Monday 6 April 2015

Borgen comes to Port Talbot

As the old saying goes, truth is sometimes stranger than fiction, and this certainly applies to the BBC's surprise hit with Borgen, the Danish political drama which follows the fortunes of a woman party leader whose career includes a stint as prime minister.

Borgen means "the castle", a reference to the seat of the Danish parliament and government, and it features a large cast of politicians of various political persuasions, sometimes duplicitous civil servants, spin doctors, media types and assorted family members. One of the more memorable cameos features a pig farmer who also leads a party which bears an uncanny resemblance to Ukip. Danish viewers would instantly recognise the bluff pig farmer as the late Mogens Glistrup who founded and led the Progress Party.

In reality, Glistrup was not a pig farmer but a lawyer specialising in tax who once boasted on national television that he did not pay income tax.

Tax is an extremely hot topic in all of the Nordic countries where the gap between rich and poor is much narrower than in Britain, and there is a deep-rooted consensus that those who earn most should also contribute most to maintain health and welfare systems which make the UK look Dickensian by comparison.

Glistrup's boast turned out to be a big mistake, and he eventually went to jail for tax evasion.

In the first series of Borgen, the lead character, Birgitte Nyborg, is married with two children, but the marriage breaks down and Phillip Christensen, the ex-husband, is mightily relieved to escape from the media spotlight and his role as house husband and political consort to resume his career in business.

If the script writers had made Christensen the scion of a political dynasty who stays married to Nyborg while launching his own political career overseas, it is likely that viewers would have felt that the plot was all a bit too far-fetched, but of course that is precisely what has happened in the case of Helle Thorning-Schmidt, the real Prime Minister of Denmark, and her husband Stephen Kinnock, only son of that aristocratic couple, Baron Kinnock and Baroness Kinnock of Holyhead.

Europe has not seen this kind of dynastic power-play since the Saxe Coburg Gothas were at their peak.

This blog previously recorded the interest shown by the Danish press in Stephen Kinnock's selection as Labour Party candidate to fight the safe Labour seat of Aberafan/Aberavon, and Kinnock is naturally odds-on favourite to represent the people of Port Talbot, one of the most deprived parts of Wales, in Westminster after 7 May despite having no known previous connection with the town.

As that blogpost noted, Kinnock's tax status has been the subject of a great deal of controversy in Denmark where such matters are taken very seriously.

At one time Stephen Kinnock was based in Geneva and was paying tax on his income in Switzerland. The Swiss tax system is complex, and rates of tax vary hugely from one commune to another. Some of the surrounding villages have some of the lowest rates of tax in the country. Where you live, as far as the taxman is concerned, can make a great deal of difference to your tax bills, and uniquely in Europe, tax evasion is not a criminal offence.

As far as tax is concerned, Denmark and Switzerland are at opposite ends of the spectrum.

For several years Kinnock insisted that he was not liable to tax in Denmark as he was based in Denmark for less than 183 days a year, although his wife and children lived in Copenhagen.

These claims have been questioned by the Danish press, with one leading daily, BT, citing statements made by both Kinnock and his wife which suggest that he has regularly spent rather longer in Denmark than the tax authorities supposed.

Kinnock announced in 2010 that he would begin paying tax in Denmark, but shortly afterwards changed his mind.

Matters came to a head later in 2010 when the Copenhagen tax office carried out an investigation and concluded that his tax affairs were indeed in order and that he was not fully liable to pay tax in Denmark

The tax office's report was confidential but was nevertheless leaked to the press a year later, shortly before a general election which saw Helle Thorning-Schmidt, the leader of the country's Social Democrats, become Prime Minister.

An official investigation into the couple's tax affairs was begun in December 2011. The two experts charged with clarifying matters came to very different conclusions. Soon afterwards allegations surfaced that opposition politicians had tried to influence the investigation, and a spin doctor was reported to the police for trying to leak the original Copenhagen tax office report to a newspaper.

A second inquiry into the leaks and allegations of political interference was launched a few days before Christmas 2011.

The inquiry continued through 2012 and 2013, with various prominent journalists and politicians giving evidence. A bizarre twist in the affair came when it emerged that the couple's own tax adviser had suggested to the tax authorities that Stephen Kinnock was gay or bisexual.

The Danish press speculated that there might be a tax advantage in this, the implication being that the marriage was, well, not quite what it seemed.

The tax adviser himself told the inquiry that his suggestion was merely a hypothetical explanation as to why Helle Thorning-Schmidt and Kinnock had not wanted to meet the head of the tax office together.

Thorning-Schmidt and Kinnock both vehemently denied that there was any truth in the claims about his sexuality, and the tax adviser was sacked.

A further twist took place in September 2013 when it emerged that an anonymous letter had been received by the inquiry alleging political interference by opposition politicians. The letter was considered to be so sensitive that it could not be published or shared with all parties to the case. Parts of the letter were nevertheless leaked to the press.

It then emerged that the letter originated from a lawyer who claimed to have information showing that the whole affair was a plot, and that he or she was considering publishing a book about it. We are still waiting for that one.

The inquiry was finally concluded in December 2013, with the chair announcing that a final report would not be published until September 2014.

The report was eventually published in November 2014, and concluded that there had been serious leaks of sensitive information to the press and that several civil servants had broken their duty of confidentiality.

To complicate matters further, while all this was happening a separate case involving the tax affairs of a prominent dom/non-dom Danish citizen was in progress. This involved Camilla Vest (stop sniggering at the back), a Danish model who was married to Peder Nielsen, boss of the Danish shipping conglomerate Maersk. The couple were found guilty in November 2011 of tax evasion and sentenced to 21 months in prison and a fine of DKr 6.6 million (approximately £650,000). The verdict was  overturned a year later, with the tax authorities' ruling on the Kinnock case playing a significant role in the court's decision.

There have been changes to the rules since the Kinnock case first broke, with the tax authorities allowing a little more leeway for "sporadic" work, such as answering work-related e-mails and telephone calls, while officially at home "on holiday" in Denmark.

As matters currently stand, Stephen Kinnock remains non-domiciled in Denmark for tax purposes, but it is unlikely that we have heard the last about his tax affairs.

If he is elected to the House of Commons in May the Danish press and opposition politicians are likely to take renewed interest in his comings and goings, and those of the prime minister.

In 2013-14 the House of Commons sat for just 162 days, and few if any MPs would have been present on every single occasion. Sittings begin at 2.30 pm on a Monday and most MPs clock off on Thursday afternoon, the conscientious ones heading back to their constituencies. Some, such as Gordon Brown in the last parliament, are very rare visitors indeed.

Unless Stephen Kinnock opts to spend a great deal of time in Port Talbot away from his wife and family and the rather more attractive surroundings of Copenhagen, it is likely that he will struggle to meet the threshold set by the Danish taxman who will also be interested in how much time he spends on the phone and dealing with e-mails while at home. And that opens up the strange possibility that Aberafan could become the first Westminster constituency to have an MP paying tax on his MP's salary in another country.

Labour rightly made a big fuss about non-domiciled Tory peers being part of the legislature while not paying tax in the UK. How would the party react to its own red prince of Denmark if the Copenhagen tax office cracks down?


The sources for this piece are all taken from the Danish media. Some are embedded in the text, but the account of the inquiry relies heavily on a Five Minute Explanation of the Tax Affair produced by TV2.


Anonymous said...

Stephen Kinnock will overcome the Danish residence rules for taxation purposes by living with dad and mam in North London and naturally claiming rental allowances of £1000 a month. For further advice he should have a word with the Hon member for the Rhondda who despite owning a property in the Capital lives in rented accommodation when not ensconced in Porth. Naturally the property he owns was purchased by courtesy of the taxpayer. Don't you just love these Socialists.

Anonymous said...

I don't think the name Kinnock and the term Socialist should be uttered together in the same breath. Surely they are a contradiction.

Unknown said...

Act 1 Scene 4:"Something is rotten in the state of Denmark" or is it Aberavon?