Allies of Nadhim Zahawi claimed on Sunday that he had been sacked by Rishi Sunak without being given a fair hearing over allegations that he had misled officials over his tax affairs.
The Prime Minister announced the Tory party chairman’s dismissal at 9am, citing the findings of his ethics adviser Sir Laurie Magnus’ report that he had committed seven breaches of the ministerial code.
But the former minister’s allies suggest the report was rushed out for political expediency and say he was only given one 30-minute meeting to defend himself.
And they said a number of key facts in his favour were not included by the ethics adviser, including that he told a senior civil servant about a HMRC investigation into his tax affairs and subsequent fine.
Mr Zahawi’s dismissal comes at a time when Mr Sunak is already struggling to maintain party unity amid deep splits over economic strategy and planning reform.
On Sunday night Mr Sunak was warned by former chancellor George Osborne that his leadership of the party was in danger of being “pulled down by scandal” just like that of John Major's.
Another of Mr Sunak’s ministers, Dominic Raab, the Justice Secretary, faces a separate inquiry into allegations of bullying.
— Nadhim Zahawi (@nadhimzahawi) January 29, 2023
Mr Zahawi, who was appointed as party chairman in October, had been facing damaging reports that he had settled an estimated £4.8 million bill with HM Revenue & Customs while he was chancellor, including paying a penalty.
Mr Sunak initially resisted calls to sack his party colleague immediately and instead stressed the need for "due process". But the report by Sir Laurie, the Prime Minister's independent adviser on ministers' interests, was published only six days later, and allies of Mr Zahawi suggested on Sunday that the conclusions had been rushed amid pressure on Mr Sunak to appear decisive.
In his report, Sir Laurie said Mr Zahawi had been guilty of repeated “omissions”, citing his failure to update his register of interests until more than a year after HMRC started looking into his taxes. When Mr Zahawi reached a settlement with the taxman in August 2022, this too should have been declared, Sir Laurie said.
"Mr Zahawi's conduct as a minister has fallen below the high standards that, as Prime Minister, you rightly expect from those who serve in your government,” he wrote.
In a letter published on Sunday morning, Mr Sunak told Mr Zahawi that he believed he had committed a "serious breach of the Ministerial Code", adding: "As a result, I have informed you of my decision to remove you from your position in His Majesty's Government.”
Mr Zahawi is furious about the decision to sack him, and is considering issuing a formal response to Sir Laurie’s report, The Times reported.
Allies of Mr Zahawi disputed Sir Laurie’s conclusions, alleging that he told Sir Tom Scholar, the then Treasury permanent secretary, about the HMRC investigation and the fine – something that did not appear in Sir Laurie’s report
And they claimed he had updated his ministerial register of interests in September when he was appointed to the Cabinet by Liz Truss. Sir Laurie’s report states this did not happen until January.
Sir Tom was sacked from the Treasury by Kwasi Kwarteng, Liz Truss's chancellor, in September.
Allies of Mr Zahawi say it is not clear whether Sir Tom was interviewed and say it would be easy to find our whether Mr Zahawi told him and whether this was passed on to the Cabinet Office.
The allies also questioned why Mr Zahawi only had one chance to set out his case to Sir Laurie - at a 30-minute meeting in the Cabinet Office last Wednesday.
They said Mr Zahawi had been expecting a subsequent meeting, but he was told on Saturday night that this would no longer take place.
In his reply to the Prime Minister, Mr Zahawi did not explicitly refer to the findings of the inquiry - and he did not apologise - but he did pledge loyalty, saying: “You can be assured of my support from the backbenches in the coming years.”
It comes as Mr Sunak faces increasing pressure from allies of his predecessor Liz Truss, who are calling on him to cut taxes in March's Budget to promote growth.
Some supporters of Boris Johnson are also openly hoping for his return to Downing Street, believing that he was pushed out unfairly by Mr Sunak's resignation as chancellor.
Mr Sunak's Chancellor, Jeremy Hunt, is sticking to his line that inflation must be tackled before taxes can be cut.
Michael Gove, the Levelling-Up Secretary, told the BBC: “Because someone commits a lapse or a sin, that shouldn't be automatically taken as an opportunity to damn an entire organisation or a way of working.
"There are always people who will fall short, whether it's in politics or other parts of public life, or professional life, or in any area."
Mr Sunak is unlikely to rush before appointing a new Conservative chairman. Stephen Massey, the party's chief executive, will step in in the interim.
On Sunday Mr Osborne told Channel 4: “At the moment he is being pulled down by a series of scandals which do not directly involve him, are kinds of hangovers of the Johnson era…
“I was the photocopy boy in Downing Street back in the nineties where John Major had all those problems, and there are similarities in that John Major was likeable, conscientious - like Rishi Sunak, but ultimately was not able to escape the downward pull of the Tory party.
“We’ll see with Rishi Sunak but he knows, as each week passes, as each new scandal unfolds, the window for action gets smaller and smaller.”
