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How Jacob Rees-Mogg’s new Brexit post could make him richer

The new minister for Brexit opportunities is thought to have a 12% stake in an $8bn investment fund that specialises in ‘emerging markets’

Seth Thévoz close-up
Seth Thévoz
9 February 2022, 3.47pm
Jacob Rees-Mogg is already one of the richest MPs
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Jacob Rees-Mogg’s new job as minister for ‘Brexit opportunities’ could make him substantially richer through his shares in an $8bn investment fund, experts have warned.

Rees-Mogg is a major shareholder in Somerset Capital, which he founded, and stands to gain if its funds benefit from Brexit trade deals. The firm specialises in investment across ‘emerging markets’ and major economies, such as China.

The government insists Rees-Mogg will not make decisions “in respect of financial services”, though could not give a full description for his new brief.

But Susan Hawley, executive director of Spotlight on Corruption, told openDemocracy: “Rees-Mogg’s vast investment portfolio in dozens of sectors across several continents could pose a serious conflict of interest with his reported intention of axing a thousand regulations when he could stand to benefit personally from the process.”

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It is thought that Rees-Mogg’s new role will largely replace the Cabinet Office minister role previously held by Lord Frost, whose portfolio included “coordination of cross-government positions on trade issues”.

Hawley added: “Worryingly, the government’s hurried announcement of his new ministerial role fails to even spell out his specific responsibilities, and so the public will be left in the dark as to what exactly Rees-Mogg will be doing on taxpayers’ time, and whether he will stand to benefit personally from any recommendations he makes.”

Steve Goodrich, of Transparency International, said: “It’s risky business when ministers hold briefs relating to their personal financial affairs, and even more so when there’s a lot of money at stake.

“In theory, there are rules in place to stop them blurring the lines between their public roles and private interests, yet in practice these have proven to be no more than just words on paper.”

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Long believed to be one of the richest MPs, in 2019, Spear’s Wealth Management estimated Rees-Mogg’s net worth “to be well over £100m”.

Somerset’s CEO, Dominic Johnson, says Rees-Mogg has been a “sleeping partner” for many years. Rees-Mogg stopped taking a salary from Somerset when he joined the government in 2019, although he remains a partner and major shareholder. He draws a six-figure annual dividend, believed to be far larger than his old salary.

Rees-Mogg reportedly took an £800,000 dividend from the firm in 2020 and another £600,000 in 2021. Under parliamentary rules, he does not need to declare the amount – just that it is over £70,000. He is understood to have a 12% stake in the company, which will be reduced to 5% by 2027 under the company’s profit-share scheme.

The ministerial code says that “ministers must ensure that no conflict arises, or appears to arise, between their public duties and their private interests”.

Ministers with shareholdings directly related to their roles are usually expected to either dispose of the shares (which, in Rees-Mogg’s case, could gain him a huge cash sum), or to put them into a blind trust.

The Cabinet Office was not able to give a list of Rees-Mogg’s new ministerial responsibilities

Until now, Rees-Mogg’s role as leader of the House of Commons put him in charge of timetabling the government’s legislation. But his new role could see him sharply overlap with his extensive financial interests.

Meanwhile, Rees-Mogg’s business partner, Dominic Johnson, also has a government role: he is a member of the board of the Department for International Trade and chairs the department’s Audit and Risk Assurance Committee.

There is no suggestion of any conflict of interest for Johnson. A list of interests is kept by the department, and directors must follow a code of conduct following the Nolan principles.

Responsibilities

The Cabinet Office was not able to give a list of Rees-Mogg’s new ministerial responsibilities when approached. Downing Street said only that they would be released “in due course”.

Responsibilities likely to be inherited from Frost include the Northern Ireland Protocol, “the coordination of cross-government positions on trade issues”, and a review of the UK’s borders by 2025.

Goodrich believes the existing ethics rules may not be robust enough to deal with this: “That it’s the PM, and the PM alone, who enforces the ministerial code means all kinds of behaviour may be permitted in return for political loyalty. Until there’s more independent oversight over ministerial conduct, there’s a distinct risk that ministers can write their own rules.’

A Cabinet Office spokesperson said: “Policy related to the financial services sector is the sole responsibility of the Treasury, and as Brexit opportunities minister Jacob Rees-Mogg will not be involved in decision-making in respect of financial services.

“The Ministerial Code sets out the process by which, following appointment, ministers should declare their interests, and take advice from their permanent secretary and the independent adviser on ministers’ interests, on any necessary steps to avoid or mitigate a conflict of interest.

“That process will take place as with any other ministerial appointment.”

Oliver Crawley, a Partner at Somerset Capital Management LLP, said: “Jacob Rees-Mogg no longer works at Somerset Capital and has had no role in any of the firm’s investment decisions for over a decade. Any partnership interest in Somerset is held in abeyance, in accordance with the Ministerial Code. Somerset Capital’s funds, including the Somerset Asia Income Fund and Somerset Emerging Markets Dividend Growth Fund, are solely mandated to invest in Asian and Emerging Markets equities.”

Rees-Mogg did not respond to a request for comment.

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