After Tony Blair’s last Prime Minister’s Questions on 27 June 2007, he headed back to his constituency with Cherie and the children. Outside Darlington Station there was a sharp reminder of his swiftly changed status. The family headed straight towards a smart BMW – and, just in time, someone arrived to whisper to the former PM that that was not his car. Would he kindly head towards the Vauxhall in the far corner?
Perhaps it was at that moment that Blair decided he would never be humiliated like that again; that the car waiting for him would always be the best in the place; that he would recreate the life he had lived as Prime Minister. More likely, the decision had been made many years earlier.
Months earlier he had been advised by a leading American businessman that, when he gave up the premiership, he should focus on rehabilitating his reputation, on doing good works, and business should be secondary. The businessman said that Blair should do a few things that are important. If there was money to be made as a by-product of doing something good for the world, fine. The model, he said, should be Paul Volcker, who made a fair amount of money, but as a consequence of doing something good and not as a principle focus.
Blair had asked to meet this businessman, who is, like himself, an active Christian, through an intermediary. The businessman, who has since broken off his relationship with Blair, now says that the former Prime Minister did not take any of his advice. He told us that Blair privately thought it was absurd advice. He says Blair is ‘very interested in money and it takes precedence over other things. It is also clear he has done a horrible job in all the assignments he has taken. There is no evidence that he has done anything positive, other than make money.
‘My advice to him was that he can make a lot of money as long as it’s a by-product of what you’re doing. James Wolfensohn built greenhouses using his own money. He was a wonderful man. There is nothing wrong with a politician making money, but you have to be prepared to sacrifice some money to do the higher thing.’
Blair’s interests have centred on the Tony Blair financial empire, the most impenetrable financial body that is legally possible in the United Kingdom. The structure of his companies makes it impossible to know who is paying him, or where the money goes, and ensures that no one can find out what he is worth.
Extremely clever tax accountants and lawyers have devised a scheme that breaks no rules but means that Tony Blair can deny any public claim disclosing his income because no one can prove it. When journalists and others make estimates, Blair representatives invariably say the estimates are wrong, but provide no information.
Except once. Blair was asked about his net worth during the razzmatazz on 21 July 2014, occasioned by the twentieth anniversary of his taking the leadership of the Labour Party. Asked if he was worth £100 million, he replied that he was worth just a fifth of that. £20 million? Our estimate is quite a lot more – we’ll come to that – but he has set up a system that makes it virtually impossible to work out his wealth; even he might have difficulty calculating it.
ORIGINS OF A FINANCIAL EMPIRE
Blair’s financial empire dates from 2009, when Tony Blair Associates (TBA) was established. Curiously, it just postdates a remarkable turnaround in the Blairs’ property fortunes (for more on Blair’s property interests, see Chapter 14, ‘The Property Portfolio’). He moved from being overburdened with mortgage debt on his grand house in Connaught Square to being able to splash out on new properties for himself and his wife in the country in 2008, and then to finance homes for his own children. The only explanation for this remarkable reversal in fortunes is that he must have big new sources of income from new clients and access to much more credit to bankroll this.
TBA’s website has changed since it was originally set up, but in early 2015 it read,
Tony Blair Associates is the umbrella organisation for our commercial operations.
We work with governments on the path of reform providing advice and support on key areas of governance, modernisation and implementation.
We provide geopolitical and strategic advice to multinational corporations.
We bring together institutional investors with potential investment opportunities.
Tony Blair’s commercial activities provide important funding for his philanthropic work.
Tony Blair Associates is entirely separate from the Foundations which are independent charitable entities accountable to their own boards and trustees and subject to applicable charity regulations.1
When he started out, it was said in the Sunday Times that the company would ‘allow him to provide, in partnership with others, strategic advice on a commercial and pro bono [free, as a public service] basis, on political and economic trends and governmental reform’.2 Since then we have heard little about TBA doing pro bono work, and the home page now says, ‘Tony Blair’s commercial activities provide important funding for his philanthropic work.’ But how much of the profit from TBA goes into the Blair charities is a closely guarded secret.
What exactly does it do? Ken Silverstein, in his book The Secret World of Oil, points out that there are several governments and companies all over the world who need better relationships with the USA, and hire lobbying and PR firms to manage their relationship with the American public and policymakers.
But, says Silverstein,
[L]obbying is subject to disclosure laws, and hence in recent years foreign governments and interests seeking influence in Washington have increasingly turned to other means, which are largely unregulated and don’t always require public disclosure. These include: making contributions to think tanks, universities, and non profit groups; setting up business associations that advocate for better political ties with the US but aren’t legally defined as lobbying organizations; and offering huge consulting contracts and speaking fees to politically prominent Westerners. These financial flows have helped recruit many prominent Western cheerleaders, including retired politicians (and their offspring), corporate titans, college professors, think-tank fellows, and countless former senior government officials …3
Blair ticks all the boxes. He is as prominent a former statesman as you’re likely to be able to hire. He has philanthropic bodies such as the Tony Blair Faith Foundation to which his clients can contribute. And, most important of all, he has the best possible contacts in the USA.
From former employees, we understand that originally there were to be two businesses – one offering advice to governments, the other offering advice to companies. However, the companies that make up TBA are structured to be impenetrable and Blair was persuaded by the business experts he hired to simplify the structure and put them under one body, TBA. Even then, his own internal business experts thought what he ended up with was too complicated, with its two similar private companies, Windrush and Firerush, which were originally intended to cater for the two different sorts of client – governments and companies.
‘Tony’s organisation has been in my personal and very confidential view a bit too complex in terms of the entities,’ says one of them. ‘The trading names of the company sound very much like off-the-shelf companies, which they are. There is a structure that looks unnecessarily complex and those names do not mean much in terms of trading. You know, the president of Kazakhstan doesn’t say, “Gosh I want to be advised on governance by Windrush or Firerush.” He says, “I want to be advised by Tony Blair.”’
TBA has similarities in its work with Kissinger Associates, which was set up in 1982 by Henry Kissinger, the former American secretary of state and national security adviser and both generates cash through consultancies and does some philanthropic work.
TBA has almost no public profile and its finances are shrouded in secrecy too. There exists a complex web of structures involving twelve different legal entities.4
They almost certainly handle some of the large amounts originally coming in from Blair’s six-figure speaking fees – according to one charity, the minimum fee is £500,000 – and from his banking and insurance consultancies, and his pay from
Middle Eastern regimes. This would not include his memoirs though, as he gave away the advance to the Royal British Legion.
OPAQUE CORPORATE STRUCTURES
Blair has set up a complex, opaque corporate structure that makes it impossible to know how much money he is making. ‘He’s willing to spend good money to keep it hidden,’ said Richard Murphy, an accountant and founder of the London-based Tax Justice Network. Blair has thus far declined to accept a peerage, which he is entitled to, and which Murphy suspects is due to the fact that he would have to disclose his income to the House of Lords if he did so.5
Murphy is an expert in this area. He explained how Blair set up such a structure to handle his money. He points out that Blair has used a very arcane structure based not on the more common limited-liability partnership – as used by Peter (Lord) Mandelson (a minister in the Blair government and a former European Commissioner for Trade) to set up his company – but on the little-known partnership regulations set up in 1907 by the Campbell Bannerman Liberal government.
As we have seen, Blair has two sets of companies: the Windrush companies and the Firerush companies. As they are partnerships under the 1907 Act, they are not taxed themselves like a limited-liability partnership or a limited company, but, instead, the owners of all their investments are taxed individually. The great thing is that the owners don’t have to be declared. It all goes back to Bircham and Company Nominees Ltd – organised through a leading private-wealth specialist lawyer, Bircham Dyson Bell – or BDB, as it now calls itself. The structure is said to have been set up by Alex Harle, Blair’s lawyer. The nominee company is called BDBCO No. 819 Ltd.
Set up as a nominee company to act as a trustee or an executor of a will, this entity does not reveal its ownership on records at Companies House. Instead, its shares are listed as held by a second off-the-shelf entity, BDBCO No 822. This company in turn conceals its true ownership. Its shares are listed as held by the lawyers, acting as nominees. Even the details of the accounts are private.
There is also one important difference between the two sets of companies – Windrush and Firerush – set up for Blair to receive his income. Firerush, unlike Windrush, is registered with what was then the Financial Services Authority, now the Financial Conduct Authority (FCA). Firerush offers investment advice in a number of low-tax and lowly regulated jurisdictions, including Gibraltar, Lithuania and Romania. This allows two things: people can invest in Blair’s Firerush companies without its being declared who they are; and the Firerush companies, unlike the Windrush companies, can start trading and investing on the world’s stock markets.
And the latter is certainly what has happened, as the Sunday Telegraph revealed in January 2013.6
The newspaper reported that:
a trading desk was now operating at Blair’s London headquarters;
five employees at one of his companies, Firerush Ventures, had obtained licences from the Financial Services Authority;
the team was led by David Lyon, formerly managing director at Barclays Capital;
the FCA (formerly FSA) licences gave Blair’s staff the power to advise clients and invest money on their behalf.
So why on earth would Blair want to be registered with the FCA? One of his former financial specialists told us, ‘They don’t trade. They are registered with the Financial Services Authority, just in case. What Tony didn’t want to do was inadvertently do something unauthorised, so they had a counsel’s opinions to what would be the safest way to make sure they never did anything that would look like they have crossed the line.
‘There is a category called arranging deals and investments, or something like that. Now, Tony said, if I had to give financial advice I’d start making people very poor. He absolutely did not give financial advice; he doesn’t really do anything that you could call financial services at all; he wouldn’t want to.’
So why the FCA authorisation? There is a clue in the fact that Blair is close to sovereign wealth funds – the biggest intact pools of capital in the world. ‘Tony happens to know the rulers of the countries who have the biggest funds,’ we were told, ‘whether it’s Malaysia, Brunei or whatever. Let’s say a company comes to him and says, I’m setting up a new venture and we need funding for this, whatever it is, and Tony introduces them to some sheikh, let’s say over lunch.
‘That’s absolutely fine. Tony is not giving financial advice; he’s not saying to the person providing the money, I have evaluated this opportunity and the return structure is excellent or whatever, this is a good investment for you. He’s absolutely not doing that; he’s never wanted to. However, just possibly, he could be interpreted to be in this category of arranging deals and investments, simply by making an introduction, even if he had no role in the financial advice.
‘So, just to be absolutely on the safe side, you haven’t strayed into financial services without meaning to, and therefore performed financial services without being under the requirement of regulation.’
It is complex and costly to become FCA-authorised, and you need to employ clerical and legal people, just to keep your authorisation up to date. It is a lot of trouble to go to on the off-chance. But we are assured: ‘Tony does not give financial advice. Tony’s best advice is, as you can imagine, about global political trends; it is about, for companies, how to deal with governments, and for governments, how to govern better.’7
A posting on LinkedIn discloses details of Blair’s operation. It was written by an IT consultant called Matt Walsh, who worked for Blair for just over a year until May 2011. Some of the clues to the Blair operation were given on the LinkedIn pages by Walsh and former Blair employee Scott Macpherson as part of their knowledge and experience to attract new clients.
Walsh discloses that he provided support for the IT operations for Blair’s possible trading system. He listed all the IT systems he oversaw during his time with Blair, including two types of trading system. This included systems used by Reuters and Bloomberg – used by expert City traders.
Macpherson discloses that he worked for Blair between 2009 and 2011 and was involved in setting up new offices for his Africa Governance Initiative.8 On his profile, Macpherson said his duties included ‘planning and implementation of satellite sites, primarily consulting on and implementing sites in Kuwait, Sierra Leone, Toronto, Liberia, Yale NY, Rwanda as well as other locations.’ Like Walsh, he said he provided ‘Bloomberg support for a small trading team.’
In September 2011 it was reported that high-profile banker Mark Labovitch had resigned as chief operating officer of Blair’s Firerush Ventures. His resignation came little more than a year after he was appointed – along with a former Lehman Brothers banker, Varun Chandra – and just days before the broadcast of the Channel 4 Dispatches documentary we speak about in Chapter 1, which revealed Blair’s incredibly lucrative business dealings across the Middle East.9
Labovitch had worked for the Irish newspaper magnate Tony O’Reilly, who at that time owned the Independent, and was an old friend and colleague of the Independent’s John Rentoul, the only journalist writing for national newspapers who remains slavishly uncritical of Blair. It was O’Reilly who introduced Labovitch to Blair, at one of several lunches Blair had in O’Reilly’s boardroom while he was Prime Minister. Blair wanted him to set up financial systems for dealing with clients who were companies, rather than governments. He wanted him to help build a commercial business. Blair was working for governments but he was seeking to approach companies.
Labovitch was there to provide a commercial office discipline, to make sure contracts were written properly. He never thought Blair needed help with setting himself up in businesses – someone would always want to pay for Blair’s help, his advice, his name. But he did want banking contacts and expertise, and part of Labovitch’s role was to show Blair the sorts of ways in which he might be useful to corporate clients.
Labovitch presented Blair with six options (not all of which are known), one of which was setting up an asset-management o
peration, because asset management was more rewarding than pure advice. One of Labovitch’s options was ruled out because it would compete with JP Morgan.
Blair also asked Labovitch to check out Oman, suggesting he visit Sir Erik Bennett, a former air force officer who was in charge of the Oman air force, to see if there was some business they could do there.
The departure of Labovitch, who has connections to some of the world’s richest investors, threatened to leave a hole in Blair’s business empire. There was a lot of damaging speculation about the reasons for Labovitch’s departure, but we understand it was simply that Labovitch is interested in dealing with commercial clients, and the business was veering towards government clients.
It did also raise questions about the ways in which the empire is run.
As we have seen, Blair’s initial income goes into a limited partnership (under 1907 partnership regulations) in both Windrush and Firerush, called Windrush and Firerush No. 3. This limited partnership is not required to publish accounts, so we cannot see where the money comes from or how much it is.
This money is then transferred to a limited-liability company, Windrush or Firerush No. 2, in a lump sum – but we don’t know whether any of the money from the No. 3 companies is channelled elsewhere. It is perfectly possible, though there is not the slightest evidence, that it could be transferred to offshore trusts.
The money is then passed from there to a No. 1 company or Windrush Ventures company, also a limited partnership under the 1907 regulations, which does not have to declare tax. But nobody knows how much of the original money that went into No. 3 company ends up in the ventures company or No. 1 company. The only information publicly available is in the abbreviated accounts of the limited-liability partnership – the No. 2 company.
In 2009 Richard Murphy did this analysis of the No. 2 company on his blog post,10 which provides the most comprehensive information we have, even though it is six years out of date:
Blair Inc--The Man Behind the Mask Page 7
