Sunday, March 05, 2006

Jowell and Mills and a pub deal and intrigue in Iran

According to Antony Barnett and Barbara McMahon in The Observer, 5 March 2006:

David Mills's business dealings spanned three continents and ran from defence to theme bars, from Iran to Italian TV.

How the lawyer's pub deal brewed a storm of trouble

According to The Observer, Tessa Jowell, the Culture Secretary, may have broken parliamentary rules on at least two occasions.

The Observer refers to industrial intrigue in Iran and to a chain of South African-themed sports bars and upmarket pubs across England.

After Blair won the 1997 general election, he made Jowell his public health minister.

According to The Observer:

At the time Jowell was involved in discussions with the drinks industry about a range of issues from relaxing drinking regulations to alcopops. She was also working on a white paper about the future of tobacco use that would see the government back away from banning smoking in pubs...

Documents obtained by The Observer reveal that on 8 February 1998, Mills used a company based in the British Virgin Islands to buy 90,895 shares in a little-known firm called the Old Monk Company...

The Old Monk Company is involved with pubs and drink.

Mills pumped £80,000 into the company...

Reportedly the shares were sold, on 3 September 1999, for £147,977.

Assuming the detailed evidence collected by the Italian prosecutor is accurate, this suggests that in a space of just 18 months while his wife was public health minister, Mills had turned a profit of £67,000 - a return of more than 80 per cent...

Opponents are likely to seize on this as an apparent conflict of interest that should have been declared.

The Observer article continues:

Within 18 months the Labour Party would be trying to secure votes at the 2001 General Election by sending out text messages to students saying: 'Cdnt give a XXXX 4 lst ordrs? Then vote Labour for extra time.'

After Labour was returned to power, Jowell was promoted to Culture Secretary with the job of driving through the new drinking laws.

In the summer of 2002 Mills talked to Baroness Symons, then a Foreign Office minister, about his interests in Iran.

According to The Observer:

He was trying to broker a $200m deal to sell aircraft to Iran but the problem was that the US had strict sanctions prohibiting this.

Mills explained the difficulty to his wife's colleague. Symons asked him to drop her a letter - a copy of which was leaked last January and revealed how Symons had given him advice on proceeding with the deal.

The Observer has now obtained the original letter which Mills wrote to Symons on 9 July 2002, 10 days after the Oxford dinner.

Mills wrote: 'Dear Liz... I am sure HMG [government] will wish to offer such support as it can to smooth the path with our American friends...'

The ministerial code states that ministers must declare to their permanent secretary the financial interests of their spouses if they could appear to be a potential conflict of interest.

At the time Mills, who had travelled to Tehran, confirmed that he had discussed his Iranian work with Jowell, so she was aware of it.

When contacted by The Observer in May 2003 about the original potentially sanctions-busting deal, Mills initially claimed that Jowell's permanent secretary had been informed, but he later admitted that this was not the case.

The Observer reminds us of the letter Mills sent to his accountant Drennan.

In it he explained how he had helped Berlusconi in a 1997 corruption trial by withholding the full truth. Mills admitted in the letter to Drennan: 'I told no lies, but I turned some very tricky corners to put it mildly ...[which] kept Mr B [Berlusconi] out of a great deal of trouble that I would have landed him in if I had said all I knew'.

Mills explained that under Italian law, he only had to answer questions put to him by prosecutors. The focus of that investigation was a Luxembourg company that Mills created more than a decade ago called Horizon. In a sense it is the root of all Mills's later problems.
In the early Nineties, the Italian government was concerned about Berlusconi's burgeoning media empire. It passed a law forcing him to sell off some of his television interests, something Berlusconi fiercely resisted. Mills came up with an ingenious solution: why not transfer Berlusconi's pay-TV channel into Horizon so that the media mogul could then show that the company was legally separate from him.


This worked, but for Mills there was an additional bonus. When the channel was eventually sold, Horizon was left with a windfall of £2m in March 1996. After Mills paid tax and shared it among the partners of his law firm, he was left with just under £500,000 - an amount Mills later described as 'not very much'. But what did he do with this money?

According to details of a 5 February meeting between Mills and his accountants, he used it to pay off a mortgage on his home. Documents from Rawlinson & Hunter state: 'The net sum of around £2m was then placed on deposit with DM's [David Mills's] bank, Guinness Mahon. It is understood that some of the dividend had been used by DM to repay his mortgage.'

So it would appear that even before the revelations last week that Mills used money from an Italian tycoon to pay off a December 2000 mortgage, funds from a company linked to Berlusconi were used by Mills to pay off an earlier mortgage.

It is unclear which of the eight mortgages Mills and Jowell took out on their two homes was paid by the Horizon windfall, but it is likely to refer to a Coutts mortgage the couple took out on their London house which was paid off in May 1996. In 1996 Jowell was in Opposition so she was not bound by any ministerial code.


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