Select Committee on Standards and Privileges First Report


APPENDIX 33 - Continued

APPENDIX 7

COMMISSION PAYMENTS

  On two occasions I received an ex gratia payment from Ian Greer Associates following the introduction of new business to the firm. The two companies concerned were the National Nuclear Corporation and the United States Tobacco Company.

  Neither company had any connection with Fayed or House of Fraser. There was no express or implied prior agreement that IGA should make these payments. IGA had no legal obligation to pay anything. Nor did I have any legal right to be paid anything. Furthermore, there was no expectation that further services of whatever nature would or ought to be rendered in exchange for the payment, which was purely a goodwill gesture.

NATIONAL NUCLEAR CORPORATION

  Since my first election to Parliament in 1983 I have actively supported the nuclear industry. I was for many years a member of the British Nuclear Forum, which brought together MPs and nuclear industry leaders. I am well acquainted with the major companies, which employ substantial numbers in the North West, and Cheshire in particular. One of these, National Nuclear Corporation (NNC) is based at Knutsford in my constituency. The company designs and project-manages the construction of nuclear power stations.

  Until 1988 the Government had a majority shareholding in NNC. The company was anxious to be privatised so that it could develop without having to secure Treasury authorisation for borrowing and without having to agree all major policy decisions with the DTI or Department of Energy.

  I regularly visited NNC to discuss general matters of concern to them. I knew the main directors personally.

  In the mid 1980s NNC wanted to raise its profile in the political world, to raise awareness of the importance of the nuclear engineering industry and to encourage moves towards privatisation.

  I was asked if I could recommend a firm of lobbyists to help raise awareness. At this distance in time I cannot remember exactly who initiated the request, but it was either Derek Taylor, (Managing Director of NNC), or Neil Forsyth (Director, Personnel and Corporate Services). I recommended Ian Greer as a starting point and informed them that his company, IGA, was widely regarded as one of the most effective lobbying companies. I informed NNC about IGA's recent success on behalf of British Airways, which was widely reported.

  The Guardian maintained in its Defence that the payment of introductory commissions is not usual practice in the industry and I understand that they were intending to call Andrew Gifford of GJW lobbyists to give evidence to that effect. It is relevant in this context that Andrew Gifford himself paid an introductory commission to Ian Greer at or about the time Gifford was assisting The Guardian. His evidence is therefore unconvincing.

  I had regular contact with NNC from 1983 when I was elected MP for Tatton. With over 1000 employees based in my constituency the reason for my association with the company is self-evident. I visited NNC at least twice a year and also visited power station sites, such as Torness and Heysham. I was in regular contact with BNFL and had been to visit Sellafield in Cumbria on several occasions.

  It was in this context that Derek Taylor formally asked me to become a consultant to NNC. I served for one year from 1 November 1987. My involvement was principally intended to assist NNC in raising awareness and understanding of the nuclear engineering business amongst Members of Parliament. The company asked me to become a consultant because they said that my work would go beyond what they would expect of me as a Member of Parliament.

  Details of the consultancy were registered with the Registrar of Members' Interests on 21 November. My consultancy came to an end following the purchase by GEC of the Government's shareholding in NNC.

  In helping NNC I was being entirely consistent with my long-term public stance on the civil uses of nuclear power. In support of this I set out below the dates upon which I made interventions in the House on nuclear topics. It will be seen that five of them took place prior to my being approached to accept an appointment as consultant and four before IGA's appointment:

21 December 1983(Sellafield discharges - Ministerial Statement)
14 May 1984(Electricity generated by Magnox and AGRs - WPQ)
13 May 1986(Debate on nuclear energy - intervention)
12 March 1987(Sizewell B - Ministerial Statement)
11 May 1987(Debate on nuclear energy - speech and intervention)
7 March 1988(PWRs - oral PQ)
28 March 1988(Announcement of NNC exhibition - WPQ)
21 July 1988(Fast reactor programme - Ministerial Statement)

  In 1989 and 1990 my Parliamentary duties (chairing a private Bill) made it impossible for me for over a year to participate in Question Time or to intervene on Statements. In July 1990 I became a Minister. It is largely for that reason that there are no more references in the Hansard index to my continuing interest in the nuclear industry - until I became a backbencher again in October 1994.

  I bring this information to the Inquiry's attention in order to counter The Guardian's allegation that the tabling of Parliamentary Questions was connected to the payment of introductory or consultancy fees. My interest in the nuclear industry has been consistent during my time in Parliament and bears no relation to my year's consultancy with NNC.

UNITED STATES TOBACCO COMPANY

  My initial contact with UST executives arose through their involvement in a libel action against the BBC concerning one of Esther Rantzen's "That's Life!" programmes. They wrote to me in April 1986; we met and this led to a discussion of public policy issues affecting the tobacco industry generally.

  Ever since my election in 1983 I have been a member of a loose all-party group of MPs who opposed further restrictions on tobacco advertising and other attempts by Government to browbeat people on smoking-related issues. I have frequently made representations to Ministers on tobacco taxation and related issues. I have also, from time to time, signed relevant EDMs.

  I have been associated with FOREST (Freedom Organisation for the Right to Enjoy Smoking Tobacco) since its inception in 1984. I was also for many years a member of the Tobacco Advisory Council. I belong to the Lords and Commons Pipe and Cigar Smokers Club.

  Lord Harris of High Cross, Chairman of FOREST for about ten years, will confirm the strength and consistency of my support.

  To the best of my recollection, sometime in 1988 UST invited Michael Brown and me to lunch. (Brown has a long history of activity in Parliament supporting a libertarian approach to smoking and tobacco).

  The Department of Health had announced in February 1988 that it proposed to introduce Regulations to ban the sale of one of their products - Skoal Bandits, known officially as oral snuff. Their existing PR company was not experienced in Parliamentary lobbying and we were asked if we could recommend a specialist company to help.

  Brown produced a list of three companies, which included IGA. We both spoke highly of IGA. I understand that UST considered these three (and possibly other companies) and, in May 1988, chose IGA in open competition. Some time afterwards Greer offered us an introductory commission payment, which we shared. This was calculated, according to what I now understand to be Greer's invariable practice, on the basis of 10 per cent of the client's first year's fee, so Brown and I received 5 per cent each.

  This was "ex-gratia" payment wholly related to the introduction of UST to IGA. No Parliamentary services were demanded or expected in return.

SKOAL BANDITS

  Oral snuff has been a major product lawfully sold in Sweden for over 200 years. A sachet, akin to a teabag is filled with tobacco, which is placed between the gum and the cheek. Nicotine is absorbed in the mouth. The Government's Committee on Carcinogenicity of Chemicals in Food, Consumer Products and the Environment (COC) advised that, whilst there was a causal connection (as with cigarettes) between oral snuff and cancer, the overall health risk was less than that incurred in smoking cigarettes.

  Furthermore, the company had been encouraged by the Government to set up a manufacturing plant in East Kilbride and a grant was provided for this purpose.

  I was not attracted to Skoal Bandits personally but I objected on libertarian grounds to the Government's proposals to ban oral snuff. I also thought it unfair on grounds that:

  (a)   UST had been encouraged by the Government to invest in a manufacturing plant in Scotland and yet, only a short time afterwards, it was legislating to close it down;

  (b)   there was no new scientific evidence which justified a change in Government policy;

  (c)   the company had been negotiating in good faith with the DHSS with a view to concluding a revised voluntary agreement to include a health warning on the packaging of Skoal Bandits and to restrict advertising.

  Michael Brown and I (together with other MPs) had several meetings with Ministers and in December 1989 I tabled a motion to annul the draft Regulations which proposed to ban oral snuff. No debate took place and the Regulations came into force in March 1990.

  UST then made a successful application for Judicial Review to the High Court, which quashed the Regulations as "unfair and unlawful."   In view of the criticism of me in connection with a telephone conversation I had with Michael Heseltine prior to my resignation from the Government, it is interesting that the Court held that Ministers had shown lack of candour with the company. In The Guardian's words:

  "(UST) wanted to see what reasons had led the COC, on unchanged evidence to change its views . . . (UST) had been led up the garden path . . . fairness demanded that it should be treated with candour. To conceal from it the scientific advice which directly led to the ban was unfair and unlawful."

  (The Guardian, Law Report 22 January 1991, page 35).   Furthermore, it is clear from the official advice accompanying draft letters of reply that the Government was acting duplicitously, in encouraging UST to put forward further proposals in respect of a voluntary agreement on marketing whilst knowing that the decision to impose a ban on the product had already been taken and awaited only the official announcement. (See, e.g., Confidential Note of 11 July 1989 from Mr McCulloch to Mrs Goldhill, Private Secretary to the Secretary of State for Scotland.)

LETTERS FROM EDWINA CURRIE AND DAVID MELLOR

  I note that both Mrs Currie and Mr Mellor have in recent months reviewed the Department of Health files on the Skoal Bandits issue, although Mr Mellor says that he has not re-refreshed his memory as a result of your request to him to give evidence at the Inquiry.

  I did not know that he had intended to appear as a witness for The Guardian in my libel case. No witness statement was served upon me on his behalf, nor was any indication given that The Guardian might call him.

Both their letters contain errors.

1. Mrs Currie

Mrs Currie says that Skoal Bandits were not legal in the UK in 1988. This is incorrect - the argument was about whether a proposed ban was justifiable.

  Mrs Currie bases her support for a ban on grounds that:

  " . . . they caused in particular a form of mouth and throat cancer which was virulent, which tended to attack young people (unlike the main tobacco cancers), which was site specific in that cancerous ulcers would develop at the site where the tobacco pouch was normally lodged in the cheek."

  There are a number of inaccuracies in this:

  (a)   the health risks from oral tobacco products in a pouch are very small, particularly when compared to other forms of tobacco use.

     A study carried out in 1978 in Sweden (where oral snuff is widely used) by the Lund Dental School concluded that the risk of contracting oral cancer from this product was one case per annum in every 50,000 snuff users. This compares with 120-140 cases of lung cancer in every 50,000 smokers and 14 cases of lung cancer in every 50,000 non-smokers.

  (b)   there was no evidence of increased susceptibility amongst young people. Nor was there any evidence to show an increasing use of oral snuff amongst young people - even in a study in Alabama, which had no legal minimum age for usage.

     There was no evidence that any form of smokeless tobacco was becoming more popular in the UK - whether nasal or oral snuff or chewing tobacco. The evidence from around the world showed that culture factors and parental example were the most important influences in the different patterns of usage in different countries.

  (c)   the Government itself accepted that smokeless tobacco products were safer than cigarettes. No new research findings had been made to justify a change in Government policy since the earlier decisions, in 1984 to encourage UST to manufacture in the UK, and in 1985 not to ban the product on health grounds.

  Mrs Currie refers to photographs of oral cancers which she passed around at our meeting. I did indeed regard these as irrelevant to the discussion. The essential question was whether the degree of risk attaching to this form of tobacco use as compared with other lawful uses could rationally justify a ban.

  Mrs Currie is an enthusiastic supporter of "gay rights," and supported the campaign to reduce to 16 the legal age of consent to homosexual acts. She appears not to have been convinced by photographs of AIDS victims that homosexual buggery should be criminalised in spite of the known significant health risks of this form of sexual activity. Her libertarian concerns appear to be rather selective, not to say illogical.

  Mrs Currie says:

  "it was well-known that these MPs were being paid by tobacco lobbyists."   I believe that Sir William Clark MP was a consultant to UST for one year and that fact was registered. I am not aware that Eric Forth, John Lee and Allan Stewart were paid by tobacco lobbyists and, if Mrs Currie has evidence that they were, she should produce it or withdraw her allegation.

  Neither Michael Brown nor I were paid to lobby on tobacco interests. For the reasons set out elsewhere in this Submission we did not, at the time, regard the commission payments as registrable or declarable as they did not influence our conduct in any way.

2. David Mellor

  Mr Mellor's letter also contains inaccuracies:

  (a)   "When I became Minister of State for Health, a position I held between July 1988 and November 1989, I was disturbed to discover that US Tobacco wished to manufacture . . . Skoal Bandits and were in line to receive an investment grant from the Scottish Office . . . "

     UST were already manufacturing and had already as far back as 1984 been offered regional aid to induce the company to locate in Scotland. The company was offered Regional Selective Assistance and Regional Development Grants amounting to £1,045,000 and had actually claimed RDGs on its investment at East Kilbride of £193,357.

  (b)   "I saw papers that plainly evidenced the greatly enhanced risk of appalling oral cancers as a result of using this product . . . "

     As shown above, the risks were small compared with other products which Mellor did not propose to ban.

  (c)   " . . . I determined to render its use unlawful . . . "

     Insofar as Mellor seeks by this to convey an impression that this was his initiative he is mistaken. The draft Regulations were announced on 26 February 1988, five months before he became a Health Minister. By the time the Regulations were actually laid in December 1989, he had ceased to be a Health Minister.

     It is true that he was responsible in the meantime for the Ministerial decisions which ultimately led to the Regulations being quashed by the High Court on grounds that Ministers had shown a lack of the candour to which UST was reasonably entitled, and had behaved unfairly.

  Mr Mellor says that he agreed to see us only with "an ill concealed bad grace". I have to say that I did not, at the time, notice that his attitude towards us was uncharacteristic of him in any way.

THE TAX TREATMENT OF COMMISSION PAYMENTS

  When discussing my 1988-89 tax return with my accountant in the summer of 1989 I gave him the details of all moneys due and received in respect of the introductions of NNC and UST, including benefits in kind. He advised that they were gratuitous payments which were not taxable as income.

  This opinion is supported by case law, principally Bloom v Kinder (1958) 38 TC 77 and Scott v Ricketts (1967) 44 TC 303.

  Bloom v Kinder demonstrates that a Schedule D Case VI assessment can be resisted even in a case where the payee has performed services or quasi-services for the payer.

  Bloom was a partner in a firm of solicitors and entered into correspondence with Cecil Moores of Littlewoods, which led to Moores purchasing the issued share capital of a firm of drapers.

  Littlewoods wrote to Bloom to say that their usual practice was to pay commission of 1.5 per cent. of the consideration in cases of that nature, despite the fact that there was no legal obligation upon them to pay anything. Bloom wrote back to say that this sum was acceptable to him as "the usual agency commission in the district," by which he meant the usual commission charged locally by estate agents and solicitors for negotiating sales of property.

  Bloom argued that the payment was a freewill payment or gift by Littlewoods.

  Vaisey J HELD: where there was no contract a commission payment was not assessable to tax under Case VI or any other provision.

  Further and higher authority for the general proposition is provided in the case of Scott v Ricketts, a Court of Appeal decision in which Lord Denning MR said:

  "The crux of the present case is that Mr Ricketts (the taxpayer) had no legal ground to be paid anything. All he had was a moral claim . . . " (at paragraph 321H)   But, even if he had had a legal claim under a contract, it is not every contract which would give rise to a tax liability:

  "The Judge (at first instance) seems to have thought that, as the payment was made under a contract, that was enough to bring it within Case VI. I cannot agree with him. It must be a contract for services or facilities provided or something of that kind."

  There was no contract, whether express or implied, between me and Greer. That must be beyond argument in respect of the NNC payment as it was not until after the recommendation had been made and the contract between Greer and NNC had been agreed that I was told about it.

  Had there been many such commissions it might be possible, in the absence of express agreement, to argue that an implied contract had arisen by the conduct of the parties. But a mere spes (or hope/expectation) does not in itself give rise to a contract capable of being enforced at law.

  Way v Latilla [1937] 3 All E.R. 759 is authority for the proposition that, while the Courts will accept the conduct of the parties and surrounding circumstances as establishing a contract for services, there must be positive evidence that the services were NOT to be gratuitous before an agreement to pay remuneration could be inferred.

  In any event Greer had no intention to create legal relations between us and it would be very difficult to argue that, just because I had received one gratuitous payment previously, enforceable obligations had been created, compelling him to make another payment if the circumstances were repeated.

  My accountant's view was and is that, as there was no contract between me and Greer, the payment was not taxable. Furthermore, his advice was and is that

  "At the material time there was no requirement to disclose on the tax return the receipt of gifts other than those received in the course of employment or which could be construed in exchange for services rendered."

  In Bloom v Kinder it was clear that Bloom had been paid in exchange for services rendered to Littlewoods - but the key point was that there was no legally enforceable obligation to pay.

  I submit a letter from my accountant confirming his advice. This was the basis on which my accountant prepared my tax return and which, relying on his professional advice, I duly signed.

  A copy of the note which he took of our telephone conversation of 24 July 1989 is also exhibited to this submission. From this document is evident that I was not seeking to conceal the receipt of these payments. Had he advised that the payment should be then included on my tax return and acted accordingly I would have signed the accompanying declaration in the usual way.

  Furthermore, the payments were fully receipted for IGAs accounting purposes and appropriately entered in their accounts. Hence the payments were properly accounted for, in accordance with the law on both sides.

  Additionally, on two occasions I received hospitality from UST: 1. St James's Court Hotel:

  Sometime in the Summer Recess in 1989 I stayed for one night at the St James's Court Hotel in Buckingham Gate, Westminster.

  Some UST executives came to London on business and I was asked if I would attend a discussion dinner with them at IGA's offices. I was happy to do this but I had a problem as I had nowhere to spend the night. Hence, a room was booked for me at a nearby hotel.

  My wife and I frequently lend our flat to friends at weekends and in the Recess sometimes for periods of a week or more. On this occasion the flat was being used by some American friends for a holiday.

  As I did not arrive at the hotel until after dinner (probably 11.00 pm) and got up to catch the 7.45 am shuttle to Manchester from Heathrow it is rather fanciful to present this "hospitality" as "lavish"; it was merely a place to sleep.

  I do not believe that this would be registrable in any event as it was hardly a "benefit." It was merely an incident of attending the dinner. I would rather have slept in my own bed but that was not possible. Additionally, the room charge is unlikely to have exceeded the de minimis registration threshold which has since been introduced.

2. Essex House, New York:

  In October 1989 I visited the US with the Treasury Select Committee. Our itinerary included two days in New York.

  UST's Senior Vice President (Marketing) invited me to attend a dinner party the day after the Treasury Select Committee concluded its business and suggested, to avoid the nuisance of changing accommodation for one night, that I should stay in UST's accommodation at the Essex House for the Select Committee days also.

  The Essex House is part hotel/part condominium and UST retained accommodation there permanently. The value of the accommodation cannot readily be quantified; I have been told that it was not priced by the day. However, the Essex House is of a comparable standard to the Intercontinental Hotel, where the rest of the Committee were staying at the time. It should be noted that I have entertained the Chief Executive of UST and his wife, and other UST executives, to lunch/dinner at the House of Commons at my own expense.

  The allegation by David Leigh that I was "on a free holiday" with my wife has no foundation. It was not a holiday and my wife was last in New York in 1980, three years prior to my first election to Parliament.

REGISTRATION OF COMMISSION PAYMENTS

  The Select Committee on Members' Interests considered the question of registrability in 1990. In their Third Report the Committee said:

  "In our view there is no doubt that (such payments) should be registered."   However, the Committee also accepted that the Rules were not clear on this point:

  " . . . it may not be readily apparent from the description of each category contained in the introduction to the Annual Register that commission payments of a minor or casual kind should be registered or where they should be registered."   The Committee also accepted that:

  " . . . different Members may well, in good faith, interpret (the rules) somewhat differently."

  With the benefit of hindsight and in a more censorious climate my judgment as to the registrability of the two commission payments is open to question. I ask, however, that the lack of registration be judged in accordance with the interpretation of the rules prevailing at the time and that the following matters be taken into account:   1. The payments were not made pursuant to any agreement.

  2. The payer had no expectation of any return.

  3. It was normal practice in the industry.

  4. The nexus of the payments was the introduction of new business, not my position as an MP.

  5. There was no attempt at concealment:

  (a)   I signed receipts for IGA's accounting purposes;

  (b)   I declared the receipts to my accountants who prepare my tax returns and advise me on Revenue practice.

  6. There is no evidence that my relationship with either company swayed me in the exercise of duties as a Member of Parliament, nor did they in fact do so.

  7. Neither payment falls within the definition of the nine categories referred to at the material time in the Introduction to the Register.

  8. The view I adopted, namely that the payments did not fall within the rules relating to registrability, is one that could be legitimately taken at the time. In this context I draw the Inquiry's attention, in particular, to the Select Committee on Members' Interests, First Report 1994-95, paragraph 13:

  "The primary purpose of the Register (is) . . . to provide information of any pecuniary interest or other material benefit which a Member may receive which might be thought to affect his actions, speeches or vote in Parliament."

  "The most recent Register (1995), adopting the Committee's recommendation in the First Report of Session 1991-92, has altered the final phrase to read ªwhich might REASONABLY be thought BY OTHERS to influence his or her actions," thus introducing an objective test whose purpose was "to remove any possibility of the existing words being interpreted in a wholly subjective sense and this misinterpretation being advanced as a justification for a failure to disclose relevant interests." [HC 326 (1991-92, paragraph 27]."

  The Committee went on to explain 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."(paragraph 17)

  9. I commenced libel proceedings against The Guardian in the full knowledge that my receipt of these two commission payments would become public knowledge, and accordingly volunteered the information in my witness statement signed as long ago as June 1995.

  I have learned by bitter experience that the media and one's political opponents are always ready to put the worst possible construction on an innocent transaction. As Tony Blair has recently discovered, the creation of a blind trust with impeccable trustees to fund his operations has not dispelled the suspicion that financial favours may be repaid in due course.

  Like him, I had no ulterior motive and nothing whatever to gain from concealment. That must be obvious from my separate registration of NNC. It seemed to me at the time that it could not reasonably be inferred from the facts that the payment might influence my conduct in Parliament and I assumed therefore that it need not be registered.

  I cannot pretend accurately to recall my thought process at the time, but I believe my reasoning would have been as follows:

  the Introduction to the Register stated that its scope sought to:

   "balance . . . what should be publicly known about MPs with . . . the proper degree of privacy to which they and their families are entitled."

  Looking at the nine specific categories for registration of particular interests none of them appears to be appropriate to such one-off commission payments. The most appropriate categories appear to be the following:

   category (4) - clients. But IGA were not clients of mine. Nor did I perform, in return for the payments, "personal services" . . . "arising out of or related to" my membership of the House. The "service" was complete in itself in the introduction of the client; there was no further obligation on my part.

   category (5) - financial sponsorships. This applies to "gifts in relation to a Member's parliamentary duties". But the payment was not made to me "in relation to my parliamentary duties"; it was made because I had recommended a client. My status as an MP was irrelevant; the nexus was the fact of the recommendation and the subsequent signing of a contract.

  None of the other categories is even remotely relevant.

  As I did not consider at the time that the payments had any bearing on my parliamentary conduct I took the view that I was entitled to the benefit of the "proper degree of privacy" referred to in the introduction to the Register.

  I said in my witness statement in May 1995:

  "Having thought much about this, I now think I applied too subjective a test - even though the test of relevance was not then couched in the explicitly objective terms introduced in 1992." (paragraph 22).

  As stated above the test was changed from a requirement to register benefits "which a Member may receive which might be thought to affect his actions, speeches or vote in Parliament" to register those "which might reasonably be thought by others to influence his or her actions etc.," (See Members Interests' Committee, First Report, Session 1994-95 at paragraph 13).

  However, when I was offered the commission payments the original rules which "were not free from ambiguity" then applied. I did not at that time think them ambiguous. It appeared to me, and presumably to Michael Brown, that casual payments of this kind did not come within the requirements of registration.

  If this was an error of interpretation on my part, it was an innocent one. In the circumstances of this case I and my family have paid a price which I think no reasonable person could claim to be proportionate to the error.

  Were it not wrapped up in the outrageous falsehoods of Fayed and The Guardian, with the vast world-wide publicity which they have calculatedly engendered, this infraction (whilst it may have been criticised) would never have attracted the degree of opprobrium which it has.

  I accept that the purpose of applying an objective test is to protect the House itself and its Members from being diminished in public esteem by such opprobrium. I accept also that the House has been greatly diminished in public esteem by the whole "cash for questions" saga.

  But without Fayed's deliberate lies and The Guardian's reckless indifference to the truth, which caused those lies to be disseminated with the force and speed of an explosion, this error of judgment on my part would have been relegated to an inside page of the newspapers on a single day and would never have had more than a fraction of the impact on the public mind which it has.

  If it is now considered that my interpretation of the rules was mistaken, I apologise unreservedly to the House for this. However, my intentions were not dishonest. By contrast Fayed has deliberately invented a pack of lies to mount a calculated assault on me as an individual MP, which could not fail to damage the integrity of the House itself.

  Nor could Peter Preston, David Hencke and The Guardian, on the basis of the so-called "evidence" they relied on, reasonably have believed Fayed's allegations about me. As I believe I have shown in my Submission, the documents are at best neutral and The Guardian relied entirely upon the uncorroborated word of Fayed, a man they knew to be not only an habitual liar but also one they knew, or ought reasonably to have known, to harbour malice towards me and a grudge against the government. The first rule of journalism is to treat sources known to have an axe to grind with circumspection.

  Further evidence of their reckless indifference to the truth is provided by the record given to me of a conversation between Hencke and Peter Clarke, (another Journalist and mutual friend), on 15 May 1995:

  "Mr Al-Fayed has given them his cheque book stubs and will be a strong witness. Even if no sums got to you, IG or someone told him he was buying you in some sense. Tim Smith has confessed all. No jury will think you are very different. Even if there was no cash changing hands the lavish hospitality will appear as a trade off. He made the point the reality matters less than the impression to a juror."

  I accept that, with hindsight, I have made misjudgments. But, unlike Fayed, Preston and Hencke I have done nothing dishonest.

  It was always my intention to deal with these payments openly in the libel action. Indeed, The Guardian would have known nothing about them had I not volunteered the information in my witness statement, which they received as long ago as June 1995:

  "I have on two occasions been paid a commission by Ian for introducing new clients to IGA." (paragraph 20).

  The details were later disclosed on Discovery when Greer and I provided bank statements, accounts and receipts fully evidencing the amounts and nature of the payments.



 
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