guardian.co.uk, Ed Howker and Shiv Malik, Friday 20 April 2012
The Jersey, Panama and Geneva connection
Ian Cameron's will
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| David Cameron's father set up offshore investment funds which explicitly boasted of their ability to remain outside UK tax jurisdiction. Photograph: Dan Kitwood/PA |
David Cameron's father ran a network of offshore investment funds to help build the
family fortune that paid for the prime minister's inheritance, the Guardian can
reveal.
Though
entirely legal, the funds were set up in tax havens such as Panama City and
Geneva, and explicitly boasted of their ability to remain outside UK tax
jurisdiction.
At the time
of his death in late 2010, Ian Cameron left a fortune of £2.74m in his will,
from which David Cameron received the sum of £300,000.
Cameron and
other cabinet members have recently suggested that they would be willing to
disclose their personal tax filings amid growing scrutiny following the budget,
but this would only shed light on annual sources of income rather than
accumulated wealth or inheritance.
The
structure employed by Cameron senior is now commonplace among modern hedgefunds, which argue that offshore status can help attract international
investors. UK residents would ordinarily have to pay tax on any profits they
repatriated, and there is nothing to suggest the Camerons did not.
Nevertheless,
the dramatic growth of such offshore financial activity has raised concerns
that national tax authorities are struggling to pin down the world's
super-rich.
Ian Cameron
took advantage of a new climate of investment after all capital controls were
abolished in 1979, making it legal to take any sum of money out of the country
without it being taxed or controlled by the UK government.
Not long
after the change, brought in by Margaret Thatcher after her first month in
power, Ian Cameron began setting up and directing investment funds in tax
havens around the world.
Leaving his
full-time role as a City stockbroker, Ian Cameron went on to act as chairman of
Close International Asset management, a multimillion-pound investment fund
based in Jersey; as a senior director of Blairmore Holdings Inc, registered in
Panama City and currently worth £25m; and he was also a shareholder in Blairmore
Asset Management based in Geneva.
However,
the family will – a public document seen by the Guardian – only details the
assets of Ian Cameron's estate in England and Wales. Offshore investments would
only be listed in submissions to HMRC for inheritance tax purposes. It is
unclear what those assets – if any – are worth and which family member owns
them.
In 2009 the
compilers of the Sunday Times Rich List estimated Ian Cameron's wealth at £10m.
He was
survived by his wife, Mary Fleur Cameron, who as his spouse would not have had
to pay inheritance tax on sums transferred between them.
In 2006
Ian's eldest son, Alexander, became the sole owner of the family's £2.5m house
in Newbury, Berkshire, where David had been brought up.
Another
family home in Kensington, London, worth £1m, passed to his two daughters in
equal share.
Cameron's
father was "instrumental" in setting up the Panamanian company,
Blairmore Holdings, in 1982, which was exempt from UK tax, when David was a
pupil at Eton aged 16.
The fund
shares its name with the family's ancestral home in Aberdeenshire, Blairmore
House, in which Ian Cameron was born in 1932 but which the family no longer
owns.
A lengthy prospectus for Blairmore Holdings written in 2006 and meant to attract high net
worth "sophisticated" investors, with at least $100,000 to buy
shares, is explicit about how the fund sought to avoid UK tax. At the time more
than half of the fund's 11 directors were UK nationals.
Under
Panamanian law the fund was excluded from taxation derived from other parts of
the world.
"The
fund is not liable to taxation on its income or capital gains as long as such
income or capital gains are not derived from sources allocated within the
territory of the Republic of Panama," the 2006 prospectus reads.
"The
Directors intend that the affairs on the Fund should be managed and conducted
so that it does not become resident in the United Kingdom for UK taxation purposes.
Accordingly ... the Fund will not be subject to United Kingdom corporation tax
or income tax on its profits," the prospectus continues.
The
investor document also credits Ian Cameron as a founder member of Blairmore
Holdings and states that as an adviser he would be paid $20,000 a year – the
highest paid director – whatever profits were realised.
In fact,
the long-term Panamanian investment fund performed above market rate over many
years averaging a 116% return from 2002-2007. Today many of the fund's largest
holdings are in blue-chip stocks such as Apple, Unilever and Coca Cola.
Before his
death, aged 77, Ian Cameron was also chairman and shareholder of Close
International Equity Growth Fund Ltd, registered in Jersey and worth £9m
according to papers filed in 2005. In that year just under half of the fund's
holdings were in UK listed stocks.
A third
fund set up in Geneva, Switzerland, had a shorter life span and finally
dissolved in 2007 but had many of the same registered shareholders as the Panamanian
outfit. These included a number of former employees of Panmure Gordon, the
stockbroking firm where Ian Cameron spent much of his career and those from
Smith and Williamson investment management where Cameron senior was a
consultant.
One notable
investor into the Panama fund was a charity established by Tory peer Lord
Vinson. Accounts from 2009 show that a charitable trust set up under his own
name invested £82,000 into the fund – almost one quarter of its investments in
shares.
Vinson's
trust that year went on to donate tens of thousands of pounds to rightwing
think tanks including the Institute of Economic Affairs and Civitas.
David
Cameron has recently remarked on companies who have taken advantage of
offshoring to legally avoid tax. Speaking at the start of the year to small
business leaders in Maidenhead, he said: "With the large companies, that
have the fancy corporate lawyers and the rest of it, I think we need a tougher
approach.
"One
of the things that we are going to be looking at this year is whether there
should be a general anti-avoidance power that HMRC can use, particularly with
very wealthy individuals and with the bigger companies, to make sure they pay
their fair share."
The row
also comes as the top rate of tax was lowered in last month's budget from 50p
to 45p and the rate of corporation tax continue to drop to achieve the
chancellor's ambition of giving the UK one of the lowest rates of corporationtax in the G7.
Responding
to opposition criticisms over the lowering of the top tax rate, Cameron said:
"The cut in the 50p tax rate is going to be paid five times over by the
richest people in our country."
Downing
Street said it did not want to comment on what was a private matter for the
Cameron family.
A
spokesperson added: "The government's tax reforms are about making sure
that some of the richest people in the country pay a decent share of income
tax."
The
investment managers Smith and Williamson, for whom Ian Cameron worked, chose
not to comment.
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