After a little mild prompting from Tom Watson, one or two bloggers have happily picked up the trail of Flying Lion Limited, a Bermuda registered company with, seemingly, one major asset – a Dassault Falcon F900EX executive jet, registration number VP-BMS, otherwise known to several Labour bloggers as ‘Con Air 1’, the Tory Party’s air taxi service of choice.
To pick up the story so far, I’d recomment Political Penguin (part one and two) and Westmonster for your starter for ten, while Chris Paul takes a little odyssey through the gospel according PPERA 2000 (i.e. the rules for calculating the value of non-cash political donations).
And me? I’ve been looking at this from another angle.
Who actually owns Flying Lion Limited?
Well, Political Penguin has much of the skinny on this:
Flying Lion Limited was at one time part of ADT. For those who don’t follow business takeovers, mergers and acquisitions, ADT used to be run by a certain Michael Ashcroft, better known as Lord Ashcroft, big rich geezer who throws lots of money at key marginals for the Tories. However, ADT itself was aquired by Tyco back in 1997 and Lord Ashcroft did indeed serve on its board of directors. However on 18 November 2002 he and another board member resigned.
All of which fits nicely with Ashcroft’s current entry in the House of Lords register of member’s interests.
*12(f) Regular remunerated employment
Executive Chairman of BB Holdings Ltd (banking and other interests in Central America)
Executive Chairman of OneSource Ltd (janitorial and landscape services in the US)
*12(g) Controlling shareholdings
BB Holdings Ltd
Carlisle Group Ltd (recruitment, janitorial and security services in the UK)
Mavinwood plc (document storage services)
*13(a) Significant shareholdings
Corporate Services Group plc (recruitment services)
Global Health Partner plc (specialised healthcare services)
Strand Associates Ltd (corporate finance and investor in other companies)
Watford Football Club plc
Digital Marketing Group plc
15(a) Membership of public bodies
Chancellor of Anglia Ruskin University
15(d) Office-holder in voluntary organisations
Chairman, Board of Trustees, Crimestoppers
Trustee, Cleveland Clinic Foundation
Trustee, Prospect Education (Technology) Trust
Treasurer of International Democrat Union
Member of the Board and a Deputy Chairman of Conservative Party
Advisory Board Member of the Institute for Justice Sector Development
But for one very recent development, which looks to require an amendment to this entry:
Lord Ashcroft, the Conservative party deputy chairman and major donor, has agreed to sell his loss-making US janitorial business in a deal that will bring him a £132m windfall.
The proposed sale of OneSource to ABM Industries shocked UK investors yesterday because it values the company, which is 74% controlled by Lord Ashcroft, at £179m. That is more than seven times its stock market value on the Aim junior stock market in London.
…The £48.10-a-share offer from ABM is 46 times the firm’s earnings before interest, tax, depreciation and amortisation – a ratio almost unheard of in the City.
In case you’re wondering how someone pulls off this kind of deal, the answer is explained in this passage of the article.
Mr Slipsager [of ABM] insisted the price was justified because of the “unique” opportunities for cost-cutting presented by the enlarged group. He expects to cut duplicated back office jobs and to generate annual cost savings for the combined group of between $45m and $50m.
ABM is also well placed to take advantage of OneSource tax losses which could wipe $14m from the enlarged group’s tax bill.
And speaking of Ashcroft and ADT, the Guardian goes on to note that:
The sale of OneSource is the latest of a string of staggering feats of financial alchemy which have punctuated Belize-based Lord Ashcroft’s business career and have left the British tax exile with a complex web of business interests worth an estimated £800m.
Other lucrative deals include timely purchases of share options at burglar alarm group ADT before the business was sold to US conglomerate Tyco for $6bn. His fortune took a dent, however, when Tyco was hit by a corporate corruption scandal involving the then chief executive Dennis Kozlowski.
Koslowski, who was CEO of Tyco from 1992 until 2002, was convicted in 2005 on 22 counts of grand larceny against Tyco in relation to $150 million in ‘unauthorised’ bonuses together with fraud against the company’s shareholders to the tune of £400 million. He is currently serving 8-25 years and appealing against the conviction(s).
Reading into the background, as especially taking into account the view of Dan Ackman (from Forbes magazine):
It’s fair to say that Kozlowski and Swartz abused many corporate prerogatives and that they invented new ones just so they could abuse them. They acted like pigs, as a lot of CEOs act like pigs. Still, the larceny charges at the heart of the case did not depend on whether the defendants took the money–they did–but whether they were authorized to take it. Questions of authority are, by nature, legal questions, not questions for jurors. Much has been made of how the second Tyco trial was less of a circus than the first one. That’s true, but only by comparison.
It appears that Kozlowski was yet another the pigopolists par excellence spawned by the same, overly lax, US regulatory regime that spawned Enron and several other similar ‘pump and dump’ style corporate scandals. Whether what he did was specifically illegal or is, of course, a matter for the US courts to decide. From what I’ve read it appears to have been deeply unethical and of, shall we say, dubious honesty, but in the worlds of high finance those two qualities and illegality do not necessarily go together.
However, getting back to Ashcroft and Flying Lion, the nature of his personal dealings with Kozlowski and Tyco are not the issue here. What is the issue is…
Well, before we get to that, its worth noting what PPERA has to say on the subject of who is, and isn’t, permitted to make donations to UK Political Parties and Politicians:
2. Section 54(2) of PPERA defines permissible donors to registered political parties as:
* an individual registered on a UK electoral register
* a UK registered political party
* a UK registered company
* a UK registered trade union
* a UK registered building society
* a UK registered limited liability partnership
* a UK registered friendly/building society
* a UK based unincorporated association
These requirements must be satisfied at the time the donation is made and the onus is on the party to check whether this is the case and return the money if necessary.
One way or another any donor has to be registered, or in the case of an unincorporated association, based in the UK in order to make donations to a UK political party or to a UK politician, and its the duty of the party/politician to which the donation is made to ensure that all donations are kosher before they accept them.
Now, what we know is that Flying Lion Ltd is registered in Bermuda but owned by Tyco International, which is based in the US and appears to be incorporated in Delaware.
Tyco, itself, cannot make donations directly to a UK political party, however it does – according to this SEC filing – have an extensive list of UK subsidiaries which could, the full list being (get scrolling, BTW):
United Kingdom Group (All UK unless stated)
ABA Electronics Ltd (Ireland)
Abbey Security International Ltd.
Abbey Security Management Ltd.
Abel Alarms Ireland Ltd (Ireland)
Access Control Systems Limited
ADT (UK) Holdings PLC
ADT (UK) Limited
ADT Aviation Limited
ADT Finance plc
ADT Group PLC
ADT Linen Services Limited
ADT Pension Fund Limited
ADT Properties Limited
ADT Securities Limited
ADT Security Systems Limited
ADT Travel Group
ADT Travel Holdings Limited
ADT Travel Limited
ADT Trustees Limited
ADT UK Investments Limited
Advanced Alarm Systems Limited
AEL Video (Ireland) Limited (Ireland)
American District Telegraph Services International Limited
Applied Maintenance Systems Limited
Ariel Burglary and Fire Protection Company Limited
AS (Overseas) Ltd.
ASH Capital Finance (Jersey) Ltd.
ASH Group Services Ltd.
ASH Rentals Ltd.
ATG Manufacturing Ltd.
Audio Education Limited
Auto Auctions (Scotland) Limited
Auto Auctions Limited
Automated Loss Prevention Systems BV (Netherlands)
Automated Loss Prevention Systems International Ltd.
Automated Loss Prevention Systems Ltd.
Automated Security (Equipment) Ltd.
Automated Security (Holdings) PLC
Automated Security (International) Ltd (IOM)
Automated Security (Properties) Ltd.
Automated Security Information Systems Technology Limited
Automated Security International BV (Netherlands)
Automated Security Investments Ltd.
Automated Security Limited
B.C.A. (Auctions) Limited
B.C.A. (Mobile Homes) Limited
B.C.A. Sports Management Limited
B.C.A. Vehicle Preparation Limited
Basingkirk Estates Limited
Bedford Car Auctions Limited
Britannia Access Systems Limited
Britannia Monitoring Services Limited
Britannia Photovision Limited
Britannia Security CI Limited (Channel Islands)
Britannia Security Group Limited
Britannia Security Systems (Midlands) Limited
Britannia Security Systems (Southern) Limited
Britannia Security Systems Limited
British Car Auctions (Aviation) Limited
British Car Auctions (Flying) Limited
Brocks Alarms Ltd.
Capitol Alarms Limited
Cheshire Alarm Services Ltd.
Chiltern Security Limited
Cleaners (South West) Limited
Coin Machine Sales Limited
Combat Alarms Ltd.
Communication & Tracking Services Ltd.
Community Action Trust Crimestoppers Limited
Constable’s Alarm Co. Ltd.
Countrywide Leisure Holdings Limited
D J Security Alarms (Wales) Limited
D J Security Alarms Limited
D.C.S. Alarms Limited
Divison 7 (Spain)
Donald Campbell Associates Ltd.
Electric Protection Services Limited
Eyelevel Electronics Limited
Ford Electronic Services Ltd.
Frome Motor Auction Sales Limited
Gailey Caravan and Leisure Limited
General Cleaning Contractors Limited
Group Sonitrol Security Systems Ltd
Hawley International Finance Limited
Hertfordshire Security Systems Limited
HMC Factors Limited
Home Improvement Holdings Limited
Huddersfield Motor Auctions Limited
Huet Security Ltd (Ireland)
IAMASCO Plc (Ireland)
Industrial Cleaners (UK) Limited
James Deacon Security Limited
Johnson and Sons Limited
K S Lift Services Limited
Kean & Scott Limited
Knightline Ltd (Ireland)
Knightlock Ltd. (Ireland)
Knightvision Ltd. (Ireland)
Knightwatch Alarms, Ltd (Ireland)
Lander Urban Renewal Ltd
Lesters Health Care Services Limited
Libas International Limited
Live-In-Style Furniture Limited
Loss Prevention Ltd.
M1 Car Auctions Limited
M1 Motor Auctions Limited
M25 Motor Auctions Limited
M3 Car Auctions Limited
Markden No. 1 Limited
Markden No. 2 Limited
Markden No. 3 Limited
Markden No. 4 Limited
Markden No. 5 Limited
Markden No. 6 Limited
Mather and Platt Alarms Limited
Measham Motor Auctions Limited
Midland Counties Motor Auctions Limited
Modern Alarms (Scotland) Ltd
Modern Alarms Ltd
Modern Alarms Ltd (IOM)
Modern Automated Security Ltd.
Modern Automatic Alarms (NI) Ltd.
Modern Automatic Alarms Ltd.
Modern Carecall Ltd.
Modern Homepack Ltd.
Modern Integrated Systems Ltd.
Modern Security Systems (IOM) Ltd
Modern Security Systems (Products) Ltd.
Modern Security Systems Ltd (Ireland)
Modern Security Systems Ltd.
Modern Telecom Ltd.
Modern Telecom Security Ltd.
Phoenix Security Services Limited
Photovision Rentals Limited
PPR Alarms Limited
Priory Security Services Limited
Pritchard Insurance Services Limited
Pritchard Laundries Limited
Pritchard Services Group B.V. (Netherlands)
Pritchard Services Group Investments Limited
Progressive Securities Investment Trust Limited
Prospect Cleaning Supplies Limited
Prospect Cleaning Supplies Limited
Prospect House Investments Limited
Prospect House No. 11 Limited
Prospect House No. 5 Limited
Prospect House No. 7 Limited
Redhill Security Services Limited
Region Protection (Notts) Limited
Renalarms Ltd. (Ireland)
S&W Bedrooms Limited
Securis Products Ltd
Securitag Ltd (Ireland)
Security Alarms Ltd.
Security Centres (Scotland) Ltd.
Security Centres (UK) Holdings Ltd.
Security Centres (UK) Ltd
Security Centres Holdings International Ltd (IOM)
Security Centres Holdings Ltd
Security Centres Investments Ltd.
Security Control Risk & Monitoring Ltd. (Ireland)
Security Systems (Rental) Limited
Security Watch Limited
Shepton Holdings Limited
Shield Protection Limited
Show Contracts Limited
Sky Signs Limited
Snap Printing Limited
Somerset Holdings Ltd (BVI)
Sovereign Security Systems Limited
Splendour Cleaning Services Limited
Streets Machine Operating Company Limited
Stretford Security Services, Ltd.
Taskman Security Services Limited
Telecom Security Ltd.
Thameside Lock and Safe Company Limited
The British Security Consortium Ltd.
The City Laundry (Norwich) Limited
The Commercial Motor Auctions Limited
The Expedier Development Company Limited
The Mirror Laundries Limited
The Motor Auctions (Derby) Limited
The Motor Auctions (London) Limited
The Motor Auctions (Scotland) Limited
The Motor Auctions Group Limited
Total Lift Services Limited
Tustin Machine Tools Limited
Tyne Car Auction Limited
U.C.P. Universal Consumer Products Limited
Ultra Security Alarms Limited
Vic Engineering Limited
Vital Communications International Ltd.
W & S Freeman Limited
White Group Electronics Limited
Willow (Wales) Limited
Two hundred and thirteen UK-based subsidiaries in total, sporting a wide variety of names – I find myself rather drawn to ‘Finesnatch Ltd’ personally – and having taken a quick and unrepresentative sample and run it through the Electoral Commissions register of donors, none of them appear to be donating any money or services to the Tory Party, or indeed any political party.
(If any fancies running the full list, then feel free – there’s an excel spreadsheet of all donations since 2001 here, which might make things a bit easier)
And there’s no sign of Flying Lion, or another variety of feline aviation in the entire list.
Tyco’s SEC filing shows two subsidiaries sporting the Flying Lion name – there is the Delaware registered ‘Flying Lion Inc’, which it appear may be operating out of Boca Raton, Florida, and in amongst the Non-US, Non-US subsidiaries there is our own, Bermuda registered, Flying Lion Limited.
This seems to raise a number of questions.
For one thing, why is a subsidiary of Tyco International, which doesn’t appear to make any political donations in the UK via any of its registered UK subsidiaries, mappily flying Tory MPs around the world at no cost to the Tory Party or MP? Especially as Lord Ashcroft appears, on paper, to have severed his personal ties with the company back in 2002.
Then there’s the question of permissibility of these donations. Dizzy reckons its kosher under PPERA:
Apparently there is something “whiffy” about these publicly made entries on the Register, because the company Flying Lion is not registered in the UK. However, the rules in the Political Parties, Elections and Referendums Act 2000 states that MPs can accept donations from foreign people or organisations if the purpose of the donation is to pay for the travel costs. The travel costs registered are to be calculated based on commercial rates too.
Well, hang on a second. The precise wording in PPERA s55 (3) is, as follows:
(3) Any donation received by a registered party shall (if it would not otherwise fall to be so regarded) be regarded as a donation received by the party from a permissible donor if and to the extent that—
(a) the purpose of the donation is to meet qualifying costs incurred or to be incurred in connection with a visit by any member or officer of the party to a country or territory outside the United Kingdom, and
(b) the amount of the donation does not exceed a reasonable amount in respect of such costs.
(4) In subsection (3) “qualifying costs”, in relation to any member or officer of the party, means costs relating to that person in respect of—
(a) travelling between the United Kingdom and the country or territory in question, or
(b) travelling, accommodation or subsistence while within that country or territory.
In which the magic words are, “if it would not otherwise fall to be so regarded”, which suggests that payments for travel costs are permissible providing that they would not otherwise be impermissible for any of the other reasons specified in PPERA – and those reasons include not only anonymous donations but also donations from foreign sources.
Which rather suggests that the jury may still be about on the permissibility of these donations, given that their source is clearly a non-UK registered company.
Then there’s the interesting reference to the donation not exceeding a ‘reasonable cost’.
What, exactly, is reasonable?
Is it reasonable to be swanning around Africa or Asia in private jet, and even if it is, there seems to be some interesting discrepancies in some of the cited costs.
For example, David Cameron’s two-day trip to Khartoum in November 2006 is registered as a donation of £16,818, while William Hague’s two day trip to the same country, in April of the same year, cost a paltry £5,430.
Okay, so the rules on travel include provision for accommodation and subsistence, so you might conjecture that the size of the entourage travelling with each might account for some of the difference – but to the tune of £10,000?
And while we’re play comparisons, in September 2006, Hague used Flying Lion to take a 5 day trip to China and Kazakhstan – I wonder, do Flying Lion do air miles? – at a ‘donation’ of £4,195; £1,250 less than a two day trip to the Sudan.
Did he get such a good deal by arranging the trip through Lastminute.com or did Flying Lion keep the costs down by doing a Ryan Air and using provincial airports?
And, getting back to the Sudan, another two day visit by William Hague, in June of this year, came in at only £2,342.30, getting on for half the cost of the trip he took the previous year.
Then there’s Andrew Mitchell’s entries in which a four day trip to Kigali, Rwanda, in January 2006 came in a £6,774, while a four day trip to the Democratic Republic of Congo – next door to Rwanda – came in at a hefty £12,464.60.
Looking at the detailed entries for both these last trips, one finds that for the trip to Rwanda, the register of members interests states that:
22-25 January 2006, to Rwanda, in my role as Shadow Secretary of State for International Development, as the guest of SURF, the Survivors Fund visiting survivors of the 1994 Genocide and conflict resolution projects. The cost of my flight was provided by Flying Lion Limited (my hotel costs met by the Conservative Party). (Registered 30 January 2006)
So, it a flight only package, costing a little over £6,500, while the entry for the Congo trip states:
12-16 April 2007, to the Democratic Republic of Congo in my role as Shadow Secretary of State for International Development. The cost of my flight was met by Flying Lion Limited. In-country costs were met by previous donations as shown in Category 4 above. (Registered 25 April 2007)
The category four donations are a list of personal donations from the following:
- Mr John Spayne of London (personal donation)
- Armajaro Holdings Ltd
- Mr Fabian French of London (personal donation)
- Thomas Goode & Co Ltd
- Cluff Gold PLC
- (Registered 11 August 2006)
- Mr Dominic Casserley of London (personal donation)
- (Registered 31 August 2006)
- Mr William Salomon of London (personal donation)
- Mr Edmund Lazarus of London (personal donation)
- Flowidea Ltd
- (Registered 5 October 2006)
- Mr Peter Dubins of London (personal donation)
So, the Congo trip was another flight only deal, costing £5,700 more than the flight to/from Rwanda with little or no appreciable difference in the actual distance travelled.
The same kind of discrepancies show up on other flights – two trips to Sudan to review at the situation in Darfur, in April and November 2006 came in at £5,480 and £5,606 respectively – both list the contribution of Flying Lion as flight only and the flying distance for each trip would come in at a round trip of just over 6,100 miles. In between, Mitchell visited Dhaka, Bangladesh – round trip just shy of 10,000 miles – at a cost of £5,366. A scheduled return flight to to Dhaka costs around £500 economy or £1400 if you fly business class.
That said, the question that seems to be of most interest to Chris is that how these donations relate to the notional market value of these flights, and this is where things get rather interesting.
Perhaps the first thing to note is that PPERA gets straight out of the gate with the following:
5(1)The value of any donation falling within paragraph 2(1)(a) above (other than money) shall be taken to be the market value of the property in question.
Before barrelling headlong into a whole series of qualifying statement that could be taken to suggest that its permissible to mark down the value of a donation in kind when recording donations on the register – although look a little more closely and what these rules actually apply to is situations where something is claimed to be either a loan or a non-registrable commercial service when, in fact, its a donation by virtue of having been provided on non-commercial terms and.or at less that the market rate.
In short if, say, a company printed a batch of leaflets for a local party that would normally cost £1,000 but charged them only £500 then the balance (£500) would have to be recorded as a donation.
Which bring us to the question of what, exactly, does it really cost – in the open market – to charter an executive jet in order to fly around the world.
And the answer, it seems, is a whole shitload more than the Tory Party have been declaring.
It’s tricky to find a clear answer to this question, as most charter companies provide an enquiry form only and give prices by e-mail, but I did find one company, Premier Aviations, who are prepared to provide some indicative prices on their website – nothing quite so far ranging as the Sudan or Dhaka (with one exception), but illuminating none the less.
And, to make comparisons easier, I should add, the company offers the option of a Dassault Falcon 900, the same plane as that operated by Flying Lion Limited.
So, some indicative prices – and these are one-way trips from London, but include the cost of flying the plane back to base.
London – Paris: a 45 minute flight, distance 228 miles (so a round-trip of 460 miles) costs…
That’s more than any donation from Flying Lion to a Tory MP or to the main party except for Cameron’s £16,000+ trip to Khartoum.
For other destinations in Europe, prices are no less steep. London to Zurich comes in at £15,700, London Nice is a tidy £17,900 and London to Rome a solid £21,100…
…and the longest flying time and round trip is the run to Eternal City, which (one way) is a flight of 2hrs 10 minutes and a distance of 898 miles.
To get to anything similar to the various flights to Africa, which come in at 3-4,000+ miles one way, you have to look at the cost of flying over the big pond. To charter a Falcon 900 from London to New York – about 3,500 miles one way – will set you back a cool £55,000, plus an extra £30K for a five day layover.
And topping that is the trip to Antigua which, at 4,077 miles, is around the same distance as the flight to Kigali in Rwanda, which Flying Lion donated to the Tories for a mere six and half grand but which, in a commercial charter, has a guide market price of £85,000 – plus, again, the £30k premium if you want the jet to layover five days to fly you home again.
With discounts like that on offer, poor old Stelios (EasyJet) must be crying in his beer.
Doing a few calculations based on performance data for the Falcon 900, which has a quoted range of 3970 miles on full tanks, it appear that at current jet fuel prices, simply filling her up is going to cost getting on for $7,000, which suggests that for many of the flights that the Tories have been taking in Con Air 1, the value of the donations recorded may, at a pinch, cover the base fuel costs of the flight – which is some considerable way short of being the full market value of the flight.
All of which, seems to me, to indicate grounds under which these donations should be subjected to a little further scrutiny.