’s villas. I assume the Blairs are not charged rent for these holidays. Anyway, I am sure they are working holidays.

Mills was behind the Bernie Ecclestone donation. Soon after he was elected as prime minister, Blair announced that sport was being exempted from the ban on tobacco advertising. Everyone was surprised by this broken election promise until it was revealed that Bernie Ecclestone had given the Labour Party £1 million a few weeks previously. Mills also lobbied for “super-casinos” and against the smoking ban in pubs. Blair’s strange policy shifts now make much more sense. As Max Hastings pointed out in a recent article: “Why should any British voter feel respect for a political party led by a man who exists in a moral vacumm? Why should we not be bitterly cross with a prime minister whose concept of right and wrong is determined by what he himself did yesterday, and plans to do tomorrow?”

Hastings goes on to argue that the Blair scandal is very different from almost all previous political scandals. It has nothing to do with sex. “It is almost paradoxical that Blair retains an unblemished reputation as a family man, but as almost nothing else.”

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Even this is not the great scandal waiting to be exposed. This involves the relationship between Tony Blair, Jonathan Powell, Alastair Campbell, Michael Levy, Rubert Murdoch, etc. and the funding of the Labour Party and the Iraq War. Is it possible that some of these loans came from companies who have benefited from the Iraq War? This is of course what has happened in the United States (Halliburton & Bechtel). Is this the reason that Tony Blair is reluctant to reveal who gave such large loans in 2005?

We now know that Lyndon Johnson manipulated Congress in order to start the Vietnam War. We also know that the greatest beneficiaries of the war was three companies based in Texas, Brown & Root, General Dynamics and Bell Corporation. All three companies had been long-term financial backers of LBJ. Will we find out the same thing about Blair and his backers? The fact that the man who arranged these loans was Sir Michael Levy.

Information emerged over the weekend that suggested there was a link between political contributions and the Iraq War. Apparently, the Tory Party has found a good way to hide political contributions from armed dealers.

This is done via “Party Auctions”. For example, David Cameron organized an auction to raise money for the Tory Party. This included an eight-person dinner that was to be provided by the well-known chef, Albert Roux. Rosemary Said, the wife of the Saudi arms dealer, Wafic Said, won the meal with a bid of £100,000. Over the last two years Wafic Said has given £550,000 to the Tories at auctions but none of it has been declared. Not only is Said an arms dealer, he is a foreigner, and legally he is not allowed to fund political parties in the UK. Auctions are a good way of hiding contributions from dubious characters. If the Tories are up to this, I suspect New Labour is also doing this.

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Andrew Rosenfeld established the Minerva property group with Sir David Garrard in 1996. Rosenfeld stake is worth £49m. He has £30m in other assets. Garrard is also a major supplier of cash to Tony Blair. There is no evidence that they are socialists. However, they do depend on the government to give planning permission for their various property ventures. For example, in January the government gave permission for them to build Minerva Building, a 217-metre office tower in London. Just a coincidence of course, I am sure the reason they supported the government because they wanted Blair to increase the minimum wage.

It was reported in the Sunday Times yesterday that John Prescott has twice approved planning permission for controversial Minerva property projects. Six months after Rosenfeld gave Labour a £1m loan, Prescott gave permission for the building of the £600m Park Place in Croydon. This involved killing a rival bid by a consortium called Whitgift. Before this decision, Minerva had suffered heavy losses. Prescott’s decision resulted in a boost to Rosenfeld’s personal shareholding by £4m. The £1m loan was obviously a shrewd piece of business.

Prescott also gave permission for the building of the 50-story Minerva tower. This will become the tallest building in the City of London. At the same time, Prescott intervened in two similar developments by other companies. Six months previous to this decision (June, 2003), Gerrard, the chairman of Minerva, gave a £2.3m loan to Labour.

Prescott of course has denied knowledge of these loans and therefore claims it did not influence his decisions.

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In 2002 the MP for Hemel Hempstead, Tony McWalter, asked Tony Blair a question in the House of Commons: "Since my honourable friend is sometimes subjected to unflattering and even malevolent descriptions of his motivations, will he now provide the House with a brief characterisation of the political philosophy he expouses and which underlines his policies?"

As one political commentator who witnessed this event later said: "Mr Blair paused for what seemed a hideous eternity to many in the chamber, before mumbling some waffle about bringing in foreign consultants to fill NHS vacancies."

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Tony Blair has just released the list of the businessmen who provided the loans.

Rod Aldridge - £1m

Richard Caring - £2m

Gordon Crawford - £500,000

Prof Sir Christopher Evans - £1m

Nigel Morris - £1m

Sir Gulam Noon - £250,000

Dr Chai Patel - £1.5m

Andrew Rosenfeld - £1m

Lord David Sainsbury - £2m

Barry Townsley - £1m

Derek Tullett - £400,000

Total: £13,950,000

Lord David Sainsbury has been the one who has given the most money to New Labour over the last ten years (£15m). What has he got for this money? Well he has been given a peerage and the post as minister of science. It is the other things he has got that is more important and the real scandal.

Since being elected in 1997 the Blair government has continually backed down on attempts to protect the health of the UK population by regulating the food industry. In the last week we have seen the government climbdown on its promise to force food manufacturers to cut salt levels in our food. The plan was to reduce personal daily intake by 10gm to 6gm to 2010. This target has now been changed to 8gm. According to health experts, this will result in around an extra 14,000 people dying a year.

The Food & Drink Federation that represents supermarkets like Sainsbury have welcomed the relaxed targets. Other members of this organization, such as Asda, Marks & Spencer, Tesco and Waitrose can be expected to donate money to Blair over the following months.

Yesterday it was announced that celebrities are to be stopped from advertising junk food during television programmes designed to appeal to the under-10s. However, as health campaigners have pointed out, there are to be no changes in advertising during other programmes that children watch. The new proposals are just delaying tactics. TV has three years to be put into effect the proposals that will not become law until next year.

Can we really be surprised that companies like Sainsbury are willing to donate large sums of money to New Labour? It is not only over Iraq that Blair has “blood on his hands”.

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Political parties have never been very keen on loans. As one official pointed out: Loans are a pain in the arse. Frankly, if you are a fundraiser you want to get the money. And either the bugger wants it back so you’ve only bought time, or you have to go cap in hand and see if they’re prepared to convert it and go through all that.”

Yet Dr Chai Patel, who has never voted for the party, originally offered to give New Labour a donation of £1.5m. However, he got a phone call from Sir Michael Levy and asked to turn it into a loan. How do you explain this?

Although Levy is keen for millionaires to give gifts and donations to New Labour, he is very much against paying income tax. In 2000 the Sunday Times revealed that multimillionaire only paid £5,000 income tax the previous year. It seems that Gordon Brown had told him all about the tax loopholes in the system (in opposition Brown promised that these loopholes would be closed).

The Jerusalem Post has described him as “undoubtedly the leader of British Jewry”. A leading international Zionist, Levy is Blair’s special envoy to the Middle East (that seems a wise choice).

Levy was also a fundraiser for the Conservative Party before the arrival of Tony Blair. He then created a series of “blind trusts” that channeled funds into Blair’s private office without the identities of rich benefactors being disclosed. In 1997 Levy raised £12m for the New Labour election campaign. Blair used Levy to cut Labour’s dependence on the trade union movement so the party’s reliance has declined from two-thirds in 1992 to about a quarter now.

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Scotland Yard confirmed yesterday that the Conservatives are also to be investigated over the " loans for lordships" scandal.

Nearly half of the benefactors who gave loans to the Tories have already emerged. The biggest known loan so far is £3.5m from Lord Ashcroft, the party's chairman. Others include Michael Hintze (£2.5m), Robert Edmiston (£2m), Henri Angest (£2m) and Johan Eliasch (£1m). Most of these are foreigners who are not legally allowed to give donations to British political parties. It raises the question, why would foreign businessmen be keen to give secret loans to British political parties?

The important issue is whether Scotland Yard will widen its investigation into the arena of corruption such as the granting of government contracts in exchange for gifts and loans.

Deputy assistant commissioner John Yates met the Commons public administration committee this week to ask MPs to postpone their hearings on the loans furore to avoid prejudicing possible police action. One fear is this is a tactic to stop MPs being questioned in public. That the real role of the police investigation by Yates is to enable a cover-up to take place. One thing is clear, John Yates will not get the top job in Scotland Yard unless he goes along with the cover-up. Nor will he get a peerage. :rolleyes:

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Not that I believe this is an accurate list. Lord Sainsbury denied he was on the list of secret donors when this story was first published in the newspapers. Was he lying then or now? Why would he give a commercial loan to the Labour Party? He has already given £6.5m since becoming science minister in 2001 (an expensive job to buy). I suspect he was telling the truth the first time and is now being used as a cover for someone who is linked to the arms industry.

This now appears to be the case. Yesterday Lord Sainsbury confessed that he did not after all tell his permanent secretary that he had made a £2m loan to the party. Of course, he did not loan the money at the time he said he did. The money was used to pay off those shady businessmen who provided the initial £2m loan.

It has emerged that the same thing has happened with the Tory Party. Lord Laidlaw and Jonas Eliasch last week gave David Cameron £5m to pay off those who did not want to be identified as loaning money to the Tory Party.

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Lord David Sainsbury has given £15m to New Labour since 1997. He also recently gave a secret £2m loan that he lied about before he was finally exposed in the press. Yet Tony Blair still refuses to sack him as Science Minister. This is not surprising as if he did, Sainsbury is likely to say I want my £2m back and I will refuse to give you any more money in the future.

As I have pointed out in earlier postings. It is clearly a conflict of interest to have a minister of the government giving such large sums of money to a political party who controls legislation that has a marked influence of the profitability of the company owned by his family.

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Another reason that the current Blair scandal is like Watergate is that it involves people trying to blackmail others into silence. Blair hopes that a private meeting with Cameron will result in a truce. However, there are other political parties (especially the Scottish Nationalists) doing their best to keep the story in the headlines.

One of the most interesting stories to emerge over the weekend concerns the property tycoons, Roy and Don Richardson. Before the election of Blair the 76-year-old twins, provided considerable sums to the Conservative Party. The two men who are worth around £309m, found it helped their business if they gave regular donations.

The Richardsons were shocked by Tony Blair’s victory in 1997. However, business is business and so they thought it might be a good idea if they began making donations to New Labour. They therefore sought a meeting with the new prime minister. The Richardsons were told that this had to be arranged via Lord Levy.

At a meeting with Levy at the House of Lords, the Richardsons were told that they would have to make £1m donation to New Labour before they would be given access to government ministers. According to Roy Richardson: “Lord Levy said, at that time, any approach to ministers would have to go through him. We didn’t really agree with that. In the past, when the Conservatives were in, we used to write direct and make appointments with ministers.”

Roy and Don Richardson refused to donate money to New Labour. However, those who did donate large sums of money to New Labour, did get what they wanted from Blair. I will explain what this was in my next posting.

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Honours and government contracts are two of the reasons why rich people are willing to donate money to political parties. However, the main reason concerns tax policy.

The Thatcher government openly redistributed wealth to the very rich with her policy of reducing the top rate of income tax to 40%. For example, by the late 1980s, the top 1% owned 17% of the wealth. In contrast, the bottom 50% owned only 10%.

When the Labour Party gained power in 1997 Blair and Brown obeyed their orders from Rupert Murdoch and left the top rate of tax unchanged. Today the top 1% own 23% of the wealth while the bottom 50% now own 6%. It is hard to believe that a Labour government would ever redistribute wealth from the poor to the rich, but that is what they have done.

Although Blair and Brown warned us they did not intend to raise taxes on the rich (Murdoch demanded they made that commitment) they did promise to end the tax loopholes that enabled Murdoch and his fellow billionaires, to avoid paying tax in this country. This they have failed to do.

Take the example of Philip Green, the owner of BHS and Arcadia. According to Stewart Lansley, the author of Rich Britain, The Rise and Rise of the New Super-Wealthy, Green has saved himself “hundreds of millions in personal tax in the past three years because the ownership of his companies is vested in the hands of his wife, Tina, who is resident of Monaco.” Over 5,000 British multimillionaires officially live in Monaco to avoid paying tax in this country.

Other supporters of New Labour such as Richard Branson, Lakshmi Mittal and Hans Rausing all use offshore tax havens to reduce their tax liabilities. This is all legal because Brown has refused to tackle this major scandal.

As you can see, it pays all rich people to donate the odd million to New Labour in order to ensure that the top rate of income-tax and the various tax loopholes are kept in place.

The consequence of this policy is to allow the rich to keep more of their wealth. Things like education and health-care still has to be paid for so those earning less than £100,000 have to pay more than they did in the past. This includes university fees, etc.

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It has been announced that BAE Systems, the British military contractor is in talks with the European Aeronautic, Defence & Space consortium to sell its 20 percent stake in Airbus. This will bring to an end a nearly 30 year partnership that spawned the world’s largest passenger plane. It is estimated that the stake is worth 6 billion.

According to the International Herald Tribune (8th April) the decision to sell is linked to Blair’s foreign policy. The newspaper quotes Andy Lynch, a fund manager with Schroder Investment Management, as saying that Blair willingness to send troops to Iraq and Afghanistan has made the arms industry a more predicable business than the aircraft industry. Especially as Blair has been very keen to give BAE long-term government contracts (the company specializes in land-based artillery). BAE is also a major supplier to the Pentagon. In fact, in the past two years it has bought six military contracting companies in the United States.

The Herald Tribune claims that BAE is in the process of transforming itself into a quasi-American company (in the same way that Blair is a quasi-American prime minister). Apparently it is currently trying to takeover L3 Communications Systems (surveillance systems) and Raytheon (missile maker). BAE Systems is now the world's 4th largest arms company. Each year it sells arms worth around £11bn across the globe.

Is it possible that Blair is involved in a corrupt relationship with BAE and Boeing? For example, Airbus booked record orders for 1,055 passenger planes last year, versus 1,002 for Boeing. With the success of the A380 Airbus is in a good position to become the world’s leading aircraft production company in the world. Business analysts are saying that BAE’s decision to sell is undermining confidence in the A380 and will help its main rival, Boeing.

Is it possible that BAE is to Tony Blair what General Dynamics, Brown & Root, Halliburton and Bell Corporation were to Lyndon Baines Johnson?

Is it possible that it was really the agents of BAE that has been loaning money to Blair and New Labour (covered up by the claims of Lord Sainsbury)? Here is an account of Blair’s relationship with BAE that appeared on the Campaign Against Arms Trade website:

http://www.caat.org.uk/publications/companies/baes.php

BAE Systems has a turbulent relationship with the MoD and has faced accusations of heavy-handed lobbying tactics and poor project management. However, whatever its problem with the Ministry and its civil servants, BAE Systems can always rely on Tony Blair.

Ever since Blair arrived in government in 1997 it has been apparent that he has supported BAE Systems against all comers and all rational argument. He pushed through controversial sales to Zimbabwe and Tanzania and lobbied, amongst others, the South Korean and South African Presidents on behalf of BAE Systems.

Striking confirmation of the relationship was provided by Robin Cook in his book 'The Point of Departure'. He states 'In my time I came to learn that the Chairman of British Aerospace appeared to have the key to the garden door to Number 10. Certainly I never once knew Number 10 to come up with any decision that would be incommoding to British Aerospace'.

The extent to which Blair's love of BAE Systems permeates the UK government isn't entirely clear, but it is clear that BAE Systems receives 5-star treatment from a wide variety of official sources:

• minister after minister trooped out to promote the sale of the Hawk aircraft to India, regardless of the level of conflict over Kashmir.

• corruption allegations, reported to the government, have not been fully investigated.

• changes to guidelines have weakened arms export controls in areas relevant to BAE Systems, most obviously those announced in July 2002 which facilitated the transfer of the company's equipment to Israel via the US.

• the DSEi and Farnborough arms fairs receive financial assistance and ministerial support.

• the Defence Export Services Organisation continues to dedicate 600 civil servants to the arms trade under the leadership of an arms industry boss, currently seconded from BAE Systems.

• there is a proliferation of 'advisory bodies' which give the major arms companies preferential access to civil servants and ministers.

• a new Missile Defence Centre has appeared for no apparent reason other than to help UK companies win US 'Son of Star Wars' contracts, with BAE Systems as the lead contractor.

• and to bring things right up to date, just last month Prince Andrew and the UK's Ambassador to Bahrain opened BAE Systems' first office in Bahrain.

The reason for Blair's affection for BAE Systems isn't immediately obvious. It's often assumed that UK jobs lie at the heart of his interest but BAE Systems' record on that score is poor. In 2003 it stated that it would make 470 workers at its Hull Brough plant redundant if it didn't receive a contract from the MoD for Hawk jets. BAE Systems was duly given the contract even though the Treasury said an open competition would save the taxpayer £1 billion (£2 million for each of the 470 jobs!). In April 2004, less than a year on, BAE Systems announced the loss of 760 jobs and the following week a further 1,000 jobs. There has been little outcry. Jobs appear only to be important when BAE Systems wants to win a contract.

Tony Blair is fully aware of this so we need to look elsewhere to understand his enthusiasm for the company. The most likely explanation revolves around Blair's fondness for big business generally and his zeal for the grand foreign policy/military statement. BAE Systems brings these together in one entity and seems to hit all the right buttons.

BAE Systems continues to receive more than its fair share of corruption allegations. And, despite the unwillingness of the Serious Fraud Office (SFO) and the MoD to investigate, they won't go away.

In September 2003, the Guardian published details of its investigation into allegations of a £20m 'slush fund' set up by BAE Systems to bribe Saudi officials. It reported that a confidential letter from the head of the Serious Fraud Office (SFO) to the MoD alleged a possible fraud operation involving BAE Systems in relation to the massive Al Yamamah arms deals with Saudi Arabia. Neither the SFO nor MoD pursued the allegations despite being provided with a box of relevant invoices and other documents by a former employee of BAE Systems' front company.

Earlier allegations that BAE paid £7m commission into a Jersey trust for Qatar's foreign minister also ended with a failure to investigate. This, despite the SFO being asked for help by the Jersey authorities, and the UK Government admitting that it had a report of this commission payment in 1998.

Other allegations have been met with an alternative official response, if a similar end result. In June 2003 the Guardian alleged that 'BAE Systems paid millions of pounds in secret commissions' to win a South African Hawk jet contract. Astonishingly, it stated that the UK government had confirmed the payment but refused to reveal the amount paid. The DTI did, however, say it was 'within acceptable limits'!

There have been other allegations relating to the Czech Republic and India, but none of the allegations draw much of a reaction from BAE Systems. The company has a standard response of ignoring specific allegations and offering a variation on the theme, 'BAE operates rigorously within the laws of both the UK and countries in which it operates.' BAE Systems is certainly careful regarding corrupt practices, but the suspicion must be that it is careful to hide them rather than shun them. The Guardian recently reported that in 1997 BAE moved 'filing cabinets full of evidence of corrupt payments to foreign politicians to a vault in Switzerland' using a subsidiary registered in the Virgin Islands.

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Downing Street has announced the new list of life peers. Four men originally put forward by Tony Blair withdrew after it emerged the independent body which scrutinises nominations had concerns about them. None of those behind loans to Labour or the Tories is on the new list. However, five of the seven on the Tory list have donated money to the party. This includes Jonathan Marland, the Tory Party treasurer and the man who arranged these loans and donations has been given a peerage. Marland is a former director of Jardine Lloyd Thompson. This is part of the Jardine Matheson Holdings group. This an Asian-based conglomerate. Its business interests include Jardine Pacific, Jardine Motors Group, Hongkong Land, Dairy Farm, Mandarin Oriental, Jardine Cycle & Carriage and Jardine Lloyd Thompson. These companies are involved in engineering and construction, transport services, property, financial services and insurance broking.

According to its website: "The Group's strategy is to build its operations into market leaders across Asia, each with the support of Jardine Matheson's extensive knowledge of the region and its long-standing relationships. Through a balance of cash producing activities and investment in new businesses, the Group aims to produce sustained growth in shareholder value."

Although based in Asia it is incorporated in Bermuda. However, as the money is given by individuals who were born in England it is not counted as foreign money (political parties in the UK are not allowed to be funded by foreign companies). Charles Leach, director, Jardine Matheson Holdings also appears on the Tory list of peerages. I wonder why an Asian based company is so keen to give money to the Tory Party?

John Lee of Emerson Developments (Holding) Ltd is another interesting name on the Tory list. Emerson Developments is a construction company that is after PFI contracts. I suspect his money has been wasted on getting these and he has to be satisfied with a peerage instead.

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