Asylum hotel company ‘paid £16,000,000 to apparent offshore firm’

Graham King is at least part owner of Clearsprings Management Ltd

A company that provides asylum hotels has paid millions of pounds to an apparent offshore consultancy firm with links to its Essex businessman founder.

An analysis of financial records for Clearsprings Management Limited, by Liberty Investigates, has uncovered £16 million worth of payments to ‘Bespoke Strategy Solutions Ltd’.

The investigation has found that the ‘consultancy’ firm is partly owned by Clearsprings’ founder and director Graham King, 57, an entrepreneur from Canvey Island in Essex.

Clearsprings is a major Home Office contractor, paid £3,500,000 a day to accommodate arrivals in the UK.

Yet Bespoke Strategy Solutions Ltd could not be located on publicly accessible global business lists, and could not be contacted for comment since it is unclear where it is registered.

Clearsprings’ own end of year accounts (filed with Companies House) identify BSS as a related party “of Clearsprings (Management) Limited by virtue of their common shareholder, G King”.

Tax experts could also not locate the company, an investigation by Metro.co.uk and Liberty Investigates found.

Clearsprings repeatedly declined or ignored requests to explain where the firm is registered or what consultancy service it provides.

Payments to Bespoke Strategy Solutions, also named BSS Ltd in documents, may reduce the Home Office contractor’s UK tax burden by lowering pre-tax profits.

Clearsprings’ books describe the payments to Bespoke Strategy Systems as ‘administrative expenses in respect of consultancy services’.

The 57-year-old was on the Sunday Times rich list

HMRC has been urged to investigate the payments to Bespoke Strategy Solutions, which is believed to be linked to Mr King

A separate analysis of Clearsprings’ accounts shows that King – who has a 97% stake in the firm – recently cashed out £70,500,000 in personal earnings from the company as profits swelled amid the growing asylum claims backlog.

King founded Clearsprings in 1999. He made the Sunday Times Rich List this year thanks to his runaway success in the asylum sector.

Most of Clearsprings’ £1,300,000,000 annual turnover is from Home Office contracts.

It was awarded its latest deals in 2019, in a deal anticipated at the time to be worth £1,000,000,000 over 10 years.

Records show King extracted £23,500,000 in March 20222 and £47,000,000 in November 2022 via a share buyback, in which companies legally use their cash to buy their own shares.

This mechanism can be used to redistribute excess profits and has potential tax advantages compared to dividend payouts.

It is yet to be discovered if Clearsprings or King benefitted from these. There is no suggestion of illegality.

Clearsprings stopped declaring the identity of its highest-paid director in 2009. However, accounts show King earned £1,600,000 between 2004 and 2008 through his salary and pension.

In 2015, the tycoon’s salary was £960,000. He has also earned £1,100,000 in dividends from the firm since 2010, including a £680,000 payout in 2015.

A company by the same name is registered in the United Arab Emirates – which affords greater secrecy to businesses than in the UK and offers many tax advantages – though it was incorporated several years after Clearsprings’ payments began.

HMRC has been urged to investigate the payments to Bespoke Strategy Solutions.

Green Party peer Natalie Bennett said King was a ‘casebook example’ of privatisation allowing public money to be ‘siphoned off into private profit’.

Labour’s Dame Margaret Hodge, the former chair of the Public Accounts Committee, which oversees government expenditure, said all firms ‘which benefit from lucrative government contracts’ must be held to the highest standards of transparency and probity’.

Mr King is said to have profited from the hundreds of people crossing the channel every day (Picture: PA)

Mike Lewis, an associate at the Center for International Corporate Tax Accountability and Research, described the lack of transparency around the payments as ‘highly unusual’.

He added: ‘It’s simple: Clearsprings needs to say where BSS Ltd is registered and disclose who receives salaries and profits from it.’

‘Clearsprings’ auditor, and the government departments who oversee their contracts, also need to confirm that they’ve seen proof of the services provided by BSS Ltd in return for millions of pounds of public money.’

Claire Aston, director at TaxWatch, said: ‘Large payments to related parties for unspecified ‘consultancy services’ need to be closely examined, given the incentives and scope for tax avoidance.’

The government describes tax avoidance as ‘operating within the letter, but not the spirit, of the law.’

Clearsprings has faced criticism for boasting of its ‘growth’ in annual accounts while asylum seekers allege they were crammed into tiny hotel rooms without beds.

Advocacy group Migrant Organise said the firm was making the lives of asylum seekers ‘miserable and sorrowful’, pointing to shoddy facilities, inedible food, mould and rodent and bed bug infestations.

HMRC said: ‘We cannot comment on identifiable individuals or businesses and we neither confirm nor deny investigations.’

Clearsprings declined to comment. King did not respond when contacted.

The Home Office declined to comment formally although stressed commercial contracts are issued in line with government procurement rules designed to ensure the best value for taxpayers.

Get in touch with our news team by emailing us at webnews@metro.co.uk.

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