When Cabinet Secretary Sir Gus O’Donnell publishes his report this week on whether former defence secretary Liam Fox broke the rules over his curious working relationship with ” adviser” Adam Werritty, it may not be the end of the matter. There is still unfinished business across the pond in the US and there could be a kickback in Britain as well.
To use a metaphor that Mr Fox and his friend might be familiar just as foot soldiers sent into battle in Afghanistan have to be wary of the explosive danger of hidden IED’s in Helmand, Fox and Werritty are still in the middle of a minefield where one false step could be fatal.
One reason is that a blogger from Manchester-Stephen Newton who had been pursuing Fox and Werrity’s Atlantic Bridge Neo Con”charity” in Britain for two years - put a formal complaint into the US Internal Revenue Service about its sister organisation in America.
Basically the accusation was similar to the British charity whose organisers have just closed down rather than obey charity rules- that Atlantic Bridge Inc was not a non-profit educational body which should avoid tax.
In a cryptic reply, the IRS said it would evaluate the information they had received and decide whether to investigate but would not contact him until the investigation was complete.
Remarkably ( and perhaps Revenue and Customs should do this here) they said that he might qualify for a financial whistleblower’s award if Atlantic Bridge was found to be tax dodging.
The IRS has still to inform Newton about his award but has made it clear it will never discuss what action it is going to take. See his own website http://www.stephennewton.com/ for his take.
The signifance of this is the US operation is totally bound up with the British one – to the extent that it funded Liam Fox’ s charity and that some of the people thought to have bankrolled Adam Werritty on his trips with the minister may well be connected. On top of this as Sunny Hundal pointed out on the Liberal Conspiracy website last week, (see http://bit.ly/n53Oye ) they include through the American Legislative Exchange Council links to powerful arms dealers like the Koch Foundation and the tobacco industry. It also backs the Tea Party. And one has only to look at the Guardian, Observer, Sunday Telegraph and the Times to see how extensive these connections are.
Now ,if and it is still if, the IRS acts against Atlantic Bridge Inc, this is only going to intensify the pressure on the people who have been backing Fox and Werritty and set a whole new trail going in the US ( no wonder the blogger has taken calls from the Wall Street Journal).
Meanwhile in Britain the trustees of the Atlantic Bridge charity have closed it down rather than comply with recommendations from our own Charity Commission to make it less partisan. the Commission seemed to think it had to treat Atlantic Bridge with kid gloves. Indeed unlike the treatment of the Smith Institute – slammed for links with Gordon Brown – it was almost obsequious in its dealings with a body that had five Tory shadow ministers advising it ( though two, Michael Gove and Chris Grayling can’t remember attending – I hope they take their present paid jobs more seriously!)
The Commission gave the charity months to change its rules – despite a decision that it was partisan which would disqualify it for charity status. Adam Werritty at the time objected to the findings-saying he was ” disappointed” by the ruling.
There was also the small question that five Conservative ministers-Liam Fox,George Osborne, William Hague,Michael Gove and Chris Grayling plus John Whittingdale ( current chair of the culture,media and sport committee) were all members of its advisory board of what is now known not to be a properly constituted charity.
If I was a sharp tax inspector at Revenue and Customs I think I might decided to approach the accountants of prominent donors like Tory donor Michael Hintze ( £47,000 in two years according to Atlantic Bridge Accounts) and see whether the donated money qualified for gift aid-saving tax payments by both the donor and the charity. And then I would claim it back.
Atlantic Bridge also charged unbelievable sums to attend its events -£400 a time and £700 for VIPs- to go to a reception at the Lanesborough Hotel in Hyde Park Corner to see Henry Kissinger get the Thatcher Medal for Freedom. Luckily under gift aid rules, at least the people going could not get a rebate from the tax authorities. No doubt it was these lavish occasions that encouraged Werritty on his high living vists, funded we now know through his private company.
There is an interesting irony about all this – the resignation will enable Fox and his friend Werritty to continue their lobbying. Journalists should keep an eye on the Advisory Committee on Business Appointments website over the next few months to see what lucrative jobs Fox applies for next.
Just like the Afghan war, this story will run and run.