The Minister's Mr Moneybags

The row over Tessa Jowell's rich husband's Italian business links has put him in the spotlight. Charles Raw on a CV to make Blair blanch
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The Independent Online
Even by the relaxed standards of the offshore investment and tax haven business, David Mills is regarded as having been a bit too "cavalier".

That was the word used by a former colleague to describe the husband of the Health Minister, Tessa Jowell, who found himself at the centre of the storm over the Government's unexpected U-turn on tobacco advertising, allowing sponsorship of Formula One racing to continue. Though Mr Mills severed his close ties to the Benetton racing team on his wife's appointment, he was immediately identified by the Opposition as a potential conflict of interest for Ms Jowell.

Within the circles in which Mr Mills, 53, a millionaire London solicitor, operates, or among the people who regulate them, nobody was all that surprised at the controversy. For some time, Mr Mills, an ebullient, gregarious character, has been fighting fires on several fronts. Despite his impeccable New Labour credentials - he plays golf with Alastair Campbell, the Prime Minister's press secretary, and entertains Peter Mandelson at his Cotswold weekend home - Mr Mills has made a fortune from advising flamboyant businessmen.

His wife may be a member of a Government that professes to despise "fat cats", but for years Mr Mills's speciality has been helping rich men who wished to avoid tax in their own countries to keep their affairs secret, and to become even richer.

His main client was Silvio Berlusconi, the TV magnate turned right-wing politician who was Italy's prime minister for seven months in 1994. When Mr Berlusconi came under investigation in Italy for corruption and creating false balance sheets for his holding company last year, the Serious Fraud Office - acting on behalf of the Milan magistrates - seized 15 bags of files from Edsaco, a company with offices off London's Regent Street, relating to Mills's work for the Italian tycoon. Subsequently, this newspaper revealed on its business pages just how closely Mr Mills had been involved in Mr Berlusconi's Byzantine manoeuvres.

After university, Mr Mills became a barrister, working at the bar for 10 years. He then decided he wanted to make the unusual move of becoming a commercial solicitor and his new career began with an introduction to a leading firm of Milanese lawyers, Carnelutti, who were looking for someone to help them set up a London office. This he agreed to do, working in tandem with the small solicitor's firm he had set up under the name Mackenzie Mills.

Mr Mills spoke good Italian, French and Spanish and began quickly to establish a very large Italian clientele, which included not just leading businessmen like Benetton, Berlusconi and the designer Valentino, but many other smaller firms. His speciality was helping them with their offshore investments and tax affairs. This was known as "grey money", and the transactions broke no laws and were acceptable to the Bank of England.

Under the aegis of Carnelutti Mr Mills formed a company, CMM Corporate Services, and this in turn set up a wide range of companies for clients. Mr Mills himself became director or secretary of some 60 of them. In 1994 - when "grey money" was getting a bad name - he sold his main business, CMM, to a company called Edsaco, a firm specialising in offshore companies ultimately owned by the giant Union Bank of Switzerland. The price is said to have been pounds 800,000 of which Mills, as the majority shareholder of CMM, would have taken a substantial slice.

That was not all. Mackenzie Mills, his law partnership, also received pounds 2m from a clever deal designed to exploit a loophole in Italian law. Concerned about Berlusconi's burgeoning media empire, the Italian government passed a law requiring him to scale down his interests. An ingenious Italian solution for one of his TV channels, advised by Mr Mills, was to set up a British Virgin Islands holding company, with his London solicitor as the owner. That way, Mr Berlusconi could legally claim the channel was separate from him. When the channel was eventually sold, the BVI company owned by Mr Mills was left with a pounds 2m surplus which was paid into an account in London under the control of Mackenzie Mills.

Mr Mills has had to provide Italian magistrates with a lengthy statement and many documents about the offshore companies he set up for Mr Berlusconi. Not surprisingly, this part of the business has since been wound down.

But Mr Berlusconi is not the only one of Mr Mills's Italian clients under investigation. Another embarrassment arises in Rome where there is an investigation into a series of alleged frauds perpetrated in the Eighties on SACE, the Italian equivalent of the Exports Credits Guarantee Department. The story centres on a tourism project which was to be set up on St Kitts and Nevis in the Caribbean and for which three hydrofoils were ordered from a Sicilian shipyard, then owned by a family named Rodriguez. The company ordering the hydrofoils was called Nautical Trading and the ships were financed by a $25m loan from Morgan Grenfell in the City, guaranteed by SACE and the St Kitts government. Mr Mills became a director of Nautical.

In the end the project failed, and the hydrofoils, which had been delivered to the Caribbean, were left rotting for some time before being returned to the Mediterranean and the Rodriguez family. They have subsequently been impounded. Investigators in Italy, London and St Kitts are trying to discover what has happened to the money, much of which seems to have disappeared via an Isle of Man company called Bluematt - not a Mills company. It is allegedly owned by the man behind the whole deal, an Englishman who has changed his name and has a fraud conviction. Mr Mills remained a director of Nautical throughout the collapse at the request of the Rodriguez family, as a "caretaker" he says, to help sort things out.

Just as investigators from Rome and St Kitts were preparing to visit London six weeks ago, to conduct interviews on the Nautical affair, Mr Mills found himself the subject of unwanted attention in Italy and Switzerland - this time because of a British company he had formed for clients. On 24 September, Greenpeace invaded the Lugano offices of a curious organisation called Oceanic Disposal Management.

ODM is run by a voluble Italian called Georgio Comerio. It advertises itself as having expertise in the disposal of nuclear and other waste on the seabed. In the raid, Greenpeace grabbed papers and have now been charged with trespass. At the same time, they issued a document headed, "The Network - A Greenpeace report on organised waste trafficking".

The husband of Britain's Health Minister features prominently in its 31 pages, because of alleged links between a company he had established in London called Technological Research and Development and Comerio's ODM. Mr Mills has condemned the Greenpeace report and claims not to know Comerio, although he admits to having spoken to him recently on the telephone.

It has been an uncomfortable year and a half for Mr Mills, the worst time, presumably, was when he was unsure whether the Italian magistrates investigating Berlusconi would try to arrest him along with all the other Berlusconi people who have been charged. That danger appears to have passed.

The problem for Ms Jowell - in her ministerial position - is that her husband operated at a politically awkward end of the market, in an industry geared to avoiding the prying eyes of the Revenue and other authorities.

Recent moves in Europe and the United States to crack down on the offshore business mean that Mr Mills has enjoyed his best years. But that will not bring much comfort to his wife's Labour colleagues: it is not tobacco advertising, but what he did during all those years when offshore work was at its peak and his wife was not in government that is the real cause for concern.