The American and British time bombs still under Liam Fox and Adam Werritty

Together forever?- Adam Werritty and Liam Fox. Pic courtesy:http://www.parker-joseph

When Cabinet Secretary Sir Gus O’Donnell publishes his report this week on whether  former defence secretary Liam Fox broke the rules over his curious working relationship with ” adviser” Adam Werritty, it may not be the end of the matter.  There is still unfinished business across the pond in the US and there could be a kickback in Britain as well.

To use a metaphor that Mr Fox and his friend might be familiar just as  foot soldiers sent into battle in Afghanistan have to be wary of  the explosive danger of hidden IED’s in Helmand, Fox and Werritty are still in the middle of a minefield where one false step could be fatal.

One reason is that  a blogger from Manchester-Stephen Newton who had been pursuing  Fox and Werrity’s  Atlantic Bridge  Neo Con”charity” in Britain for two years – put a formal complaint into  the  US Internal Revenue Service about its sister organisation in America.

Basically the accusation was similar to the British charity whose organisers have just closed down rather than obey charity rules- that  Atlantic Bridge Inc was not a non-profit educational body which should avoid tax.

In a  cryptic reply, the IRS said it would evaluate the information they had received and decide whether to investigate but would not contact him until the investigation was complete. 

Remarkably ( and perhaps Revenue and Customs should do this here) they said that he might qualify for a financial  whistleblower’s award if Atlantic Bridge was found to be tax dodging.

 The IRS has still to inform Newton about his award  but has made it clear it will never discuss what action it is going to take. See his own website http://www.stephennewton.com/  for his  take.

 The signifance of this  is the US operation is totally bound up with the  British one – to the extent that it funded Liam Fox’ s charity and that some of the people thought to have bankrolled Adam Werritty on his trips with the minister may well be connected. On top of this as Sunny Hundal pointed out on the Liberal Conspiracy website last week, (see http://bit.ly/n53Oye ) they include through the American Legislative Exchange Council  links to powerful arms dealers like the Koch Foundation and the tobacco industry. It also backs the Tea Party. And one has only to look at the Guardian, Observer, Sunday Telegraph and the Times to see how extensive these connections are.

Now ,if and it is still if, the IRS acts against Atlantic Bridge Inc, this is only going to intensify the pressure on the people who have been backing Fox and Werritty and set a whole new trail going in the US ( no wonder the blogger has taken calls from the Wall Street Journal).

Meanwhile in Britain the trustees of the Atlantic Bridge charity have closed it down rather than comply with recommendations from  our own Charity Commission to make it less partisan.  the Commission seemed  to think it had to treat Atlantic Bridge with kid gloves. Indeed  unlike the treatment of the Smith Institute – slammed for links with Gordon Brown – it was almost obsequious in its dealings with a body that had five Tory shadow ministers advising it ( though two, Michael Gove and Chris Grayling can’t remember attending – I hope they take their present paid jobs more seriously!)

The Commission gave the charity months to change its rules – despite a decision that it was partisan which would disqualify it for charity status. Adam Werritty at the time objected to the findings-saying he was ” disappointed” by the ruling.

There was also the small question that five Conservative ministers-Liam Fox,George Osborne, William Hague,Michael Gove and Chris Grayling plus John Whittingdale ( current chair of the culture,media and sport committee) were all members of its advisory board of  what  is now known not to be a properly constituted charity.

 If I was a sharp tax inspector at Revenue and Customs I think I might decided to approach  the accountants of prominent donors like  Tory donor Michael Hintze   ( £47,000 in two years according to Atlantic Bridge Accounts) and see whether the donated money qualified for gift aid-saving tax payments by both the donor and the charity. And then I would claim it back.

Atlantic Bridge also charged unbelievable sums to attend its events -£400 a time and £700 for VIPs- to go to a  reception at the Lanesborough Hotel in Hyde Park Corner to see Henry Kissinger get the Thatcher Medal for Freedom. Luckily under gift aid rules, at least the people going could not get a rebate from the tax authorities. No doubt it was these lavish occasions that encouraged Werritty on his high living vists, funded we now know through his private company.

There is an interesting irony about all this – the resignation will enable Fox and his friend Werritty to continue their lobbying. Journalists should keep an eye on the Advisory Committee on Business Appointments website over the next few months to see what lucrative jobs Fox applies for next.

 Just like the Afghan war, this story will run and run.

How ex-ministers make a fortune out of insider lobbying

stephen byers- like a cab for hire-pic courtesy daily telegraph

The damning disclosures about former Cabinet ministers Stephen Byers, Geoff Hoon and Patricia Hewitt touting for paid advocacy expose a fundamental flaw in the regulation of the lobbying industry. They also reveal fundamental weaknesses in blocking ex ministers and former senior civil servants making a fortune from “insider” knowledge gained in government.

For years it has been an open secret that the lobbying industry has failed spectacularly to regulate itself. Divided between two groups, the Association of Professional Political Consultants and the Public Relations Consultants Association, it is still not agreed to set up a joint body with agreed standards on how to conduct business. Nor do all companies have to belong to either association. Some companies voluntarily register clients, others keep lists secret. Some companies (belonging to the APPC) ban politicians from directorships, but the politicians themselves can and have set up their own lobbying and public relations companies which avoid membership of the APPC. Similarly large legal firms also have lobbying and public relations arms and avoid disclosing the identities of their clients under   spurious “client confidentiality” rules. They also employ ex Cabinet ministers.

The government had a chance to do something about this a year ago by introducing a statutory register for lobbyists. The all party Commons Public Administration Committee called for it in a report. Tom Watson, as a junior Cabinet Office minister, was sympathetic to tougher action to curb excesses, but only now has Harriet Harman, leader of the House, committed the government to do anything about it. Better late than never, but I suspect the Sunday Times and Channel Four Dispatches revelations have had more effect than any serious deliberations by MPs.

If the government had acted earlier neither the TV company nor the Sunday Times could have set up a fake lobbying company to talk to ex ministers, because it would have be registered- and the game would have been up from day one.

Worse this lack of control of lobbying is compounded by the toothless role of the Advisory Committee on Business Appointments which is supposed to vet ex-ministers jobs. Effectively however, this body allows ex ministers to do what they like when they leave office. Yes, they are expected to seek their advice for any appointment within two years of leaving government. And the committee can impose restrictions on jobs they could take up. But ministers can ignore their advice knowing they face no penalty whatsoever and knowing that the committee has no resources to ever check up whether the minister is even following their imposed restrictions – particularly over lobbying.

 The fundamental weaknesses on both sides created the perfect storm that allowed the media to expose the latest lobbying scandal over the weekend. Sadly we shouldn’t be too surprised that ex ministers can carry on like this in private in order to make more money in a day than a state pensioner receives in a year. The present system is designed to allow both ministers and lobbyists to get away with it with impunity.

A shorter version of this post is in today’s Guardian and a longer version on the Guardian’s Comment is Free website.