Cabinet Office refuses to investigate Jacob Rees-Mogg financial “conflict of interest”

The Cabinet Office has refused a request to investigate whether the Leader of the House of Commons Jacob Rees-Mogg could be in breach of the Ministerial Code by refusing to declare any financial dividend he received from the investment firm Somerset Capital Management (SCM), Scram News can reveal.

An official complaint was lodged in September with Helen McNamara, director-general of the Cabinet Office Propriety and Ethics Team, regarding a perceived conflict of interest between Rees-Mogg’s role in government and his 15% shareholding in Somerset Capital Management. This was after an interview with Channel 4 Dispatches in which Rees-Mogg refused to disclose the precise amount he had received in dividends.


The Cabinet Office responded to Scram News’s request for comment by stating: “We do not comment on individual cases. All Ministers are required to follow the Ministerial Code requirements about management of their personal interests.

“No investigation has been launched.”

It is now understood that a separate complaint has been lodged with the Cabinet Secretary Sir Mark Sedwill in an attempt to appeal the decision not to investigate by the Propriety and Ethics Team.

Rees-Mogg resigned from his official role at Somerset Capital Management following his appointment as Leader of the House of Commons in Boris Johnson’s new government. A prominent Eurosceptic, Rees-Mogg had first stepped down from the day-to-day running of the investment firm when he became a Member of Parliament in 2010, but retained an advisory role.

Allegations of a conflict of interest have stemmed from the fact that the post-Brexit “global trade” vision promised by Johnson’s government could boost SCM’s profits, since the firm invests heavily in emerging markets.

Once a member of the European Research Group, Rees-Mogg is on record dismissing the idea of the UK staying in the single market and customs union after Brexit, joining other Eurosceptics in calling for a “clean” separation with the EU.

Moves to create barriers to trade with the EU would force UK companies to strike up deals elsewhere, directly profiting companies backing emerging markets, like SCM.

From the SCM website

Denying that the disclosure of his personal income from SCM would be in the public interest, Rees-Mogg has said: “Curiosity is a perfectly understandable human emotion. But just because people are curious doesn’t mean there’s an entitlement to information.”

Rees-Mogg also rejected claims that SCM’s decision in the past year to open two new funds in Dublin rather than London had anything to do with Brexit.

“Our decision to do it predates Brexit,” he told Channel 4.

Rees-Mogg – who owns a shareholding of up to 15% in SCM – is believed to have received a £1 million payout from the company last year, potentially reaching up to £7 million since 2016.

The firm’s accounts also show that profits doubled after the EU referendum. SCM’s accounts can be found publicly, and they show that its operating profits have risen from £14.7m in the year to March 2015, to £34.1m in 2018.

However Rees-Mogg denied that the increase in SCM’s earnings were related to Brexit, saying that, “Anyone who thinks that the Chinese economy or the Indian economy has been determined by Brexit is living in cloud cuckoo land.”

Mr Rees-Mogg declares in his House of Commons Register of Interests that he is paid £500 an hour for his work at SCM and takes home around £15,000 a month on top of his MP’s salary. However, Rees-Mogg’s refusal to answer allegations that he has received around £7 million since 2016 – making him one of the highest-earning politicians in the country – has raised concerns that the Leader of the House could now be in breach of the Ministerial Code.

The Ministerial Code, which dictates the standard of conduct expected of ministers, stipulates they must “scrupulously avoid any danger of an actual or perceived conflict of interest between their Ministerial position and their private financial interests.

“The precious principles of public life enshrined in this document – integrity, objectivity, accountability, transparency, honesty and leadership in the public interest – must be honoured at all times; as must the political impartiality of our much admired civil service.”

Under the Ministerial Code, Rees-Mogg is not permitted to exert any control over the running of a business, though he did not have to resign as a partner of SCM. He can simply place his partnership into a trust over which he has no direct control, known as a blind trust. It is believed that this is the option he chose.

Under a standard ‘blind trust arrangement’, an individual can still receive income from an investment, but cannot make decisions about the investment, such as vote at company meetings.

However, to date the company has yet to confirm the details of Rees-Mogg’s arrangement with the company.

This refusal from the Cabinet Offices’s Propriety and Ethics Team raises an important question of public trust. As an independent investigatory mechanism, it has a duty to investigate any allegation that the Ministerial Code has been breached. The internal oversight and scrutiny of ministers is an essential function that ensures government is transparent.

Effective regulators ought to be at a healthy distance from those they regulate. And while the Propriety and Ethics Team is accommodated in the Cabinet Office, staffed by the Cabinet Office and funded by the Cabinet Office, questions could now be raised about how that distance is maintained.

Oliver Murphy is a freelance journalist.

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