Panama Papers: Britain's Cameron admits he profited from father’s offshore fund

Cameron addresses students at Exeter University in Exeter, Britain, April 7, 2016.
Cameron addresses students at Exeter University in Exeter, Britain, April 7, 2016.PHOTO: REUTERS

LONDON (AFP) - British Prime Minister David Cameron admitted Thursday he had held a £30,000 (S$60,000) stake in an offshore fund set up by his father, after days of pressure following publication of the so-called Panama Papers.

Cameron sold the stake in the Bahamas-based trust in 2010, four months before he became prime minister, he said in an interview with television channel ITV.

Downing Street have issued four statements on the affair this week following Sunday’s publication of the leaked Panama Papers, which showed how Panama-based law firm Mossack Fonseca had helped firms and wealthy individuals set up offshore companies.

"We owned 5,000 units in Blairmore Investment Trust, which we sold in January 2010. That was worth something like £30,000," Cameron said.  

 
 
 
 
 
 
 

"I sold them all in 2010, because if I was going to become prime minister I didn't want anyone to say you have other agendas, vested interests.” He insisted he had paid income tax on the dividends from the sale of the units, which he bought in 1997.  

According to a report in the Guardian, the stake was purchased for £12,497 and sold for £31,500 in January 2010, giving the Camerons a £19,003 profit - £300 below the capital gains tax allowance.

Downing Street first dismissed the story as a private matter on Monday before saying Cameron had no offshore funds, then saying he and his wife and children did not benefit from any offshore funds.

It later added that Cameron would not benefit from such funds in the future.

The Prime Minister has been under intense pressure from the main opposition Labour party and media this week to come clean on the extent of his links to the offshore trust.

The story could be damaging partly because it taps into a perception of the Conservatives as the party of the wealthy, and its leadership as products of affluent backgrounds educated at some of Britain’s most expensive schools.

"The PM has always been aware that if voters knew the scale of his wealth, they would consider him incapable of relating to their daily struggles," wrote Isabel Oakeshott, author of a biography of Cameron, in the Daily Mail newspaper this week.

Cameron’s father Ian was a stockbroker who died in 2010, four months after his son became premier.

The Prime Minister revealed on Wednesday he had been stung by criticism of his father – who he has previously called his "hero" – and stressed that the culture in the finance industry had changed in recent years.

"It has been a difficult few days, reading criticisms of my father and his business practices – my dad, a man I love and admire and miss every day," Cameron said.

The revelation comes five days after the Tory leader’s father, Ian Cameron, was named in the unprecedented leak of more than 11 million documents from Mossack Fonseca.

The Panama Papers revealed how Ian Cameron 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, said the Guardian.

As a director of Blairmore Holdings, an investment fund run from the Bahamas but named after the family’s ancestral home in Aberdeenshire, Ian Cameron oversaw tens of millions of pounds on behalf of wealthy families, it added.

The company was founded in the 1980s and moved to Ireland in 2012, two years after David Cameron became prime minister. In its 30-year history, Blairmore has never paid a penny of tax in the UK on its profits, said the Guardian.

Documents released in the Panama Papers show how the firm used unregistered “bearer shares” to protect its clients’ privacy. Ian Cameron’s use of the firm to help shield investments from UK tax helped build up a significant legacy, part of which was inherited by the PM.

There is no suggestion that this avoidance arrangement or others exposed by the leak were illegal.

In Thursday's interview with ITV political editor Robert Peston, the Guardian says, the Prime Minister defended his father’s involvement in the fund.

"I want to be as clear as I can about the past, about the present, about the future, because, frankly, I don’t have anything to hide, I’m proud of my dad and what he did and the business he established and all the rest of it," Cameron said.

"I can’t bear to see his name being dragged through the mud. I chose to take a different path from my father, grandfather and great-grandfather, who were all stockbrokers, and I’ve got nothing to hide in my arrangements and I’m very happy to answer questions about it."

Cameron also rejected suggestions that the fund was created to shelter investors from tax. He said: “I think a lot of the criticisms are based on a fundamental misconception, which is that Blairmore Investment, a unit trust, was set up with the idea of avoiding tax. It wasn’t.

"It was set up after exchange controls went so that people who wanted to invest in dollar denominated shares and companies could do so."