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Nadhim Zahawi’s lawyer is at risk of being sanctioned for attempting to restrict a critic of the former Conservative chancellor with intimidatory warnings.
It is the first time a solicitor has been referred to a tribunal over an alleged ‘Slapp’ — a strategic lawsuit against public participation.
Zahawi announced on Thursday that he would step down from parliament at the next general election. An MP since 2010, he was sacked as Tory chair last year after being found to have committed breaches of the ministerial code by failing to be transparent about his tax affairs.
The Solicitors Regulation Authority this week decided to refer Zahawi’s lawyer to the Solicitors Disciplinary Tribunal for allegedly telling tax expert Dan Neidle that Neidle could not reveal that he had received a demand to retract an allegation he had published about the MP, according to two people briefed on the move.
The partner at law firm Osborne Clarke wrote to Neidle in 2022 telling Neidle that the demand he had received from the lawyer — on behalf of Zahawi — was “without prejudice” and confidential, and warned him against publishing or even referring to it, saying it would be a “serious matter”.
The SRA considered the lawyer’s conduct could amount to a Slapp — an approach employed by lawyers to try to intimidate and shut down reporting.
The practice has come under greater scrutiny in recent years over concerns that particularly Russian oligarchs and other powerful individuals weaponised litigation to shield themselves from scrutiny.
The SRA has investigated several instances of alleged Slapps, but the case involving Zahawi’s lawyer is the first time the regulator has referred the alleged use of such conduct to the SDT.
It is up to the SDT to decide on whether to bring charges against the lawyer. Its decision is expected in the coming months.
The SRA in 2022 issued guidance describing Slapps as “the misuse of the legal system, and the bringing or threatening of proceedings, in order to discourage public criticism or action”.
It later warned lawyers against any inappropriate labelling of correspondence with phrases such as ‘not for publication’ and ‘confidential’, “when the conditions for using those terms are not fulfilled”.
The SRA notes on its website that it usually only refers cases to the SDT when its “view is that the misconduct is so serious it requires a solicitor to be prevented from practising”.
Only the SDT can suspend and strike off solicitors and it also has unlimited fining powers, whereas the SRA can only fine individuals up to £25,000.
Zahawi paid £5mn to HM Revenue & Customs, including a £1mn penalty, to reach a settlement with the UK tax authority while he was chancellor in the summer of 2022.
Before entering politics, Zahawi had made his estimated £100mn fortune as co-founder of YouGov, the polling company.
Balshore Investments, a Gibraltar-based company, described in YouGov annual reports as “the family trust of Nadhim Zahawi”, held a 40 per cent stake in the business that was worth more than £20mn before it was sold down by 2018.
Neidle, founder of think-tank Tax Policy Associates and formerly head of tax at Clifford Chance, claimed that if the sale had been liable for capital gains tax in the UK, it would have provided £3.7mn to government coffers.
Zahawi said in 2022 that he had never had an interest in Balshore Investments, or any trust associated with it, and that neither he nor his wife, or their children, were beneficiaries.
A spokesperson for the MP said his father Hareth Zahawi, who lives abroad, owned Balshore.
But Neidle’s investigation into Nadhim Zahawi’s tax affairs found that the former minister had received a payment of £99,000 from Balshore Investments in 2005, contrary to his claims that he had never benefited directly from the trust.
A spokesperson for Osborne Clarke said: “We are disappointed with the SRA’s decision to refer this matter to the tribunal, and we disagree with the basis and reasoning for the referral.
“We have carefully considered and investigated the matter with external advisers and are confident that the partner acted within the established law and practice in this area.”
“We consider that the partner concerned behaved fairly and appropriately in his communications with the third party and did not seek to mislead or take unfair advantage in any way,” they added.
Zahawi did not respond to a request for comment.
Neidle said: “SRA investigations are confidential, and so I won’t be commenting until the current processes are complete.”
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