UK PM Rishi Sunak fires Conservative chairman Nadhim Zahawi after tax probe

The government also released the inquiry report by Rishi Sunak's newly appointed independent ethics advisor, Laurie Magnus

British Prime Minister Rishi Sunak on Sunday dismissed a senior ally whose murky tax dealings have focussed anger at the government as a cost-of-living crisis brings misery to millions.

An inquiry into the wealthy Conservative party chairman Nadhim Zahawi's tax affairs -- dating from his founding of the YouGov polling company in 2000 -- had found a "serious breach" of ministerial rules, the government said.

"As a result, I have informed you of my decision to remove you from your position in His Majesty's Government," Sunak wrote in a publicly released letter to his Iraqi-born ally.

Sunak appointed Zahawi as the party chairman, and cabinet minister without portfolio, when he entered 10 Downing Street nearly 100 days ago, following the implosion of Liz Truss's premiership and the demise of the scandal-plagued Boris Johnson.

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Then, as his letter noted, Sunak vowed to deliver "integrity, professionalism and accountability at every level".

Instead, the Zahawi case, and allegations of bullying levelled by civil servants at Deputy Prime Minister Dominic Raab, have undermined Sunak's attempts to restore public faith in the beleaguered Conservatives.

The inquiry report by Sunak's newly appointed independent ethics advisor, Laurie Magnus, found that Zahawi effectively lied to successive Conservative leaders when he came under investigation by the UK's tax authority.

Zahawi settled the matter last September -- with a fine for late payment reportedly worth £5 million ($6.2 million) -- months after he started serving under Johnson as chancellor of the exchequer, in ultimate charge of the UK tax agency.

But he did not reveal the fine in his declaration of ministerial interests, until it emerged in newspaper reports this month. Initially last year, he tried to silence journalists and a tax consultant with threats of libel lawsuits.

Zahawi had failed "to be honest, open and an exemplary leader through his own behaviour", the damning report by Magnus found.

Sunak's decision to fire Zahawi, rather than invite him to resign with some saving of face, underlined the serious political stakes at play at a time when millions of Britons are struggling to pay the bills.

Zahawi oversaw Britain's Covid vaccine rollout and was well regarded in his party as an aspirational success story, having moved to Britain aged 11 with his Kurdish family not speaking any English.

The opposition Labour party said Sunak should have fired Zahawi immediately, rather than seeking to buy time by asking Magnus to investigate.

The scandal underlined that Sunak was a "weak" prime minister, senior Labour MP Bridget Phillipson told Sky News.

"The stench of sleaze just hangs around the Conservative party," she said.

Sunak has faced questions himself about his family's tax affairs after it emerged that his Indian wife Akshata Murty had for years enjoyed "non-domicile" status, which shielded her from paying UK taxes on her overseas income from her family's Infosys business group.

And last week he apologised for receiving his second police fine, after he was filmed not wearing a seatbelt in the back seat of a moving car.

As chancellor himself under Johnson, Sunak was fined along with the then prime minister for attending an illegal workplace party during a Covid lockdown.

The "partygate" scandal was one of several that brought down Johnson.

Sunak's vows of integrity were in sharp contrast to that record, but he remains stalked by his predecessor's dealings in government.

A separate probe is underway into reports that just before he was made chairman of the BBC by Johnson, former banker Richard Sharp was involved in securing a private credit line for up to £800,000 ($990,000) for the then-PM from a Canadian businessman.

Zahawi, who had insisted on his innocence, vowed to continue supporting Sunak as a backbench Conservative MP.

But in a letter to the prime minister, he added that he was concerned "about the conduct from some of the fourth estate (the media) in recent weeks".

Senior minister Michael Gove defended Sunak's handling of the case.

"I think what reflects on him is the determination that he has to ensure that people are dealt with fairly, that the government focuses on delivery," he told BBC television.