Brexit: Jacob Rees-Mogg defends Ireland move by City firm he co-founded ahead of EU withdrawal

Brexit negotiations may cause ‘considerable uncertainty’, the firm’s prospectus warns

Lizzy Buchan
Political Correspondent
Thursday 14 June 2018 14:23 BST
What is still needed to complete a deal with the EU?

Prominent Brexiteer Jacob Rees-Mogg has defended the move by a City firm that he helped to found to establish an investment fund in Ireland ahead of the UK leaving the European Union.

The Conservative MP faced questions when it emerged that Somerset Capital Management (SCM) had launched a new investment vehicle in Dublin amid concerns about being cut off from European investors.

A prospectus for the new business, which was registered in March and will be governed by EU and Irish rules, listed Brexit as one of the risks, as it could cause “considerable uncertainty”.

The disclosure is potentially embarrassing for Mr Rees-Mogg, who has been one of the most vocal advocates of a clean break from the EU through his role as chairman of the European Research Group (ERG), a powerful Eurosceptic group of backbench Tories.

Referring to Brexit, the fund’s prospectus said: “During, and possibly after, this period there is likely to be considerable uncertainty as to the position of the UK and the arrangements which will apply to its relationships with the EU and other countries following its withdrawal.

“This uncertainty may affect other countries in the EU, or elsewhere, if they are considered to be impacted by these events.

“As [the firm is] based in the UK and a fund’s investments may be located in the UK or the EU, a fund may as a result be affected by the events described above.”

The fund also warned its clients directly of the dangers of a hard Brexit, saying it would “increase costs” and make it difficult to pursue its objectives.

Mr Rees-Mogg, who is a partner at SCM but does not make investment decisions, told The Daily Telegraph: ”A number of existing and prospective clients requested domiciled access to Somerset’s products.

“The decision to launch the fund was nothing whatsoever to do with Brexit.”

The Brexit warnings were guidance from lawyers rather than a policy statement from SCM, he added.

It comes after a bruising two-day contest for the government in the Commons as ministers tried to overturn a string of amendments to the EU withdrawal) bill.

Theresa May managed to head off a revolt with promises of a compromise amendment to her flagship Brexit bill, setting out more detail on the terms of the “meaningful vote” promised to MPs on the final Brexit deal.

Pro-EU Tories say they remain ready to rebel if their demands are not satisfied by the compromise amendment, while Eurosceptic MPs such as Mr Rees-Mogg attacked the plan for saying it made a “no-deal Brexit” more likely.

It came after Jeremy Corbyn suffered a major rebellion, with six members of his shadow team among more than a third of Labour MPs who voted against the whip over the Brexit Bill.

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