Select Committee on Standards and Privileges First Report



Chronology of the Allegations

  176. The earliest reference to allegations of cash or other payments to Members involved in lobbying on behalf of House of Fraser appears to have been during the course of a conversation in June 1993 between the then editor of The Guardian, Mr Peter Preston, and Mr Al Fayed. The purpose of this meeting, arranged by Mr Al Fayed, was in fact to discuss a separate issue - political donations by foreign-based businessmen. The name of Mr Smith came up tangentially and, when asked by Mr Preston how he knew him, Mr Al Fayed introduced the allegation that Mr Smith and Mr Hamilton had received cash payments from him, sometimes contained in envelopes, in return for their Parliamentary services. The question of Mr Hamilton's stay at the Paris Ritz also arose.

  177. It was claimed that during the course of July 1993, two Guardian journalists, Mr David Hencke and Mr John Mullin, put Mr Al Fayed's allegations to Mr Smith and Mr Hamilton (as well as Mr Greer). Both Members denied taking cash payments; Mr Hamilton confirmed his stay at the Ritz but, according to the journalists' account, claimed that it had only been for "one or two nights" and any costs incurred by the hotel represented a "purely notional transaction".

  178. Both in his submission to the inquiry,[49] and in his oral evidence, Mr Hamilton denied that Mr Hencke and Mr Mullin had put the issue of cash payments to him, their questions having been confined to the Ritz episode. However, contemporaneous documentation in the form of meeting notes which I have examined,[50] and whose authenticity I have no reason to doubt, appear to support the account given by Mr Hencke and Mr Mullin.[51]

  179. On 1 October 1993, in a letter to Mr Preston, Mr Hamilton denied any financial impropriety in his relationship with Mr Greer and threatened legal action if The Guardian published allegations to that effect. He did, however, concede that the Ritz visit had lasted "several days" rather than the one or two nights originally acknowledged to Mr Mullin and Mr Hencke. (In this letter there is no reference by Mr Hamilton to the allegation that he had received cash payments from Mr Al Fayed. Mr Hamilton relied on this omission in support of his contention that the allegation had not been put to him by The Guardian journalists in July 1993).

  180. At this stage, The Guardian were still waiting for Mr Al Fayed to agree to allow them to have access, and if necessary make public reference to, the documentary material in his possession. Without this supporting evidence, the newspaper could not run the legal risk of printing the allegations, especially those relating to cash payments.

  181. On 21 October 1994, the day after the eventual publication in The Guardian of Mr Al Fayed's allegations relating to Mr Smith and Mr Hamilton, a formal complaint in relation to the Ritz stay was submitted by Mr Alex Carlile to the Select Committee on Members' Interests. A week later Mr Carlile extended his complaint to include the alleged receipt by Mr Hamilton of benefits in kind, in the form of Harrods vouchers, to a total of about £6,000. This allegation, in turn, was subsequently extended to cash payments of £20,000 and vouchers to a value of £8,000.[52] (The Committee decided, on a division, not to pursue the second complaint on the grounds that it had effectively become sub judice following Mr Hamilton's decision to issue a writ for libel against The Guardian).

  182. In evidence,[53] dated 5 December 1994, supplied to the Committee through his solicitors, D J Freeman, Mr Al Fayed set out a schedule of dates on which cash was allegedly paid to Mr Hamilton. The dates were extracted from Mr Al Fayed's diary, it being his recollection that cash to a value of £2,500, in bundles of £50 notes, or gift vouchers worth up to £3,000, were handed to Mr Hamilton at his request on each occasion on which a meeting took place between them at either Harrods or Mr Al Fayed's London residence at 60 Park Lane during the period 2 June 1987 to 21 November 1989. Mr Hamilton was also alleged to have received two Christmas hampers worth £185 each in 1988 and 1989. In addition, Mr Al Fayed listed a number of benefits in kind, as well as the stay at the Ritz hotel, which he claimed Mr Hamilton had enjoyed at his expense.

  183. So far as Mr Greer was concerned, Mr Al Fayed stated that over and above IGA's annual consultancy fee, payments of £12,000 and £6,000 had been made in 1987 and of £13,333 plus VAT in 1990, the purpose of which was to enable Mr Greer to reward Mr Hamilton and Mr Smith for their services.

  184. A year later, in oral evidence to the Privileges Committee on 1 November 1995, Mr Al Fayed extended the allegations against Mr Smith and Mr Hamilton to cover Sir Andrew Bowden, who he claimed had taken a cash payment of £5,000, as well as demanding £50,000 to act as a Parliamentary consultant to House of Fraser.

  185. Mr Al Fayed's witness statement for the libel action, dated 23 June 1995, repeated the allegation that between 1987 and 1989 Mr Hamilton was paid, at his own request, £2,500 "on each occasion when he and I were alone". The statement added, however, that the money given to Mr Hamilton "did not correspond to a particular `tariff' for services"; payments were made because Mr Hamilton suggested that "he had or was going to undertake some Parliamentary work for which it was appropriate ...". Mr Al Fayed explained that when he had referred to a figure of £2,000 per question in his discussions with Mr Preston in 1993 this had represented "a rough guess" on his part as to how much he appeared to be paying in terms of the amount of Parliamentary activity being undertaken on his behalf.

  186. As regards Mr Hamilton, Harrods vouchers had also been handed over during some of the private meetings between the two men in 1988 and 1989. On such occasions, Mr Hamilton would "broadly hint that he wanted to `go shopping'". The stay at the Ritz was again mentioned as a benefit in kind taken by Mr Hamilton.

  187. In his witness statement, Mr Al Fayed reiterated his earlier claim that additional extra-contractual payments of £12,000 and £6,000 (in 1987) and £13,333 (in 1990) had been made to Mr Greer. Of these Mr Al Fayed explained: "I was specifically asked by Ian Greer for this money to pay Messrs Hamilton and Smith and I paid it to him for that reason".

  188. In evidence to this inquiry, Mr Al Fayed confirmed, in his written submission of 12 December 1996, the position regarding payments to Mr Hamilton as set out in his solicitors' letter to the Select Committee on Members' Interests in December 1994. But Mr Al Fayed added, as in his earlier witness statement to the court, that there was no "tariff" for Mr Hamilton's services - in other words he was not paid so much per question or Early Day Motion. So far as the Ritz stay was concerned, Mr Hamilton had received spending money of between £2,000 and £3,000: this formed part of the series of cash payments alleged to have been made to him by Mr Al Fayed.

  189. In addition, according to Mr Al Fayed, Mr Greer had solicited and received payments from Mr Al Fayed over and above IGA's agreed annual consultancy fee which, he understood, would be used to reward Mr Hamilton. (Mr Al Fayed added, however, that he did not know whether in fact any of this money had actually been passed on to Mr Hamilton in cash or in kind).[54]

  190. The nature and scope of Mr Al Fayed's allegations were further amended and clarified in a statement made by Counsel on his behalf during oral evidence[55] to the inquiry on 23 January 1997. It was explained that the schedule of alleged payments to Mr Hamilton prepared by D J Freeman had been based on their instructions from Mr Al Fayed to the effect that "every time I met Mr Hamilton he asked for a payment and I made a payment". This statement had been taken by D J Freeman as the basis for preparing Mr Al Fayed's evidence and, with the aid of diary entries and other notes, a detailed pattern of payments had been compiled.

  191. In a letter dated 18 February 1997 to another firm of solicitors acting for Mr Al Fayed (Dibb, Lupton Alsop), D J Freeman broadly confirmed the circumstances in which Mr Al Fayed's evidence came to be produced in the form of such a detailed chronology, although they pointed out that Mr Al Fayed's original instructions had limited the making of payments to Mr Hamilton to those occasions when they met alone.[56] In drawing up the schedule of payments, the assumption had then been made that where only Mr Hamilton's name appeared in the diary, no one else would have been present at the meeting. In an accompanying letter Mr Stuart Benson of Dibb, Lupton Alsop added: "[Mr Al Fayed] has consistently stated since the allegations were first made in 1994 that payments were only handed over when he and Mr Hamilton were alone; if in fact, despite the diary entry recording the presence of only Mr Hamilton, he was accompanied by someone else, no payment would have been made".

  192. In his oral evidence,[57] Mr Al Fayed, asked whether he stood by his earlier evidence as to the timing and frequency of the payments to Mr Hamilton, declared: "Yes. This is to the best of my recollection. Maybe once, twice, but most of the time he was paid." Later he added "Maybe once or twice I did not give him money".[58]

49  See Appendix 33. Back

50  See Appendix 29. Back

51  This issue is dealt with in more detail at paras 518 to 527. Back

52  See para 15 and 16. Back

53  See Appendix 1. Back

54  The reference here is to Mr Hamilton only, since Mr Al Fayed's formal complaint to me was against Mr Hamilton alone, not Mr Smith (see para 30). Back

55  Q 473. Back

56  Emphasis added. Back

57  Q 723. Back

58  Q 773. Back

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Prepared 8 July 1997