M Zahawi is under growing pressure after admitting resolving a a multimillion-pound tax dispute with HMRC by paying a penalty — reportedly around 30 per cent of a £5 million settlement – while chancellor under former prime minister Boris Johnson.
Mr Sunak has now ordered an investigation into the scandal, but Mr Flynn called for him to go further, accusing the Prime Minister of being “scared to make a decision”.
Appearing on Sky News, Mr Flynn claimed the Prime Minister had promised there will be “professionalism, integrity and accountability” when “he came into office”.
The SNP Westminster leader said: “And what we’ve seen in his short time is the Gavin Williamson scandal, the situation with [deputy prime minister] Dominic Raab and the allegations made about him, the chaos with the home secretary being a threat to national security, but then getting her job back.
“And now, of course, we see the situation [with] the chair of the Conservative Party, a former chancellor, and his bizarre tax affairs. I think we need clarity immediately from Nadhim Zahawi in relation to that. But in the meantime, Rishi Sunak needs to grasp the thistle and get Nadhim Zahawi gone.
“This is kicking it into the long grass from Rishi Sunak. He’s scared to make a decision, and he’s scared to make a decision because his party is deeply, deeply divided.”
The accusation comes after a senior Tory MP broke ranks to call for Mr Zahawi to “temporarily recuse himself” from his party and Cabinet role until a probe into his conduct is over.
Caroline Nokes, chairwoman of the Commons women and equalities committee, told BBC Breakfast Mr Zahawi should “stand aside until this matter is all cleared up”.
She said: “When you become the story, it’s a distraction from anything else the Government’s trying to do. There are countless examples of good, competent Cabinet colleagues who got themselves in a mess, who have resigned and in some instances returned just a few months later, and I think in order to get this cleared up, Nadhim should stand aside and let the investigation run its course.”
An outspoken critic of Mr Johnson, Ms Nokes said he bore some of the blame for the unfolding story.
Ms Nokes added: “I would lay part of the blame at Boris Johnson, this is a legacy problem. Much like the BBC story [about a loan guarantee for Johnson], this is a hangover from his time.”
Home Office minister Chris Philp earlier said there were “no outstanding issues” in relation to Mr Zahawi’s tax affairs when appointing him Conservative Party chairman in the autumn.
Speaking to Times Radio, he said: “As far as I’m aware, the point at which Nadhim Zahawi was appointed to his current position by the current Prime Minister, the Prime Minister was not aware of the previous back-and-forward earlier in the summer.
“And he was told there were no outstanding issues – taxation issues – applicable at that time. Obviously subsequent to that, particularly over the weekend just gone, a number of questions have arisen, have come up publicly.
“And it is in response to those that the Prime Minister has quite rightly announced this independent investigation.”
Labour said Mr Zahawi’s admitted carelessness should see him removed from Government. Shadow foreign secretary David Lammy told Sky News: “When you’ve been chancellor of the exchequer and you said you’ve been careless despite the fact that offshore trusts have been set up in Gibraltar, I’m sorry, you really ought to resign or be sacked.”
As the pressure piles on the Prime Minister, the head of the Civil Servants Union, Dave Penman, said Mr Zahawi coulc be sacked as chairman of the Conservative Party without the need for an investigation as he had breached the ministerial code.
He explained: "You don't have to have an investigation to make this decision, you know that every minister serves with the confidence of the Prime Minister.
"So if the Prime Minister has felt that Nadhim Zahawi has not been honest, one of the seven principles of public life, has not been open about it, is not showing leadership, then the Prime Minister at any point can sack any minister. He's the one making these choices ... the buck stops with them.
"It's not for the civil service to police the ministerial code. The ministerial code actually says that. It's for the Prime Minister and for ministers themselves to be open and transparent about their affairs, so that any issue about a conflict of interest can be dealt with. And that includes moving between departments, because you may not have a conflict with one ministerial responsibility, but you may have a conflict with another."
Mr Zahawi, in a statement on Monday, said he was “confident” he had “acted properly throughout”. His tax affairs formed one of two controversies Mr Sunak has been forced to confront this week, with questions also being raised over the decision to appoint Richard Sharp as BBC chairman while he reportedly helped former No 10 incumbent Mr Johnson secure a loan of up to £800,000.
Mr Sunak distanced himself from the allegation, saying the chairman’s appointment was made by “one of my predecessors”.
Downing Street has not given a timeline or date for when the ethics investigation should be completed, but stressed it would be “swiftly”.
The Prime Minister’s official spokesman said: “We haven’t set a timeline for it because whilst we want this to be conducted swiftly, it’s important equally that it is thorough, hence why we’re not restricting to a particular date.”