Nadhim Zahawi, libel lawyers and SLAPPs: a cautionary tale of wealth, power and free speech
The use of SLAPPs has come to wider attention following Nadhim Zahawi’s tax scandal and the targeting of an investigative journalist, writes Nick Mitchell
The issue of Nadhim Zahawi’s tax affairs dominated the news agenda for weeks in January. For Rishi Sunak, still less than 100 days into the job as Prime Minister, it has proved to be a major irritation, at a time when he was supposed to be setting out his agenda, amid dire poll ratings.
Zahawi’s sacking was inevitable, and, having found the evidence he needed through his ethics advisor Sir Laurie Magnus, Sunak duly picked up the phone on Sunday morning to the Tory Party chairman to say his services in government were no longer needed.
In his own graceless and guilt-free response to Sunak, Zahawi ignored all of his seven breaches of the Ministerial Code, and instead took aim at the press which had caught him out. He wrote, with an apparent straight face, that he was “concerned about the conduct from some of the fourth estate in recent weeks”.
Rewinding back to summer of last year, a big part of the reason Zahawi’s financial chicanery came to light is through the work of Dan Neidle, who probed the issue in detail since the summer, when it was first revealed by The Independent that Zahawi was the subject of investigations by the National Crime Agency, the Serious Fraud Office and HMRC. In the days that followed, Neidle, not a journalist himself but an experienced tax lawyer, begun to dig deeper.
He looked at all the publicly available documents on Zahawi’s business activities and found a filing error that proved to be decisive. Without going into all of the details here, which you can read on Neidle’s blog, it transpired that the then-Chancellor had avoided around paying around £3.7 million of capital gains tax on shares in YouGov, the polling firm he founded in 2000, because his founder shares had gone to a company based in tax-free Gibraltar.
Zahawi is an extremely wealthy and powerful individual, and when extremely wealthy and powerful individuals feel threatened, they very often hire expensive lawyers. So when Neidle aired his findings, he was quickly messaged on Twitter by a representative of law firm Osborne Clarke, acting on behalf of the politician. They wanted to discuss the issue over the phone, but Neidle - a lawyer himself let’s not forget - insisted on written communication, adding that he wouldn’t accept any “without prejudice” communication, which is normally kept private.
But this is not how Zahawi’s lawyers wanted to play the game. Instead, they sent Neidle an email labelled “without prejudice” demanding that he retract the “allegation of lies by the end of the day” or face further action. They picked the wrong person to intimidate. Ratcheting up the stakes can backfire spectacularly if you underestimate your opponent.
However, not everyone’s an experienced tax lawyer, and this kind of communication is a tactic that’s typical of how law firms handle the reputation of their clients: a pre-emptive strike designed to threaten a critical voice into submission. It’s also known in legal circles as a hallmark of SLAPP, or “Strategic Lawsuits Against Public Participation” - a tactic used to stifle public criticism and free speech. In a consultation last year, the government itself defined SLAPP as “an abuse of the legal process, where the primary objective is to harass, intimidate and financially and psychologically exhaust one’s opponent via improper means.”
That has done little to stop its rampant use, against investigative journalists and members of the public alike. Another deeply disturbing case emerged in the same week that Zahawi was plastered across newspaper front pages: almost unbelievably, it emerged that the UK government had allowed Yevgeny Prigozhin, the leader of Russia’s murderous Wagner Group, who are now playing an increasingly active role on the frontline in Ukraine, to get around international sanctions to legally target a British journalist.
As revealed by OpenDemocracy, the British government granted licences for the London-based and aptly-named Discreet Law to work on a case with the Putin ally’s lawyers in St Petersburg, so that they could draw up a campaign to target Eliot Higgins, the founder of the citizen journalism website Bellingcat, which had done important work investigating Prigozhin’s vigilante group before the Russian invasion of Ukraine in 2022.
They carefully targeted Higgins over tweets he’d sent promoting the Bellingcat work, so that they could build a libel case against him rather than the publication, which is headquartered in The Netherlands, with its less punishing libel laws. Following Putin’s invasion of Ukraine, the case collapsed when the UK law firm withdrew its services. But Higgins was still left with estimated costs of £70,000.
It can only be a good thing that this kind of practice is now being called out, because not only does it amount to bullying, it inevitably has a chilling effect on a free press. The Solicitors Regulation Authority (SRA) has already warned solicitors to stop sending libel letters which falsely claim to be confidential, and has issued new guidance against using terms like “not for publication” or “without prejudice” - “when the conditions for using those terms are not fulfilled”.
And following the Higgins case, the House of Lords Select Committee on Communications and Digital is recommending a range of measures to tackle SLAPPs, including a defence fund paid by wrongdoers, multi-million pound increases in fining powers and more oversight of the relationship between law firms and so-called “black PR” and private intelligence organisations.
Committee chair Baroness Stowell of Beeston described the current activity to counter SLAPPs as “wholly inadequate”. She added: “The regulator is not properly equipped with the powers necessary to deter law firms against abusive practices. But it needs to demonstrate greater boldness in holding law firms to account to inspire greater confidence. The decent law firms will stand to gain from a strong regulator, and should support the Solicitors Regulation Authority in being much more proactive and open in their investigations and penalties.”
Whether these law firms, “decent” or otherwise, pay any heed to this new scrutiny remains to be seen. BAt a time when oligarchs, billionaires and even wealthy politicans can act with near-impunity, it’s vital that journalists, citizens and dogged tax experts can continue to shed light on malpractice wherever they find it. Without intimidation and, ironically, without prejudice.