Select Committee on Standards and Privileges Ninth Report


Memorandum submitted by the Parliamentary Commissioner for Standards

Complaints against Mr Peter Mandelson


1.    Shortly before Christmas 1998 it was widely reported in the press that in October 1996 Mr Peter Mandelson, Member for Hartlepool, had received from Mr Geoffrey Robinson, Member for Coventry North West, a loan of £373,000 towards the purchase of a property in Northumberland Place, London W2. At the time when these reports appeared, both Mr Mandelson and Mr Robinson were members of the Government, as Secretary of State for Trade and Industry and Paymaster General respectively. It was also public knowledge that the Department of Trade and Industry had since early 1998 been considering a series of complaints about the affairs of certain companies with which Mr Robinson had previously been connected either as chairman or as a director.

2.    Mr Mandelson wrote to me on 22 December 1998 (Annex A) saying that he had received a loan from Mr Robinson and setting out its terms. He also said that, when he became aware that his Department was considering Mr Robinson's affairs, he had agreed with his officials that he would have no role in any such consideration and had not done so. He said that he did not believe that he was required to declare the loan in the Register of Members' Interests "as it was not a gift or gained through my being an MP". However he requested my advice on whether it should have been or ought now to be registered, and said he would abide by my decision.

3.    I replied (Annex B) that the definition of gifts, hospitality and other registrable benefits contained in the Rules for Registration[10] included loan concessions. While accepting that there was some doubt about the application of the Rules to transactions between Members, I said that it was necessary to bear in mind the principal purpose of the Register, which 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". I also pointed to the requirement set out in the Rules that "If there is any doubt, (a benefit) should be registered". My advice to Mr Mandelson was that registration in these circumstances would be the wisest course.

4.    Mr Mandelson followed my advice, and his entry in the Register published as at 31 January 1999 contains, under gifts, benefits and hospitality (UK), the following: "loan from Geoffrey Robinson MP to assist in purchase of home".

5.    In the New Year I received two letters from Mr John Redwood, Member for Wokingham, dated 29 December 1998 and 28 January 1999 (Annex C), asking me to examine whether Mr Mandelson ought to have registered not only the loan from Mr Robinson but "at least one free flight" of which he had been the beneficiary. Mr Redwood pointed to a previous decision of the Committee that, though ordinary commercial loans would not normally be registrable, loans outside commercial terms would be; "the question at issue .... is whether the loan is a soft one or not". He also raised the issue of whether the terms on which Mr Mandelson had borrowed £150,000 from the Britannia Building Society were more favourable than those available commercially.

6.    Several members of the public also wrote to me in similar terms following the publicity given to Mr Mandelson's purchase of the house in Northumberland Place. Mr Robert Henderson of London NW1 raised similar complaints to Mr Redwood and in addition suggested that Mr Mandelson might have obtained his loan from the Britannia by improper completion of his mortgage application form. Mr Henderson also asked me to look at the general question of the propriety of MPs accepting large material favours from one another (Annex D).

7.    I asked Mr Mandelson to provide me with the information I needed to consider these complaints (Annex E). He wrote to me on 23 February 1999 and 24 March 1999 (Annex F), and I have discussed these matters with him on several occasions to clarify matters. I have also received information on these matters from Mr Stanley Silverstein, the Company Secretary of Warnaco, Britannia Building Society, Messrs Herbert Smith who acted on an inquiry for Britannia Building Society, and Messrs Wegg-Prosser and Farmer, Mr Mandelson's solicitors.



8.    The "free flight" referred to by both Mr Redwood and Mr Henderson was offered to Mr Mandelson by Ms Linda Wachner, Chairman of Warnaco Inc. which has interests in the UK and is based in New York.

9.    Mr Mandelson explained that there were three separate occasions when, during private holidays in the United States, he had accepted from Ms Wachner, a personal friend whom he had known since 1994, flights in her company plane.

(i)  In September 1996, he joined Ms Wachner for a holiday at her home on Long Island, and she collected him from Cape Cod;

(ii)  In December 1996, in the course of a visit to Washington, Ms Wachner invited him to join her for a weekend break at her home in Aspen, and he travelled with her on her return flight to New Jersey;

(iii)  In August 1998, he spent his summer holiday with Ms Wachner on Long Island, travelled with her to Aspen, from Aspen to New Jersey and was then invited to accompany her by plane to Venice. He stayed there at his own expense before flying back with her to London where she was conducting business.

(My estimate of the commercial cost of comparable flights at economy rates is not less than £3,000.)

10.  Mr Mandelson provided the information that Warnaco, a clothing company, has a small manufacturing plant in Northern Ireland and a distribution facility in Nottingham. He said he had no reason to believe that Ms Wachner's business interests fell within the responsibilities of the Department of Trade and Industry.

11.  The Company Secretary of Warnaco has written to me to confirm that the company had neither sought nor received any grants or subsidies from the DTI in over nine years. He subsequently told me that prior to 1990 the company had received some grants from the Department of Trade and Industry. He also confirmed that "on each occasion when Mr Mandelson travelled on company aircraft, he travelled as a guest of our Chairman who personally reimbursed the company for the cost associated with such travel" (Annex G).

12.  The Rules state that, with certain specified exceptions, registration is required for "overseas visits made by the Member or the Member's spouse relating to or in any way arising out of membership of the House where the cost of the visit was not wholly borne by the Member or by United Kingdom public funds." Sometimes the dividing line is unclear. A Member may be convinced that such a gift has been made to him or her in a private capacity whereas others may reasonably think it could lead to influence. Indeed the Rules say "Gifts and material benefits are exempt from registration if they do not relate in any way to membership of the House" but make it clear that "the extent to which this exemption applies in any particular case is necessarily a matter of judgement. Both the possible motive of the giver and the use to which the gift is put have to be considered: if it is clear on both counts that the gift or benefit is entirely unrelated to membership of the House, or would not reasonably be thought by others to be so related, it need not be registered. If there is any doubt it should be registered."

13.  Having considered Mr Mandelson's explanation of the circumstances and the evidence I have seen, I have no reason to doubt that these flights were offered to him as a personal friend rather than in his capacity as a Member of Parliament. Since, in my judgement, the benefits he received did not arise out of membership of the House they were not registrable.

14.  I do not uphold the complaint that Mr Mandelson was required to register these flights. Nevertheless by August 1998 Mr Mandelson was Secretary of State for Trade and Industry and since Ms Wachner had a business operating in the UK it would have been wise for him to have registered the benefit.


15.  Under category 5 of the Rules for Registration (Gifts, benefits and hospitality (UK), Members are required to register:—

(a)  tangible gifts, such as money, jewellery etc., valued at over £125;

(b)  other benefits, such as hospitality, tickets to sporting and cultural events, relief from indebtedness, loan concessions, provision of services etc., to a value of more than 0.5% of a Member's annual parliamentary salary. In 1996, this threshold stood at approximately £215.

"The rule means that any gift, or other benefit, which in any way relates to membership of the House and which is given gratis, or at a cost below that generally available to members of the public, should be registered" if its value is greater than the specified amounts.

16.  The references to "relief from indebtedness" and "loan concessions" were specified in the light of the decision of the Committee in 1996 to which Mr Redwood refers. Two former Members negotiated on behalf of Mr Thomason, then a serving Member of Parliament, an accommodation with various creditor banks that they would not press for immediate repayment of the Member's debts. In that case the then Commissioner concluded, and the Committee agreed, that this constituted a benefit which would not have been available to members of the public and on those grounds it ought to have been registered by the Member.[11]

17.  Mr Mandelson agreed a loan of £373,000 from Mr Robinson on 15 October 1996. The terms of the loan were set out in a memorandum drafted for Mr Mandelson by his solicitors, Messrs Wegg-Prosser and Farmer (Annex H). Those terms state that the loan was unsecured and repayable with simple interest. The loan would not be registered at the Land Registry as a charge on the property without the consent of both parties unless Mr Robinson gave Mr Mandelson 90 days' notice of his intention to register. In the event of Mr Mandelson's death Mr Robinson could register the loan. In the event of Mr Robinson's death Mr Mandelson would secure the interest of Mr Robinson's estate in the repayment of the loan but the estate would not register a charge on the property for at least 6 months from the date of death. Part of the loan was to be repaid from the sale of Mr Mandelson's properties in Clerkenwell and Hartlepool. The remainder of the loan and interest were to be repaid on the sale of the Northumberland Place property. Mr Mandelson's solicitor has informed me that it had been subsequently agreed that the interest payable would be compound rather than simple.

18.  Mr Mandelson said in his letter of 24 March 1999 (Annex F) that this was a concessionary loan, provided by a friend of seventeen years' standing, and was not made on commercial terms. The loan differs from the case referred to in paragraph 16 above in that it was from a fellow Member rather than from an outside body negotiated by former Members. Mr Mandelson says that he had always understood that transactions between one Member and another were not covered by the rules on registration.

19.  The Rules do not specifically include or exclude loans between Members. When the establishment of the Register was originally debated by the House in 1974, the then Leader of the House made it clear that it was designed for the disclosure of outside interests. "The issue today is not whether Members should have outside interests, but whether and how we should make them known to our colleagues and our constituents."[12] Detailed rules were framed following the debate. I understand that prior to November 1995 the House relied largely on the Rules on the Registration and Declaration of Financial Interests for the regulation of the conduct of Members.

20.  Lord Nolan in his introduction to the First Report of the Committee on Standards in Public Life said that their recommendations were "designed to maintain, and where necessary restore, the standards of conduct in public life which the public are entitled to expect and to promote a policy of openness which will enable the public to see that their expectations are being met". Chapter 2 of the Report addressed the question of outside influence on Members, and the post-Nolan changes to the rules of conduct agreed by the House in November 1995 focussed on this issue.

21.  In July 1996, the House approved a Code of Conduct to be observed by Members and strengthened the existing Rules. Neither the Rules nor the Code of Conduct exempt transactions between Members.

22.  Category 5 of the Rules requires the registration of gifts and benefits "which in any way relate to membership of the House". Mr Mandelson said that he had not obtained the loan from Mr Robinson "through my being an MP".

23.  Given the history of the development of the Code of Conduct, I have no reason to doubt that when Mr Mandelson agreed the loan in October 1996 he relied on the assumption that the Rules on Registration were concerned with benefits received from outside bodies and persons rather than from fellow Members. Having requested my advice on the matter Mr Mandelson accepted my reasoning that he should register the loan.

24.  However, accepting that Mr Mandelson made that assumption in October 1996, the situation changed when he was appointed Secretary of State for Trade and Industry on 27 July 1998. He became aware of the involvement of his Department with Mr Robinson's former companies and he properly sought to ensure that he was not compromised within his Department. At that point he was subject to the Ministerial Code of Conduct, which removes any doubt. It states;

"(vi)    Ministers must ensure that no conflict arises, or appears to arise, between their public duties and their private interests;

 (vii)    Ministers should avoid accepting any gift or hospitality which might, or might reasonably appear to, compromise their judgement or place them under an improper obligation."

"109.  Ministers will want to order their affairs so that no conflict arises or is thought to arise between their private interests (financial or otherwise) and their public duties."

"114.  Ministers must scrupulously avoid any danger of an actual or apparent conflict of interest between their Ministerial position and their private financial interests."

25.  In my view it could not have been possible for Mr Mandelson to comply with the Ministerial Code without entering the loan in the Register of Members' Interests.

26.  Mr Mandelson recognised the possible conflict of interest when he became Secretary of State at the Department of Trade and Industry and properly took action within the Department. He should also have disclosed the loan in the Register in accordance with the Code of Conduct for Members of Parliament and the purpose of the Register.

27.  I therefore consider that Mr Mandelson should have registered the loan from Mr Robinson at the latest by 27 July 1998 and I therefore uphold the complaint.


28.  The question of Mr Mandelson's mortgage from the Britannia Building Society was raised in the complaints from Mr Redwood and Mr Henderson on the grounds that it may have been concessionary and therefore registrable, or improperly obtained.

29.  I have looked at these complaints in the light of the requirements of the Code of Conduct for Members of Parliament and the Rules. Those which apply here are as follows.

On whether the loan was concessionary the Code says on personal conduct:

"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"

and the Guide to the Rules states that:

"The main purpose of the Register of Members' Interests 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 of Parliament."

and on registration of benefits:

"The rule means that any gift, or other benefit which in any way relates to membership of the House and which is given gratis, or at a cost below that generally available to members of the public, should be registered ...."

On whether the loan was properly obtained the Code says:

"Holders of public office should be as open as possible about all the decisions and actions that they take."


"Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest."


"Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest."

30.  I have received details of the mortgage application process from Mr Mandelson, Mr Mandelson's solicitor Messrs Wegg-Prosser and Farmer, and Messrs Herbert Smith, a firm of solicitors whom Britannia Building Society appointed to conduct an independent review of this mortgage application and of whether their own processes were sound and fair given speculation from their members, the public and the press.

31.  Mr Mandelson's solicitor tells me the loan agreement was made between Mr Mandelson and Mr Robinson before 14 October 1996 "to enable Peter Mandelson to acquire and refurbish the property". Mr Mandelson applied to the Britannia Building Society for a loan of £150,000 towards the £465,000 purchase price of the Northumberland Place property. He has provided me with a copy of his mortgage application form which he signed on 30 August 1996 (Annex I). The mortgage was provided by Britannia Building Society for completion on 23 October 1996.

32.  I have looked carefully at the mortgage application form. It is incomplete and, at the date Mr Mandelson signed it, it was incorrect.

33.  Question C2, Details of Existing Accommodation, asked:

"Please give details if you have or have had a mortgage or are the tenant of your existing dwelling". Mr Mandelson gave details of the £40,000 mortgage on his Clerkenwell flat but no information about the mortgage on his Hartlepool house which was £35,000.

Question D "Commitments" asked:

1. Do you have any hire purchase/loan agreements? Mr Mandelson replied "No". Mr Mandelson did not say he had a loan on his Hartlepool house.

In answer to another question

5. "Do you propose to borrow any other money upon security of the property to assist in the purchase?" Mr Mandelson replied "No".

34.  I have asked Messrs Herbert Smith whether Mr Mandelson was asked by the Britannia Building Society on what basis he was providing the balance of the purchase price. Messrs Herbert Smith tell me that they put this question to the Britannia Building Society branch manager who interviewed Mr Mandelson for his mortgage application. The branch manager told them that Mr Mandelson said his family was providing the balance. Mr Mandelson told Messrs Herbert Smith that his mother was providing the balance but that she later declined to do so.

35.  Mr Mandelson's solicitors, Messrs Wegg-Prosser and Farmer, have told me that

"The General Conditions of the Britannia offer to Mr Mandelson state that 'The balance of the purchase price is to be provided by the purchaser and it is understood that no second mortgage or other loan is being arranged in connection with the purchase.' At the date that the Report on Title was delivered to the Britannia I understand that this was the case. Subsequently when the personal loan from Mr Robinson was agreed shortly before completion neither I nor Mr Mandelson thought to inform the Society.

My personal conduct of the conveyancing of Mr Mandelson's home has been exhaustively investigated, initially by the Britannia in correspondence and later in correspondence and in a very lengthy interview with Solicitors representing and advising the Society. I understand they have reported to the Britannia that no action is appropriate or required.

I have acknowledged that because of a number of factors, including the illness and death of my father in October 1996, my own management of the transaction fell below the high standard that I have maintained in 30 years of practice. I appreciate that I should have thought to inform the Britannia of the arrangement with Mr Robinson. I should make it clear however that it has always been my view that the loan never prejudiced the interests of the Britannia both because of its terms and the identity of the parties involved. I understand that they accept that view" (Annex J).

36.  This indicates that the information held by Britannia Building Society complied with the conditions of their offer, namely that Mr Mandelson was intending to provide the balance of the purchase price without any other mortgage or loan and that he had no other loan outstanding. Mr Mandelson failed to include on the application form details of the loan on his Hartlepool house or to inform the Britannia Building Society when he obtained the loan from Mr Robinson and Mr Mandelson's solicitor has admitted he failed to carry out his duty to inform Britannia Building Society of the loan from Mr Robinson.

37.  At the request of the Britannia Building Society Messrs Herbert Smith wrote to me (Annex K) setting out the findings of their inquiry.


".... our client has instructed us to summarise the conclusions which we have reached regarding this matter which are as follows:—

1.  There was no dishonest intent on behalf of Mr Mandelson or Mr Wegg-Prosser and, therefore, no element of mortgage fraud.

2.  There was never any financial risk to the Society at any time and no loss will be suffered by the Society as a result of this transaction.

3.  The Society has always been fully secured—the arrangement with Mr Robinson was that his loan was unsecured (so that the Society's interests prevailed) with interest being rolled up and only payable on the sale of the property. Accordingly, there was never a risk that Mr Mandelson would be unable to make his interest payments to the Society despite the loan from Mr Robinson.

4.  The Society's normal lending criteria and procedures were followed at all times, and the Society conducted itself properly throughout the transaction and in the aftermath of the publicity arising in respect of this matter in December 1998/January 1999."

They also said:

"A solicitor acting for a lender on a mortgage transaction has a contractual obligation to adhere to the express instructions of that particular lender (these are usually sent out, as in this case, with the initial letter of instruction). Furthermore, a solicitor is also under a common law duty to take reasonable care to protect and secure the position of the lender. The general duty on a solicitor is to report to the lender any matter which comes to his attention which materially affects the nature of the transaction.

There was no express instruction from the Society in this case, and there is no duty at common law, for a solicitor to confirm the ability of the borrower to cover the remainder of the purchase price. However, a solicitor is under a duty to inform the lender of any material change (in the borrower's circumstances or otherwise). Wegg-Prosser and Farmer were instructed in this case (in accordance with the Society's standard instructions) to inform it if they became aware that a third party was lending money towards the purchase of the property and/or if a third party was to take a charge over the property in respect of that loan.

Wegg-Prosser and Farmer did not inform the Society about the change in Mr Mandelson's circumstances and also failed to inform the Society that Mr Robinson was to provide a loan towards the purchase of the property which was to be secured by a second charge on the property.

Mr Mandelson applied for and was granted a standard five year fixed term mortgage with no special concession whatsoever being granted to him. Indeed, all normal procedures were followed including a request that Mr Mandelson be interviewed at his local branch. This interview took place on 30 August 1996."

38.  While the terms of the mortgage offered by the Britannia Building Society were not in themselves concessionary, the mortgage was obtained without the disclosure of all the requisite information. In addition the information Mr Mandelson provided on his mortgage application form was not correct.

39.  As a consequence, 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. I must therefore uphold the complaint that it was outside normal commercial practice.

40.  Mr Mandelson failed to inform the lender of two material facts and therefore breached the Code of Conduct for Members of Parliament which requires them to be as open as possible about all the decisions and actions that they take, and to take steps to resolve any conflicts arising in a way that protects the public interest.

41.  I therefore uphold these complaints.


42.  From my investigation of these complaints it appears that there are matters which require clarification for Members and the public, given the concerns of the House which led to the setting up of the Committee on Standards in Public Life and the adoption of the Code of Conduct.

43.  I decided that in this case the question of influence was not at issue in relation to the benefits Mr Mandelson received from his personal friend Ms Wachner. However Members should be aware when accepting such generous gifts of the principle on which the Rules are based. 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. The Committee may wish to remind Members of this principle.

44.  The Committee may also wish to consider removing any doubt by including within the Rules specific guidance on whether or not transactions between Members which fall within the registrable categories ought to be registered.


1.  Flights accepted from Ms L Wachner

Complaint not upheld. (Paragraph 14)

2.  The loan from Mr G Robinson to acquire and refurbish Northumberland Place

Complaint upheld. Mr Mandelson should have registered the loan from Mr Robinson from 27 July 1998 at the latest. (Paragraph 27)

3.  The Mortgage from Britannia Building Society on Northumberland Place

Complaints upheld. The mortgage was obtained on a basis outside normal commercial practice. Mr Mandelson's mortgage application was incomplete and inaccurate and he therefore breached the Code of Conduct for Members of Parliament. (Paragraphs 39 and 40)

11 May 1999Elizabeth Filkin


10  The Code of Conduct together with the Guide to the Rules Relating to the Conduct of Members (HC 688). Back

11  Fourth Report of the Committee on Standards and Privileges, Session 1995-96. Back

12  HC Deb (1974) 874, c 393 Back

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