Select Committee on Standards and Privileges Second Report


MINUTES OF EVIDENCE - Part 3

Mr Davies

  78.  George, you said that you accept the present system of registration and the obligation on Members of the House to be frank about their business interests when they speak in the House or when they otherwise are engaged in parliamentary activities. You accept that entirely?

  (Mr Galloway)  Indeed I voted for it, yes.

  79.  Could I just get some of the facts absolutely straight and we may be going slightly over some of the ground we have already covered, but I do not think there has been complete clarity. When did you actually establish Hawk? Can you remember the date when Hawk was incorporated or founded?

  (Mr Galloway)  If it was in the Register of January 1994, as Mrs Taylor said, then it must have been in 1993.

  80.  And let us get it absolutely straight, the various shareholders. You were a shareholder?

  (Mr Galloway)  Yes.

  81.  And there was this Mr Al Fagih.

  (Mr Galloway)  No, Al Fagih is the director of CDLR. There was Mr Al Masri, M-A-S-R-I, who is now the Serjeant at Arms in Gaza. Then Amineh Abu- Zayyad, who is my partner, common-law wife, in that awful parlance, and Mohammed Sarwar who is a councillor in Glasgow and who quite soon might be a Member of this House.

  82.  So there were four shareholders?

  (Mr Galloway)  And a fifth one, Ann Pettifor.

  83.  And they each contributed £1,000 to the capital of Hawk? Is that right?

  (Mr Galloway)  Yes.

  84.  And they were all directors of the company, were they, or were only some of those shareholders directors?

  (Mr Galloway)  I think all of them were directors.

  85.  And that was established some time in 1993 on that basis and the shareholding did not subsequently change in any way?

  (Mr Galloway)  No.

  86.  George, if all of those five people each paid £1,000 into the company, presumably at some stage the company had £5,000 in its bank account. Is that right?

  (Mr Galloway)  Not exactly because some paid their £1,000 in kind. Some paid it in some of the costs involved in Palestine. Some paid it in some of the costs involved in the stationery and in other expenses in setting the company up, legal expenses, for example, in setting the company up. I think the amount that went into the bank was around £3,000.

  87.  Did Hawk keep accounts?

  (Mr Galloway)  Yes, insofar as it had any accounts to keep, the bank account of what went in and what went out. The Companies House requirements for registering - that is the point I made earlier to Sir Archibald - if a company traded or not, were complied with, and it did not trade in terms of the regulations of Companies House.

  88.  Yes, but I had in mind that since you had a rather complicated system of paying in the issued share capital of the company, it would have been particularly necessary to keep accounts and you would have wanted to make absolutely clear how much had been paid out in other respects in Palestine or in kind because clearly it would be necessary to maintain equity between the shareholders and to make sure that other people already had contributed £1,000 in value, so you would have kept accounts for that, would you not?

  (Mr Galloway)  Yes, but that was not difficult. There were only five of us and we were all close, but I have a very large bundle of receipts from the trip to Palestine and for the stationery and the rest and I have the bank account which shows money going in and money going out and a resultant balance of zero and we filed nil accounts at Companies House.

  89.  George, you have said that you believe in making a frank disclosure of the position and you have just explained what the position was. In the light of those answers to me, your actual declaration in the Register of January 1994 was anything but frank, was it not? What you actually registered was political consultant (unpaid) to Hawk Communications International Ltd, a communications company recently established to assess democratic development in the new Palestinian entity. There are already two things which are very deceptive about that. One is that you say you are a political consultant unpaid when you were a director and shareholder, and surely your interest should have been registered for what it was, as a director or shareholder; and the second thing is that you imply that this business is a separate business, a pre-existing business and that maybe you have just begun to register your interests in this business in January 1994, but you do not indicate at all that what has happened is you have created this business.

  (Mr Galloway)  I do not know how deceptive that is, especially about a business which actually never did any business.

  90.  Wait a moment, George, you have already given testimony this afternoon that you hoped that the business would be a success, that you hoped it would make a profit, that it was run commercially, that you were not against profit, that profit would have been distributed. Clearly you had not made any profit before you started but you were hoping it would be profitable. You say "unpaid" which implies that you stand to gain no remuneration.

  (Mr Galloway)  I was unpaid and have been unpaid.

  91.  It rather implies you expect no remuneration, but why do you call yourself a political consultant to the company when you are actually a shareholder and director of the company?

  (Mr Galloway)  I do not have that Register in front of me. I would be surprised if it did not say that I have a shareholding in the company -

Mrs Taylor:  It does in the next one, in January 1995.

Mr Davies

  92.  A year later you make a much franker declaration which is much more in accordance with the letter and spirit of the rules, but what I am trying to probe is why, when you first made an entry in the Register, it was such a very unfrank mention of your relationship with this company?

  (Mr Galloway)  I am sorry that you feel that way. It certainly was not intended to be unfrank. It was a declaration at the very earliest opportunity. It would have been made after discussion with the officials in the office. I cannot really tell you why the form of words that is in there -

  93.  George, are you suggesting that the Registrar advised you to translate shareholder and director into political consultant unpaid? Surely these are two very different roles in life, are they not?

  (Mr Galloway)  Yes, I expect they are.

Chairman

  94.  I wonder whether I could come in because there is another point related to this because, in fact, the entries are under completely different headings in the two years. In January 1994 they are under miscellaneous and unremunerated interests and there is no reference at all under remunerated directorships and registerable shareholdings. By 1995 there are entries under remunerated directorships and registerable shareholdings and, perhaps understandably in those circumstances, miscellaneous and unremunerated interests have disappeared, so to speak.

  (Mr Galloway)  Presumably I had none, I had no miscellaneous and unremunerated interests. I suppose the only explanation I can give is that at that very early stage of the company's life I was unclear as to what the business that would be generated would be, or even a very clear idea of where the company wanted to go. But in 1995, during the intervening 12 months, no business had been transacted, so it was not as if I had in the course of that 12 months begun to receive remuneration or anything like that. I really do not recall the discussions I had with the Clerks at the time, but I do remember going to see them about the registration. Does one fill in a form and choose one's headings oneself or does the clerk place these under -

Chairman:  Most people who are Members are able to answer that

straightforwardly. I have had nil returns for 17 or 18 years for reasons that everybody here understands. As I understand it, people do initially choose what answers to give to what questions on the form, but if they are in any doubt they would normally consult the Registrar, which is presumably what you did.

Mrs Taylor

  95.  I think the procedure is that after every Parliament we are sent a form but for updating purposes we are just invited to send in additional information.

  (Mr Galloway)  I think that is probably what happened, that I sent in this additional information and it has been placed as miscellaneous and unremunerated because I made it clear I was unremunerated, as I was at that time and have been subsequently.

Mr Davies

  96.  There are two things which I find difficult to accept that you have now told the Committee. One is that you thought that by January 1995 the company had been in existence for more than a year and had not traded, whereas that was not the position in 1994 and that that is somehow the explanation for the difference in the way in which you have registered this relationship. I would have thought it might have been more plausible if you had said that by January 1995 you realised this company was never going to make a profit and so you therefore registered it as an unremunerated interest. In actual fact, you have got it unremunerated in January 1994, a few months after you have established the company, at a time when you have told us you did expect to make a profit. The second thing I find very difficult to accept from what you have just told us is you said in 1994 you did not have any very clear idea as to what the company's role was. The shorthand writer will correct me if I have mis-stated or summarised badly what you have just said, but you have actually given a sort of summary of the business plan in January 1994. You said it was a communications company recently established to assist democratic development in a new Palestinian entity, which was a very precise role for the company. At the time you said your explanation for a rather peculiar way of registering the interests was because the company did not have a role, but that is surely contradicted by the explanation you actually gave at the time.

  (Mr Galloway)  I re-state my point that I do not see that the difference is large enough for you to claim that it is deliberately unfrank. As a matter of fact, you might hold to my credit that in January 1995, despite the fact this company was not trading - and I will remind you, it is not required to register an interest in a company which is not trading, I could have left it off the Register altogether, but I did not precisely for reasons of frankness and clarity - I registered it even though it was not trading while there was no requirement for me to do that.

  97.  George, had you not registered it in 1995 and had I challenged you with that then the answer you have just given might have been relevant to the question I had asked. In actual fact, I have not challenged your entry for 1995, I have challenged your entry for 1994.

  (Mr Galloway)  But the same answer goes, I did not need to register it in 1994 because it was not trading. It had only just been set up.

  98.  But the rules say that where you have either a financial interest or the possibility of a financial interest you should register. Therefore, you set up a company which you have already told us this afternoon it was intended to trade and you were quite right to register it. I am still looking for an explanation from you as to why you decided, instead of saying you were director and shareholder - a very classic thing to say, explicitly provided for in the form which many other people use in their registrations - you somehow wanted to attenuate your connection with the company by saying "political consultant (unpaid)", which is very extraordinary. Supposing every Member of Parliament who is actually a director and shareholder decided to call that a political consultant (unpaid), we should essentially in the House of Commons be changing our use of vocabulary.

  (Mr Galloway)  I think that we have already established that it was not a question of filling in a form. At the beginning of Parliament one filled in a form. This was an update and therefore would have taken the form of a letter from me. I do not know what stage the company was at in January of 1994. I do not know, for example, if I had then formally been registered as a director, although I am not going to argue that point with you because I simply do not know. But I really do not think one can be properly accused of a lack of frankness in registering a company that there was no requirement, according to the rules at the time, to register.

Chairman:  The Clerk has just reminded me of one of the bank statements with which you have provided us, which is the opening statement for Hawk Communications when between £2,000 and £3,000 appears to have been paid in. This was only opened on 18 March 1994.

Mrs Taylor

  99.  So you registered that because it was something in the offing.

  (Mr Galloway)  Thank you.

Mr Davies

  100.  It does imply, however, that that is an existing company, does it not?

  (Mr Galloway)  It could be an existing company, but I had not even opened a bank account yet. I think what this illustrates is that the whole operation was in its embryonic stage.

  101.  Can you just remind us of another date, George? When did Hawk cease to function? When was it actually wound up?

  (Mr Galloway)  I think in the Autumn of 1995.

  102.  Because Mr Al Mass'ari is still referring on the tape to Hawk existing in the Autumn, is it, or is it August of 1995 that is the latest reference to that? It is very shortly after that time.

  (Mr Galloway)  He is certainly being led in that direction.

  103.  You say he has been led in that direction. That was not actually the position. Hawk really was not working at that time, do you think?

  (Mr Galloway)  It never traded. It was moribund and then it was wound up, as Companies House can confirm.

  104.  Can we move on because you have given testimony this afternoon that Hawk had nothing to do with Al Mass'ari or the CDLR. That is right, is it, really?

  (Mr Galloway)  Yes.

  105.  But you did at one point want to bring the two things together and there were all these discussions you have described.

  (Mr Galloway)  We had one discussion of a evening and a follow-up discussion on the telephone the next day.

  106.  And did Hawk prospect for any other kind of business? Did you propose its services to anybody else in the course of its existence?

  (Mr Galloway)  Only the - I do not know if you would call it "prospecting" - but only the approach to the Westminster Foundation for Democracy. That is the only one I can recall.

  107.  And there your prospective client would have been the Westminster Foundation for Democracy? You would have said, "This is a service we can perform which is in accordance with your purposes. Would you like to pay us to do that?" basically?

  (Mr Galloway)  Yes, I do not know if "client" would be the exact relationship, but we asked for a grant from the Westminster Foundation for Democracy to produce that and that we would distribute those leaflets in the Palestinian territories.

  108.  Could we just move on to your relationship with CDLR and Mr Al Mass'ari? You said earlier on that you did not receive anything which could be called taxable expenses. What is your definition of taxable expenses?

  (Mr Galloway)  It is more a question of what the Inland Revenue's is and what the House authorities' definition is, but a taxable expense would be an expense which was in effect a reward, while an untaxable expense is the simple reimbursement of monies expended on work. For example, as all of us do, we have all of us travelled to places to make speeches and we are reimbursed by the people to whom we have made the speech for our costs involved in getting there. If they were adding, you know, £100 on top or if they were saying, "Why don't you have dinner in the best hotel in town before you start and have a sumptuous breakfast the next day", it might begin to move into the area of taxability, but rather like the old saying goes, "if it looks like a duck and walks like a duck, the chances are, it is a duck". I was very clear that the simple reimbursement of monies expended by me in pursuit of political activity did not constitute a taxable expense. That was endorsed by Sir Gordon Downey after consultation by him with the Inland Revenue.

  109.  Now, you received quite a lot of expenses which were not taxable. Among them was the reimbursement of the expenses that you have listed on your letter dated 27 January to our Chairman, the expenses for various basically flights and subsistence. Did you yourself undertake any of those flights?

  (Mr Galloway)  Some of them.

  110.  So some of them were expenses that you had incurred?

  (Mr Galloway)  Not the flights; the hotel bills.

  111.  But not the flights?

  (Mr Galloway)  No.

  112.  Did you undertake any travel at all for CDLR?

  (Mr Galloway)  I certainly went to Oxford University once and I drove to various places with them in the car, but I never flew anywhere at their expense.

  113.  And you never went abroad at their expense?

  (Mr Galloway)  Never.

  114.  Al Mass'ari in the tape talked about you receiving £1,000 to £1,500 a month. Is that correct?

  (Mr Galloway)  No, it is not correct.

  115.  How much do you think you received a month?

  (Mr Galloway)  Well, I received only this figure, which is in the letter of 27 January. Where the confusion is -

  116.  Well, when you say "this figure", you have got to add up those expenses that are listed on your Visa card -

  (Mr Galloway)  Yes, this is all I received.

  117.   - and the advertisements, is that right, at the bottom of the page?

  (Mr Galloway)  Yes. This letter sums all of the expenses that I received.

  118.  So that adds up to about £5,000, just more than £5,000.

  (Mr Galloway)  I am sorry, I should have tallied it up myself.

  119.  So you received this amount of money in cash?

  (Mr Galloway)  Yes.

  120.  From Dr Al Fagih.

  (Mr Galloway)  Yes, between May of 1995 and the beginning of 1996.

  121.  And most of them you paid with your Visa card?

  (Mr Galloway)  All of them I paid.

  122.  Including the Refreshment Department?

  (Mr Galloway)  Yes.

  123.  It is slightly curious. Your letter does not sort of make that clear, but it does not list it as one of the Visa outgoings anyway. You have already said that you never kept any accounts of these other receipts or the disbursements?

  (Mr Galloway)  No, no more than if I travel to speak to the Brighton Labour Party and they give me the train fare back do I keep an account of that.

  124.  Why do you think Dr Al Mass'ari thought that you were receiving between £1,000 and £1,500 a month?

  (Mr Galloway)  Well, it is not clear from the transcript what he really thought. He does mention that figure more than once, but he also qualifies that over and over again by saying, "This included..." and he goes on to adumbrate a whole number of things which are supposedly included, including bodyguards and hotels and meetings of various kinds and other services, so he appears at some stage in the transcript to be saying that I received that amount of money, but what he is really, I think, saying, although it is hopelessly wrong, and that is because he has nothing to do with money or organisation, is that that is the sort of sum he thought my work was costing, not that I was receiving, but was costing, and in that he has the figures entirely wrong because if you were to tally up all the academics who were paid either directly by Al Fagih or by me, tally up the cost of the people who swept the headquarters regularly for bugs, the sum is far more than that, but those sums were never paid to me; they were paid directly by Al Fagih to the people involved.

  125.  I see. The slight problem with that, George, is that it is quite clear that Al Mass'ari felt that there was a sort of budget he had for PR or communications work and that there was, therefore, a trade-off between the extent to which he could employ you, and he was obviously well disposed to you, and the extent to which he could employ Pat and John, which is the Monaco agency, and on page 8 of the clean text, if you like, the latest text that we have, he says, if you look about three-quarters down that page where he talks about John and Pat having a professional contract: "£2,000 per month, that is their contract. So Saad said, OK. I will offer them £1,000; we cannot afford £2,000. Because George was roughly £1,000 a month; something like that. I think so. Or £1,500. Then we have a total of £2,500. And so we have the two PR groups doing different sides." There is a clear indication that you were sharing in that budget and if he was going to have you, it had to be at the expense of cutting back John and Pat which somewhat goes against your testimony to us that he had no idea about money and so forth.

  (Mr Galloway)  I think it is clear enough he had no idea about money or about numbers. A man who can confuse hundreds of envelopes with 15,000 envelopes is a man who is not very good at numbers, but the most important point I would make in response to what you are saying is that he, and he says so 18 times in this transcript, had nothing to do with money. Saad Al Fagih was the one who controlled the organisation and expenditure and he was the only one who paid money out.

  126.  That is quite clear.

  (Mr Galloway)  So any ideas that Al Mass'ari had about who was costing what, whose work was costing what are merely guesses on his part. He was not involved in any way, as has been made clear by him and Al Fagih, in these financial affairs. Now, I repeat myself, that what I think is being alluded to there is the cost of the work that I am doing, not the amount of money that was given to me, but the amount of money which is being expended by the organisation in relation to work being assisted and generated by me.

  127.  Well, that does not make sense of his remarks, does it, because if this was money being expended which would have been expended anyway on bodyguards or academics or anything which you were not involved in, then in no sense was there a trade-off between your coming on board and the existing PR contract. This paragraph clearly makes it plain, I think, that there was a choice that they could make within their budget of having more of you and less of John and Pat or the reverse, so if there were expenditures which would have gone on anyway which were unrelated to that, what Al Mass'ari is saying does not make sense. The other thing is I do not want you -

  (Mr Galloway)  Can I respond to that point?

  128.  Yes, of course.

  (Mr Galloway)  I do not think that anything in this transcript in the mouth of Al Mass'ari can be said to be clear or plain because a number of things are said and they are contradicted elsewhere. Secondly, it is not for work that would have been done otherwise. That was going to be done anyway. A lot of this work was being generated by me. For example, I was the person who suggested to them that they should hire academics to produce academic work to give themselves some weight in British public opinion. So that was not work that would have been done otherwise. I not only came up with the idea of producing these books but even came up with the suggestion as to what shape they would be, what size they would be, even which colour they would be. So the work that I was suggesting and was then being done would not have been done otherwise. It was in that sense being generated and driven by me, but the money for it was not being given to me. I will give you another example. I was the one that suggested their offices might be bugged, as indeed they were more than once, and I was the person who suggested that we find a private detective who would sweep the place.

  129.  But you did not pay them, did you?

  (Mr Galloway)  No.

  130.  You did not hire or pay them?

  (Mr Galloway)  I generated the work.

  131.  So in the case of the academics sometimes you were the conduit by which they were paid and sometimes you were not.

  (Mr Galloway)  Twice.

  132.  Nevertheless, the issue we do have is that Al Mass'ari obviously was conscious of a budgetary constraint on using you. That is quite clear, is it not, from this tape?

  (Mr Galloway)  I do not think it is clear, no.

  133.  From the sentence I have just read out?

  (Mr Galloway)  It is not clear because, in fact, the figures bear no relationship to the true position in any case, so it cannot be clear.

  134.  It would be clear if, in fact, you were being paid £1,000 to £1,500 a month and in actual fact you are saying it is much less than that. This text is incomprehensible, is it not?

  (Mr Galloway)  It is largely incomprehensible, but that might be because it is a compilation of several different tapes with all the other caveats that I have made already. But he himself says in the same transcript several times that I was not being paid anything personally. We could go through them and I can draw your attention to the line numbers, if you like.


 
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