Short to get tough on Ashcroft tax haven 

Minister expected to press for abolition of Belize laws
giving tycoon an exemption worth millions

   Clare Short is to press for a clampdown on Tory treasurer Lord
   Ashcroft's tax free status in Belize if, as expected, Labour wins
   on Thursday. 

   The international development minister is expected to hold
   urgent talks with the central American government about the
   findings of a Whitehall commissioned report into Belize's tax
   laws, which allow the tycoon a 30-year tax exemption worth
   tens of millions of pounds. 

   She is in a strong position to press for the abolition of the
   exemption. She can argue that Britain will not cancel the poverty
   stricken country's debt repayments - estimated at £12.7m - if
   Belize is losing mil lions of pounds of revenue from a prominent
   citizen. 

   The tougher line emerged yesterday following the Guardian's
   revelations that the Tory peer, who is a leading donor to William
   Hague's election campaign, was embroiled in a fresh
   controversy over his business dealings. US state department
   and drug enforcement administration papers obtained by the
   Guardian reveal American fears that Belize's secretive tax haven
   "created to provide tax shelters for companies owned by
   Ashcroft" is being easily exploited by money launderers and
   fraudsters. 

   At yesterday's Tory election press conference, William Hague
   was asked to comment on the US suggestion that Lord Ashcroft
   - though doing nothing illegal - had helped to create a banking
   climate in Belize where such activities were possible. 
   He replied: "We will fight this election on what is happening in
   Britain, not what is happening in Belize. I did not see anything in
   this morning's article which was either new or made any
   substantive allegations against the party treasurer. We are not
   in charge of affairs in Belize." 

   Ms Short, expected to stay in her post after the election, is
   reported to be furious that KPMG, the accountants appointed by
   Whitehall to investigate the tax exemption, have failed to come
   up with any new information about the scale of Lord Ashcroft's
   offshore activities in their revised report sent to her department
   last week. This is despite a request to KPMG to rewrite the
   report after they claimed it was outside the terms of reference to
   examine Lord Ashcroft's company, Carlisle Holdings. 

   Any move by Ms Short is certain to anger Lord Ashcroft who,
   Whitehall sources say, threatened legal action against the
   international development secretary after alleging she made
   defamatory remarks against him at the world trade summit in
   Seattle in 1999. It is alleged that a private conversation between
   Ms Short and a Belize minister was relayed back to him from
   the summit. His lawyers are said to have written a stiff letter
   demanding a retraction and threatening action against her. She
   is said to have sent an equally stiff reply, denying the actual
   words used. Last night Alan Kilkenny, who acts as a
   spokesman for Lord Ashcroft, insisted the peer had not
   threatened Ms Short or demanded an apology. 

   The Belize government is also worried about retaliation from Lord
   Ashcroft if it is pressed to end his tax breaks. One senior official
   said: "It is unfair. We are caught in a very difficult position,
   whichever way we move." He feared that Lord Ashcroft would
   launch a lawsuit against Belize which could destabilise the
   country's economy. 

   Questions have also been raised about the role of KPMG itself
   in carrying out its investigation into Belize's tax affairs. The
   accounting firm runs its own business in Belize advising people
   on how to take advantage of the country's offshore sector. It also
   acts as external auditor to Lord Ashcroft's bank, the Belize
   Bank. The company said the investigation was carried out by
   separate consultants from its Leeds branch who visited Belize to
   gather the information. A spokesman said that "Chinese walls "
   applied to the investigation to ensure that it was impartial and
   independent. 

   Ministers were said to be unaware about KPMG's involvement in
   Belize when they appointed the company to undertake the
   inquiry, and have asked Sir John Vereker, the permanent
   secretary at the Department for Internationl Development, to
   raise the matter with them. 

   Mr Kilkenny said last night: "I have no comment to make as it is
   two days before the election

   Rob Evans, David Hencke and Michael White
   Tuesday June 5, 2001
   The Guardian 

   "The Guardian" - English broadsheet 

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