Examination of Witness (Questions 40 -
TUESDAY 18 MAY 1999
40. Peter, can I just say this has been
a very, very difficult inquiry for us, as Members of the Committee,
not only for you but for us as well. Very, very difficult. I just
want to ask, at this stage, one or two questions, and I might
come back later. On 30 August did you, in your mind, when you
were in that building society, when you were talking to Mr McDermott,
believe that your mum would, basically, come up with a loan?
(Mr Mandelson) I did believe my mother would pay.
41. You were convinced in your mind of that?
(Mr Mandelson) Yes, I was. I might have been wrong
to be convinced, and I might have been deluding myself, but, no,
I thought she would. But I do not think, at the time, I was focusing
sufficientlyand I say this in all honestyon how
the sum of money involved would look to her.
42. I want to read something to you and
I would like you to comment on it, because it is an interpretation
that has been placed on a conversation that took place between
you and Mr McDermott. It is from the report of the Herbert Smith
investigation. It is dated 22 March and it is paragraph (1) at
the bottom of sheet 2, under "Mortgage Interview at Queensway
Branch". The bottom paragraph reads as follows: "Both
Mr McDermott and Mr Mandelson did agree that the interview was
`rushed' towards the end which may mean that little time was available
for Mr Mandelson to check the form before signing. (This may explain
why obvious errorsMr Mandelson being described as a `Minister
of Parliament'were not spotted and corrected by Mr Mandelson
at the review.) Mr Mandelson confirmed also that he did not take
a copy away with him so as to check its accuracy when more time
was available to him, and that he recalled only giving the form
cursory attention." That suggests a fairly sloppy interview
between you and Mr McDermott, where Mr McDermottif that
is an accurate reflection of what happened at this meetingwas
not particularly tight in his questioning, that everything happened
in a hurry and that, in those conditions, errors may well have
arisen. I wonder whether you could, perhaps, comment on what you
remember of that interview?
(Mr Mandelson) I will do that. It is an accurate
description of the interview, but I do not believe it yields the
interpretation or the conclusions that the Commissioner has reached
in her report to you, which I read earlier today.
43. I do not want to go into that yet. I
would like you to deal specifically with what you recall of that
(Mr Mandelson) I think that Mr McDermott was slightly
surprised to find me in his branch. I do not think he realised
it was going to be me. I did not say "I am Peter Mandelson,
I am arriving at your branch the next day"; an appointment
was made by my office with him to have a discussion about applying
for a mortgage with the Britannia Building Society. I arrived.
I had been driven there by my research assistant from the office.
He then went off to park the car. I went into the building society
and I sat down with him in this rather airless cubicle. I explained
to him what I wantedwhat I was there forwhat the
exercise was about, and he said "Fine". He got the application
form out. I never touched the application form, except to sign
it. I never read the application form after he had completed it.
I am not placing any responsibility on him, by the way, for this;
I am not saying that he did wrong or anything at all. He did not
do anything that was wrong, but he filled it in. Rushed. It was,
perhaps, rushed towards the end because I think, probably, I had
to get back to Millbankprobably for something that had
happenedheaven knows what, I do not know. I feel that I
was there for about 40 minutes, 45 minutes; I did not feel I was
only there for about 10 minutes. I cannot say precisely how long
I was there. He was very forthcoming to me; very eager to get
it all done, very eager to get it moving and was very pleased
that I had come to Britannia. I think he was rather pleased I
had come to his branch, to be honest. He never pressed me on any
details about anything. I am not saying that he was not thorough
in his questioning and I am not saying that he acted in an unprofessional
way but I do not have any recollection at all of being pressed
for information which I found myself unable to give or unwilling
to supply. I never felt the need to be the least bit evasive with
him and, indeed, I cannot think of any motivation I would have
either for misleading him or withholding information from him
on any subject at all because I did not think there was any reason
why the Britannia Building Society should not want to give me
a mortgage. I did not feel that there was anything in my personal
circumstances, in my financial circumstances or any other arrangements
I had that might lead them not to give me a mortgage and for that
reason I had to dissemble about. It just was not like that. Then
towards the end of the interview my research assistant came in,
arrived, I signed the form and I left. I did not take a copy of
it. I am sure I should have done that but I did not I am afraid.
44. We are all very human, are we not really,
and here you are, you are a well-known politician on and off the
television screen and you walk into this building society and
you sit down and you are interviewed by this chap who probably
thinks in his mind "I will be telling my family about who
I interviewed this morning". Is there a possibility that
he may well have
(Mr Mandelson) I am sorry, I misled you, he did
know that I was coming. I am sorry, something just reminded me.
He did know that it was me who was coming because he came in on
his day off to see me.
45. Perhaps that suggests
(Mr Mandelson) There was something you just said.
He came in especially on his day off because it was me.
46. In other words he made a special effort.
I think somewhere in one of these reports there is reference to
someone being "star struck". Do you think he may have
felt a little
(Mr Mandelson) I do not know whether he was star
struck. He was certainly very pleased to see me.
47. Is there a possibility that he may have
been perhaps a little sloppy in the way that the form was filled
out because he simply felt that he was not, for reasons that we
all understand, in a position to question you as closely as otherwise
he might have done?
(Mr Mandelson) I do not think it is fair to say
that he was sloppy. I think he felt a reticence in interrogating
me perhaps in a way that he might have done with a complete stranger
or somebody he had doubts about. I am interpreting that. I am
offering my view of him, I am not stating that as a fact.
48. If there was a reticence do you think
that in itself would have been the reason why there were these
errors on the form, that he did not press the questions as diligently
as he might otherwise have done?
(Mr Mandelson) Let me address both of them.
49. I would like to pause for a moment.
(Mr Mandelson) There are two aspects of it. One
is I was asked whether I was going to borrow any money that would
be secured on a property that would effectively be a second mortgage.
I was asked that question by him and I answered truthfully "no".
Not only "no" because of the relevant facts at the time
but those facts endure. I have never taken a secured loan. I have
never borrowed money that placed a further charge on the property,
on Northumberland Place. In the case of my mother, that frankly
was going to be a sort of gift and that was, therefore, not a
secured loan. Specifically on the question it says in D5 "Do
you propose" and this question I think is very, very important,
"Do you propose to borrow any other money upon security of
the property to assist in the purchase?" I would have asked
what that question meant because I would not have known on the
face of it what that meant.
50. You would have asked or you did ask?
(Mr Mandelson) I would have asked.
51. Can you say that clearer. Did you ask?
(Mr Mandelson) I cannot say for sure whether I
asked but I think it would have been very, very unlikely that
I would have understood what that question meant. I am not financially
literate in that way and I would not have understood. In my view,
and I firmly think this, I cannot say to you categorically that
I did ask him this because I do not have a precise recollection.
I am sorry that I do not, it would be wrong of me to mislead you.
I think it is extremely unlikely that I would have been able to
answer "Do you propose to borrow any other money upon security
of the property to assist in the purchase?" I would not at
the time have understood what "security of the property"
meant. He would have said to me "Are you going to take out
a second mortgage on this? Is this going to be a further charge
on the property?" and I said "no". The answer was
no and it remained no.
52. You said "no" or you would
have said "no"?
(Mr Mandelson) I said "no".
53. By voice?
(Mr Mandelson) By voice. I said "no".
That was the case then and it has always remained the case whether
in relation to the option of my mother or in relation to Geoffrey
Robinson giving me a loan. On no occasion in no discussion I have
ever had was it ever suggested for one moment that either of those
loans would place a charge on the property. The second matter
relates to Hutton Avenue. If I had been asked
54. We are having trouble finding the question
five that you are referring to.
(Mr Mandelson) D5.
55. Now we know where we are.
(Mr Mandelson) On page three of the application
Mr Campbell-Savours: We
have got it.
56. Were you asked the question verbally
or did you have the sheet in front of you?
(Mr Mandelson) Verbally. I did not have the sheet
in front of me. There is a second point about Hutton Avenue. In
the case of Hutton Avenue I am afraid it did not seem relevant
to me to tell them about Hutton Avenue. I imagine and I believe
that I would have described my living circumstances, my assets
or whatever, but I do not have any precise recollection and therefore
I am not going to mislead you, I do not have a precise recollection
of saying to Mr McDermott "I have a property in Hartlepool,
it has this mortgage on it, it is worth that much and I am going
to discharge it when I get the proceeds from the sale of Wilmington
Square". I think it is unlikely that in a general introductory
discussion I would not have described where I lived and everything.
We talked about me being a Member of Parliament, he knew that
I lived in my constituency, but I did not tell him I had a mortgage
on my home in my constituency, nor did I think it was particularly
relevant to do so. I have had a mortgage on my property in my
constituency since 1990 that had existed perfectly happily with
my mortgage on my property in London. It never created any problem.
There had never been any suggestion that it was something that
was relevant to anyone. It was not in my mind at the time and
in any case I intended to discharge the mortgage on Hutton Avenue
when I sold the property in Wilmington Square. The building society,
or Herbert Smith on behalf of the building society, has acknowledged
that the mortgage application form was not designed in such a
way as to elicit information about another mortgage on an MP's
property. If you look at the application form it just does not
present that question. It would not have been in Mr McDermott's
mind to ask it if he had not been thinking of my having a property
as a Member of Parliament in my constituency. It was not in my
mind to offer the information because I did not think it was relevant.
The question did not naturally arise from the application form
as it is designed and, of course, as Herbert Smith have subsequently
said: "If this information"and I am quoting from
Herbert Smith"had been disclosed and Mr Mandelson
had also said that the mortgage would be discharged out of the
Wilmington sale proceeds, Mr McDermott would still have recommended
this transaction to the Society." It made no financial material
difference to the building society whatsoever.
57. Could I ask you a very simple question,
which is a question that everyone will ask you. We have the document
here which you signed. Can you tell us now why, in retrospect,
you did not check it? It would have saved us a lot of difficulties.
(Mr Mandelson) He did not ask me to check it.
58. He did not ask you?
(Mr Mandelson) He did not say, "Will you
check this thoroughly and read it thoroughly and go away and I
will come back in ten minutes."
59. He did not say, "There is a declaration
here"? He did not say, "Will you sign it"?
(Mr Mandelson) He did not say anything about a
declaration at all. He said, "This is the form, we'll go
through it." It is in his handwriting, it is not in my handwriting.
I am not putting any responsibility on Mr McDermott at all. It
is my responsibility to check things that I sign. It is just that
on this occasion I am afraid I did not.