Select Committee on Standards and Privileges First Report


APPENDIX 33 - Continued

CHAPTER 10: ISSUES ARISING FROM MY OWN CROSS-EXAMINATION

Q1875. The Heseltine/Butler Memorandum

  665. I explained in oral evidence the fraught circumstances in which my telephone conversation with Michael Heseltine took place. I would like to re-emphasise this point. Only those who have experienced it can really understand what it is like to be besieged by the world's media pack. I felt like a goldfish swimming in a bowl of piranhas. The journalists were interested in one thing only - securing a kill. There was no news value in my survival.

  666. My telephone conversation with Michael Heseltine on the morning of Friday 21 October was the first occasion on which I had been able to speak to him since the story broke. He had only that morning returned from an extensive tour of the Far East.

  667. The previous day I wrote out a statement for the Prime Minister, refuting The Guardian allegations and denying that I had been paid to do anything for Fayed, either directly by him or indirectly by Greer. That statement is correct.

  668. I acknowledge the difficulty of establishing now the precise words used in the frenetic atmosphere of October 1994. Three lines recording a conversation spread over 10 minutes, and written by a person who was not a party to it, is self-evidently inadequate.

  669. I understood Michael Heseltine to want to know whether I had had any financial relationship with Ian Greer by which Fayed money could have found its way into my pocket. A retainer or general consultancy fee could not, of course, have excluded that possibility.

  670. But the NNC and UST commission payments did exclude that possibility. Fayed money was not involved - the payments came entirely from the first year's fees paid by NNC and UST, neither of which company had any connection with Fayed.

  671 The term "relationship" also implies some element of continuity. The receipt of two single commission payments for the introduction of two specific companies, carrying no implication of further obligation, does not constitute a "relationship". There was no element of continuity. I acknowledge that a "relationship" might have developed if such payments had been received with reasonable regularity - but I received only two, separated by 13 months, eight or nine years ago.

  672. This has been described as a semantic distinction, but I was answering the question I was asked. If I had been asked whether I had ever received a payment of any kind from Greer I would have said that I had. But this was not the question.

  673. By way of example, if I had instructed an estate agent to sell my house for me and paid a commission on the sale and then, over a year later I had sold another property and paid the estate agent a commission on that sale, by no stretch of the imagination could it be alleged that I had a financial relationship with that estate agent. On the other hand, if I had even a 1 per cent interest in his business it could be said that I had. I do not have and never have had any such interest in Mr Greer's business of any amount or sort whatsoever.

  674. With the benefit of hindsight I recognise that, ideally, I should have expanded upon the answer which I gave to Michael Heseltine. But it is also fair to ask for this conversation to be placed in a real-life context.

  675. It was not a bone-dry forensic cross-examination. It was a human reaction in unforeseen circumstances of considerable stress. In any event I intended to deal with the issue of the two commission payments up-front in my examination-in-chief in my libel action and, to this end, I volunteered the information in my witness statement as long ago as May 1995. The Guardian pretends that it "unearthed" these payments but that is untrue; the disclosure was mine. The timing was, however, important, the reason for this being the damage caused by the untrue allegations in The Guardian.

  676. I was then the lead-item on the news world-wide. Clearly, in the media frenzy immediately following The Guardian's publication of Fayed's falsehoods about me, handing them another stick to beat me with would have forced my resignation. That would have made it much more difficult for me to disentangle myself in the public mind from Tim Smith - who had admitted being paid by Fayed.

  677. I wanted this distinction to remain as clear as possible. If I had to resign later, so be it. But I would thus be separate from Smith. He had accepted Fayed's money and I had not.

  678. It should also be borne in mind, if I am to be criticised for equivocation, that I was simultaneously its victim. When I met the Chief Whip, Richard Ryder, and the Cabinet Secretary on the morning of 20 October I was ostensibly given a choice. Ryder said that the pressure might be too great for me to withstand but the decision whether to resign or not was left to me. I said that I would have to consult my solicitor, Peter Carter-Ruck, about the legal ramifications.

  679. I asked Ryder whether he wanted me to resign. He would not commit himself and left me alone to decide whilst he went to the Cabinet meeting. I spoke to my solicitor and my wife, decided not to resign and left a message to that effect.

  An hour or so later I received a furious telephone call from Ryder as I arrived at Heathrow en route for Cheshire. It was clear that, although I had exercised the choice which he has ostensibly given me, he strongly disapproved of my decision.

  680. Nevertheless, as I had decided to remain a member of the Government, I had a right to expect collective support. The displeasure of the Chief Whip carried with it the clear implication that such support would be only lukewarm. Considering the relentless pressure on me from the media, only robust support from the Government would ensure my survival.

  681. Events were to bear this out. I was allowed to continue in office theoretically enjoying Government support but in practice without it. Over succeeding days I had to endure the spectacle of unattributable media briefings about how support for me was ebbing away.

  682. On the following Monday I was denied the opportunity to speak to Michael Heseltine and refused permission to communicate with my colleagues in the House of Commons. The Chief Whip refused to give me a reason for this and told me to "go back to my Department and get on with my job." He did not tell me that it had already been decided that by lunchtime tomorrow I would not have that job.

  683. Whilst I was angry at the time, I understand the impact of media pressure on the Government which, justly or unjustly, my departure would relieve.

  684. At my resignation meeting with Richard Ryder and Michael Heseltine the following day I was presented with two new allegations. Although Ryder knew about them when I spoke to him the night before, he did not reveal them to me at the time.

  685. One I was able to refute immediately by reference to the appropriate entry in the Register of Members' Interests. The other concerned allegations of dishonesty on the part of Plateau Mining plc, (a company of which I had been briefly a director over four years previously) and a fraud investigation into allegedly connected companies. I had received several telephone calls from the Whips' Office the previous night asking questions about my directorship but no-one would tell me the purpose of the questions.

  686. I asked to see the details of the allegations. I was told I could not as the papers were confidential. As I had played no part whatever in the company after joining the Government in July 1990 I was unable to deal with the "allegations" and had to accept the call for my resignation.

  687. Eventually these papers were subpoenaed from the Government on Discovery in my libel action. They contained no evidence of allegations of either dishonesty by Plateau or that it was involved in a fraud investigation into connected companies.

  688. When my conversation with Michael Heseltine is viewed in the context of events I hope that what I said in my conversation with him will be accepted as reasonable and understandable in the circumstances, particularly having regard to the importance of distancing myself from the conduct of Tim Smith inasmuch as he had admitted payment by Fayed.


  689. Even if the worst possible construction is put upon my words I wholly reject the imputation in Fayed's submission to the Inquiry that it demonstrates that my word is not to be relied on. In the words of former Prime Minister, Sir Alec Douglas-Home, there is a world of "difference between telling a direct lie and not revealing all," especially in extremis.

  690. Fayed, by contrast, has told large numbers of coldly calculated lies over a very long period of time - the most stunning illustration of which came right at the end of the Inquiry with his brazen assertion that his solicitors, D J Freeman, had misunderstood him over two years before, when he alleged that he had made payments to me on 12 specific occasions.

  691. He was, thus, changing his evidence at the last minute on the most serious of all his allegations - which he had repeated to the Members' Interest Committee, to the Court in the Guardian's Defence in the libel action, to the Privileges Committee and even in his written submissions to the present Inquiry into his own allegations.

Q1909 and Q2081 The value of Fayed's gifts.

  692. It is misleading to say that the value of Fayed's gifts and hospitality amounted to "many thousands of pounds." I respectfully direct the Inquiry's attention to a letter which I attached to my evidence to the Members' Interests Committee which puts this matter in perspective.

  693. It was written to The Independent by Mr Bernard Hilton (who is not known to me) on 26 October 1994. The actual cost to Fayed of the Ritz hospitality was minimal.

  694. On the evidence of the manager, Frank Klein, the hotel was not full - so Fayed was not deprived of room revenue, the costs of which arise whether I was there or not. The only costs he actually defrayed, therefore, were those of the ingredients of the food we ate and the wine we drank.

  695. In this context it is absurd to value the food and wine at the inflated prices charged in the hotel - the wine mark-ups appeared to be about 500 per cent over the retail price from a wine merchant of the modest wines we consumed (we never drank vintage champagne). I would be surprised if the actual cost to Fayed of our six days in the hotel was greater than £500.

  696. It is relevant that I tried to reciprocate his hospitality - usually with gifts from the House of Commons shop. Although, as we now know, he disdained some of these gifts, like the portcullis cuff links, their cost represents a far greater proportion of my income than his gifts corresponded to in his.

  697. For example, in gratitude for our visit to the Ritz I gave him a Wedgewood coffee service from the House of Commons shop, which now sells for about £120.

Q1920.

  698. Either the shorthand writer misheard Counsel's question or I did. I would not have said that I have my diaries for 1988 and 1989, as my answer to the following question makes clear. The correct answer is that I had my diaries but they have been mislaid.

Q1926. The Greer 1987 election funds

  699. Counsel appeared to find suspicious the absence of Michael Grylls, Tim Smith and me from the list of those who received contributions to their election fighting funds.

  His suspicions are groundless. The reason is simple - we did not need the money. Our constituencies - Surrey NW, Beaconsfield and Tatton had the some of the best fund-raising records in the Conservative Party.

  In the year ending 31 March 1987 Surrey NW was placed 3rd in the whole country in the Conservative Central Office National Quota Scheme table of 650 constituencies; Beaconsfield was placed 8th and Tatton 17th.

Q1940.

  700. It was not Hugh Aldous FCA, but Philip Heslop QC, who resigned as an Inspector on grounds of conflict of interest.

Q1941. lleged meeting with Fayed 2 June 1987

  701. I have always considered it inherently unlikely that I went to London to attend a meeting with Fayed on 2 June 1987 during the General Election. No evidence was provided to justify this allegation until the Fayed telephone message pad was disclosed as late in the proceedings as mid-September 1996.

  702. What seems likely to have happened is that a meeting had been arranged for 2 June but the General Election supervened. In the hurly-burly of the campaign I had neglected to cancel it and the telephone call from me to Fayed's office must have been in response to a question from Fayed's secretary asking: "Would it have to be cancelled."   My answer would have been "Yes, it would," which explains why "Yes" appears on the message. If this reasoning is correct the secretary who took the message must have been distracted by something and simply forgot to erase the entry in Fayed's diary.

  703. It is extremely difficult to see what value there could have been to Fayed in a meeting in the middle of a General Election campaign. It would clearly have been impossible for me to do anything to help him at that moment because, Parliament having been dissolved, there were no MPs and all Ministers were campaigning. Fayed has produced no documents indicating any non-Parliamentary activity by me at that time and has been unable to suggest what such a meeting would have been about.

  704. Furthermore, Fayed's diary records a meeting between us on 18 June 1987. If so, it seems probable that the meeting scheduled for 2 June was postponed to 18 June, the day after Parliament resumed following the Election. As nothing useful could have been done since 2 June there would have been little point in having another meeting on 18 June if the first meeting had taken place.

Q1951. Financial temptations in June 1987?

  705. Counsel suggested that an offer of £5,000 would have been particularly tempting to me in June 1987 and referred to the balance on my bank statements.

  This is a distortion. I have now looked through my bank statements since 1987 and, (with the exception of the period from the summer 1988 to early 1990 when we were saving hard to move to a bigger house), the balance is reasonably constant in the low thousands. We have tended to spend what we earn.

  £5,000 would have been neither more nor less tempting in June 1987 than at any other time. It was never offered; so the question of accepting it never arose.

  706. It is very significant that Fayed and Greer discussed offering Smith a paid consultancy on behalf of HoF in February 1987. Hence, when Smith was actually offered payment by Fayed in May 1987 it was a logical step to occur.

  707. There was never at any stage any suggestion that I should be offered a paid consultancy so there was no reason for Fayed to make to me the same offer which he had made to Smith.

Q1954. Alleged meeting with Fayed 18 June 1987

  708. It is perfectly possible that I did visit Fayed on 18 June 1987. That was the day after Parliament resumed and there would have been a particular reason to do so if a meeting planned for 2 June had been postponed.

  No doubt he was also interested to know how a new Parliament might create new problems or opportunities.

  For my part, it would have been a convenient time to visit him. The first week of a new Parliament is concerned solely with formalities - election of the Speaker and swearing in of Members. Otherwise there would be nothing going on in the House itself. No doubt I did many things outside Westminster at the same time.

Q1966. My role compared with Tim Smith

  709. Counsel asserted that, from the 1987 General Election to 1989 I carried out a role for Fayed which was almost indistinguishable from Tim Smith.

  For the reasons which I gave in my oral evidence at Q1980 (the minimal amount of time which these activities involved in the course of a week, month or year) I do not believe much can seriously be made of this.

  710. However, the facts are as follows:   (a) Parliamentary Questions   After the 1987 General Election I asked only two groups of questions in two years:

  Two Written PQs on 7 June 1988

  Four Written PQs on 4 April 1989 (answers appeared on different days between 6 and 12 April 1989).

  My Oral PQ of 13 February 1989 had nothing whatever to do with Fayed. It was an attack on David Leigh over Westland.

  711. Tim Smith, by contrast asked WPQs on the following dates after the 1987 General Election:

1987    28 October
5 November
13 November
19 November

198810 February (Two PQs)  
29 February (Two PQs)
25 May (Two PQs)
13 July
19 July
26 July
10 November
28 November

He asked an Oral PQ on 23 January 1989.

  Dale Campbell-Savours, in this period asked 19 WPQs, two Oral PQs and put down 58 EDMs.

  712. (b) Meetings with the Secretary of State took place on

  12 March 1987 (Hordern, Smith, Grylls)

  13 May 1987 (Hordern, Smith, Grylls, Hamilton)

  29 July 1987 (Hordern, Smith, Hamilton)

  14 December 1987 (Hordern, Smith, Grylls)   Hordern and Smith attended each of the four

   -    they were both paid by Fayed.

  Grylls attended three

   -    Fayed says he was not paid.

  I attended only two.

  713. I was unquestionably much less active than Smith. The facts do not support the imputation that I must have been paid because he was paid.

  Furthermore, Norman Lawrence has told me that Peter Hordern and Tim Smith were the names which were routinely mentioned inside the Fayed organisation as being on the Harrods "payroll," whereas my name was never mentioned at all.

Q1988. etc: Draft letter to Douglas Hurd:

  714. I said (Q1989) that it was not unusual for drafts to be presented to MPs for their agreement.

  Royston Webb confirmed this in paragraph 14 of his letter of 13 February 1997 to the Inquiry:

  ". . .I would often draft Early Day Motions for Dale (Campbell-Savours) which he would then scrutinize and reject or publish, introducing such amendments as he considered appropriate."   Campbell-Savours was, of course, not paid.

  715. A copy of this letter was sent to George Younger, then Secretary of State for Defence. But the letter itself does not appear to have gone to the Home Secretary. I attach a letter dated 18 April 1995 from Rosalind McCool, Parliamentary Clerk in the Home Office, confirming this fact, which Counsel appeared to doubt.

Q1996. Dale Campbell-Savours

  716. Counsel appears to regard him as having a lesser role in the anti-Lonrho campaign.

  Whilst it is true that he had nothing to do with Greer, (whom he regarded as a malign influence, according to Webb), he had a great deal of direct contact with Webb and performed just as useful a function (if not more so) for Fayed as the Conservatives.

  717. He was never invited to join delegations to Ministers.

  But that is not unusual. Ministers feel more inhibited in the presence of MPs from an opposing party and discussion would not be as open. All-party delegations tend, therefore, to be formalities and this would be so regardless of the political complexion of the Government.

Q1997. "Tim Smith drops by the wayside."

  718. Counsel implied that, in February 1989, Smith dropped out and I became more active.

  There are no grounds for believing this.

  Smith signed a Campbell-Savours EDM on 2 May 1989 and tabled one himself on 15 May 1989.

  Apart from signing three Campbell-Savours EDMs and one by Smith, I engaged in no activity after February 1989, but for the episode of Dr Marwan, Lonrho and Libya.

  4PQs drafted by Royston Webb were tabled on 4 April.

  2 related short letters were written on 21 March and 7 April.

  A very short EDM was tabled on 3 May.

  These activities required very little more than reading the brief which I asked Webb to produce to satisfy myself that it was proper to do what I was asked and signing the relevant forms.

  719. Counsel may not appreciate how signatures are often obtained for EDMs. I signed Campbell-Savours' EDMs of 18 April, 2 May and 20 June and I signed Smith's EDM of 15 May.

  My signature appears on the first day that these EDMs appeared on the Order Paper, so both Campbell-Savours and Smith must have approached me and asked me to sign the motion papers before they tabled them. I could not have signed them in any other way, as they had not yet appeared on the Order. Paper. The initiative was, therefore, entirely theirs and probably resulted from a chance encounter in the Tea Room.

  720. To present this minimal activity (which took perhaps a couple of hours altogether) as "taking up a lot of time" (Q1968) or "days and days" (Q1969) is a distortion. If one added up the time spent on all the activities related to Fayed over the period 1985-90 I doubt that it would exceed an average of a few days a year.

  There were good legitimate reasons for my involvement and, in the context of my political activities generally, this was a minimal amount of time.

Q2009. Preston's (and Hencke's) notes

  721. It is not clear how these "jottings," as he originally called them in his witness statement (paragraph 3) came to light so recently (Q820). If Preston "found them before the court case" they should immediately have been revealed to us. They were not."

  722. In this context it is worth pointing out also that David Hencke misled the Inquiry when he said that there is a rule of the House against taking notes of conversations on the Terrace (Q834). I know of no such rule.

  I have often on the Terrace given interviews which have been recorded, either by tape or manuscript notes. Hencke has been the Guardian's Westminster correspondent since 1986; his ignorance on this point is surprising. Even if he is to be believed, it still does not explain why he did not make notes immediately after his important interview with me.

  723. At Q2011 it is made clear that, despite Preston's admission on 10 February, his notes had still not been produced by 20 February. At Q2012 Counsel said that I would be sent these notes as part of a further submission from The Guardian after "tomorrow" (i.e., 24 February). As at 3 March I have received nothing.

Q2024. Fayed telepone message - alleged meeting before Christmas 1988.

  724. A telephone message dated 13 December 1988 has been produced by Fayed, purportedly from Ian Greer's office arranging a meeting between Fayed, Michael Grylls, Tim Smith and me on Tuesday 20 December 1988.

  725. It is highly probable that I did not attend this meeting, if it took place. In those days my wife and I always went down to Portsmouth for a Christmas lunch with my parents in the last few days before the Christmas Recess, as we always spent Christmas itself with her parents in Cornwall.

  I spoke in the House at Question Time on Monday 19 December. The House rose on Thursday 22. That means that we would have gone to Portsmouth either on the Tuesday or the Wednesday. I think it is more likely to have been the Tuesday.

  726. I am supported in this analysis by Fayed's telephone message itself. The telephone message is undated but, from its place in the pad, appears to be the 14 December. The message says that I was

  ". . . free tomorrow morning and next Wednesday after 2.30 p.m."   That indicates that I was not in Portsmouth for lunch on Wednesday 21. It takes an hour and a half to drive from Portsmouth to London.

  727. As I believe that I did not attend the meeting with Fayed on the 20 I might well have made arrangements to see him separately to discuss the subject of that meeting and to deliver a Christmas present to him. His own diary entry suggests that we met on 15 December.

  728. Furthermore, my sister says she remembers a conversation with my grandmother about my grandfather at this lunch. She remembers it particularly as my grandmother had just had her hundredth birthday and the lunch in 1988 was on the anniversary of his funeral - which was 20 December. There is a photograph of the occasion.

Q2043. Foreign currency for holiday in France September 1987.

  729. In answer to the Inquiry's question about how this trip was financed, I said that it was probable that I bought some foreign currency but that the foreign exchange details would not appear on the bank statement.

  Unfortunately, I do not possess a chequebook relating to September 1987 but I have found an old cheque book which records a purchase of £100 worth of francs on 5 July 1990, obviously for the weekend visit to Paris referred to in Q2114.

  This confirms that, if foreign currency were obtained from a bank, only the sterling details would appear on the bank statement. The cheque cleared on 11 July - cheque no. 001696.

Q2062. The question of the registrability of gifts, hospitality, etc., before 1991-2.

  730. The complaint against me includes "various gifts like Christmas hampers valued at £185 each," I presume for the years 1987-89. I have no idea of the value of the hampers and no evidence of value has been provided - or even of the nature of "other gifts." I also reciprocated. I contend, therefore, that such gifts were not registrable.

  731. I did receive private hospitality from Fayed - two days at Balnagown Castle in 1989, staying in a flat above a garage in converted stables. Fayed says this was a bungalow. He is incorrect; I have submitted a photograph of where we stayed.

  732. As to the registrability of gifts of this nature I refer the Inquiry to the Select Committee on Member's Interests, Session 1994-95, First Report.

  The strong implication of the Report is that hospitality in a private house, however sumptuous, is not registrable unless it has "a financial value which is readily ascertainable" (paragraph 19). On this basis I contend that the hospitality at Balnagown was not registrable.

  733. In contrast, where hospitality is enjoyed in a private suite in a hotel, where it is "possible to make an approximate estimate of its notional cost by reference to the advertised prices for public rooms" it is now held to be registrable. I think that this would have come as a surprise to most Members in the 1980s that they would have to carry out such an exercise.

  734. The rules at that time were less clear and Members were more relaxed about what they registered, as is clear from the comments in the Second Report of the Members' Interests Committee 1994-95 in respect of non-registration by numerous Members of weekend visits to the Gleneagles Hotel at the expense of Conoco plc.

  735. In its First Report of 1994-95 the Committee said:

  "15. The current Register (i.e., 1995) contains for the first time a section specifically designed for the registration of gifts, benefits and hospitality from UK sources and refers to the minimum financial value for tangible gifts and £160 for other benefits. Prior to 1994, however, the registration form used by Members to submit their entries made no explicit reference to gifts, nor was hospitality, as such, mentioned either in the Register or the form.


  "16. The Committee have some sympathy with Mr Hamilton's impression that the requirements of the Register with respect to gifts and hospitality were not as explicit as they have since become and that it was more difficult for members to establish their exact coverage from the written material available to them. Though by the end of 1987 the section entitled `Financial sponsorship, Gifts etc.' had appeared in two successive editions of the Register itself, the incorporation of gifts into this section was not reflected in the registration from which was sent out annually to Members. Furthermore, there was then no equivalent to the recently published Guide to the Rules which accompanied last year's revised registration forms.


  "17. They accept that certain aspects of the original rules were not free from ambiguity, and it was precisely for this reason that they felt it necessary to conduct a comprehensive review before the end of the last Parliament."   The Committee went on nonetheless to find that my stay at the Ritz ought to have been registered.

  736. In its Second Report 1994-95 the Committee upheld similar complaints against Tony Blair and John Prescott:

  Tony Blair failed to register a trip by Concorde to the USA in June 1986, including at least two nights in a luxury hotel in Washington, all of which was provided through the agency of Ian Greer. Blair subsequently tabled an EDM in support of the interests of those whose hospitality he had enjoyed.


  Tony Blair also failed to register a weekend stay enjoyed by himself, his wife and family at the Gleneagles Hotel in May 1989 at the expense of Conoco plc.

  Similarly John Prescott and his wife enjoyed in 1994, (after the House had made more explicit the rules on registrability of hospitality), a weekend at the Gleneagles Hotel at the expense of Conoco plc. He failed to register this.

  737. The Committee found:

  "12. Of the numerous participants from all parties in Conoco-sponsored seminars at Gleneagles over the previous 15 years, few if any have thought fit to enter their attendance in the Register."

  738. The Committee went on to say:

  "The Registrar is authorised to accept any entry which relates to the present Parliament and we would not wish to deter Members who, on second thoughts, feel that certain interests ought to have been registered earlier, from taking the necessary action for fear that they will then attract a complaint."   In spite of that invitation few if any Members have done so.

  739. It is a matter of argument whether complaints of this nature both trivialise the registration system and reduce the standing of the House with the public as a result of the distorted way in which they are subsequently reported. This is particularly so in the case of complaints which are very stale - dating back to the 1980s - when the rules were less explicit and the climate less censorious.

Q2099. Alleged request to return to the Ritz

  740. The evidence of Fayed, Webb and Klein may have been prompted by the discovery of the telephone messages in connection with my visit to Paris in July 1990. Although Fayed mentioned in his witness statement (para. 11) an alleged request to return to the Ritz in 1987, he produced no details of this until Frank Klein provided a witness statement which, although dated 30 September 1996, I saw for the first time when it was provided on 23 February 1997.

  741. It is astonishing that Mr Klein's memory is so good nine years later that he is able to single me out amongst the tens of thousands of guests who have stayed in his hotel in the meantime - a large number of whom would have been recipients of Fayed's hospitality.

  742. A notable feature of this Inquiry is that all Fayed's employees seem to be gifted with total recall in microscopic detail many years later where I am concerned - in stark contrast to their total amnesia concerning anyone else.

  743. It is untrue that Klein placed his Mercedes at our disposal. The only car which was provided for us was solely to transport us to the Windsor villa. I cannot now remember the make of car; it was certainly not a limousine but a saloon. It is incredible that Klein should purport to recall that we "used it on two or three occasions to visit areas in Paris." His supposed recall of such a trivial detail after nine years ought to call into question the truthfulness of his statement.

Q2109. Did I drop Fayed after the DTI Report?

  744. At the time I was prepared to give Fayed the benefit of the doubt. The Report's conclusions did not seem to square with my personal impression of the man at quite close quarters over a period of some years.

  745. The Guardian has criticised me for not distancing myself from him after The Observer printed a pirated copy of the Report in 1989. I was not disposed to treat that as authentic, but even if it were, I was suspicious of the conclusions because of what I saw as the procedural weaknesses of DTI Investigations, about which I had written letters of complaint to Ministers. I still have sympathy with Fayed's procedural complaints, which led to his unsuccessful challenge to the DTI in the ECHR.

  746. The Guardian has criticised me for adopting retrospectively the criticisms of Fayed by the Inspectors. The explanation is simple - their conclusions about Fayed have been borne out by my own experience.

  As my Submission makes clear there is a method to Fayed's madness, which can be discerned in all his vendettas - against Christoph Betterman, against Prof Rider and colleagues, against Graham Jones, against Peter Bolliger and against me. Knowing the lies he has invented against me, I can now see what I was blind to in 1990.

  747. The Guardian's position, however, is incomprehensible. They castigated him in editorials in March 1990 as a liar and a fraud. Preston, in his witness statement, said

  "There is simply no question of The Guardian in 1994 `rehabilitating Mr Fayed or `forgetting' what it had published about him 4 years earlier." (paragraph 15)   Yet now they adopt virtually his every word - whilst admitting that he is "maddeningly broad-brush" and that he "may not have an eye for detail" (euphemisms for "unreliable").

Q2126. Commission payments

  748. Although such payments were perfectly legitimate for MPs at the time, with hindsight, my judgment in accepting a commission payment from a lobbyist was open to question. It seemed to me at the time a simple matter - I had introduced a client and received an ex gratia payment for that and that alone. There was no further obligation on either party.

  Had there been one, as when I became a consultant to NNC, I would have registered it.

  749. The accounting evidence shows conclusively that Greer's commission arrangements were standard in form - 10 per cent of the first year's fees was paid to the introducing party, whether or not he was an MP.

  Furthermore, the fact that I shared one payment with Michael Brown demonstrates that the payment was exactly what is stated - a commission payment on the introduction of that particular client, US Tobacco, and not a convert payment for some other service. However, given the changed climate of today, I acknowledge that such payments are bound to arouse suspicions, fairly or unfairly, and I would not now accept them.

  750. I do not understand the answer which I am reported as having given to Q2133.

  The point I was trying to make here is that, had Greer and I really wanted to conceal these payments it would have been very simple to do so. The entire sum of £10,000 could easily have been disguised as purchases for his company without identifying me in the accounts at all.

  It is only because he and I accounted properly for the payments - through my signed receipts and his book-keeping entries - that the details have been fully traceable. Furthermore, I did report the facts to my accountant and we discussed the tax treatment of them. Had Greer and I wished to conceal these payments he would not have mentioned them to his accountants and I would not have mentioned them to mine. It would then have been all but impossible for anyone to discover their existence.

Q2135. Were the payments and the method of receipt reasons for dropping the libel action?

  751. It was inevitable, following my disclosure of the two payments in my witness statement, that we would have to disclose all their details on Discovery. The details in my accounts as the payee would have to match those in Greer's. That would have entailed disclosing not only the July 1989 cheque but also the details of the payments in kind.

  752. There could be no question of failing to do that. I knew that from the moment I issued the writ. I knew that it would have to be explained at trial. If I had thought it fatal I would not have proceeded with the action at all.

  753. Furthermore, even if I had not addressed this point at the start, I had certainly done so by the time that the action was stayed in July 1995, which was more than a month after the witness statements had been served. However, after the action was stayed in July 1995, I went to the unprecedented length of amending the Bill of Rights 1689 in order to revive it in the full knowledge that every aspect of the commission payments would have to be dealt with at trial.

  This issue had no bearing whatever on my decision to discontinue.

Q2147. The air tickets to New Orleans

  754. The cost of these tickets was £1,594. I have found the originals amongst my papers relating to the Republican Convention and copies are attached hereto.

  My wife and I stayed at the Monteleone Hotel in New Orleans from 13-18 August with a delegation of Conservative MPs and others. The hotel costs were a package deal booked through Conservative Central Office in London and paid for in advance. I have checked this point with Sir James Spicer MP, who was at that time the Chairman of Conservatives Abroad, under whose auspices the trip was organised and who accompanied us on the trip. He has agreed to confirm the arrangements should you require this.

  Whilst in New Orleans we had virtually no expenses, as is apparent from the Schedule of Events - comprehensive hospitality was organised each day by the Republican Party. The Conservative Party does the same for foreign guests at its Conference here.

  Before going to New Orleans we had flown from Gatwick to Charlotte, North Carolina. I then gave a lecture to the English Speaking Union in Greensboro, North Carolina, where we had stayed privately with an old friend of mine who was Chairman. From there we flew to Charleston, South Carolina, to stay privately with other friends before flying on to New Orleans.

  From New Orleans we went to Colorado, where we stayed privately with friends. The credit card entries refer to this section of the trip.

  No doubt we purchased some dollars before departing. The item for £605.95 debited on 9 August looks like a purchase of £600 in dollars plus 1 per cent commission but I cannot confirm this with other documents.

  I hope that disposes of any lingering suspicions of illicit cash in respect of that trip.

Q2151. Tax treatment of costs of attending Republican Party Convention.

  755. Sir Gordon told me some weeks ago that he had no intention of setting himself up as an Inspector of Taxes second-guessing the tax treatment of my income and expenditure. However, it is clear from Q2151 and others that that has become a feature of the Inquiry.

  I think this is unfair. However, as Counsel has raised suspicions, clearly I must deal with them. I claimed only a portion of the travel and accommodation expenses in attending the Republican Party Convention and was careful not to claim any amount in respect of the recreational part of our trip. That is why the total claim is less than the cost of the air fares alone.

  The question of the tax treatment of any individual receipt of payment is not relevant to the tax treatment of any claim for a deduction. They are two quite separate issues. Expenditure can quite easily be deductible, even though it is paid for out of a payment which is not taxable. The air tickets were purchased with moneys which were due to me.

Q2162. and ff. The tax treatment of commission payments

  756. Until we explored the issue when I gave oral evidence I thought that I had asked Greer to pay me the UST commission and the remainder of the NNC commission by cheque following a discussion with my accountant, who advised that neither would be taxable.

  757. Counsel reasoned that this could not be so as the cheque predates the attendance note of my accountant. Clearly, my previous conclusion must have been a muddled recollection on my part - unless the date on the attendance note is incorrect, which I do not think is likely.

  758. How did my misapprehension arise? It was only in the weeks before the trial date that I began to think about this issue. By then seven years had elapsed since the events and conversations concerned. I did not devote a great deal of attention to this as I thought I could recall what had happened. I did not focus on the dates on the documents.

  759. The most obvious explanation for the appearance of the cheque is that Greer simply wanted to clear his books. The payment was made close to the end of the first twelve months of the UST contract. Greer would have known then what 10 per cent amounted to; and I presume he added the remaining £746 of the NNC payment to tie up a loose end.

  760. Within ten days of its receipt I was discussing my tax return for the year 1988-89 with my accountant and I reported to him the full amount of the payments, including the benefits in kind which were all received in that tax year. Clearly, therefore, I was not attempting to conceal them. If I had been, I would not have mentioned them.

  761. The payment by cheque can have had nothing whatever to do with the Andrew Roth incident. I do not recollect being aware of Roth's conversation with Grylls at that point. Nor had I been told, by Grylls or Greer, that Grylls had received commission payments.

  If Greer and I had been concerned to conceal these payments because of Andrew Roth we could easily have done so. Neither of us needed to reveal the nature of the payments to our accountants. They could quite easily have been "lost."

  762. If I had been concerned about commission payments as a result of Andrew Roth there were a number of options.


  Firstly, I could have returned the cheque, saying I no longer thought it wise to accept.


  Secondly, I could have asked Greer to continue paying me in kind and to "lose" the payment in his accounts by purchasing, say, office equipment.


  Thirdly, I could have delayed banking the cheque and consulted Greer and/or my accountant before deciding what to do.

  I did none of those things. As part of my return of income for the previous tax year, which I habitually discuss with my accountant in the summer, I revealed the full amount of the payments, including the cost to Greer of the benefits in kind. There was no concealment at all.

  763. Furthermore, Greer asked me for signed receipts, which I was happy to produce. This would hardly have happened if there had been any intention to conceal. The documents prove that I had already reported the payments to my accountant before I signed the receipts.

  764. Whatever view is taken of the accountancy and tax treatment of these payments the one thing which is clear is that they were fully recorded in documents and disclosed to professional advisers on both sides. That is not consistent with an intention to conceal.

  765. Q2202 Bank account details.

Save & Prosper
3 August 1987£2,000Fees Office cheque 16 July
12 August 1987£900BAA share offer (similar item on deposit account)
25 September 1987    £1,500Fees Office cheque 10 September
27 November 1987£1,500Fees Office cheque 19 November
24 December 1987£1,923.54 Fees Office cheque of £1,750 17 December. Presumably another cheque for £173.54 accompanied it.

NatWest Deposit Account
29 June 1988£3,900Fees Office cheque 23
5 July 1988£1,250NALOO quarterly fees
26 July 1988£2,175Fees Office cheque 21 July
28 September 1988£1,250NALOO quarterly fees
19 December 1988 £1,360 Payment relating to great aunt's estate. Cheque to close bank account £1,194.58. Presumably accompanying item(s) amounted to £165.42

April 1988-April 1989 Deposits
21 April 1988£1,350NALOO quarterly fee plus £100
24 May 1988 £5,000 Loan from father to purchase £5,000 of shares in Proctor's - debit item appears 27 May from current account
27 May 1988£5,000Gerald Howarth cheque (proceeds of legal action)
17 June 1988£2,172.11Tax refund £2,106.11 plus £166
29 June 1988£3,900Fees Office cheque 23 June
5 July 1988£1,250NALOO
26 July 1988£2,175Fees Office cheque 21 July
23 September 1988£2,310Fees Office cheque 15 September
28 September 1988£1,250NALOO
17 October 1988£1,322.19Tax refund
20 October 1988£2,040.26Great aunt's estate
24 October 1988£8,163.11Great aunt's estate
29 November 1988£1,254.92Great aunt's estate
19 December 1988£1,360Great aunt's estate £1,194.58 plus £165.62
22 December 1988£2,175Fees Office 16 December
4 January 1989£1,632.95NALOO £1,250 plus £382.95
11 January 1989£7,660NNC cheque £7,500 plus £160.
9 February 1989 £4,555.50 Transfer £4,500 from Save & Prosper to NatWest current account plus £5.50
4 April 1989£1,574.92NALOO £1,250 plus £324.92

  I believe that this explains all the deposit items apart from £646.93 paid into the Save & Prosper account on 28 November. This was a postal banking account; I do not believe there were branches to receive payments, so it is fanciful that this might have been a cash deposit.

"Unexplained" payments

  At Q2211 Counsel observed that the monthly credit card payments did not correspond to cheques drawn on the bank accounts. I explained that my wife, then as now, paid with one composite postdated cheque to cover both her and my debts.

  I attach a copy of some old cheque stubs which I have discovered, which illustrate this point:

  On 19 June 1988 a cheque was paid to Barclaycard for £621.34 which covered a payment on my behalf of £137.78 which appears on the July statement.


  Similarly a cheque for £1,136.13 was issued on 13 January 1989, of which £36.43 covers the payment on my behalf credited on 8 February.


  Similarly on 10 February a cheque was issued for £210.30, which covered a payment on my behalf of £19.71 credited on 23 February.

  An examination of our more recent cheque stubs will illustrate this also.

Q2215. £40,000 loan from my father.

  766. We completed the purchase of The Old Rectory at the end of February 1990 but did not sell our old house until August. We therefore had to have a bridging loan. Two cheques for £20,000 were credited to the Special Reserve account on 21 and 22 February; a cheque for £40,000 was debited on 22 August.

  My wife's parents similarly gave us a bridging loan of £70,000 which was credited on 23 February and debited on 21 August.

  767. Q2226. My answer to this question is incomplete. The point I was trying to convey is that (a) I was unaware of the possibility of a commission payment and (b) Greer was unaware of the existence of NNC at the time I made my recommendation. Therefore, there was no connection between the decision to recommend and the decision to offer a commission.

Q2238. "Cash for Questions" a Fayed invention

  768. Counsel objected to my stating this fact. It is important to realise that Fayed's story has achieved world-wide attention only because of two startling features:

  (a)   Fayed's original taximeter allegation of charging £2,000 a time (or £1,000 or £3,000 or "rough guess" intermediate figures) for Parliamentary Questions.

  Fayed long ago abandoned this allegation. Neither he nor The Guardian ever produced a shred of evidence to justify it. The documentary evidence proved to be false from the outset. Fayed has now very explicitly stated that whatever he paid to Smith was not related to any particular activity and he says the same in respect of his false claims about me.


  (b)   Payments in cash.


     The original allegations did not mention direct cash payments. The Guardian did not print this allegation until 2 October 1996, nearly two years after Fayed produced the D J Freeman letter, from which, since 23 January 1997, he has sought to resile.

  769. The true story is that Tim Smith had an undisclosed consultancy of a general nature, in the course of which Fayed made occasional payments in cash, apparently unrelated to any specific Parliamentary activity. That truth was revealed privately to the Prime Minister in October 1994, and to the Inquiry in Smith's evidence in February 1997 but the general public is still unaware of the details.

  770. In fact, despite the unusual nature of the payment, as Smith banked the cash and accounted for it for tax purposes, the only point of criticism in terms of House of Commons rules is that he did not register it in a timely way. If Fayed and The Guardian had told the truth from the start the story would not have grown legs and run around the world.

  Nor would this Inquiry have been appointed - even if the story of the commission payments had been added to it.

  771. Smith ought to have registered his interest earlier than he did. Similarly, with hindsight, I ought to have registered my commission payments. But even if the worst construction is put upon this, the payments themselves were quite legitimate under the Rules as they then stood. Had the payments been as Fayed and The Guardian alleged they would have been corrupt and unlawful.

  772. The damage caused to Parliament and to individual reputations has been vastly magnified by the devilishly clever way in which Fayed's allegations have been dishonestly contrived. The evil genius is probably Michael Cole, Fayed's wordsmith.

Q2243. US Tobacco lobbying

  773. Counsel voiced suspicions that the commission payment was not for the introduction of UST but a disguised form of payment for my activity on their behalf.

  As a result of my experiences with this Inquiry I can now see why such suspicions might be aroused. However, the need for a lobbyist arose when the issue came to head, with the announcement of the proposed ban on oral snuff in February 1988. Prior to that UST were in the throes of negotiating a voluntary agreement with the Department of Health to restrict sales to minors. There appeared to be no problem with this and, although I discussed this and other tobacco issues with UST from time to time, no intervention by me was either sought or necessary.

  774. Greer was called in because the issue boiled up. That explains the coincidental timing of my own activities in meeting Ministers and, ultimately, tabling my EDM. If UST had already engaged another lobbying firm, I have no doubt that I would have become involved in the same way, on account of the amicable relations we had established through the BBC libel cases.

  775. Similarly, in Michael Brown's case, his activities formed part of a continuum beginning some years before we introduced Greer and continuing long afterwards.

  Whatever view is taken of my own role, it is obvious in Brown's case that the Greer payment was irrelevant to his Parliamentary activities on UST's behalf. But, as we received the payment jointly because of our joint role in the introduction, it must surely follow that it was irrelevant to my activities also.

  776. Nevertheless I acknowledge that it might reasonably be perceived otherwise and, at the time, I considered the question of registrability from too subjective a standpoint. I repeat that the Members' Interests Committee in July 1990 confirmed that the rules were less clear in those days and that different Members could, in good faith, interpret them somewhat differently.

  777. I acknowledge also that it would have been prudent to consult the Registrar. Like the majority of Members in those rather more relaxed days, having concluded that the payment was not registerable, I did not give it another thought. I knew that my conduct had not been influenced by it and that was enough.

  778. I recognise in retrospect that I ought to have considered it from the standpoint of the suspicious bystander. But most Members, in my experience, did not take that censorious view at the time - as is evident from the dozens of Members of all parties who have never registered the Conoco weekends at Gleneagles Hotel and, no doubt, much else besides.


 
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