David Cameron’s father ran an offshore fund that avoided ever having to pay tax in Britain by hiring a small army of Bahamas residents – including a part-time bishop – to sign its paperwork.
Ian Cameron was a director of Blairmore Holdings Inc, an investment fund run from the Bahamas but named after the family’s ancestral home in Aberdeenshire, which managed tens of millions of pounds on behalf of wealthy families.
Clients included Isidore Kerman, an adviser to Robert Maxwell who once owned the West End restaurants Scott’s and J Sheekey, and Leopold Joseph, a private bank used by the Rolling Stones.
The fund was founded in the early 1980s with help from the prime minister’s late father and still exists today. The Guardian has confirmed that in 30 years Blairmore has never paid a penny of tax in the UK on its profits.
The prime minister’s spokeswoman said that Downing Street had responded to allegations about Ian Cameron in the past.
Asked if there was still any family money invested in the fund, she said: “That is a private matter.” She said the prime minister had “taken a range of action to tackle evasion and aggressive tax avoidance”.
The Panama Papers, 11.5m documents leaked from the offshore agent Mossack Fonseca, reveal the details of how Cameron Sr sheltered Blairmore’s profits with a series of expensive and complicated arrangements.
Blairmore was a longstanding customer of Mossack Fonseca, whose internal data was obtained by German newspaper Süddeutsche Zeitung and distributed by the International Consortium of Investigative Journalists to the Guardian, the BBC and other media outlets around the world. Details of Ian Cameron’s offshore dealings will be revealed on BBC1’s Panorama on Monday night.
Incorporated in Panama but based in the Bahamas, the fund retained up to 50 Caribbean officers each year. Their job was to sign paperwork and fill roles such as treasurer and secretary. They included the late Solomon Humes, a lay bishop with the non-denominational Church of God of Prophecy. He acted in various roles including vice-president over a number of years from the mid-1990s.
Blairmore is shown to have been controlled using an obscure financial instrument known as bearer shares. These do not carry the name of the owner. They are similar to banknotes in that they simply belong to the person holding the certificate in their hand.
Though legal, bearer shares have been abolished in many countries because they have been used by mobsters and tax evaders for money laundering. There is no suggestion that Blairmore was using them for any illegal purpose, and they were common among offshore funds at the time.
Using bearer shares was not always practical. There were “hundreds” of investors, according to minutes of company meetings, and the printed certificates were kept under lock and key in the Bahamas. Documents relate Cameron Sr having to count stacks of certificates to make sure none had been lost or stolen.
The company was concerned about protecting its good name. Minutes from 2001 show Blairmore’s directors discussing the importance of monitoring news about Panama to “ensure that the jurisdiction is in keeping with the company’s pristine reputation”.
Cameron Sr was one of five UK-based directors until shortly before his death in 2010. In order to avoid UK tax, his venture had to be managed and controlled from abroad. A team of six other directors from Switzerland and the Bahamas was recruited, to ensure that a majority of the board was based outside Britain. However, the paper trail suggests this was a conjuring trick, albeit one tolerated by the law. Board meetings were held every year in Nassau and Switzerland, often in the five-star Hotel Beau-Rivage in Geneva. While the Europeans regularly jetted out to the Caribbean, there is little evidence of travel in the opposite direction, raising questions about how much the Bahamas directors contributed to strategy and decision making.
For Blairmore, 2006 was an important year. It sent out a prospectus calling for new investors – clients were asked to put in a minimum of $100,000 (£70,000) each. However, the prospectus stated two of the three Bahamian board members waived their $5,000 fee that year. They were the only directors recorded as doing so.
Through the Bahamas branches of Coutts and later SG Hambros, Blairmore retained dozens of local residents. There is no suggestion this arrangement was illegal and it was used by other offshore funds at the time.
The signatories were authorised to perform complex financial tasks. They could, company minutes state, “sell or buy any stocks, shares, annuities” and even “precious metals”.
In reality, according to the documents, big investment decisions appear to have been taken in the UK. Strategy was seemingly discussed in London where the investment management firm Smith & Williamson and five of the directors including Cameron were based.
Minutes from a 2001 directors’ meeting in the Bahamas say: “Mr Cameron concluded by stating that the company’s investment team … met regularly to discuss stock picks and strategy and that he was pleased with the teamwork over the past 18 months.”
A key decision was taken in 2005 to replace the bearer shares with traditional shares where the owners are named in a register. A series of emails that year between Mossack Fonseca and the fund’s London lawyers suggest the decision was taken not at one of the regular offshore board meetings, but apparently at a board meeting in London.
‘Serious questions from HMRC’
After reviewing the files, Richard Brooks, a Private Eye journalist and former HMRC tax inspector, said: “If HMRC had seen the papers they would have had some very serious questions. The clear intention for Blairmore was to avoid becoming UK tax resident and the test for this, even in 2006, is the location of the central management and control.
“This means where the key business decisions are taken. The evidence here suggests in this period they weren’t taken outside the UK, in which case it is hard to see how the company was not managed and controlled, and therefore tax resident, in the UK at the time.”
The fund has been registered with HM Revenue and Customs since its inception and has filed detailed tax returns every year. Its individual investors are responsible for their personal tax affairs and liable to tax in their own country.
Blairmore was created at a time when currency controls had just been relaxed and a number of British money managers decided to go offshore to make the most of low-tax jurisdictions. In 2012, in response to wider industry trends away from offshore, Blairmore moved residence from Panama to Ireland, which means it is now regulated in Europe. It still exists today, with more than $31m (£22m) under management.