The Committee on Standards and Privileges
has agreed to the following Report:
COMPLAINTS AGAINST MR PETER MANDELSON
1. We have considered memoranda from the Parliamentary
Commissioner for Standards relating to the complaints by Mr John
Redwood, Member for Wokingham, and Mr R Henderson and other members
of the public against Mr Peter Mandelson, Member for Hartlepool.
The Commissioner's memoranda are appended to this Report, together
with other written evidence. Certain details in the evidence which
are not material have been omitted. We have also taken oral evidence
from Mr Mandelson, which is published with this Report.
2. We agree with the Commissioner in not upholding
the complaint about the non-registration of the flights in question.
Members should nonetheless bear in mind that the requirement to
register is governed not by their own conviction that their actions
in Parliament will not be influenced by the gift, nor whether
the giver intended to exercise influence, but by whether others
might reasonably think that this might be the case. If there is
any doubt a benefit ought to be registered.
3. The second complaint was of late registration
of the loan from Mr Geoffrey Robinson. Mr Mandelson said that
when he agreed the loan in October 1996 he relied on the assumption
held by some Members that the rules on registration were concerned
with benefits received from outside bodies and persons rather
than from fellow Members. In her reply of 21 January to a letter
from Mr Mandelson the Commissioner acknowledged that there was
considerable doubt about the application of the Rules on registration
to transactions between Members. She stated the general principle
in the rules that if there is any doubt a benefit should be registered.
She advised him to register the loan. He then did.
The loan has recently been repaid.
4. The Rules are not specific about benefits which
one Member may receive from another. There is ambiguity in the
Code of Conduct. On the one hand, it states that "Holders
of public office should not place themselves under any financial
or other obligation to outside individuals or organisations
that might influence them in the performance of their official
duties". On the
other hand, the main purpose of the Register is "to provide
information of any pecuniary interest or other material
benefit which a Member receives which might reasonably be thought
by others to influence his or her actions, speeches, or votes
in Parliament, or actions taken in his or her capacity as a Member
5. In our view the questions which need to be answered
in deciding whether a benefit is registrable are the same whether
the benefit is received from another Member or from someone outside
Might the benefit reasonably be thought
by others to relate to membership of the House?
Might it reasonably be thought by others
to influence the Member who receives it?
Might it reasonably be thought by others
to be intended by the lender to influence the Member who receives
The answers to those questions will depend on the
particular circumstances of the case. If the answer to any of
the questions is 'Yes', and the value of the benefit exceeds the
current de minimis limits (£125 in the case of gifts,
or 0.5% of the current parliamentary salary in the case of other
material benefits), the benefit is registrable under the Rules.
6. We consider that any loan or other arrangement
from one Member to another, on whatever terms, which amounts as
in this instance to eight times a Member's annual parliamentary
salary could be thought to influence the conduct of the Member
who receives it unless there is some compelling argument to the
contrary, and should therefore be registered. We agree with the
Commissioner in upholding the complaint. We do recognise the explanation
given by Mr Mandelson that he assumed that loans between Members
were not registrable. Mr Mandelson should have registered the
loan from Mr Robinson at the latest by 27 July 1998, when he became
Secretary of State for Trade and Industry.
The fact that a benefit is registrable does not imply that any
impropriety attaches to it.
7. The third complaint related to Mr Mandelson's
mortgage with the Britannia Building Society. We have considered
whether this fell within our responsibilities, since in his dealings
with Britannia Mr Mandelson was not acting in his capacity as
a Member. There are arguments on both sides of the case. On the
one hand, the House does not seek to regulate what its Members
do in their purely private and personal lives. On the other hand,
the maintenance of public trust in the integrity of Parliament
requires Members to observe the highest standards of conduct in
financial matters. The Nolan Committee recommended that the Code
of Conduct for Members of Parliament should apply "to all
aspects of public life". We understand that it may not have
been the intention of the House, when it approved the Code on
24 July 1996, to remove this concept from the Code.
The Commissioner considered the complaint because the mortgage
was directly linked to the loan from Mr Robinson.
8. The substance of the third complaint was
(a) from Mr Redwood, that the loan may have been
"concessionary and therefore registrable";
(b) from Mr Henderson, that the loan may have
been "improperly obtained".
9. Issues raised in the complaint were dealt with
in the course of the substantial investigation and fraud inquiry
carried out by Herbert Smith solicitors at the request of the
Britannia Building Society. In their report entitled "Project
Offenbach" dated 22 March 1999, in relation to failures by
Mr Mandelson fully to disclose all requisite material information
and also material changes to the nature of the transaction, they
"(1) There was no obvious reason/motive
for Mr Mandelson not to disclose details about Hutton when that
mortgage was to be discharged as part of the transaction.
(2) The Britannia mortgage application
form in use at that time was not specifically designed to extract
details of second properties/second mortgagesit is therefore
conceivable that Mr Mandelson was not properly focused by the
questions in sections C and D on his ownership of Hutton.
(3) The interview was clearly "rushed"Mr
Mandelson informed us and it is clear from obvious mistakes in
the form that it was not properly checked by Mr Mandelson before
it was signed.
(4) A copy of the mortgage application
form was not provided by the Society to WPF (it is not the Society's
usual practice so to do). Accordingly, Stephen Wegg-Prosser could
not later correct any failure by Mr Mandelson to disclose information
during the interview nor, indeed, was he aware of any inaccuracies.
(5) Mr Mandelson was not advised at
any time by Stephen Wegg-Prosser to disclose material changes
in the transaction to the Society, as he should have beenhe
was let down by his adviser.
(6) The transaction took place immediately
proceeding, during and immediately after, the last Labour Party
Conference before the 1997 General Election. Mr Mandelson was
the principal organiser and, we are told, was working round the
clock. It is clear that Mr Mandelson's mind would have been fully
focused on the conference and preparations for the forthcoming
General Election throughout the whole of this period.
(7) There was never any financial risk
to the Society in any of the actions/omissions because of the
nature of the transaction and the value of the equity in Northumberland.
The Society had a first charge over Northumberland. The interest
arrangement agreed between Mr Mandelson and Mr Robinson in respect
of the latter's loan was that interest was not immediately payable
but would accrue and only become payable on an eventual sale of
Northumberland. Accordingly, there was no risk that interest payments
to Mr Robinson would prejudice in any way Mr Mandelson's ability
to pay interest to the Society on his mortgage with the Society."
In its recommendations the Herbert Smith report goes
on to conclude that
"Whilst there are some inconsistencies in
the information given to us, as a result of our investigation
(not least from our interview of Mr Mandelson) we have concluded
that Mr Mandelson did not have any dishonest intent at any relevant
time and did not consciously mislead the Society."
10. We agree with the Commissioner that the terms
of the mortgage offered by Britannia were not in themselves concessionary.
Nevertheless the mortgage was obtained without the disclosure
of all the requisite information. A non-Member in the same position
would have been treated in the same way. We were told that Mr
Mandelson's application was dealt with commercially at all times.
11. As to whether the loan had been obtained improperly,
the Commissioner states in her report that "Mr Mandelson,
unknown to the Britannia Building Society, received his mortgage
on a different basis from that which would properly have
applied to other members of the public". (Emphasis added.)
12. Mr Mandelson ought to have given full and accurate
information to Britannia. Under Britannia's general conditions
his solicitor, who was acting as Britannia's agent, should have
fully disclosed the change in the funding arrangements for the
purchase of the property prior to Mr Mandelson's taking up the
13. Mr Mandelson said that in omitting to inform
the Britannia Building Society of three material facts in connection
with his mortgage application, namely the mortgage on his house
in Hartlepool, the loan from Mr Robinson and the delay in the
sale of his London flat, it was not his intention to mislead Britannia.
We accept that the Herbert Smith report (Project Offenbach) presents
a fair assessment of issues surrounding the mortgage application
and the subsequent allocation of the mortgage. Mr Mandelson's
solicitor, who suffered a family tragedy shortly before the transaction
started, has acknowledged that his management of the transaction
fell below his usual standard, and that he should have thought
to inform Britannia of the arrangement with Mr Robinson. We consider
that Mr Mandelson acted without any dishonest intention.
- We recommend that no further action be taken.
1 Appendix 1, Annexes B and F. Back
of Conduct, HC (1995-96) 688, p.1. Back
p.8, paragraph 9. Back
1, paragraph 24. Back
the correspondence between the Chairman of the Committee and the
Rt Hon Ann Taylor which is set out in Appendix 10. Back
1, paragraphs 28-41. Back
5, p.xxxix. Back
3, p.xxxiii. Back