The mystery of Lord Ashcroft and the paradise island business empire
Fresh revelations have raised a series of questions about the links between the former Conservative deputy chairman Lord Ashcroft and a company responsible for luxury projects across a string of islands
Lord Ashcroft insists he has had no interest in Johnston International since he sold it in 1999. Photograph: Steve Back / Rex Features
The company no longer exists and little is known about it in the Westminster village. Yet who controlled Johnston International, which won building contracts across the Caribbean worth tens of millions of pounds, has triggered awkward questions for the Tories, and above all for their major donor, Lord Ashcroft.
The Tory peer, who has given the party more than £10m, is spending a small fortune on lawyers and spin doctors to deal with inquiries about his relationship with Johnston, whose interests before it collapsed with debts of $30m stretched across Belize, the Turks and Caicos Islands, Barbados, and Trinidad and Tobago.
The company, and its relationship with politicians in the Turks and Caicos Islands, a British overseas territory, plays a central role in a libel action being brought by Ashcroft against the Independent newspaper.
A BBC Panorama investigation, broadcast last Monday, suggested that the Tories' former deputy chairman had misled the stock market about his links to the firm.
And now an investigation by a court-appointed liquidator into the relationship between Johnston's parent company, a plethora of interlinked companies and Ashcroft's British Caribbean Bank (BCB), is raising as many questions as it answers. Even MPs are taking an interest in an obscure company that only a few weeks ago they had never heard of.
Last Wednesday, at Prime Minister's Questions, the Labour MP Thomas Docherty asked: "Can the prime minister guarantee that Lord Ashcroft has now told the whole truth about his connections with the building company Johnston International, or is it yet again one rule for the prime minister's rich friends and another rule for everyone else?"
Johnston was already under scrutiny even before it collapsed in 2010, leaving its employees with unpaid wages.
A government inquiry examining allegations of systemic corruption in the Turks and Caicos Islands heard that the firm built Belview, a luxury waterfront mansion, for the islands' former premier, Michael Misick. The inquiry heard that to pay for his mansion, Misick, who was forced to resign in 2009 and is now battling multiple corruption allegations, all of which he denies, took out loans of almost $5m (£3.2m) from a Johnston subsidiary. The loans were then consolidated into a further loan taken out with BCB.
In 2009, at the end of the corruption inquiry, its chair, a former lord justice of appeal, Sir Robin Auld, published an official report that placed Johnston under further scrutiny.
Auld suggested that the awarding of "major construction contracts" on the islands could be a potential line of inquiry for the authorities including those "awarded to Johnston International for two new Turks and Caicos Islands hospitals, said to have been overpriced and awarded without any appropriate tender process with an initial budget of $40m and costs to date of $125m".
Auld was at pains to stress his inquiry had found no evidence to confirm any of the contracts were corrupt – only that they might be worthy of investigation.
The contracts were awarded by a Canadian healthcare company, and lawyers for Ashcroft insist that Johnston had no direct contact with the islands' government over their allocation. Ashcroft has insisted that he has had no "economic, beneficial or legal interest" in Johnston since he sold it in 1999.
However, internal company documents obtained by Panorama show that Johnston's chief executive, Allan Forrest, regularly reported to Ashcroft. One fax from Forrest to Ashcroft read: "Dear Michael, a short note to thank you for the salary increase. Much appreciated." Another, written after Forrest visited Belize, where Ashcroft made much of his money, refers to Johnston's parent company, Oxford Ventures, an obscure business based in the British Virgin Islands, a tax haven. Forrest wrote: "The perception in Belize is that you are still in full control of Oxford's assets (which you are of course)."
There is a growing belief in the Turks and Caicos Islands that Helen Garlick, an experienced lawyer who is leading a special investigation and prosecution team in the islands, will seek to question Forrest, who was also director of Oxford Ventures when it went into administration at the same time as Johnston.
A forensic accountant, appointed by the British Virgin Islands' supreme court to trace Oxford's assets, said he would be seeking answers from the Ashcrofts in light of the Panorama investigation.
"I would like to talk to Lord Ashcroft," said Chris Johnson of insolvency experts CJA Associates Ltd. "We have seen the faxes [from Forrest to Ashcroft in the Panorama programme]. I would like to ask questions of anybody who has a relationship with Oxford in my duties as the official liquidator."
In what could prove a significant development, Johnson said last week that he had obtained a court order in the Turks and Caicos Islands allowing him to request documents held by Ashcroft's BCB banking empire relating to Oxford and its collapse.
"Legally, this enables me to seek information and to ask people for explanations," said Johnson, whose investigation is examining the role of another director of Oxford, an anonymous British Virgin Islands' firm called Northtown. The company is a former director of Bearwood Corporate Services, the business through which Ashcroft has donated millions to the Tories and which was investigated – and cleared – of making illegal payments to the party by the Electoral Commission.
An organisational chart obtained by the Observer suggests Oxford may be the ultimate parent company of as many as 40 businesses and that Northtown is the director of 20. The chart reveals Oxford Ventures' sprawling empire is byzantine, stretching across tax havens including the Cayman Islands, Belize and the British Virgin Islands to countries including Kuwait, the UK, Mexico and Canada.
Ashcroft's exact relationship with Johnston remains unclear. In 2010 the company told the Observer through its lawyers: "Lord Ashcroft has had no interest (whether legal, beneficial, economic or managerial) since 1999 when Johnston was the subject of a management buyout from a public company, which was disclosed fully."
Ashcroft's relationship with Johnston came under further scrutiny in court last week. The peer is pursuing a libel action against the Independent's former publisher for a series of stories examining how the company benefited from a property boom in the Turks and Caicos Islands, where the peer is a "Belonger", a citizen entitled to certain privileges. He has built a school on the island, donated to charity and is credited with delivering much-needed jobs.
David Price, defending the paper, said that "what is being stated" about Ashcroft is "that he funded this boom, he constructed this boom, through Johnston, knowing this boom was being created through systematic corruption".
Price continued: "He [Ashcroft] is not the corrupter. The corrupter is Michael Misick."
In a letter to the Observer, lawyers for Ashcroft, who is the founder of the Crimestoppers charity and has pledged £5m to the construction of a new yacht to be used by the royal family, declined the paper's request for him to clarify his involvement with Johnston.
However, his spokesman insisted Ashcroft had "no involvement" in Johnston's "day-to-day management and the implication that it remained his company is completely wrong".
The focus on Ashcroft's Caribbean business interests comes as the peer conducts a government review of UK military bases in Cyprus. Ashcroft, whose companies have provided private jet and helicopter flights to several Conservative cabinet members, including the prime minister, David Cameron, was given the role after renouncing his status as a "non-dom". The peer's shock admission before the last election that he was someone who did not have to pay UK tax on his overseas business interests prompted a furore and embarrassed Cameron.
Now, as politicians, lawyers and liquidators seek answers over Ashcroft's relationship with a collapsed Caribbean construction company, those same business interests are once again under acute scrutiny.
■ Born in Sussex in 1946, Michael Ashcroft was brought up in British Honduras, now Belize. His wealth is estimated at £1.3bn.
■ Ashcroft was appointed Conservative party treasurer in 1998 by the then leader William Hague and remained in the role until 2001.
■ In 2000 he was admitted to the Lords as a Conservative working peer after promising to become a permanent tax resident of the UK. In the same year he was knighted for public service to Belize.
■ He was deputy chairman of the Conservative party from 2005 to 2010.