Labour's Margaret Hodge accused of hypocrisy over tax affairs

A prominent Labour politician and a fierce critic of tax avoidance has been accused of hypocrisy after receiving shares in a family company based in the tax haven of Liechtenstein.

Margaret Hodge, former head of Britain's parliamentary public accounts committee, was among the beneficiaries in 2011 of the winding-up of a Liechtenstein foundation that held shares in Stemcor, the private steel-trading business set up by her father Hans Oppenheimer.

The shares were brought onshore using a scheme, known as the Liechtenstein Disclosure Facility (LDF), that offered reduced penalties and no risk of prosecution for Britons moving undeclared assets back to the UK.

Ms Hodge said she had not been a beneficiary of the Liechtenstein foundation until the shares were brought onshore using the LDF in 2011, and that she had not played a role in setting up or running it.

But the disclosure - reported by The Times - has exposed her to charges of hypocrisy. Ms Hodge became one of the UK's best known politicians in the last parliament by denouncing businesses and individuals over their tax arrangements, and criticising Revenue & Customs for its handling of avoidance. But she has previously made no public statement about the use of offshore vehicles or the LDF associated with the family shareholdings.

Her committee has been particularly critical of the lenient terms offered by the LDF, including last month during its investigation of alleged tax evasion by clients of HSBC's Swiss bank.

A committee report said: "We are concerned that the current system still causes the odds to be stacked in favour of tax evaders using offshore accounts when the worst that will happen if they are caught is that they will pay the tax they owe and a fine."

Ed Balls, shadow chancellor, leapt to the defence of Ms Hodge. He said: "These were shares which were transferred by her family out of Germany before the second world war. Margaret has brought these shares onshore and paid the appropriate tax. I think she has done the right thing."

A spokesman for the Conservative party said: "It's for Margaret Hodge to justify her own tax arrangements."

The Times also reported that three-quarters of the shares in the family's Liechtenstein trust had previously been held in Panama, which Ms Hodge described last month as "one of the most secretive jurisdictions" with "the least protection anywhere in the world against money laundering".

In a statement, Ms Hodge said: "The Link Steel Foundation was set up in 1970 by members of my extended family, Jewish refugees who fled Austria and Germany for France and the United States. I had no role in setting it up or running it, and was not a beneficiary of the foundation until 2011, when the shares were brought onshore via the LDF, ending the structure my relatives created. At that point I then inherited additional UK shares in Stemcor. I was of course aware of this transfer and the increase in my shareholding.

"Stemcor is a family company and I have always fully declared my shareholdings. I have never held an executive or non-executive role and therefore have not had any role in the company.

"As a shareholder I have on a number of occasions sought and received assurances from the executive that the company always paid the appropriate tax.

"All I could do as a shareholder in a company not run by me, and over which I had no influence or control, was to ensure that any shares I held were above board and that I paid all relevant taxes in full. Every time I received any benefit from the company this happened."

Liechtenstein was one of the world's most secretive tax havens until it was rocked by a tax evasion scandal following the theft of bank data and under intense pressure from its neighbours, it renounced bank secrecy. In 2008 it negotiated a deal with the UK, under which it would close the accounts of bank customers who did not come clean, in return for the introduction of a partial amnesty for individuals who wanted to put their affairs in order.

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