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Mr. Maxton: Given the hon. Gentleman's experience of the investment world and his story about how the Guinness affair came to light, will he comment on the difference between self-regulation in Britain and Government regulation in the United States?

Mr. Davies: No, because while that is an important subject, it cannot be properly fitted into the speech that I intend to make this morning, which will be limited to the issues raised by my hon. Friend the Member for Bexhill and Battle. I have dealt with the matter that the hon. Gentleman has raised in many contexts, including that of the Treasury Committee.

We were all surprised in January 1987 when the Bank of England suddenly demanded the resignation of Mr. Reeves and Mr. Walsh. My understanding from the report put to us by Lord Catto was that there had been much concern in Government circles. The implication was that Whitehall may have had a role in the decision. But the impression we were given was that the Bank of England had not resisted any pressure that might have come from this end of town. In any case, we decided that we had no alternative but to accede to the demands made of us. During that day, Mr. Reeves and Mr. Walsh left the firm.

As my hon. Friend the Member for Bexhill and Battle said, elsewhere in the City over the next few days as a result of similar initiatives of which I have no direct knowledge, other people left their firms, including Lord Spens, whom I know personally. He had been a colleague when he was a director at Morgan Grenfell. I did one major transaction with him after he went to Ansbacher which was not related in any way to any of the matters under discussion this morning. I have not seen him for many years; I do not think that I have seen him since I have been in the House.

I felt it necessary to make that personal statement to corroborate, so far as I can, in one small particular at least, part of the story that my hon. Friend set out. I want to draw one clear conclusion from what I have said, which I believe follows from the whole of this debate. We live in a democracy; we are proud of living in an open society. We live in a country that has always been well governed by international standards, and I trust that it will remain so. We must have confidence in the integrity, honesty and openness of all our procedures.

It follows that I must disagree with my hon. Friend, who at one point appeared to regret that the DTI inspectors' report into the House of Fraser, which had had

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an impact on decisions taken in relation to that bid, had been published. When a decision is taken that impacts on the freedom of individuals--in this case the right of shareholders to accept a higher offer for their shares--or the freedom of any of our citizens to conduct his or her business in the way that he or she thinks fit, it is right that the grounds for such a decision should be made public. Irrespective of whether the procedures of the DTI inspectors investigating the House of Fraser matter were flawed--they may have been; I have no comment on the merits of the arguments of my hon. Friend the Member for Bexhill and Battle--the report should have been published. It should have been open and available so that we could question any flaws in the report or in the procedures of the inspectors who produced it and so that we could have seen the relation between the report and the decision subsequently taken by Ministers or others that affected the conduct of the bid or the rights and property of individuals.

Equally, in the case of Guinness, it is wrong that after 10 years we still have not seen the report of the DTI inspectors. I have not seen it. As far as I know, none of my fellow directors at Morgan Grenfell has seen it; and nor has anyone else. Some of those involved in subsequent legal actions may have seen part of it. That is not satisfactory. In my days in the financial markets--this is still very much the case--we were trained to be suspicious of anything that looked like a false market, anything that looked like a market in which information was not openly available to everyone who was taking decisions and who was involved in that market. Similarly, in politics there are great dangers in decisions being taken on the basis of information that is available only to some of the parties or to those taking decisions. Others cannot then understand the basis of decisions, which may be arbitrary or unfair. We do not know whether they are unfair or arbitrary because we do not know the information on which they were taken.

So far as I know, all the criminal investigations that arose from the conduct of the Guinness bid for Distillers have been concluded. It is time that the report and all relevant information was published. I know this is controversial, but I have always supported a freedom of information Act. The new Government promised one before they were elected, but have been remarkably silent since coming to power.

Mr. Maxton: It will be implemented.

Mr. Davies: I fear that it may not be the last promise made by the Labour Government that is likely to be buried. I leave that party political point aside. If we had a freedom of information Act, it would be possible for citizens to demand to see information where there was no explicit judicial or national security reason for withholding it.

The onus in the successful freedom of information Act in the United States is on the Administration to justify withholding information. They have to produce specific justifications in each case. That is not the case in Britain, but it should be. Even if the Labour party will not fulfil its electoral commitment to introduce such an Act--

Mr. Maxton rose--

Mr. Davies: I am about to finish. I hope and trust that, even in that event, it will be possible at least to publish

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the Guinness report after what has been too long a delay. I hope that, in future, it will be a matter of good practice that any reports that form the basis of decisions that interfere in the markets and the freedom of individuals to conduct their business in the way that they choose should be made publicly and freely available.

10.39 am

Mr. Richard Page (South-West Hertfordshire): Occasionally, debates in the House lift the various motions above the mundane. We are grateful to my hon. Friend the Member for Bexhill and Battle (Mr. Wardle) for launching such a one today and livening up our Wednesday morning activities. I am glad that he started by putting some distance between what he had to say and some leadership contest that I understand is currently taking place in the Conservative party. My hon. Friend the Member for Grantham and Stamford (Mr. Davies) broadened the debate into the United States dimension. For a moment, I thought that we were about to be diverted into the advantages or disadvantages of self-regulation in the City. I am glad that he resisted the inducements of the hon. Member for Glasgow, Cathcart (Mr. Maxton) to take us down that path. Nevertheless, he corroborated part of the speech of my hon. Friend the Member for Bexhill and Battle and gave some substance to what he had to say.

My hon. Friend the Member for Bexhill and Battle lifted a corner of the veil over certain Department of Trade and Industry inquiries. For me, it was a journey down memory lane. All of us who were Members of Parliament when the events to which he referred took place remember being deluged by highly expensive, glossy publications in which claim and counterclaim were made by Messrs Rowland and Al Fayed when they were having their lovers' tiff. Since then, they have kissed and made up and are once more good friends--or so they say. I kept and filed away all those publications. They will undoubtedly have some historic interest. For me, they are a marvellous example of the vanity and perhaps ruthlessness of wealthy men who are frustrated when what they want to achieve is no longer put in their hands. There is a great similarity with the behaviour of a child of four or five who has a toy taken away and drums his heels into the ground in frustration.

My hon. Friend the Member for Bexhill and Battle made a number of points and focused on the Guinness and House of Fraser affairs. I do not intend to comment on those cases. Once or twice, he extrapolated a point or two, but that was up to him. It is his debate. The question for me is the worries that he expressed about the guidelines for DTI inquiries and the inquisitorial style that has been used by the inspectors. My hon. Friend gave examples to buttress his concerns about the impact on the individuals who have been touched in these affairs, so it is right that I should ask the Minister to examine the guidelines and the methods of investigation. The investigators have not always covered themselves in glory, not only in the affairs that have been mentioned, but in others. A fresh look would not go amiss.

10.42 am

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Nigel Griffiths): May I add my congratulations to you, Mr. Deputy Speaker, on your

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elevation to office. I also congratulate the hon. Member for Bexhill and Battle (Mr. Wardle) on securing the debate. I pay tribute to my immediate predecessor, the hon. Member for Solihull (Mr. Taylor), whom the House acknowledges to be a gentleman, and I thank hon. Members on both sides of the House who have been so helpful and supportive to me in my first weeks in office.

The debate is a serious one. I wish to cover as closely as possible the points that have been raised by my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and various other hon. Members, but it is important in the short time available to me to give my first impressions as a Minister of dealing with the Department of Trade and Industry investigations and enforcement directorate. I have taken the opportunity to meet as many of the staff as possible, and I am impressed by the commitment that they have shown and the depth into which they go into matters. Some of the remarks that were made earlier should not be allowed to detract from the tremendous work which all hon. Members believe the directorate does. The staff of the directorate are charged with investigating allegations of wrongdoing in companies, and we all agree that they have a difficult job.

The subject of today's debate is the inspectors' inquiries, which are more narrowly focused than the work of the investigations and enforcement directorate using its powers under section 447 of the Companies Act 1985.

The DTI has appointed 20 sets of inspectors under the Financial Services Act 1986 to investigate suspected contraventions of insider dealing law. The hon. Member for Bexhill and Battle concentrated his attention on the Companies Acts powers today. The powers are wider than those granted to section 447 investigators. Inquiries are usually announced and there is an expectation that in most cases there will be a published report. It is inevitable that the wider inquiries take longer to complete and are much more expensive, as they rely mainly on the appointment of external inspectors.

The hon. Member for Bexhill and Battle expressed a valid fear that the examination of witnesses under our system was unfair and oppressive. He quoted Lord Justice Sachs, and I should like to quote him back to the hon. Gentleman. He said:


There can be little doubt among hon. Members that, without flexibility--although there must be proper safeguards, and I believe that there are--and the considerable powers that are available, it would be simply impossible to amass the evidence that is required to bring the perpetrators of some of the complex City frauds and insider dealing share transactions to justice.


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