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UK prime minister Rishi Sunak is facing pressure to give back donations the Conservative party accepted from a telecoms company after its French entities were last week convicted of money laundering and VAT fraud.
Lycamobile, the UK-headquartered international mobile virtual network operator, gifted £2.15mn to the Tories between 2011 and 2016, according to the Electoral Commission database.
The Paris criminal court convicted Lycamobile’s French corporate entities of committing fraud with respect to value added tax and money laundering in a decision issued on October 26. It fined them €10mn. Lyca Mobile France is appealing against the convictions.
The former chief executive of the company, Christopher Tooley, was found guilty and received a suspended jail sentence. Alain Jochimek, the head of the French business, was also found guilty and received a three-year prison sentence, which can be served under electronic monitoring.
Tooley was fined €250,000 and barred from business in France for five years. Jochimek was fined €120,000 and received the same ban. Both men are appealing against the sentences, fines and bans on company directorships.
In the wake of the verdict the Tories are facing demands to give up the money the party accepted from Lycamobile, which specialises in prepaid cards for mobile phones.
Christine Jardine, the Liberal Democrats’ Cabinet Office spokesperson, wrote to the prime minister on Wednesday, calling on him to launch an “immediate, independent inquiry” into the matter.
She raised concerns that the Conservatives accepted £600,000 of donations from Lycamobile after “serious allegations” of money laundering were reported by the press in October 2015, including £45,000 that the party accepted after French prosecutors brought charges in connection with those allegations in June 2016.
In her letter Jardine asked Sunak to “assure me that the Conservative party is not planning to keep” the £2.15mn from Lycamobile given the verdict in the French criminal courts. She asked for an update on what the Tories plan to do with the money.
Jardine also highlighted press reports that in 2017 HMRC rejected a request from French officials to raid Lycamobile’s London offices. French prosecutors were seeking assistance with their investigations into suspected money laundering by the company.
At the time HMRC linked its decision not to co-operate to Lycamobile’s status as a major donor to the Tories, telling French officials that “it is of note that they are the biggest corporate donor to the Conservative party”, according to correspondence reported by BuzzFeed.
HMRC told the Financial Times in 2018: “HMRC always investigates suspected rule-breaking professionally and objectively and is never influenced by political considerations.”
Jardine urged Sunak to investigate the UK government’s refusal to assist French prosecutors in their investigation, and whether this decision was connected to the donations made by Lycamobile to the Conservative party. She warned that “even the perception” of such a link would be “incredibly damaging to public trust in politics”.
A Tory official said: “All donations to the Conservative party are properly and transparently declared to the Electoral Commission, published by them, and comply fully with Electoral Commission rules.”
Last week the Paris criminal court ruled that Lycamobile had “deceived” the tax authorities by “misusing” the VAT rules to claim “undue” reimbursements from the tax authorities.
It also found that the French companies had “knowingly participated in a complex and elaborate money laundering system” between 2014 and 2016.
The judgment said the “opaque” system, which involved a series of shell companies, two Lycamobile salespeople and resellers in the immigrant neighbourhood of La Chapelle in northern Paris, operated for the benefit of construction companies that needed cash to pay employees who were working illegally.
Lycamobile said: “Lyca Mobile France continues to maintain its complete innocence in that it was in fact a victim of fraud by organised crime in which it played no role whatsoever.
“We remain confident of acquittal across all corporate and individual verdicts and look forward to reasserting our defence in the higher courts, where the legal arguments will be more rigorously examined.”