A tax expert has told a tribunal of a “shocking threat” made by a lawyer acting for former chancellor Nadhim Zahawi that there would be “serious consequences” if he published correspondence about retracting claims the politician had lied about failing to pay tax.
Ashley Hurst, of Osborne Clarke law firm, faces a solicitors disciplinary tribunal over allegations that he sent an email and letter to Dan Neidle, founder of Tax Policy Associates, in July 2022 in which he “improperly attempted to restrict Mr Neidle’s right to publish that correspondence and/or discuss its contents”.
The communications asked Mr Neidle to retract claims he had published that Mr Zahawi lied about failing to pay £3.7 million in tax, and also not to publish the correspondence.
The email, sent on July 16 2022 and marked “without prejudice”, said Mr Zahawi considered Mr Neidle “overstepped the mark today by accusing him of lying to the media and the public” and conveyed an opportunity for Mr Neidle to “retract your allegation of lies in relation to our client”.
It also said: “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 libel lawyer if you have not done already.”
Giving evidence to the disciplinary panel on Monday, Mr Neidle said he took the email to mean that he could not publish the fact that he received a message from the then-chancellor’s lawyers ordering him to retract the claim and that “there would be serious consequences if I did”.
“I thought that was shocking,” he said, adding that he was not sure if it was a threat of civil proceedings on the basis of breach of confidence or a threat to take it to the SRA or both but he “knew it was a threat”.
Mr Neidle eventually published both the email and the letter from Mr Hurst, crediting those publications with bringing a “great deal” of attention to Mr Zahawi’s tax affairs.
“Ultimately (it) led to Mr Zahawi’s undoing when the fact of his secret settlement became public,” he said.
“If I had not been able to publish, Mr Zahawi would still be in politics and might even be prime minister.”
He added that he did not believe “the mere fact that a letter is labelled ‘without prejudice’ makes it confidential”.
“There was nothing in this letter that was confidential,” he told the panel. “The idea that it was improper to refer to it seemed indefensible.
“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 said he was “concerned” about financial consequences.
On July 19 2022, Mr Hurst sent a letter to Mr Neidle which was headed “private and confidential” and marked “not for publication”.
The letter said: “Please also do not misrepresent the nature of this letter. It is not a threat to sue for libel. It is a request that you reconsider what you have published and adopt a fair and balanced approach to your investigations.”
Mr Neidle labelled the letter “weak” and told the hearing that he concluded Mr Zahawi was “bluffing” after receiving it.
He said that “if you are facing someone with £100 million and sufficient political incentive” you “have to worry about the prospect that they would bring legal action” no matter how weak their case might be.
“It was only when I concluded that he could not afford to bring legal action because it would be a calamity for him that the threat went away,” Mr Neidle added.
“The Chancellor of the Exchequer is one of the four Great Offices of State,” Mr Price said. “Defamation claims by holders of these offices are extremely rare.
“The Chancellor has ultimate responsibility for HMRC and for ensuring that taxpayers are not avoiding taxes by, among other ways, the use of offshore structures, especially when tax burdens are high for those who cannot afford to put such structures in place.
“Any tax avoidance of this kind and/or related HMRC investigation is fundamentally incompatible with the office of Chancellor.
“The fact that Nadhim Zahawi was threatening a defamation claim in relation to an allegation of multimillion-pound tax avoidance is itself a matter of strong public interest.”
Mr Price said the warnings in the email that Mr Neidle is not entitled to publish or refer to the correspondence, and that that would be a serious matter, “sought to prevent any scrutiny of Nadhim Zahawi’s decision to threaten the defamation claim, potentially indefinitely”.
Mr Hurst denies the allegations against him.
Ben Hubble KC, for Mr Hurst, said in written submissions: “Mr Hurst acted appropriately at all times”.
Mr Hubble also said the case does not bear “any of the hallmarks of a Slapp (strategic lawsuits against public participation)” – a legal action that aims to harass, intimidate and financially and psychologically exhaust the other party in relation to matters of public interest.
