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Jowell’s Husband: David Mills2006-03-05The first three articles below are taken from the Sunday Times 2006-03-05. As ever their insight team does an excellent job. To understand David Mill’s predicament it may be best first to read ‘The Personal Background’ – the magnitude of Labour’s problem begins to be foreseen in the ‘Stench of sleaze’. One is right to ask – what is the involvement of the ‘Blairs’ with Berlusconi; where and who will ‘Jowellgate’ unravel? One can also question how the Formula 1 exemption on smoking was obtained yet the UK’s biggest exercise of skulduggery appears to be London’s success over Paris with the Olympic bid. More on this London naughtiness will be revealed over the forthcoming weeks but London’s major Ken Livingstone should be concerned with more than his recent suspension. Mills wanted to use wife's name to deflect Revenue Stench of sleaze The Personal Background Culture Secretary Jowell splits from husband The separation statement in full Mortgage-signing is a feminist issue Tessa Jowell - a simple explanation Propaganda Due - P2 Tessa Jowell is guilty Silvio Berlusconi David Mills intricate web of company directorships Ken Livingstone David Mills suggested using his wife Tessa Jowell’s status as a cabinet minister in response to an HM Revenue and Customs investigation into his tax affairs. Documents seen by The Sunday Times reveal that Mills wanted to use his wife’s name, without her knowledge, when attempting to explain a suspicious £350,000 payment he had failed to declare to the taxman. The payment is at the heart of the scandal surrounding Mills. Prosecutors in Milan claim it was a bribe from Silvio Berlusconi, the Italian prime minister, for favourable evidence given at two court hearings. Mills, a corporate lawyer, was forced to pay tax on the sum, having initially claimed it was a gift. Yet there is a puzzle as to why the Revenue failed to prosecute him, as it should for tax professionals suspected of tax dodging. Mills failed to declare the suspect payment to the Revenue for three years and then initially misled tax inspectors about who had given him the money. Yet after several face to face meetings with Revenue officials he was charged only a third of the maximum penalty and was not prosecuted. Yesterday Nigel Evans, a Tory MP, said he would write to the Revenue asking whether Mills was given preferential treatment. “They appear to have treated Mills in a more lenient fashion,” he said. “He seems to be very free and easy in dropping his wife’s name.” Mills’s difficulties arose in January 2004 when the Revenue wrote to him saying it was investigating his affairs. He asked his accountants for advice, saying he had failed to declare the money which had come from the “B People” three years earlier after he had turned “some very tricky corners” while giving evidence in the Berlusconi cases. Minutes of a meeting with his accountant three days later say: “[Mills] wondered whether, in view of sensitivities arising from his status as a spouse of a government minister, the SCO [special compliance office] should be contacted and the matter dealt with in a meeting. In particular he has concerns about the circumstances of the 1999 gift and the potential for this to be misconstrued.” It is not clear whether Mills actually used his wife’s name and the documents show that his accountants advised against it. However, last week it emerged that he had name-dropped both Jowell and the prime minister in an attempt to win a licence to practise in Dubai. Italian prosecutors say they know of 50 examples of Jowell’s name being used to bolster Mills’s business. In May, three months after the meeting with the accountant, Sue Mullins, Mills’s tax adviser, wrote to the Revenue claiming the undeclared gift was from Carlo Bernasconi, the late cousin of Berlusconi. This time, however, it was for passing on “some useful information on offshore investments”. Mullins wrote: “My client has never regarded the receipt as other than a gift. My client was naturally extremely grateful for it.” This did not wash with the Revenue, and Mills was forced to pay the taxman about £230,000. Experts say this would comprise £148,000 in income tax, £35,000 in interest and a penalty of £45,000. Four leading accountants confirmed last week that this was lenient for a professional dealing in tax. The standard tax manual states that an “accountant, solicitor or similar professional person . . . would be treated inevitably as a potential criminal prosecution” if found breaking the rules. Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants said: “That is a light penalty. “The Revenue have a track record of taking tax lawyers or accountants to court for withholding information about their own affairs.” Mike Warburton of accountants Grant Thornton said: “This is a very low penalty rate which others would never have got away with.” The penalty looks even more lenient as Mills has now changed his story since claiming the payment was from Bernasconi. In a statement yesterday, Mills’s lawyer indicated that the Revenue had now been told the money actually came from Diego Attanasio, a shipping magnate from Naples. Attanasio, who served a prison sentence for bribery, denies making the payment to Mills. Meanwhile, fresh questions are emerging about Jowell’s claims of ignorance about the payment. As The Sunday Times revealed last week, Jowell and her husband took out a £408,000 mortgage on their London home in September 2000, which was repaid within a month using the alleged bribe. In a statement issued last week to Sir Gus O’Donnell, the cabinet secretary, Jowell claimed she had not known until “recently” that the mortgage had been paid off. However, it has emerged that she signed a second mortgage application form in March 2002 on the same house for £250,000, and confirmed there was no outstanding mortgage. The lender, Mortgage Express, has rechecked the form to confirm this. “There is nothing untoward,” said a spokesman. Yet Jowell claims that she did not know about her husband’s windfall until August 2004 — by which time it had been reclassified as normal earnings that wouldn’t have to be declared. Yesterday Mills’s solicitor stated that his client had paid all taxes due on all amounts received from Attanasio. “My client accepted the Revenue’s view that the absence of a written deed of gift rendered the payment taxable, whatever the circumstances or identity of the donor, and informed them who had in fact paid the money to him.” This week Italian prosecutors are expected to ask a judge in Milan to commit Mills and Berlusconi to trial. The judge has 30 days to decide. Until a few days ago Tessa Jowell was in danger of being remembered as a minister so cloyingly loyal to the prime minister that she “was ready to jump in front of a bus for him”. Now she risks being seen as a politician so ambitious that she was prepared to abandon her 27-year marriage to save her career. Politicians have faced conflicts over their personal relationships before; Robin Cook was forced by Alastair Campbell to choose between wife and mistress, while David Blunkett’s love life had more implausible plot lines than a Dan Brown novel. Ms Jowell may have taken us into new territory. Did she do the right thing? There are two versions of the story, and two possibilities. The first, the sympathetic one, is that Ms Jowell has been betrayed by her husband, David Mills, a tax lawyer who could have been said to have operated at the dodgy end of the business. She may have known a little of his financial wizardry, but as a busy woman could not be expected to keep his complex business affairs under close scrutiny In this version Ms Jowell had an epiphany over the past few days, only now realising that her husband was up to his neck in questionable deals with questionable Italians, that he had done his best to avoid a large income tax bill and that he had used his wife’s position and the claimed support of people “from the prime minister down” to open doors. With this knowledge, which came thanks to the efforts of this newspaper and the leakiness of the Italian magistrates, dawned the realisation that the trust that is the basis of any marriage was over. Who could blame her for walking out? Many people will sympathise with this version; perhaps most women will do so. There is, however, a second interpretation. Ms Jowell and Mr Mills were the archetypal new Labour couple, making the journey from far left Camden, where they met as councillors, to the heart of government, where one of them became the most squeaky clean of cabinet ministers. Ms Jowell objects to her husband using his political connections to open doors now, but there is no doubt his money was useful in opening doors for her in the past. Bryan Gould, a Labour leadership candidate in the early 1990s, recounted one such episode: “The first meeting of supporters was well attended. We were made immediate offers of financial help. David Mills . . . husband of Tessa Jowell, the newly elected MP for Dulwich, generously wrote out a cheque.” Their home in the country became a mini-Cliveden, a magnet for ministers, spin doctors and sympathetic editors. In this version Ms Jowell probably had a shrewd idea of what her husband was up to but chose not to get too closely involved. Voters may take the same attitude as some Labour backbenchers: incredulity that huge sums of money could have been whizzing in and out of the Jowell-Mills household without one spouse raising an eyebrow. Astonishment, too, at the determination of new Labour’s rich and famous to avoid paying tax. While Gordon Brown has squeezed the last drop out of ordinary families, clamping down on all ways of minimising tax, Mr Mills was trying to pass off a £350,000 payment as a tax-free gift. Which way will it play? Ms Jowell has been saved so far by her proximity to the prime minister; she has not been ordered to hurl herself under that bus. Yesterday’s separation will allow the minister to distance herself to some extent from her husband’s fate in the Italian courts. But it has not drawn a line under the embarrassment she is causing the government. She stands accused of providing misleading information about a mortgage on her home. The public will also want to know whether the Inland Revenue was leaned on to look kindly on the couple’s tax affairs. The commissioner for parliamentary standards may have a view too. Either way, the stench of sleaze and political expediency will remain. This government cannot afford much more of that. When Mills and Jowell met in London in the 1970s, it was a collision of ambitions. He was an Oxford graduate and barrister with a social conscience; she was a social worker turned charity administrator. Both were married to other people. They found a common bond, initially, as Labour party councillors in Camden, the north London borough better known for its ruinous finances than its romantic atmosphere. In 1976 Mills left his wife and three children and the following year Jowell left her husband. The couple began living together before marrying in 1979 and embarking on a thoroughly Blairite division of labour. He took the Cherie role, concentrating on the law, retraining as a solicitor with international expertise. She took the Tony route, honing the image and charm as she climbed the political ladder. Throughout the 1980s, Mills made the running. His law practice brought him into contact with the empire of Berlusconi, a driven, right-wing business tycoon. Jowell by contrast spent 13 years failing to win a seat at Westminster. It was in the 1990s that the balance of power in the marriage began to reverse. In 1992 Jowell narrowly beat Barbara Follett, wife of the novelist Ken Follett, to become Labour candidate in the middle-class south London constituency of Dulwich and West Norwood. Although Labour lost the general election Jowell won the seat. At Westminster she slipped into Blair’s plans for new Labour with ease. She was, as one friend put it, “seething with new Labour enthusiasm and ideals” and, as another put it, “brilliantly on-message”. In the new world of Blairism, donkey jackets were out and Armani was in. This chimed perfectly with Mills’s unapologetically sharp-suited image as an international lawyer. The makings of a charmed social circle were in place. Jowell was on first-name terms with the fresh-faced future prime minister. Mills advised the empire of Il Dottore, as Berlusconi was known, on setting up offshore companies. And, adding gravitas, Mills’s older brother John was married to Dame Barbara Mills, the director of public prosecutions from 1992-98. Mills had more than 50 clients, including Benetton, the clothing manufacturer and Fininvest, the company at the heart of Berlusconi’s media empire. He and Jowell were able to finance a lifestyle that far outstripped most of their left-leaning north London peers. “At that point things could not have been better for David,” said a friend last week. “His business seemed secure and profitable and there was no controversy. What’s more, Tessa’s career was taking off.” In October 1994 Mills led his own firm, Mackenzie Mills, into a merger with the swish London legal partnership, Withers. It was after this that “things started to go wrong for him”, says a note prepared by his accountants, Rawlinson & Hunter, and later passed to the Italian prosecution team. “In 1995 the Italian authorities instituted legal action, issuing warrants for several people involved in the [offshore Fininvest] structure. There were two charges of false accounting, and another charge in relation to an illegal donation to the socialist party. Although [Mills] was not himself arrested, he was served with notice by the Serious Fraud Office to produce documents.” The move against Berlusconi, with its focus on the offshore archipelago that Mills had created, hit the lawyer hard. “His involvement in the process was high profile and he was demonised in Italy, compromising his credibility as an adviser,” noted his accountants. “In consequence, his position at Withers was severely undermined and, although he was not asked to leave, he retired from the practice in December 1997.” Friends describe Mills as a “proud” man and throughout this period he remained the patriarch of the family — his children describing him as a “legend”. When questions were asked at home about the “Italian business” Mills swept them aside as “politically motivated nonsense”. If any questions were raised about his career he replied confidently that there was no problem. By now, Labour had been elected to power and Jowell was minister of health. The potential for mixing business with politics was clear and almost immediately a furore blew up over whether to ban tobacco sponsorship of Formula One motor racing. Labour had pledged to take action, but the motor racing industry lobbied hard for an exemption. Who was one of the legal advisers acting for the industry? Mills. And who was a key minister advising on the issue? Jowell. Blair granted Formula One a limited exemption and Jowell denied there had been any conflict of interest. Sources claimed at the time that she had wanted a total ban. This glimpse into the murky world where politics and business collide could have damaged Jowell’s career, but it was in the early days of the new Labour honeymoon and she sailed on. Indeed, she built a reputation as the Mrs Clean of politics — perhaps with a tendency to play the nanny — as her husband plunged deeper into the labyrinth of international finance. Once a high-flying lawyer, Mills’s career was now faltering badly. “Since leaving Withers in 1997, Mills had a number of business activities either on his own or in partnership with others. However, his involvement in the Italian litigation created an unwanted notoriety in legal circles and has prejudiced his ability to practise successfully,” noted his accountants. In January 1998 Mills was made to give evidence as a prosecution witness in two trials in which Berlusconi was accused of paying bribes to get favourable tax treatment for his companies. As an architect of the media baron’s complex web of offshore companies, Mills had been privy to the fine details of how the Berlusconi empire operated. At the trials he was careful what he said, as he privately later admitted. To understand what happened next, it is important to note that he also had financial difficulties in Britain. From 1997 to March 2000 he was in dispute with his former partners at Withers over a legitimate £2m payment relating to his work for Berlusconi. Mills wanted to take the lion’s share, he told his accountants, because he had taken the greatest “risk”. However, his partners disagreed and the money was more equally divided. Mills took away just £483,675 for a job that had in effect ended his career. Mills may not have let his family know about the extent of his problems, but it appears his Italian friends knew he was running short of money. As he told his accountants in a note that has become known as the “Dear Bob” letter: “I kept in close touch with the B people, and they knew my circumstances. They knew, in particular, how my partners had taken most of the dividend; they also knew quite how much the way in which I had been able to give my evidence (I told no lies, but I turned some very tricky corners, to put in mildly) had kept Mr B out of a great deal of trouble that I would have landed him in if I had said all I knew.” The problems now besetting Mills and his wife stem from the allegation, which he now denies, that he was paid for his “tricky corner” work. In late 1999 he went to Italy and met Carlo Bernasconi, a close associate of Berlusconi. According to Mills’s accountants, Bernasconi had some good news for him. Mills wrote: “I was told I would receive money, which I could treat as a long-term loan or a gift. $600,000 [£350,000] was put in a hedge fund and I was told it would be there if I needed it. “For obvious reasons of their own (I was still a prosecution witness, but my evidence had been given), it needed to be done discreetly.” This, the Italian prosecution now alleges, shows Mills took a bribe. Citing the Dear Bob letter, they say the evidence is there in black and white and signed in his own hand. Mills, however, now denies this, saying the Dear Bob letter was written by him as a “totally insane” ploy to protect the identity of the person the money actually came from — Diego Attanasio, a Neapolitan businessman. Nevertheless, a minute of a meeting Mills had with his accountants only a few days after writing the Dear Bob letter records: “DM [David Mills] advised that the gift was unsought, entirely unexpected but extremely welcome in view of his reduced circumstances and therefore he accepted it as an act of friendship on CB’s [Carlo Bernasconi’s] part.” For Mills, the key point here was whether or not the money was a gift. If it was, he might escape paying tax on it, he thought, which would help to improve his “reduced circumstances”. |
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