Letter from the Parliamentary Commissioner
for Standards to Mr Tim Smith MP
I am now in a position to set out in formal
terms the complaint made against you by The Guardian. The
allegations of misconduct are as set out in the draft Amended
Defence of The Guardian in the High Court action 1994
H No. 1654, dated September 1996 which you may or may not have
already seen (for your assistance I enclose a copy of that Draft
Amended Defence). Where there are references in the list of allegations
to Mr Ian Greer, the reference should be read as if it included
Ian Greer Associates Limited, or any similar company or entity
by which Mr Ian Greer carried on the business of public affairs
consultant and Parliamentary lobbyist.
ALLEGATIONS OF MISCONDUCT MADE AGAINST MR TIMOTHY
SMITH MP
1. From 1986 to 1990 you were a member of a
group of 5 Members of Parliament (Mr Neil Hamilton, Sir Michael
Grylls, Sir Peter Hordern, Sir Andrew Bowden - between February
and July 1987 - and yourself), who comprised the parliamentary
lobbying operation for Mr Mohamed Al Fayed and the House of Fraser.
As a member of this group you, together with the other Members
of Parliament in the group, received material benefits for work
undertaken by you, from Mr Al Fayed and/or Mr Ian Greer.
2. On 17 June 1986, as part of that lobbying
operation in an adjournment debate in the House of Commons, you
raised the issue of the independent directors of The Observer
newspaper, and interference by Mr "Tiny" Rowland. You
accused Mr Rowland of running a series of false stories amounting
to a personal vendetta against the Fayed brothers.
3. On various dates in 1987, 1988 and 1989 you
tabled Parliamentary Questions and Early Day Motions on behalf
of Mr Al-Fayed - full particulars are as set out in Paragraphs
(5A), (6), (29) of the Particulars of Justification in the Draft
Amended Defence referred to above.
4. Between 18 May 1987 and 27 July 1987 £18,000
was paid by Mr Al-Fayed to Ian Greer for the stated purpose of
making payments to MPs - part of that sum was paid by Ian Greer
to you.
5. Between approximately 1 June 1987 and
31 December 1989 you received from Mr Al-Fayed approximately
£6,000 in cash, representing payment for your services in
tabling parliamentary questions and motions and other parliamentary
services as set out in these numbered paragraphs.
6. On 1 February 1990, Ian Greer rendered to
House of Fraser a special invoice for £13,333 plus VAT,
specifically to cover disbursements to Members of Parliament including
you.
7. In 1987, 1988 and 1989 you went as a delegate
to Ministers, and wrote to Ministers, to advance the cause of
Mr Al-Fayed and/or House of Fraser, as part of the services which
you were supplying to Mr Ian Greer and/or Mr Al-Fayed, and without
disclosing the fact that you were being paid by Mr Ian Greer and/or
Mr Al-Fayed for performing those services.
8. You deliberately omitted to declare or register
any of the payments and benefits received as set out above, by
making appropriate entries in the Register of Members' Interests
and (as alleged in paragraph 7 above) or by making an appropriate
declaration in all correspondence and meetings with Ministers
or Parliamentary colleagues.
(I attach copies of your Register entries and
relevant correspondence from your Registry file. Please note that
these documents are supplied for your information and assistance,
and they are not to be taken as intended to corroborate or otherwise
the above allegation.)
I would welcome a detailed, written
response to these allegations setting out which are accepted,
which are disputed, and in so far as actions or omissions are
accepted by you as correctly described, providing any explanations
which may assist me in my inquiry. As part of that written response
I would be assisted by details of all benefits (monetary or otherwise,
direct or indirect) received by you or by your family from Ian
Greer (of course including Ian Greer Associates Limited, etc.)
and/or Mr Al-Fayed (or Harrods, House of Fraser or any related
company). If payments were received in cash, I would appreciate
details of how such payments were made, when they were made,
and by whom and to whom they were made. I have put this request
for information in this somewhat open form because, although
paragraph 5 above refers to £6,000 having been received from
Mr Al-Fayed, I am aware that at the time of your resignation
it was suggested that you had received a larger sum, in the region
of £25,000.
I do not seek to place any limit on the length
of any written statement which you may wish to submit, but so
that the inquiry can proceed I would appreciate your written
statement as soon as possible, and in any event by 30 January
1997. If you propose to submit written statements from others
who may assist me in considering your responses to these allegations,
I would also hope that they could be provided to me by the same
date. If there are potential witnesses from whom you have not
been able to obtain written statements, please identify them
(with details as to how they can be contacted) and explain why
their evidence will assist my investigation of the allegations
set out earlier in this letter.
DOCUMENTS
I would welcome copies of any documents upon
which you may wish to rely, which may show the limit of payments
received by you, and/or evidencing payments in money or benefits
in kind, including hospitality, from Mr Al-Fayed, Harrods, House
of Fraser, Mr Ian Greer (and/or Ian Greer Associates), whether
conferred directly or indirectly, including commission payments
(if any) for the introduction of new clients to Ian Greer and/or
Ian Greer Associates. In particular, I would want to see any
records kept by you of payments received.
PROCEDURE
I enclose a copy of the procedure note which
will form the basis for the conduct of my inquiry.
16 January 1997
Letter from Mr Tim Smith MP to the Parliamentary
Commissioner for Standards
Thank you for your letter of 16 January which
sets out the complaint made against me by The Guardian.
Before dealing with the specific allegations
numbered 1 to 8 in your letter, it may be helpful if I provide
a general explanation of my involvement with Mr. Mohamed Al-Fayed
and the House of Fraser.
I am sorry that I have no documents relating
to this period apart from my diaries which constitute no more
than a list of engagements. These events occurred between eight
and eleven years ago and I am afraid that I have disposed of
all my other records relating to the House of Fraser.
My interest in the affairs of House of Fraser
stemmed from my long-standing professional interest in the affairs
of Lonrho.
As a chartered accountant I first encountered
Lonrho in November 1971 when employed by Peat Marwick Mitchell
in the capacity of audit senior. In October 1971, PMM had been
invited by the board of Lonrho to investigate the group's current
position and future prospects. I was a junior member of a large
investigation team operating both in London and Africa. I was
sent to Lonrho's head office, Cheapside House, to assist in the
investigation work. I remember being struck by the Byzantine complexity
of Lonrho's group structure.
In May 1971, the Department of Trade and Industry
appointed Allan Heyman QC and Sir William Slimmings to investigate
the affairs of Lonrho. Their report was published in March 1976.
They reached a number of conclusions which were highly critical
and indeed damning of Lonrho's activities. The Government was
advised by counsel that it had good grounds for launching a criminal
prosecution but chose not to do so following strong advice from
the Foreign Office that the evidence likely to emerge at a criminal
trial could be highly damaging to Britain's relations with certain
African countries.
In the early 1980s, Lonrho made repeated attempts
to acquire House of Fraser but was thwarted by a Monopolies and
Mergers Commission report which recommended against the acquisition
and which was accepted by the Government.
Following allegations that Lonrho had organised
a so-called concert party of House of Fraser shareholders, in
August 1983, the DTI appointed John Griffiths QC to investigate
the membership of House of Fraser. His report was published in
July 1984. On the conflicting evidence of Mr Tiny Rowland and
another witness, he concluded: "(The other witness) gave
to me a compelling feeling that he was telling the truth. Mr Rowland
did not." On the evidence of Mr Ali Al Fayed he said; "I
do not disbelieve Mr Ali Al Fayed's evidence. He struck me as
a respectable and responsible man responding naturally to what
he was asked".
I first met Mr Mohamed Al-Fayed some 16
months after reading the Griffiths report. This was on 10 March
1986 at a lunch at Harrods arranged by Mr Ian Greer. At the lunch,
Mr Al-Fayed explained that, since he and his brothers had acquired
House of Fraser a year earlier, he had come under increasing attack
by Lonrho. I was sympathetic to Mr Al-Fayed both because of my
long-standing concerns about Lonrho's activities and also because
I took the view that since all the shareholders in House of Fraser
had been paid in full for their shares there could be little
cause for concern about the takeover. I was reassured by the fact
that the takeover had been approved by the Office of Fair Trading
and the DTI on the basis of information supplied by Mr Al-Fayed's
merchant bankers, Kleinwort Benson and his solicitors, Herbert
Smith. Leading financial journalists such as Mr Ivan Fallon had
written favourably about Mr Al-Fayed and, as time passed, it was
clear that, contrary to Mr Rowland's assertions, he was quite
capable of running Harrods and the other House of Fraser stores.
According to my diaries, I met Mr Al-Fayed again
on 26 March. Subsequent to this, on 17 June 1986 I initiated
an adjournment debate on Lonrho's ownership of The Observer.
Between March 1987 and January 1989 I asked
27 parliamentary questions dealing with either House of Fraser
or Lonrho or both. One of these was an oral question, the rest
were written. I can confirm that I drafted them all myself although
in some cases the material on which the questions were based was
supplied to me by Mr Al-Fayed.
Of these questions, two dealt with the inspectors'
report on Lonrho, three dealt with alleged defects in Lonrho's
accounts, five with Lonrho subsidiaries called Blorg and Contango,
one with Lonrho subsidiaries called Northchart and Coronation,
four with Lonrho's dealings in the shares of House of Fraser before
that company was acquired by Mr Al-Fayed, one with unsolicited
communications from Lonrho, one with Lonrho's acquisition from
Guinness of 10 whisky brands, and nine with the inspectors' report
on the House of Fraser. The information relating to Lonrho's
accounts and the Lonrho subsidiaries was supplied to me by Mr
Al-Fayed. The other questions were entirely my own; for example,
on 16 November 1988 I asked the DTI for the cost and other details
of three investigations, House of Fraser (cost £1.5 million),
Milbury (cost £1.1 million) and Guinness (cost to date £1.6
million).
The oral question which I asked on 23 January
1989 suggested that Lonrho's most recent unsolicited communication,
A Hero from Zero, might be recommended for the Booker prize for
fiction.
For the reasons that I have set out earlier,
I believed what the Al-Fayeds had been telling everybody from
the Secretary of State downwards about their origins, wealth,
business interests and resources. However in the latter part
of 1988, I began to have concerns about the Al-Fayeds and whether
or not they had been telling the truth about all of these matters.
I knew that they had had considerable difficulties with the DTI
inspectors appointed in April 1987. I was aware that the inspectors
had had on more than one occasion to give the Al-Fayeds a deadline
for the provision of information or the answers to questions.
It appeared to me that the Al-Fayeds had not been co-operating
with the inspectors in the way that might have been expected.
I started to feel uncomfortable about the uncritical support
that I had given them. By the middle of February, 1989, I confirm
that I decided not to undertake any further matters for them.
Between May 1987 and January 1989 I was paid
fees by Mr Al-Fayed. These payments which were in cash were made
to me personally by Mr Al-Fayed. I am afraid that I do not have
a record of when these payments were made or how much they amounted
to. The sum was, however, substantially larger than £6,000,
probably about £18,000. Mr Ian Greer was not an agent for
these payments. Indeed, he had absolutely nothing to do with
them and was wholly unaware of them. Furthermore, I was not paid
a fixed sum to ask specific questions.
According to my diaries, I had 14 meetings
with Mr Al-Fayed in the 21-month period from May 1987 to January
1989. I advised him on how he should advance his case, as often
counselling against a particular course of action as in favour
of it.
When Mr Al-Fayed paid me fees in May 1987, I
should then have registered an interest in the Register of Members'
Interests. I explained to Mr Al-Fayed that I had other consultancies
each of which was the subject of a written agreement, each of
which involved the payment of fees on a regular basis and each
of which was registered in the Register of Members' Interests.
I told him that I would like to agree similar arrangements with
House of Fraser so that I could register the agreement in the
Register. He did not respond to this proposal and, naively, I
allowed the matter to drift. I repeat the apology which I made
in October 1994 in my letter of resignation to the Prime Minister
for my failure to register a declarable interest over 21 months
from May 1987 to January 1989.
As previously set out, in February 1989, I decided
that I would terminate my relationship with Mr Al-Fayed and the
House of Fraser. At the same time, I wrote on 6 February to the
Registrar to declare an interest as a consultant to House of
Fraser plc. The Register is a register of current interests and
it is not possible to make a retrospective entry. As my relationship
had now ended, I wrote to the Registrar shortly afterwards enclosing
a revised list of my interests which omitted House of Fraser.
At the same time, I informed the Government Chief Whip that I
had done this and he confirmed that this was the appropriate action
to take to put matters right.
In April 1987, the DTI appointed Henry Brooke
QC and Hugh Aldous to investigate the affairs of House of Fraser
(Holdings) plc. They were particularly referred to the circumstances
surrounding the acquisition of shares in House of Fraser plc
in 1984 and 1985. The inspectors' report was published in March
1990.
The inspectors said that, although Ministers
and officials were unsure what to make of the Al-Fayeds about
whom they knew little, they saw little alternative to reach a
decision in their favour and they took comfort - rightly or wrongly
- from the assurances which were given to the OFT and the DTI
by the Al-Fayeds and, more importantly, from an impression which
had been created that Kleinworts, the Board of House of Fraser
and the Al-Fayeds' solicitors, Herbert Smith, had aligned their
reputations with the representations of the Al-Fayeds.
The inspectors concluded that the Al-Fayeds
dishonestly misrepresented their origins, their wealth, their
business interests and their resources to the Secretary of State,
the OFT, the House of Fraser board and shareholders and their
own advisers. The inspectors received evidence from the Al-Fayeds
which was false and which the Al-Fayeds knew to be false. In
addition, the Al-Fayeds produced a set of documents which they
knew to be false.
The inspectors devoted two appendices to the
role of the press. They said that "In the present case it
appears to us that two processes were at work concurrently. On
the one hand, Mr Mohammed Al-Fayed was telling lies about himself
and his family to representatives of the Press, and once those
stories were on a cuttings file or in a press cuttings library
they grew and multiplied without much further inquiry into their
accuracy. On the other hand he gave instructions to his very
able lawyers to take legal action against any who sought to challenge
his claim that he and his brothers beneficially owned the money
with which they bought House of Fraser. To a great extent he
succeeded in his aims. Most newspapers and magazines considered
that discretion was the better part of valour and preferred to
write about other things than get involved in an expensive libel
action with a rich man. As a result of what happened, the lies
of Mr Al-Fayed and his success in "gagging" the Press
created new fact: that lies were the truth and that the truth
was a lie".
I now turn to the specific allegations numbered
one to eight in your letter.
1. I was not a member of a group of five Members
of Parliament who comprised the parliamentary lobbying operation
for Mr Mohammed Al-Fayed and the House of Fraser. There was no
such group. I had no meetings with Members of Parliament at which
the parliamentary lobbying operation for House of Fraser and Mr
Mohammed Al-Fayed was discussed. The only meetings I had were
with Mr Al-Fayed or his representatives, in particular Mr Royston
Webb. Some of these meetings were also attended by Mr Ian Greer
and Members of Parliament, namely Mr Neil Hamilton, Sir Michael
Grylls and Sir Peter Hordern. The first of these meetings took
place on 10 March 1986 over lunch at Harrods arranged by Mr Greer.
2. On 17 June 1986 I initiated an adjournment
debate on Lonrho's ownership of The Observer. I said that
I was sorry that the directors of The Observer were either
unable or unwilling to prevent Mr Rowland from pursuing his personal
vendetta against the Al-Fayed brothers. It seemed to me that the
independent directors of The Observer in particular ought
to have been able to intervene. This debate took place 11 months
before Mr Al-Fayed paid me any fees so there could be no question
of any interest to declare.
3. Between March 1987 and January 1989 I asked
27 parliamentary questions dealing with either House of Fraser
or Lonrho or both. I tabled one early day motion in May 1989.
4. I have no knowledge of any sum paid between
18 May and 27 July 1987 by Mr Al-Fayed to Mr Greer for the stated
purpose of making payments to MPs. Part of any such sum was not
paid by Mr Greer to me. Mr Greer has never paid me any money
at any time.
5. Between approximately May 1987 and January
1989, I received from Mr Al-Fayed approximately £18,000
in cash, for advice, consultancy and parliamentary services.
6. I have no knowledge of a special invoice
for £13,333 plus VAT rendered to House of Fraser by Mr Greer
on 1 February 1990, specifically to cover disbursements to MPs
including me. Mr Greer has never paid me any money at any time.
Furthermore, I terminated my relationship with Mr Al-Fayed in
February 1989.
7. I did write once or twice to Ministers and
I did have one or two meetings with Ministers to advance the
cause of Mr Al-Fayed and House of Fraser. I regret that I did
not disclose the fact that I was being paid by Mr Al-Fayed.
8. I did register all of the payments received
from Mr Al-Fayed by making an entry in the Register of Members'
Interests. I regret that this entry was made much later than it
should have been.
I wish to respond to certain particulars
of justification cited by The Guardian. I have numbered
these in accordance with the draft Amended Defence of The
Guardian in the High Court action 1994 H No. 1654 dated September
1996 which you sent me.
(5A) As far as I am concerned, Mr Greer did
not instigate or direct any of my parliamentary activities. I
decided when I was going to ask questions in Parliament and I
drafted these questions, in a limited number of cases using material
supplied to me not by Mr Greer but by Mr Al-Fayed.
(6) I did not discuss Mr Rowland's letter to
me with Mr Greer. My activity in support of Mr Al-Fayed was not
greatly reduced by Mr Greer. Mr Rowland's letter was one of the
factors that I took into account in deciding to terminate my
relationship with Mr Al-Fayed.
(13) Mr Greer did not know of the payments to
me by Mr Al-Fayed.
(29) On 2 May 1989 I signed an early day motion
tabled by Mr Dale Campbell-Savours about The Observer
and the Tornado deal and on 15 May 1989 I tabled an EDM about
the independent directors of The Observer. These EDMs
were tabled three months after I terminated my relationship with
Mr Al-Fayed.
Finally, you ask for details of all benefits
received by me or my family from Mr Greer and/or Mr Al-Fayed.
In addition to the fees which I have already mentioned, I received
from Mr Al-Fayed two Harrods teddy bears and two Harrods Christmas
hampers and, for my wife, a Harrods staff discount card which
she used once, to purchase goods to a value of less than £50.
I received no benefits from Mr Greer.
30 January 1997
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