Nadhim Zahawi’s lawyer is facing a first-of-its-kind disciplinary case for allegedly attempting to prevent the public disclosure of a legal threat made on behalf of the former chancellor in an email to British tax lawyer and commentator Dan Neidle.
Reputation lawyer Ashley Hurst, head of client strategy at Osborne Clarke, who represented Zahawi over questions about the one-time Tory leadership candidate’s tax affairs in July 2022, is accused by the Solicitors Regulation Authority (SRA) of ‘improperly attempting to restrict’ Neidle‘s right to publish correspondence.
The case, which began on Monday, is the first concerning an alleged strategic lawsuit against public participation (SLAPP).
Hurst denies acting improperly. In a statement, Osborne Clarke said Hurst ‘acted in accordance with the law, market practice and his regulatory obligations’.
What is the hearing centred on?
In the email and letter at the centre of the accusation, Hurst demanded that Neidle retract his claims about an HMRC investigation into Zahawi and refrain from publishing anything about the email.
The claims Hurst referred to in the email alluded to Neidel’s disclosures about Zahawi’s tax investigation and his allegations the former chancellor lied when asserting that his failure to pay £3.7 million in tax was due to a genuine error.
The scrutiny surrounding Zahawi’s tax affairs centred on his co-founding of the polling company YouGov and the allocation of founder shares to a Gibraltar-based company, Balshore Investments, owned by an offshore trust controlled by his parents.
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In January 2023, media reports claimed Zahawi had agreed to pay a substantial settlement to HM Revenue and Customs (HMRC), which included a penalty for previously unpaid taxes. The total settlement was reported to be nearly £5 million.
The controversy intensified when it was revealed that Zahawi had failed to disclose the HMRC investigation to his permanent secretary and in his ministerial declaration of interests. He also did not inform Prime Ministers Boris Johnson, Liz Truss, and Rishi Sunak about the investigation.
Sunak later dismissed Zahawi as Conservative Party chairman in January 2023, citing a ‘serious breach’ of the Ministerial Code.
‘Shocking claims’
Neidle, the former head of tax at Clifford Chance and founder of tax advisory firm Tax Policy Associates, told the tribunal on Monday that the contents of the email he received from Hurst were ‘shocking’.
The contents of the email, sent on July 16 2022, were read out to the panel. Hurst claimed Zahawi considered Neidle to have ‘overstepped the mark […] by accusing him of lying to the media and the public’. Hurst added: ‘It is up to you whether you respond to this email but you are not entitled to publish it or refer to it other than for the purposes of seeking legal advice. That would be a serious matter, as you know. We recommend that you seek advice from a libel lawyer if you have not done already.’
The Solicitors Regulation Authority (SRA) claimed that Hurst’s threats breached its code of conduct. More specifically, the SRA accuses Hurst of failing ‘to act in a way that upholds public trust and confidence in the profession’ as well as failing to ‘act with integrity’.
Public interest claims
Neidel has repeatedly said he had the right to make those claims and to publish Hurst’s email. In 2022, the tax commentator published the email claiming it was in the name of public interest. ‘If I had not been able to publish, Mr Zahawi would still be in politics and might even be Prime Minister,’ Neidel told the panel.
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‘The fact that Nadhim Zahawi was threatening a defamation claim in relation to an allegation of multi-million-pound tax avoidance is itself a matter of strong public interest,’ said David Price KC in a written statement for the SRA.
First ever SLAPP case at the Solicitors Disciplinary Tribunal
It is the first time the Solicitors Regulation Authority is prosecuting a lawyer at the tribunal for attempting to use quasi-legal documents to suppress public discussion, in what is known as a SLAPP case (Strategic Lawsuit Against Public Participation).
The panel heard that Hurst’s 2022 email was headed ‘Confidential & Without Prejudice’, which implied a ‘prohibition on disclosure’ and an ‘implicit threat’ of pursuing a defamation claim, Price said during the hearing.
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In his witness statement on Monday, Neidle said he read the correspondence as a request to retract his ‘allegations within 24 hours or they would send […] a letter of action.’ He added that he considered it a ‘request where Mr Zahawi gets exactly what he wants and I get nothing.’
‘I do not believe ‘without prejudice’ heading makes [the correspondence] confidential. There was nothing in this letter that was confidential,’ Neidle said. ‘If made by someone worth less than £100 million I would not have taken it seriously for a millisecond but I had to take it seriously,’ he added, mentioning he was concerned about financial consequences.
In the written opening submissions, Ben Hubble KC (for Hurst) said his client ‘acted appropriately at all times’, that ‘allegations against Mr Hurst should be dismissed,’ and that ‘ this is not a case that bears any of the hallmarks of a SLAPP.’
The hearing before a three-person panel is due to continue until Friday.
