Peter Oborne in The Daily Mail, 3rd March 2007
The decade has seen the emergence of a crucial post at the heart of government: private banker to the Prime Minister. It has not yet been formally acknowledged in any of the text books, but it is no longer possible to understand how Britain works without grasping that Downing Street’s Mr Money Bags now occupies what amounts to a massively important new constitutional role. The first occupant of the unofficial post, Michael Levy, was introduced by Tony Blair after making a very modest fortune in the pop music business. As the Prime Minister’s chief fundraiser, he has been arrested twice in cash for peerages investigation – on the second occasion under suspicion of conspiracy to pervert the course of justice.
It is a commentary on the fundamental triviality of the Blair Government that a low-grade figure such as Levy has been allowed to occupy such a prominent position for so many years. But in contrast, it is a reflection on the essential seriousness of Gordon Brown that he has chosen a genuinely substantial individual as Levy’s replacement. The financier Sir Ronald Cohen, who has been one of the Chancellor’s most trusted informal advisers for the past decade, recently made the surprising decision to retire from active business life. This was an extremely significant move: he will shortly emerge from the shadows of the City to become one of the most senior members of the inner circle of the next Prime Minister.
Initially, Sir Ronald will be entrusted with the task of restoring Labour Party finances. The party is bankrupt at the moment as a direct consequence of the cash for peerages affair. Sir Ronald will be asked to help find the money to fight the next General Election, without leaving Labour cripplingly dependent on union donations. He will also be brought into the heart of government in other ways. Gordon Brown already employs Sir Ronald as a foreign policy adviser, just as Tony Blair used Lord Levy. The Chancellor has a history of working only through cronies: I guess Sir Ronald Cohen is likely to have more influence on foreign policy than whoever has the misfortune to become foreign secretary.
His stature will be far greater than that of mere Cabinet ministers. The truth is that Sir Ronald, Treasury Minister Ed Balls and just one or two other key Brownites will run the country. Anyone who wishes to understand what Britain under Gordon Brown will be like has no choice but to understand Sir Ronald Cohen, who he is and what he does. The first thing to note about Sir Ronald is that he is an homme serieux. Whereas Lord Levy made an estimated £5 million to £10 million [$9.5-$19m] advising Alvin Stardust and assorted 1970s rock stars, Sir Ronald is the founder of the private equity business, which makes massive profits out of buying, restructuring and then selling on great chunks of British business and which controls about a quarter of the country’s private industry.
This makes him a businessman of enormous importance. It has also made him, through his own firm Apax, extremely rich. My sources suggest that he has a fortune of, at the least, £250 million [$475m]. More importantly, they add [under prompting by our libel lawyers] that he is a man of high integrity and some intellectual distinction. This distinguishes him from Lord Levy, who had no meaningful qualifications to act as Tony Blair’s foreign affairs adviser and was generally an embarrassment to all concerned on his numerous trips abroad on behalf of the Prime Minister. After an exotic childhood (his family was forced to flee to Britain from Egypt after the rise of Nasser in the 1950s), Sir Ronald attended Oxford University and Harvard Business School. Apart from his outstanding business career, he is a director of the International Institute for Strategic Studies, a very well-connected think tank specialising in political and military conflict. His Portland Trust is an important not-for-profit foundation aimed at bringing peace to the Middle East through an economic renaissance.
In the light of such philanthropy, it might seem strange to suggest that the rise of Sir Ronald gives cause for alarm. However, important doubts do exist. They do not concern him personally [our libel lawyers have instructed us to say], but rather the distasteful connection that has emerged over the past decade between Labour and big business. More pertinently, there are uncomfortable concerns about certain amoral individuals behind private equity who are open to the charge of being little more than asset strippers making huge fortunes by reducing decent businesses to husks and consigning hard-working people to the scrapheap. The Blair Government has long given every appearance of being ready to carry out favours in return for political donations or other kinds of help.
For example, the Prime Minister allowed Government policy on tobacco advertising to be changed after the Labour Party received £1 million [$1.9m] from [Jewish] Formula One boss Bernie Ecclestone, and was in negotiation for another donation. He helped the Indian tycoon Lakshmi Mittal in his bid for a Romanian steel firm for no other reason, so far as one can tell, than a £125,000 party donation. Ministers also provided assistance to the controversial Hinduja brothers over an application for a British passport around the time they promised a donation to the Millennium Dome. The list of such deals is long and shameful.
There is strong circumstantial evidence that a similar exchange of favours has been taking place with the private equity business, where Sir Ronald is the doyen. Sir Ronald (who has personally given some £1.5 million to Labour since 2001 alone) is one of a group of private equity moguls who have made very substantial donations to the Labour Party. Meanwhile, ministers have proved extremely susceptible to lobbying by the industry’s body, the British Venture Capital Association. For example, in 2003 Gordon Brown dropped plans for a change in the way the venture capital funds were taxed.
The following year, ministers axed proposals to toughen up their responsibilities for employee pension rights. A favourite tactic in private equity take-overs – to the distress of employees – is to slough off any responsibility for pensions. Above all, Gordon Brown opened the way for private equity entrepreneurs to make massive fortunes when he slashed the rate of capital gains tax soon after becoming Chancellor. Throughout its time in government, New Labour has given its unreserved public help to the private equity “industry.” It should be noted that this support has come at the expense of Labour’s traditional backers in the trade union movement and among ordinary Labour activists.
I have no proof [our libel lawyers have instructed me to say] that there is the slightest connection between the large donations to the Labour Party (mainly from people who, like Sir Ronald, showed no interest in Labour until it was on the verge of power) and the generous tax treatments offered to the private equity industry. For all I know, everything is completely above board. But let’s engage in a mind game. Let’s imagine that it was a Tory chancellor who finds himself in the same position as Gordon Brown. Let’s imagine that his closest adviser was a super-rich grandee from a sector which the Tories had loaded with tax breaks over the past decade. Let’s imagine that the unions were furiously claiming that the industry’s riches were fundamentally stolen from the workers. Gordon Brown, were he shadow chancellor, would be thundering at the rancid corruption of it all. I’m not saying he would be right. But the truth is – and he must realise this more than anyone – that he will only have one chance to clean up the mess and culture of sleaze that he will soon inherit from Tony Blair.