Select Committee on Standards and Privileges First Report




  237. By way of background to his method of operation, Mr Greer told the Select Committee on Members' Interests in October 1988 that he did not retain Members of Parliament and that he was "completely disassociated" from them.[90] Subsequently, Mr Greer was asked in a letter from the Clerk to the Select Committee, dated 25 October 1989, whether he stood by that statement in the light of allegations by Mr Andrew Roth in the latest edition of the reference book on Members, Parliamentary Profiles, that he did, in fact, pay commission fees to Members for the introduction of new clients. Mr Greer replied, in a letter to the Committee dated 30 October 1989, that he did "not wish to alter my statement in any way".

  238. Mr Greer added: "... we have no contractual arrangement with any third party under which the intention is that they should introduce business to us on a continuing basis. The obligation on the part of the person receiving the introductory fee is complete at the time the introduction is made. It is not in any way dependent upon the success or otherwise of the service we perform, and most certainly not upon any further assistance to be given during the contract period. It is paid purely for the introduction. I would add that on many occasions the payment of a fee is not initiated by the introducing party and our offer to make such a payment frequently comes as a surprise".

  239. In later evidence to the Committee, dated 9 May 1990, provided in response to a request for a note of the "dates on which payments were made by IGA to individual Members of Parliament", Mr Greer declared that three of these had been received by Sir Michael (then only identified as Member `A') in 1985, 1986 and 1990. He made no mention of consultancy fees.

  240. In his own evidence to the Committee, dated 14 June 1990, Sir Michael also acknowledged three introduction payments (but none in the other two categories mentioned in paragraph 193) - on 1 November 1985; 14 May 1986; and 3 October 1989 (not 1990 as indicated in Mr Greer's letter to the Committee).

  241. It subsequently emerged that both Mr Greer's and Sir Michael's evidence had been inaccurate in material respects. In a letter dated 2 October 1996, Sir Michael told me that, owing to a "lack of clarity" in IGA's book-keeping, the figures on which he had relied in giving evidence to the Committee had been found to be incorrect on being examined during the preparation of Mr Greer's case for the libel action. The true figure for the number of Sir Michael's commission payments, it appeared, ought to have been "between four and six".

  242. This error was confirmed in a letter from Mr Greer of 14 October 1996. The reason given by Mr Greer for the discrepancy was that apart from the new business introduction payments made by IGA to Sir Michael, he was in receipt of a regular fee in connection with the Unitary Tax Campaign which was sometimes paid by IGA and recovered from UTC. Mr Greer did not explain why this should have led to the number of commission payments to Sir Michael being under- rather than overestimated. In a further letter dated 14 February 1997, Mr Greer conceded that the number of introduction fees paid to Sir Michael may in fact have been as many as seven.

  243. The book Sleaze lists five clients whom Sir Michael introduced to Mr Greer: British Airways; Charles Church (a property company); Biro Bic (manufacturers of disposable lighters); Whitbread; and the `Honour Hong Kong' campaign. But other documentation seen by the inquiry, including notes by Mr Greer's former solicitors on their analysis of IGA's accounts, suggests that Sir Michael may also have received commission payments in respect of other companies, described as: Plessey;Lockheed; and Humbertech/Shroders.

  244. Sir Michael rejected the suggestion by The Guardian that shortly after receiving a commission payment for introducing British Airways to IGA he had engaged in Parliamentary activity on BA's behalf. He had asked a written question on 24 July 1987, but this related to British Caledonian, not BA. He had made a brief intervention, not a prepared speech, relating to BA in a debate on 16 July 1987 on the merger of BA and British Caledonian. This was two years after he had received the relevant introduction fee from Mr Greer. Contrary to The Guardian's assertion, he had registered a trip on the inaugural BA flight to Rio de Janeiro and back. (This claim was supported by Sir Michael's register entry).

  245. Sir Michael also denied having undertaken any Parliamentary activity on behalf of Whitbread or having lobbied in Parliament on behalf of `Honour Hong Kong' or Biro Bic.

  246. The fact that the Select Committee had been misled by Mr Greer about the number and nature of payments to Sir Michael was the principal cause of Mr Greer's decision, on legal advice, to abandon the libel action - a matter dealt with more fully later in this report.[91]

  247. Both Sir Michael and Mr Greer regretted the fact that inaccurate information had been given to the Select Committee but denied any deliberate intention to conceal the facts. Sir Michael claimed that as soon as he learnt of the error he had written to put matters straight.[92]


  248. In his letter of 14 October 1996, Mr Greer explained that Sir Michael was paid a regular fee as an adviser to the Unitary Tax Campaign (for which IGA acted as the secretariat). On a number of occasions, however, according to Mr Greer, the fee was paid by IGA and recovered from the UTC.


  249. Mr Greer's letter of 14 October disclosed that the consultancy fees paid direct to Sir Michael by UTC were not the only remuneration he had received in connection with the campaign against unitary taxation. In addition, "there were some instances where he was paid by IGA to carry out additional work on behalf of UTC". In his later statement of 11 February 1997, Mr Greer explained that the campaign had been "a very demanding one" and that Sir Michael had "spent an increasing amount of time on it". The UTC Committee did not, Mr Greer continued, have the funds to pay Sir Michael "a fee reflecting the work involved". Mr Greer had therefore "agreed to pay him a top-up fee specifically and solely for UTC activities".

  250. In a supplementary statement, Sir Michael told the inquiry that when he first took on the UTC assignment, neither he nor Mr Greer had realised how important it would become and how rapidly the workload would expand. The UTC was one of Mr Greer's "flagship" clients and it was important to him to see the campaign through to a successful conclusion. After ten years of "consistent effort" a satisfactory outcome affecting "a large number of British companies" had been achieved. The basic UTC fees were paid half-yearly (Sir Michael explained that he never received any payments from IGA on a quarterly basis). The top-up fees were paid in the same way. Sir Michael maintained that they had "nothing whatever to do with Harrods".

  251. I asked Mr Peter Welch, the former chairman of the UTC for a statement[93] on his knowledge of Sir Michael's relationship with the Campaign. Mr Welch told me that Sir Michael's services had been enlisted following a recommendation from Mr Greer. The volume of work imposed on Sir Michael had varied considerably from year to year, but Mr Welch could shed no light on the reasons why he had needed additional remuneration over and above the fee he was already receiving from UTC. Indeed, Mr Welch had not been aware that such a need was said to exist, nor that UTC had indicated its inability to pay Sir Michael, from its own resources, the full amount he required. The fact that Mr Greer had agreed to pay Sir Michael a `top-up fee' was also unknown to him.

  252. Examination of the UTC files held by IGA and obtained from them by the inquiry did not provide any documentary confirmation of the payment to Sir Michael of additional or `top-up' fees attributable to his work for the Campaign.

  253. In a further statement,[94] Mr Welch was unable to confirm details of any arrangement whereby Sir Michael's basic fee from UTC would, on occasion, have been paid initially by IGA and then recovered from UTC. Mr Welch was in possession of a cash book which indicated that it was unlikely that such an arrangement would have existed after June 1990.

  254. The issue of payments to Members led in October 1996 to the resignation from IGA of Mr Andrew Smith, its former Group Chief Executive. He explained, in a letter dated 5 March 1997, that the main cause of the rupture in relations with Mr Greer had been the disclosure, as part of the discovery process for the libel action, that on successive occasions between 1988 and 1990 Mr Greer had given inaccurate information to the Select Committee on Members' Interests as regards the nature and number of the introduction fees paid to Sir Michael Grylls and about his relationship with Members generally. These misleading statements represented only one of a number of what Mr Smith described as "discrepancies in relation to payments to Sir Michael".

  255. Mr Smith also referred in this context to the fact - unknown to him before the latter stages of the abandoned court case - that Sir Michael had received additional payments described as "fees" in the IGA accounting books. Mr Smith made it clear that he regarded the making by Mr Greer of payments in this category as constituting an "ongoing financial relationship" with Sir Michael. Mr Smith added that even at that stage, immediately prior to his resignation from IGA, he had not been aware - despite the fact that he had been secretary to the Campaign and their public affairs adviser for over ten years - that Sir Michael was receiving `top-up' fees for his work for UTC. In the earlier years of his association with UTC Sir Michael had asked for an increase in his fee from £8,000 to £10,000 per annum but this had been negotiated with, and agreed by, the Campaign Committee.


  256. It was pointed out to Mr Greer by Counsel to the inquiry that although Mr Al Fayed did not claim to have paid money directly to Sir Michael, he argued that the alleged sums passed to Mr Greer were intended for rewarding the Members who were active in the House of Fraser lobbying group. In that context, therefore, the message book entries apparently showing Mr Greer asking for a quarterly payment from Mr Al Fayed were especially relevant when set against other documentary evidence from IGA's accounting papers relating to Sir Michael.

  257. It was put specifically to Mr Greer that in September and November 1988 he was apparently reminding Mr Al Fayed about an outstanding three months' payment of £5,000; and that extracts from IGA's cash books for the following year showed two payments of comparable amounts to Sir Michael, also apparently assessed on a quarterly basis. Thus, the first cash book page referred to an amount of £5,750, payable for "Commission 1.7.89 to 30.9.89", whilst the second was headed "Commission Sept to Dec 1989, Qtr", again in the sum of £5,750, but was described as being attributable both to "commission" and, elsewhere on the page, to "fees".

  258. Mr Greer accepted[95] that since it was not his practice to make quarterly payments to anyone, and since fees and commission were quite distinct categories, he could not readily provide an explanation for the cash book entries. He speculated that "it could have been he [Sir Michael Grylls] introduced four clients in one year, I do not recall. You could have had a situation where he introduced a client and it was a commission payment, but it was paid in stages rather than, for whatever reason (cash-flow perhaps), as a one-off". But Mr Greer acknowledged[96] that the coincidence between the amounts and the quarterly pattern of the payments allegedly demanded of Mr Al Fayed in 1988 and actually made to Sir Michael in 1989 was "striking".

  259. In an attempt to clarify the position, Sir Michael supplied the inquiry with a schedule of payments[97] which he had received from IGA between 1983 and 1993. This schedule was not as helpful a piece of evidence as might have been expected, partly because the categorisation of the sources of the individual payments was confused, partly because it was incomplete, and partly because it was difficult to match up the entries with the three payments listed in the evidence to the Select Committee in 1990. These inadequacies are described in more detail in turn below.

  260. The sources of the payments (that is to say the person or organisation to whom the relevant invoices were sent) are variously described as "Ian Greer"; "Ian Greer/UTC"; "UTC"; and "UTC/IGA". But it is not clear which of the payments represent commission and which are fees in relation to the Unitary Tax Campaign and, within the latter category, which reflect payments direct from UTC (only two are recorded as such) and which are the so called `top-up' fees from Mr Greer. Two of the payments, in October 1985 and April 1986, are for extremely exact amounts including a number of pence, the precision of which Sir Michael was unable to account for. Ten of the payments are for sums (£5,750 and, from 1991 onwards, £5,875) which appear to comprise a basic £5,000 element plus VAT at the prevailing rate. These are not entirely explicable, either from the point of view of their size or timing, in terms of the known pattern of commission payments, or of fees relating directly or indirectly to UTC.

  261. The three commission payments described by Sir Michael in his 1990 evidence to the Select Committee were received by him on 1 November 1985; 14 May 1986; and 3 October 1989. Sir Michael explained that, so far as the dates in the schedule were concerned, these related to the invoices, which were normally rendered on the first of the month, whilst the cheques in payment were "often received a month or two later". This implied that a gap of up to six weeks, approximately, might be expected between the dates of the three commission payments and the relevant invoices in the schedule.

The November 1985 Payment

  262. In the schedule supplied by Sir Michael, the closest entry to 1 November 1985 was that described as "Oct 1985 - Ian Greer/UTC - £7,834.38". (The nearest entries on either side of two payments were for January 1985 and April 1986). But it was put to Sir Michael by Counsel to the inquiry,[98] that neither in its attribution to Ian Greer/UTC nor in its specific amount, did this look like a commission payment for introducing new business. In response, Sir Michael stated: "it is possible, because it is rather an odd sum, it may have included a part of a referral payment because we sent a composite invoice. But, as I say, I cannot be sure of that".

The 14 May 1986 Payment

  263. The nearest entry to 14 May 1986 in the schedule was "April 1986 - Ian Greer/UTC - £5,965.83". As with the first of the three payments acknowledged to the Select Committee, this appears misdescribed, if, as Sir Michael claimed, it relates to an introduction fee.

The 3 October 1989 Payment

  264. The 3 October 1989 payment did not appear at all in Sir Michael's schedule. In a letter dated 21 February 1997 explaining the omission, Sir Michael stated that, on re-checking his books, he had come across an invoice for September 1989 in the sum of £5,750 relating to the Unitary Tax Campaign, which would have triggered a payment on 3 October. Sir Michael continued that as it had been his belief that this invoice was rendered directly to UTC he had not included it in the schedule, which was intended only to cover invoices submitted to IGA. But Sir Michael's explanation did not shed any light on the process by which consultancy fees from UTC, whether paid direct or via Mr Greer, came to be included with the three commission payments acknowledged to the Select Committee in 1990.

  265. In a later letter, dated 25 February, Sir Michael mentioned two further payments not listed in the schedule. The first was in June 1989, in the sum of £5,750, which related to consultancy fees invoiced directly to UTC, not IGA. (The second June 1989 invoice had been included in the schedule, as it was paid by IGA). Other invoices rendered in 1989, but paid direct by UTC, were dated 1 July (£5,750) and 1 December (£5,750). Neither of these payments appeared in the schedule for the reasons already given by Sir Michael.

  266. A further omission from the schedule, however, was an invoice for £5,750 for UTC-related fees, dated 1 September, and paid by IGA (not UTC) on 28 September 1989. This is very close in time to the payments Sir Michael told the Select Committee he had received on 3 October of the same year,[99] but it remained unclear after Sir Michael's oral and written evidence whether in fact these were one and the same.

  267. I obtained statements[100] from Mr Malcolm Moring, IGA's former bookkeeper in which he made the following points:

    -    that quarterly payments of £5,000 plus VAT were made by IGA to Sir Michael throughout the period from March 1987 until 1994 and that these payments related to introduction fees;

    -    that Sir Michael sent invoices for these payments to Mr Greer;

    -    that in about October or November 1987 he (Mr Moring) collected, on Mr Greer's instructions, £6,000 in cash from IGA's bank and gave it to Mr Greer; that no explanation for this cash withdrawal had been given by Mr Greer; and that the transaction was not recorded in IGA's accounts;

    -    that every Friday from March 1987 until 1995 he gave Mr Greer £50 out of petty cash, in a brown envelope;

    -    that he had had no knowledge of any arrangement whereby IGA recovered from UTC fees paid to Sir Michael; his recollection was that IGA charged UTC an agreed fee for Sir Michael's services.

  268. In his response to Mr Moring's evidence, Mr Greer said that he had discussed the issues raised in it with Sir Michael. He wished to make a number of observations:

    -    the invoices for Sir Michael's top-up fees of £10,000 per annum in relation to UTC work were rendered twice a year;

    -    it was a mystery why Mr Moring had described the introduction fees as being paid to Sir Michael on a quarterly basis;

    -    he had no recollection of drawing £6,000 in cash in 1987, or any other year; if he had done so, it would have had to be fully accounted for through receipts and cash book entries;

    -    cash withdrawals of £1,000 had been made in 1987 and 1992 to fund the expenses of staff members sent to help candidates with their election campaigns;

    -    the weekly £50 withdrawal from petty cash was part of his legitimate expenses allowance, used for immediate items such as taxis or drinks; the Inland Revenue were aware of the allowance.

  269. Mr Greer added that Mr Moring's statements could be explained by reference to difficulties in his personal background and consequent emotional problems.

  270. My own analysis of the IGA accounts did not disclose any regular pattern of quarterly payments to Members or others - in fact I saw evidence for only two such cases.

  271. Accepting that he had not been able in all cases to provide detailed explanations for the circumstances surrounding the various types of payments from IGA or UTC, Sir Michael vigorously denied any impropriety on his part. In particular, he rejected any suggestion of a link between money received from Mr Greer and his lobbying activity on behalf of Mr Al Fayed. And he added that he had never been paid to lobby Ministers on behalf of IGA, except in the case of UTC.[101]

90  Q 513. Back

91  See paras 528-538. Back

92  See Appendix 47. Back

93  See Appendix 108. Back

94  See Appendix 109. Back

95  Q 1579-80. Back

96  Q 1581. Back

97  See Appendix 50. Back

98  Q 2489. Back

99  See para 261. Back

100  See Appendix 111 and 112. Back

101  See Appendix 57. Back

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