The Guardian revealed on Sunday that the head of HMRC, the government body responsible for investigating and regulating tax loopholes, was a partner in a City firm that acted for the offshore entity that David Cameron had shares in. Edward Troup was a part owner of Troup, Simmons & Simmons until 2004 when he joined the civil service, and once wrote in a Financial Times column that “taxation is legalized extortion”.
While there is no indication from the documents the Guardian has seen that Troup personally advised any of Mossack Fonseca’s offshore entities, it is a clear ethical conflict of interest that his firm managed Blairmore Holdings, who have never paid a penny of tax in the UK throughout their 30 year history despite having almost certainly been run and managed in Britain.
The defences the Tories will want to wheel out will most likely be the usual: they’ll probably point out that it’s legal, that tax evasion is criminal but that this is tax avoidance so it’s not so bad, and by the way Ed is a dear friend and he hasn’t got a corrupt bone is body, and so on. Perhaps they’ll feel like there’s too much pressure on them and sack Troup and pretend it was all a terrible mistake. Troup doesn’t really matter.
Are we supposed to believe that Cameron was honestly unaware of Troup’s involvement with these offshore assets?
What matters is that the Tories will go into damage control, and will find out which individual in government they can afford to throw overboard for this. Troup will survive or not depending on whether Cameron feels like he can get away with sacking him and looking like he’s just made an innocent mistake. But the Prime Minister’s political capital is already feeble after last week’s clusterfuck of evasive manoeuvres and lame excuses, and there are rumours that he’s trying to save himself by offering top cabinet positions to Boris and Gove and other Brexit opportunists who could otherwise make him walk the plank.
And with Troup’s connection to his own offshore investment now revealed, Cameron is going to find it very hard to defend himself. Are we supposed to believe that Cameron was honestly unaware of Troup’s involvement with these offshore assets, that he had been invested in himself? The best case scenario for him is that he looks dangerously incompetent, putting a tax dodging expert in charge of HMRC and not bothering to vet the candidate. So he may try for a while to hide behind that and wait for the media to get bored.
The Tories on one day proclaim a belief in rational self-interest as the noblest mechanism of free enterprise, and on another will stiffly pretend that political contributions from vested interests is given out of the goodness of their hearts
But what if the cabinet decides that Cameron is dead weight now, and that maybe it’s time for a mutiny against him? The Tories’ reputation is already toxic enough on the issue of tax avoidance, and Cameron’s entire argument on the subject has for years been an explicitly moral one. He’s made a big show of strutting around as the self-proclaimed champion of tax morality since he took office, and has said loudly and often that the problem isn’t just one of legality but of ethics. If he decides to play dumb, it’s far from certain that the Brexit gang will support him in maintaining that narrative, and may instead find the scent of his blood irresistible.
It would be a mistake, though, to see Cameron’s defenestration (if it happens) as simply a power play by Eurosceptics. Their fear is more existential: the true constituency that the Conservative Party serves is under threat. I’m talking less about their individual accounts and much more about the big banks, the hedge funds, the offshore elites, who bankroll the party and whose blatant-if-legal corruption is no longer fooling anyone.
They have calibrated the state so that particular parts of its apparatus are yoked in the service of financial interests
Even before the Panama leaks we knew that nearly three quarters of top Tory donors are linked to tax havens. Half of all their election funds in 2010 came from the financial sector, in a party who on one day proclaims a belief in rational self-interest as the noblest mechanism of free enterprise, and on another will stiffly pretend that political contributions from vested interests is given out of the goodness of their hearts. That £5 million in party donations from HSBC’s Swiss account holders to numerous Tory politicians doesn’t exactly look like a flood of charitable whimsy.
The Tories have calibrated the state so that particular parts of its apparatus are yoked in the service of financial interests. We know that the head of the BBC Trust, Rona Fairhead, takes in roughly £500,000 from HSBC as a non-executive director, and that since her appointment the bank’s numerous fraud allegations have received barely any coverage. The Financial Conduct Authority, which has spent three years bullying and stonewalling a whistleblower trying to bring a case to them about a potential HSBC credit card fraud worth £1 billion, contains a board member who worked at a top job at HSBC for five years. Is it unreasonable to wonder if perhaps Troup’s appointment wasn’t made because Cameron decided all by himself that he fancied giving the job to a friend?
If by some bizarre improbability both Cameron and Osborne failed to be aware of Troup’s former work, it would be a hell of a coincidence
To begin with, what the cabinet might not want to trumpet too loudly as this unfolds is that it was actually George Osborne, as Chancellor of the Exchequer, who was directly responsible for Troup’s appointment. Did the famously calculating Gideon make the slip-up of not knowing some very basic facts about Troup’s career history before making that decision? On their own website HMRC tell us that “Edward is a qualified solicitor with experience gained in the private sector at Simmons and Simmons”, so it’s hardly as if they’re unaware of his history down at the office. And when Troup was given the job, Osborne, who has previously employed Troup personally, refers to “Edward’s wealth of experience in tax”, while the Cabinet Secretary, Sir Jeremy Heywood, said “his strong financial background make[s] him strongly placed to deliver.”
Of course, Osborne could also try to be cute about it by taking the line that Troup’s work with offshore entities was technically legal and that’s what matters, but then he’d have to disavow that other thing he said when Troup started this job: “he will prove a huge asset to HMRC as it…continues its vital work to clamp down on tax avoidance and evasion”. Avoidance and evasion? How little did he supposedly know about this man who he had already personally employed for several years before appointing him to a top regulatory role in one of the most important departments in the British government?
This is not a crisis of legality but rather a sudden and unavoidable debate about the breadth of political possibility
If by some bizarre improbability both Cameron and Osborne, who each had different connections at different times to Troup, failed to be aware of the fact that Troup was professionally aligned with the kind of offshore entity the public are finally seeing thanks to the Mossack Fonseca leaks, it would be a hell of a coincidence.
What the Panama Papers are increasingly revealing is that this is not a crisis of legality but rather a sudden and unavoidable debate about the breadth of political possibility. How is Troup supposed to lead an inquiry into a system in which he participated? It’s not unreasonable to wonder if that was precisely the logic of his appointment. Troup being rumbled is bad news for institutions like HSBC far more than it will be for David Cameron; they’re the ones who were about to be investigated by a fellow traveller.
If the Tories decide that Cameron is a junk bond and they need to dump him, it won’t be merely to detoxify their brand, but to have an individual take the fall for their collective misdeeds of selling our democracy to their friends in the financial sector, who refuse even to pay their fair share to keep things running smoothly. This is bigger than Cameron; this medieval sense of entitlement of the entire financial class is to blame, and they will want the public to be duped into thinking that Cameron alone is compromised to their will. Among the infighting and the panic, the snarling, existentially urgent goal of the Tories now is to desperately maintain the great lie of our time: that there is not enough to go around.