The chancellor is under pressure to reveal where his multimillion-pound personal fortune is invested after suggestions that some of his wealth, which is managed by a so-called blind trust, could be held in offshore tax havens.
Opposition MPs and transparency campaigners on Monday called on Rishi Sunak to be “completely transparent” about where his wealth – earned over a long career at the US investment bank Goldman Sachs and hedge funds – is invested in order to avoid potential conflicts of interest with his role running the UK economy.
The lowdown on blind trusts
A blind trust arrangement allows an individual to hand over the control of shares, property and other assets to an independent trustee who is employed to manage its contents. While the beneficiary continues to own and profit from the investments, they are no longer involved in its day-to-day management.
In theory, blind trusts allow people in public office to continue to own investments in companies, while avoiding the accusation that there is a potential conflict of interest.
While blind trusts are mostly used by politicians, other people in sensitive positions such as journalists, charity workers and even religious leaders have placed their personal assets into blind trusts. In the US, President Lyndon Johnson was an early adopter of a blind trust, as he did not want to sell the Texas television station he owned before entering the White House. Donald Trump and Theresa May both set up trusts when they became president and prime minister respectively.
The campaign group, Spotlight on Corruption, says seven sitting government ministers currently have blind trust arrangements in place, according to the the latest register.
Because they can abused. While they allow politicians to appear to be making decisions free of the accusation of personal gain, blind trusts let politicians own substantial investments free of any public scrutiny as their contents are private.
While an actively managed share portfolio, held in a blind trust over a number of years, would allow the beneficiary to argue no conflict of interest, campaigners say a newly appointed minister who had recently transferred their assets into a blind trust would still be aware of where their money was invested.
While the beneficiary and the trustee are required not to discuss the trust’s investments and the former should have no influence over the latter, there is little to stop this happening on an informal basis, and it is not policed in any way.
Some politicians will sell anything that could be construed as a conflict of interest – Barack Obama sold all his stocks shortly after becoming a senator.
In 1998, a parliamentary report by Lord Neill found the use of blind trusts to be “inconsistent with the principles of openness and accountability“ and recommended that such trusts be “prohibited as a mechanism for funding political parties, party leaders, members of parliament or parliamentary candidates”.
No. The ministerial code says it is up to the personal responsibility of each minister to decide whether and what action is needed to avoid a conflict or the perception of a conflict.
When Theresa May became prime minister she did set up a blind trust, but had chosen not do so when she was appointed home secretary. David Cameron did not use a blind trust while Tony Blair set one up after becoming prime minister. It later emerged that his wife, Cherie, had directed the trustees to buy two flats in Bristol – the start of what grew into a £27m property empire.
The trust is simply dissolved and the assets are returned to the original owner, complete with any gain or loss accrued while the investments were held in the trust. Politicians who create a blind trust for their assets when elected usually will terminate it once they leave office and any conflict of interest questions are eliminated.
Sir Ed Davey, the Liberal Democrat leader, said: “The truth with this trust is that the only people that are blind to it are the public. The chancellor only set up the trust 18 months ago but the public has no idea where the money is or whether there is a conflict of interest. With public trust in this government plummeting, greater transparency in all their dealings is essential and the chancellor must show a lead.”
Sunak registered a blind trust in July 2019 after he had been appointed chief secretary to the Treasury under the previous chancellor, Sajid Javid. Under a standard blind trust arrangement individuals can still receive income from their investments but cannot make decisions about how the money is invested.
The campaigners and MPs are concerned that Sunak will know where his money was invested before he placed it in the blind trust, and that raises concerns that his decisions as chancellor could be influenced by his personal stakeholdings.
The financial transparency campaigners have also called on the chancellor to be categorical on the question of whether any of his wealth is sheltered in offshore tax havens.
Abena Oppong-Asare, the shadow exchequer secretary to the Treasury, said: “Rishi Sunak needs to be completely transparent with the public about whether any of the funds he invested in a blind trust are held in offshore tax havens. Taxpayers paying their fair share expect nothing less.”
Sunak is the only chancellor to have used a blind trust since details of ministers’ interests began to be published in 2009. Seven serving ministers hold a blind trust, compared with 13 in 2015.
Richard Murphy, a visiting professor of accounting at Sheffield University management school and a self-described “tax justice campaigner”, said: “The problem with this arrangement is that the blindness is for the public. We literally know nothing.”
Daniel Beizsley of the financial transparency campaign group Spotlight on Corruption said: “The issue as I see it with Sunak is that unless the trustee was given specific instructions to diversify the portfolio, then Sunak is fully aware of its contents. It’s difficult to see how this could absolve him of conflict of interest claims. Additionally, by placing assets into the blind trust arrangement, the public’s ability to judge potential conflicts is reduced as his ministerial declaration is now empty.”
Sunak’s spokesperson refused to comment, but a Treasury source said: “Blind trusts/blind management arrangements are longstanding mechanisms for protecting ministers in the handling of their interests. They ensure ministers are not involved in any decisions on the management, acquisition or disposal of items in the arrangement.
“Politicians of all stripes have used blind trusts/blind management arrangements to ensure they avoid any conflict of interest, including the last Labour government.”
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