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December 2nd, 2011

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The government will appoint an independent commission to investigate whether Venstre politicians at the tax ministry interfered in the ongoing tax audit of PM Helle Thorning-Schmidt and her husband Stephen Kinnock in the summer of 2010, back when Thorning-Schmidt was opposition leader and VenstreÂ’s number one threat.

The then-tax minister, Troels Lund Poulsen (Venstre), or Poulsen’s spindoctor, Peter Arnfeldt, “possibly” authored a memo that was delivered to the Copenhagen tax authority Skat with a recommended judgment on Thorning-SchmidtÂ’s tax audit, according to the tax ministryÂ’s highest-ranking civil servant and top aide, Peter Loft.

Last month, the current tax minister Thor Möger Pedersen (Socialistisk Folkeparti) asked Loft and Erling Andersen, the head of the Copenhagen Skat, to give him their written explanations of why they met five times in the summer of 2010 to discuss Thorning-Schmidt’s personal tax audit, and why Loft apparently gave Andersen the memo with the recommended judgment on Thorning-Schmidt and Kinnock’s audit. Those explanations were delivered to Pedersen last week and contained the explosive allegation that Poulsen or Arnfeldt may have authored the memo.

Under Danish law, the Tax Ministry is not allowed to interfere with active, personal tax cases.
Moreover, at the time of the audit, the Venstre-Konservative government was in severe danger of losing the upcoming election, and Thorning-Schmidt was the person most likely to win it – as indeed she went on to do in September 2011.

On Friday, Pedersen announced at a press conference that Loft’s and Andersen’s explanations about the meetings contained “contradictory” information.

Andersen wrote in his explanation that “the permanent secretary [Loft] gave me a memo. There was no indication of who had written it. Of course I asked Peter Loft about it, but got the answer that he didn’t know. It had just turned up.”

Loft also mentioned the memo in his explanation, adding that he “didnÂ’t know where it came from.”

“I think that I got the memo from the tax minister [Poulsen] or from his special counsel, Peter Arnfeldt,” Loft’s written explanation said. “I donÂ’t know where the memo came from – possibly from VenstreÂ’s press officer.”

The mystery memo allegedly provided judgments on various aspects of Thorning-SchmidtÂ’s audit, with a final recommendation that her husband, Stephen Kinnock, should be deemed liable for taxation in Denmark.

Such a judgment would have put Thorning-Schmidt in the awkward situation of having to justify why Kinnock had not been paying taxes in Denmark.

Ultimately Skat cleared Thorning-Schmidt and Kinnock of tax evasion – and Andersen wrote in his independent explanation that the memo with the mystery author “was not used, because the assumptions in it were not correct in relation to the actual circumstances of the audit.”

Loft explained that he gave Skat Copenhagen the memo without knowing precisely what was in it.

In September, 2011, just before the parliamentary election, Thorning-Schmidt’s audit was leaked to the press along with Thorning-Schmidt and Kinnock’s CPR numbers. Loft himself went to the police to ask for an investigation into the leak.

In his press conference on Friday morning, Pedersen said that an independent commission led by a judge would be formed to “get to the bottom” of the entire case. He noted that the commission would explicitly investigate whether the former tax minister Poulsen or Venstre’s press officer had anything to do with the ministry’s interference in the then-opposition leader’s audit.

“It’s a serious case, so every stone must be turned over,” Pedersen said. “The government believes that there are questions here that parliament cannot disregard.”

Pedersen added that he still had “complete trust” in Loft and Andersen.

Directly following PedersenÂ’s announcement, Poulsen held his own press conference and announced that he had nothing to hide and welcomed the investigation.

“I look forward to speaking about it so that I can clarify what my role was in the case. But an investigative committee doesn’t consist of journalists,” the former tax minister told the assembled journalists.

Until Friday, Poulsen had claimed that a pledge of “confidentiality” prevented him from commenting on the case.