Nadhim Zahawi earned at least £1.3 million from interests in Kurdistan after cultivating close links with a powerful regional family, at the same time as he sought to shape Britain’s foreign policy in the area.
The Conservative Party chairman, whose career is in the balance after revelations about his tax affairs, is now facing questions over the sums he made as a “fixer” for oil companies in the disputed region, while he was an MP.
Zahawi, who was born in Iraq, developed friendships with power brokers in the Barzani family, one of two tribes that dominate Kurdish politics, and became known as the “go-to consultant for companies wishing to gain access to the Barzani clan”.
Nadhim Zahawi at home with his brother-in-law, the interior designer Broosk Saib, in 2004Nadhim Zahawi at home with his brother-in-law, the interior designer Broosk Saib, in 2004
Nadhim Zahawi at home with his brother-in-law, the interior designer Broosk Saib, in 2004
He arranged internships in the UK for children related to officials and was involved in a British company of which the son of an Iraqi politician is a major shareholder.
Zahawi drew on his lucrative relationships with the ruling elite as he accompanied British officials and politicians to Kurdistan, hosted political meetings in the UK and used parliamentary debates to urge Britain to aid the regional government’s security and economic interests.
• Nadhim Zahawi lets ethics investigator see his tax records
On at least one occasion in 2014 he failed to declare his interests while speaking in parliament on the subject.
Last night Angela Rayner, the Labour deputy leader, said: “The accusations swirling about Nadhim Zahawi’s conduct in government raise new questions not only over whether his ministerial interests were above board and properly declared at all times, but whether steps were taken to avoid an actual or perceived conflict of interest. There is now a whole slew of questions for the Conservative Party chair and a growing catalogue of concerns for the prime minister’s ethics adviser to consider.”
Zahawi came to Britain as a childZahawi came to Britain as a child
Zahawi came to Britain as a child
Fleeing from Baghdad
Zahawi has said that his family had to flee the Baath regime in Iraq in the 1970s and he arrived in England as a boy. After school and university, where he studied chemical engineering, he returned to Iraq in his early 20s as an aide to Jeffrey Archer, now Lord Archer of Weston-Super-Mare, who had campaigned to raise funds for Kurdish refugees.
The trip took place amid allegations that a lot of money from a fundraising concert had gone missing, and a journalist described Zahawi and another aide “rapidly going native carrying Kalashnikovs”.
There were other problems. Archer upset Masoud Barzani, a warlord, by declining his invitation to a banquet. Barzani had the electricity to Archer’s hotel cut in retaliation.
Zahawi became a Conservative councillor in 1994 and worked on Archer’s unsuccessful London mayoral campaign before setting up the polling company YouGov.
Zahawi worked as an aide to Jeffrey ArcherZahawi worked as an aide to Jeffrey Archer
Zahawi worked as an aide to Jeffrey Archer
When he was elected as MP for Stratford-upon-Avon in 2010, Zahawi was fêted in Iraq as the first Kurdish MP.
By 2003 his father had won rebuilding contracts in the region through Iraq Project & Business Development (IPBD). And in Westminster Zahawi became co-chair of the all-party parliamentary group on Kurdistan and went there a lot.
He built a close friendship with Barzani who had become president of the Kurdistan regional government (KRG) in 2005.
Crucial too, was his relationship with the oil minister, Ashti Hawrami. “There was an old industry joke that Kurdistan’s ministry of natural resources consisted of Ashti Hawrami and his briefcase,” Ben Van Heuvelen, editor of Iraq Oil Report, said.
In 2011 Zahawi visited Kurdistan at least four times, attending meetings with Barzani, Barham Salih, who later became president of Iraq, and other senior figures. On one visit he led 70 business people to Arbil in what was said to be “part of a wider government effort to spur trade with Britain”.
A few weeks later he was back in a personal capacity, attending a Kurdish-Iraqi oil and gas conference seeking to attract foreign investors.
Saddam Hussein in 1970Saddam Hussein in 1970
Saddam Hussein in 1970
CENTRAL PRESS/GETTY IMAGES
Oil company contracts
He used his relationships to foster closer relations between Britain and Kurdistan. As well as leading trade delegations, he met Kurdish officials in London. These connections made him attractive to oil companies, too. Zahawi became a regular at an annual oil and gas conference billed as “the place to meet the key Iraqi and Kurd officials and decision makers”.
The conference’s first principal sponsor was Gulf Keystone, which was founded by Todd Kozel, an American who was jailed last year for failing to declare $66 million in assets. Keystone was funding the APPG in 2014 when Zahawi told a newspaper that he did not “mix my personal interests with my work as a member of the APPG”.
A year later, however, he was appointed Keystone’s chief strategy officer. It was in crisis and its share price was falling because the KRG was withholding oil payments of $250 million.
Industry sources said that Zahawi was seen as being key to getting the payments restarted. One said that he was worth his weight in gold. “When you saw him and the oil minister together, they were like two brothers,” the source said. “With a company like that, in a sector like that, political relationships with the government [or] the quasi-government are absolutely critical.”
Ashti Hawrami, the KRG oil minister who had a “good relationship” with ZahawiAshti Hawrami, the KRG oil minister who had a “good relationship” with Zahawi
Ashti Hawrami, the KRG oil minister who had a “good relationship” with Zahawi
SEBASTIAN MEYER/GETTY IMAGES
Zahawi succeeded in restarting payments. “Nadhim had a good relationship with Ashti Hawrami, the KRG oil minister,” said Alan Mohtadi, who heads T&S Consulting Energy and Security, which advises companies in the Kurdish oil and gas sector. “If you wanted to get anything done you had to go through Hawrami. Nadhim was able to leverage this and other relationships with the government to ensure Gulf Keystone got paid on time.”
He was also seen as a valuable route to the British government and a representative of UK plc.
“The KRG is incredibly aware of the value of relationships with foreign powers,” Van Heuvelen said. “Anyone who could come into Kurdistan and who could say, ‘I have connections with the British government,’ is going to be listened to. They know having someone supportive in their corner could help with diplomatic issues both internationally and in terms of relations with Baghdad, as well as even with military support.”
Zahawi earned £1.3 million from Gulf Keystone between 2015 and 2018, and was granted share options worth about £300,000 at the time they were issued, although it is unclear how much they were sold for.
Zahawi earned £1.3 million from Gulf Keystone between 2015 and 2018Zahawi earned £1.3 million from Gulf Keystone between 2015 and 2018
Zahawi earned £1.3 million from Gulf Keystone between 2015 and 2018
SEBASTIAN MEYER/GETTY IMAGES
In 2012 he was hired by Afren, an oil exploration company which was trying to find buyers for two Kurdish oil fields it had stakes in. He worked for Afren until its collapse in 2015 and also advised a Canadian oil company called Talisman Energy.
The commercial terms of the agreements were masked because Zahawi declared in the register of members’ interests that they were clients of his consulting company, Zahawi & Zahawi, rather than disclosing contracts.
At about the same time he became a major shareholder in Genel Energy, which had an interest in an oilfield which he and MPs visited during an APPG trip in 2013. At the time Zahawi said he had not “been privy to any insider information” and had chosen to invest “on the strength of their business”.
A growing role in Westminster
As well as earning a lot from his work in the region, Zahawi was becoming an influential voice on British-Kurdish relations. In 2015 he accompanied Boris Johnson, who was mayor of London, to Kurdistan. Foreign Office officials said the visit, which included meetings with Nechirvan Barzani, Masoud’s successor as president, had been “cooked up” by Zahawi. He had spoken in a parliamentary debate the previous month in which he congratulated the Iraqi prime minister and Barzani on “coming together to form the revenue-sharing and hydrocarbon deal”.
He raised security issues in the region, which were holding back oil companies, and asked whether Michael Fallon, who was defence secretary, had a chance to discuss the formation of a national guard “with both parties in Kurdistan and Baghdad”. He failed to declare an interest.
Zahawi with Boris Johnson on a visit to Arbil in 2015Zahawi with Boris Johnson on a visit to Arbil in 2015
Zahawi with Boris Johnson on a visit to Arbil in 2015
ANDREW PARSONS/PARSONS MEDIA
Zahawi hosted Barzani and other officials in the UK, including meeting Johnson when he was foreign secretary in 2019 and on two visits to Downing Street after he became prime minister. He also helped to arrange an internship for Mazen Barzani, a relative of the Kurdistan president, in his parliamentary office in 2017. It has also been alleged by Kurdish sources that Zahawi helped arrange a separate, previously unreported, internship at Conservative Party headquarters for someone else linked to Barzani.
The relationship between the Barzanis and Zahawi has endured. When he became chancellor last year, Masoud’s son, Masrour Barzani, the prime minister of Kurdistan, tweeted his congratulations.
Father’s offshore trusts
His business career has been allied with the interests of his father, Hareth. The tax dispute that threatens to topple him relates to his share in YouGov, the polling company, being allocated to Balshore Investments, a Gibraltar company owned by an offshore trust controlled by Zahawi Sr. YouGov in turn had commercial dealings with IPBD.
Berkford Investments, another Gibraltar entity owned by Zahawi’s parents, provided a high-interest loan used to buy a house and riding stables in his Warwickshire constituency in 2011.
A Twitter account that has operated since 2017 under his father’s name has been defending Zahawi for months. It has described Carol Vorderman, the television presenter, and other online critics of Zahawi as “political whores”, and sent pictures of snakes to journalists who commented on Zahawi’s problems.
The account changed its name in July last year, at the time Zahawi’s tax affairs first made headlines, but it is not clear if his father is operating the account.
Zahawi Sr invested in Crowd2Fund, a business launched by the brother of the MP Matt Hancock, through Balshore.
Unusually, two of the company’s directors also have links to Kurdish politics. They include Asoz Rashid, the son of President Rashid of Iraq. Rashid also has a significant stake in the business. Another director, the former Deutsche Bank banker, Hussain Qaragholi, was reportedly involved in negotiations to provide finance to the KRG.
Zahawi was asked whether he introduced the directors to Hancock but, through a spokesman, declined to answer that or other questions relating to Kurdistan. The spokesman said that Zahawi would not be commenting while his tax affairs were being investigated by the government’s independent ethics adviser.
Family has business ties to Hancock’s brother
Nadhim Zahawi has been involved with a crowdfunding company his parents own with Matt Hancock’s brother (George Greenwood and Billy Kenber write).
Crowd2Fund was launched in 2014 by Chris Hancock as an innovative platform for entrepreneurs to raise capital from investors.
Balshore Investments, the Gibraltar company at the centre of Zahawi’s tax troubles, was listed as a founding investor, taking an initial share in the company. His parents are now declared as persons of significant control for the firm. Zahawi has never stated an interest in the business.
Matt Hancock and Zahawi are friends and close political allies, having co-authored a 2011 book called Masters of Nothing on financial crises.
Chris Hancock told The Guardian in 2017 that he knew Zahawi personally, but the MP was not “hands on” in the management of Crowd2Fund. He also said Zahawi was not involved in Balshore’s decision to invest.
Zahawi was not “hands on” in the management of Crowd2Fund, a platform for raising capital for entrepreneursZahawi was not “hands on” in the management of Crowd2Fund, a platform for raising capital for entrepreneurs
Zahawi was not “hands on” in the management of Crowd2Fund, a platform for raising capital for entrepreneurs
TIMES PHOTOGRAPHER JACK HILL
Analysis of historic internet domain data by The Times, SourceMaterial and openDemocracy shows that Zahawi appears to have played some role in the firm, however.
From June 2015, the owner of the website’s internet domain was listed as Nadhim Zahawi, with his contact details given as his YouGov email address. Zahawi was also listed as the owner of other Crowd2Fund web domains.
The firm benefited from specific government deregulation, when tax-free savings accounts (ISAs) were extended to the crowdfunding sector in 2016. There is no allegation this benefit was illegitimate.
The company also attended the launch by then Tory chancellor George Osborne of Innovate Finance, which promoted growth of the UK financial technology, sector in 2014. In one parliamentary debate that year Zahawi had intended to call on businesses to look “beyond the monopoly of the high street banks, at equity options and at the innovative new online platforms, [such as] crowdfunding and peer to peer”. He also intended to call for the government to “accelerate the diversification of the financial system”. However, after running out of time to speak in parliament, Zahawi gave an abbreviated version of the speech and posted the rest on his website.
Two company directors — Asoz Rashid and Hussain Qaragholi — appear to have links to the Kurdistan Regional Government (KRG), with whom Zahawi has close ties. Rashid is the son of the Iraqi president Abdul Latif Rashid, a veteran Kurdish politician, while Qaragholi, a former managing director at Deutsche Bank, was reportedly involved in negotiations to provide finance to the KRG.
Asoz Rashid said his family had known Zahawi’s for a long time, and that he only dealt with Zahawi’s father in relation to Crowd2Fund.
He said his involvement in Crowd2Fund predated his father’s appointment and Zahawi entering government, and that Crowd2Fund had acted properly at all times. It is understood Qaragholi was not introduced to the firm by Zahawi.
Zahawi declined to comment. Crowd2Fund did not respond to a request for comment.
Source: The times