Jowell ‘misled’ officials over Mills Iran link

The Sunday Times: Tessa Jowell has been accused of misleading the most senior official in her department over her husband’s Iranian business dealings.
The Sunday Times

Jonathan Calvert and Robert Winnett

TESSA JOWELL has been accused of misleading the most senior official in her department over her husband’s Iranian business dealings.

The culture secretary told Dame Sue Street, her permanent secretary, in February last year that her husband David Mills had resigned his position as managing director of a firm that was attempting to sell £115m worth of British Aerospace jets to Iran.

She was attempting to draw a line under a growing controversy after it emerged that her husband had lobbied a fellow minister over the deal.

Mills’s links with Iran have been embarrassing for Jowell, who now has to absent herself from cabinet discussions concerning Iran.

The record of the disclosure that Jowell made to Street states: “Secretary of state’s spouse: resignation from his position as managing director of BDIC (UK) (the firm behind the aircraft deal) with effect from the end of this month.”

Street “noted” the disclosure but did not consult the prime minister.

However, there is no record of Jowell telling the permanent secretary that her husband was the legal owner of BDIC (UK). Documents filed at Companies House earlier this year show that at the end of 2005 the firm’s only shareholder was Mayfair Corporate Services, a company wholly owned by Mills.

The disclosure — in documents released under the Freedom of Information Act — will add to pressure on Sir Gus O’Donnell, the cabinet secretary, to launch a full investigation into Jowell’s compliance with the ministerial code.

The code stipulates that ministers must reveal to their permanent secretaries any financial interests involving their spouses that may present a potential conflict of interest.

Jowell has already admitted failing to disclose two other controversial business deals involving her husband, but said that she had not been informed of them by him.

Last weekend the couple announced that they were separating.

This weekend Nigel Evans, a Conservative MP, accused Jowell of hiding her husband’s financial links. “The very fact she made this declaration shows she did know something about her husband’s dealings,” he said. “She was prepared to declare one thing but not the fact that he owned the company. Clearly, that is a huge problem which Sir Gus O’Donnell must investigate.”

Italian prosecutors have amassed detailed evidence in their case against Mills, who is alleged to have received money from Silvio Berlusconi, the Italian prime minister, for giving evidence favourable to him in an earlier court action.

The evidence also raises questions about the accuracy of Jowell’s public statements over her husband’s financial affairs and her knowledge of his dealings. It reveals:

Mills was responsible for an £80,000 investment in the shares of Old Monk, a pub chain, while his wife was a health minister involved with licensing laws. The shares were bought by an offshore trust run by Mills and almost doubled in value within a year.
Last week, when details of the investment were revealed, Jowell denied that her husband had owned shares in the firm. It was previously not known if Mills had personally profited from the deal.

However, bank statements from the offshore trust show that £147,428 from the sale of the Old Monk shares was paid into the trust’s account in September 1999. Three days later, £151,654 was transferred from the trust to Mills’s personal bank account. o Jowell has denied that a £350,000 “gift” at the cen tre of the latest scandal involving Mills was connected to Berlusconi.

However, a letter from Sue Mullins, Mills’s accountant, in May 2004 shows the Inland Revenue was told the money was linked to Berlusconi. She said the money had been given by Carlo Bernasconi, a director of one of Berlusconi’s companies and a “long time friend” of the Italian prime minister.

Mullins wrote: “The subject matter of this letter, bearing in mind Carlo Bernasconi’s closeness to Silvio Berlusconi (although Mr Mills has no reason to believe that the latter has or had any knowledge of the gift) is extremely sensitive, as being open to obvious misinterpretation.” She asked the Revenue to “afford it the utmost discretion”.

In her statement to the cabinet secretary, Jowell said she learnt of the £350,000 “gift” only in August 2004. However, documents uncovered by the Italian prosecutors show that Mills was concerned about the impact of the payment on his wife’s political career in February 2004 during a meeting with accountants.
In an interview with the prosecutors, David Barker, an accountant at Rawlinson & Hunter, said: “He (Mills) expressed concern that if the Italian prosecutors became aware of the payment that they would immediately seek to link it to the evidence which he had given in earlier cases.

“He also expressed concern for his wife’s political career.”

Mills — according to Jowell’s account — did not even mention the money after he had confessed to the Italian prosecutors during a formal interview that July.

A source close to the investigation commented last week: “Mills left the Milan law courts at one in the morning after confirming that the money was a gift from Berlusconi. Do people really think that he did not tell his wife when he returned home?” Mills changed his account on the source of the money several months after being interviewed by the prosecutors. He now claims the donor was Diego Attanasio, a Naples businessman, but Attanasio denies giving the money.

Jowell was, however, well aware of Mills’s business interests in Iran and his attempts to lobby the government at a private dinner party.

In 2002, Mills asked Baroness Symons, then a Foreign Office minister, for assistance over the Iranian aircraft deal. Jowell was forced to register her husband’s work as managing director of BDIC when the story emerged. The row erupted again in January 2005 when it was revealed that Symons had given Mills advice.

Symons wrote: “Dear David. Given the obvious political sensitivities you will need to tread very carefully with this one. This is a difficult time to be raising Iran policy in Washington . . . So you will need to think very carefully about a lobbying strategy calibrated to achieve the right result.”

The following month Jowell made the declaration that Mills had resigned as BDIC managing director, neglecting to mention his ownership of the company.

This weekend a spokeswoman for Jowell confirmed the culture secretary is barred from taking part in cabinet discussions about Iran or receiving cabinet papers on the country. It is thought to be the first time a cabinet minister has been barred from debates on crucial areas of government policy.

The spokeswoman added: “Tessa Jowell has made it clear that she has always discharged her responsibilities under the ministerial code in good faith.”

Following last week’s story in The Sunday Times, Evans wrote to David Varney, chairman of the Revenue, asking for a statement on whether Mills received preferential treatment during a recent investigation into his tax affairs.

The MP’s letter asks: “Was it the case that his wife’s name and her role as secretary of state for culture, media and sport were raised with your officials during the investigation? If this is the case, how did it come up and how was it dealt with?” Mills was unavailable for comment last week.