Select Committee on Standards and Privileges First Report


"The Slush Fund"

  751. Mr Al Fayed maintains that he contributed in three separate ways to a pool of money or "slush fund" to enable Mr Greer to make payments to "his" Members for the work they were doing on his behalf:

      (i)    quarterly payments of £5,000 in cash to Mr Greer in addition to his annual consultancy fee;

      (ii)  a cheque for £13,333 + VAT to Mr Greer on 1 February 1990;

      (iii)  cheques for £12,000 and £6,000 to Mr Greer shortly before the 1987 election.

  752. Mr Greer maintains that the additional quarterly payments did not exist; that the cheque for £13,333 + VAT was a project fee for work related to the publication of the DTI Inspectors' report on the House of Fraser; and that the cheques for £12,000 and £6,000 were to provide contributions towards the election expenses of around 30 Members or candidates.

Alleged Cash Payments to Mr Greer

  753. On the alleged cash payments to Mr Greer, Mr Al Fayed is somewhat vague about the period and amounts - and it is to be noted that this allegation does not appear to have been raised before September 1996. However, Mr Al Fayed's basic allegation is strongly supported and corroborated by Ms Bozek and Ms Bond as first-hand witnesses, and by circumstantial evidence in the form of telephone messages referring to a payment under the arrangement which was said to be overdue.

  754. Mr Greer claims that Ms Bozek and Ms Bond are lying and that the messages are forgeries - going so far as to suggest that they were constructed in Mr Al Fayed's office to fit in with alleged payments made by Mr Greer to Sir Michael Grylls. However, he acknowledges that if the messages are genuine, he can offer no innocent explanation of their content.[338] His secretary confirms that she never left such messages with, or received cash from, Mr Al Fayed's office.

  755. I found the evidence of Ms Bozek and Ms Bond concerning this allegation convincing, particularly on the main substance that cash payments were made to Mr Greer over and above the agreed contractual rate for the provision of lobbying services. Moreover, expert forensic examination of the messages strongly supports their authenticity as contemporaneous documents. Nor has Mr Greer improved his own credibility by providing misleading information to the Select Committee on Members' Interests in 1988, 1989 and 1990.[339]

  756. On the basis of the evidence to the inquiry, including that of Mr Al Fayed as corroborated by Ms Bond and Ms Bozek, I conclude that there is a strong probability that cash payments, additional to his consultancy fee, were made to Mr Greer, over a period of time, probably about 18 months; and that these sums were either handed to him or collected from 60, Park Lane. I note the statement by his secretary - but she may well have been unaware of the arrangement.

  757. I am not persuaded that this arrangement was agreed between Mr Greer and Mr Al Fayed at the outset of their contractual relationship. It is more likely that the question of additional cash payments to Mr Greer arose at some time during the course of that association.

The Cheque for £13,333 plus VAT

  758. Mr Al Fayed claims that the payment of £13,333 plus VAT was to reimburse Mr Greer for "overheads" which he (Mr Al Fayed) assumed would include rewards to the lobbying group. Mr Greer, on the other hand, maintains that it was a specially negotiated three months project fee for monitoring developments and providing advice following the publication of the DTI Inspectors' report (by which time the full consultancy had been reduced to a far more modest level).

  759. As The Guardian have pointed out, there is no indication from the papers produced to the inquiry that any "project" was undertaken, and I have seen scant evidence to support the claim that much time-consuming activity was involved by IGA on Mr Al Fayed's behalf. Mr Al Fayed himself saw little need for additional lobbying or monitoring work by that stage. Moreover, the fee was paid in advance, some three months before the Inspectors' report was published, and its amount represented an annual equivalent of over £50,000 - more than double the rate for the original consultancy. On balance, I find Mr Greer's explanation unconvincing and my suspicion is that at least part of the money might have been available, and used, for other purposes. However, as this cheque postdates the main period of Parliamentary activity on the part of the group of Members with which this report is concerned, and as the allegation is mainly based on the uncorroborated word of Mr Al Fayed, that suspicion remains unresolved.

The Cheques for £12,000 and £6,000

  760. As with the cheque for £13,333, the fact that these payments were made by Mr Al Fayed to Mr Greer is not in dispute. Equally, there is little doubt, on the evidence of the IGA payments schedule,[340] that the funds were used by Mr Greer either to provide contributions towards the campaign expenses of a number of identified Members or candidates, or to meet other related election expenditure. It follows therefore that the allegation that the cheques for £18,000 were used to make payments to members of the lobbying group is not substantiated, with the exception of Sir Andrew Bowden.[341]

  761. Although the broad distribution of the funds seems to be reasonably clear there is, however, disagreement about the purposes for which they were originally solicited. Mr Greer is in no doubt that he always intended to use the funds for making donations towards the election expenses of selected Members and candidates. Mr Al Fayed, on the other hand, believed - and continues to believe - that they were meant as "special payments" for "his" Members, particularly Mr Hamilton and Mr Smith; and that, having contributed heavily to the Conservative Party's central funds, he would have had no interest in supporting any local campaigns.

  762. In fact, this could have been a genuine misunderstanding between the two men. In asking for the second cheque, Mr Greer spoke of helping "one or two Conservative candidates" and this could have been interpreted by Mr Al Fayed as support for "his" Members. But Mr Greer may equally have been thinking of a small number whom he had been unable to support from the earlier cheque.

  763. I do not think there are grounds for saying that Mr Al Fayed was deliberately misled. On the other hand it is difficult to escape the conclusion that Mr Greer selected the Members concerned for his purposes, not Mr Al Fayed's.

  764. These conclusions on the "slush fund" are important to my inquiry because of the opportunity such a pool of money created for making payments to Members. Mr Greer's actions are only under investigation to that extent.

338  See para 219. Back

339  See paras 237-242. Back

340  See paras 224-31. Back

341  See paras 767 and 778-80. Back

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Prepared 8 July 1997