Luxury private members’ clubs owned by Russian and US billionaires are among a spate of Scottish firms owned by wealthy foreign nationals that have claimed millions of pounds in taxpayers’ money via the Covid-19 job retention scheme.
The high-end clubs, one of which charges super-rich members £95,000 a year to access its grouse moors and Victorian hunting lodge, are ultimately controlled by companies in offshore low tax jurisdictions. One claimed as much as £1.15 million via the Treasury initiative, which is being wound up on Thursday.
Other prominent recipients of furlough money include Donald Trump’s Scottish businesses. They claimed up to £1.54m during the pandemic, despite the fact the former US president’s Turnberry resort made scores of redundancies.
The job retention scheme was introduced last spring to support struggling businesses and prevent mass unemployment, but the vast sums being paid to firms with opaque corporate structures or which have made swingeing staffing cuts will reignite debate over how the pandemic has exacerbated social inequalities.
The numbers of billionaires in the UK jumped by a record 24 per cent over the past year, with their combined wealth increasing by around a fifth.
There is no suggestion of illegality on the part of those billionaires whose firms accessed payments, but given Covid-19’s calamitous impact on public finances, the payments have sparked anger.
Dame Margaret Hodge MP, chair of the all-party parliamentary group on anti-corruption and responsible tax, said it was “totally unacceptable” that billionaire business owners with firms in tax havens could “take advantage” of public funds. She accused the UK government of being “irresponsible” by failing to include conditions to its Covid-19 financial support.
Scotland on Sunday cross referenced HM Revenue & Customs furlough payment datasets with Companies House records to establish how some of Scotland’s wealthiest and notable foreign business figures accessed funding. The data only covers banded payments between December 2020 and June this year, meaning that 12 months’ worth of claims remain unknown.
Over that seven month period, the firm behind Skibo Castle, which is now run as “one of the world’s most prestigious private clubs,” claimed up to £1,150,000. Membership of the Carnegie Club – named after Skibo’s one-time owner, the Scots-American industrialist and philanthropist, Andrew Carnegie – is priced at £9,500 per annum, in addition to a £30,000 joining fee.
The 8,000 acre property is owned by Ellis Short, the US founder of the private equity fund, Kildare Partners, and former owner of Sunderland football club. The Sunday Times rich list puts his fortune at £880m, up £20m on last year.
Skibo Ltd’s most recent annual accounts show it turned a profit of £603,000. Its ultimate parent undertaking, Scytherbolle Ltd, is registered in Bermuda. A spokeswoman for the Carnegie Club said it was “unable to comment” when asked a series of questions by Scotland on Sunday.
It is not the only exclusive members’ club to utilise the furlough scheme. The company behind the 22,000 acre Tulchan estate in Grantown-on-Spey claimed up to £130,000.
Tulchan has an illustrious history, having played host down the years to Edward VII, George V, and George VI, as well as US president Teddy Roosevelt and prominent business figures such as William Vanderbilt and J.P Morgan.
It was bought four years ago by Russian vodka billionaire, Yuri Shefler, for a reported £25m, and is home to what is billed as “the most private of private members’ clubs”. The annual fee starts at £95,000 a year.
Forbes puts Mr Shefler’s net worth at £1.67bn. Tulchan’s ultimate parent company, the Tulchan Trust is based in Guernsey. The Speyside estate did not respond to enquiries.
Balnagown Castle Properties, controlled by Egyptian billionaire Mohamed Al Fayed, the Harrods owner, claimed up to £40,000. The firm oversees the 92-year-old’s 65,000 acre estate in Easter Ross. Its ultimate parent company, Ocarina Trustee AG, is based in the tiny principality of Liechtenstein.
Mr Al Fayed and his family have a fortune worth around £1.7bn, up £25m on last year. Balnagown did not respond to enquiries.
Elsewhere, Mr Trump’s Turnberry resort, which is ultimately owned by a New York-based state grantor trust in the 75-year-old’s name, claimed up to £1,325,000. The RMT union, which said that at least 66 jobs have been lost at the South Ayrshire business since last summer, has described its use of the scheme as an “abuse”.
Mr Trump’s Aberdeenshire property claimed as much as £220,000 over the same period. The Trump Organisation did not respond to enquiries.
Turnberry is not the only business to claim furlough money while overseeing cuts. Highland Spring, which is owned by Mahdi al-Tajir, one of Scotland’s richest men, received as much as £360,000.
The firm closed one of its plants and made 27 redundancies during the pandemic. Its parent company, Park Tower Holdings Establishment, is registered in Liechtenstein.
A spokeswoman for the Highland Spring group said the furlough scheme helped it to protect “as many jobs as possible”, and support the firm’s “long term sustainability” at a time when it experienced a downturn in trading.
Blackford Farms, the firm behind the 20,000 acre al-Tajir estate in Perthshire, claimed up to £70,000. Its ultimate parent firm, Ciara Investments Group, is incorporated in the British Virgin Islands. Another al-Tajir company, Ochil Developments (UK) Ltd, which is also controlled by Park Tower Holdings Establishment, received up to £175,000. Mr al-Tajir’s fortune has been put at £1.68bn, up £18m on 2020.
Dame Margaret, the Labour MP and veteran tax campaigner, told Scotland on Sunday: “It is totally unacceptable that billionaire business owners with companies based in tax havens have been able to take advantage of public funds through schemes like the furlough.
“From the outset of the pandemic, I urged the government to add conditions to its financial support schemes such as transparency, environmental responsibility, workers’ rights, or fair tax conduct.
“But instead of doing the right thing and strengthening corporate conduct, this irresponsible government was too busy handing out dodgy contracts. It’s high time they learnt the true value of the taxpayers’ pound.”
Alison Thewliss MP, the SNP’s shadow chancellor, said: “Multinational companies who have generated mass profits throughout the pandemic – especially those who are owned by entities in tax haven jurisdictions – should absolutely consider repaying the money given to them during the crisis.
“However, the UK government must also heed the warnings and shore up its tax system in order to prevent more overseas tax avoidance scandals, as demonstrated in this report.
“Sadly though, the only tax changes we have seen from this Tory government is a hike in National Insurance which fails to target the millionaires with unearned wealth, and hammers those on the lowest incomes.”
Alex Cobham, chief executive of the Tax Justice Network advocacy group, said that while the overall benefits of the job retention scheme were clear, there were concerns that businesses that benefited from public support did not use the fund as intended, or “meet their basic societal responsibilities to pay tax”.
“Both of these hinge on whether or not there is sufficient transparency to hold businesses accountable,” he added. “Where businesses structure themselves via secretive jurisdictions such as Liechtenstein or the majority of the UK’s dependent territories, from Guernsey to the British Virgin Islands, they are typically much less transparent – and the overall risks of unaccountable and antisocial behaviour rise.”
Pat Rafferty, Unite’s Scottish secretary, said: “The job retention scheme was specifically designed to prevent mass unemployment, and to help keep businesses and workers afloat during a period when the economy was in free-fall.
“Yet, we see billionaires and major companies, many of them with dubious employment practices, taking full advantage of this scheme while cutting jobs, terms and conditions, and offshoring UK public funds to tax havens such as Bermuda and the Channel Islands.
“The fact that none of these companies have done anything apparently illegal goes to the heart of the issue. Unite argued that the furlough scheme should have come with conditions attached to it and not literally giving a blank cheque to rogue employers.”
A spokeswoman for the Treasury said: “The furlough scheme has been instrumental in protecting nearly 12 million jobs during the pandemic, and our Plan for Jobs has contributed to there being nearly two million fewer people now expected to be out of work than was previously feared.
“We expect businesses to abide by the spirit of the scheme and they can voluntarily pay back money claimed if they no longer need the support.”
JPI Media Publishing, the owners of Scotland on Sunday, claimed up to £1m via the furlough scheme.