Select Committee on Standards and Privileges Minutes of Evidence


Examination of Witness (Questions 40 - 59)

TUESDAY 18 MAY 1999

MR PETER MANDELSON

Mr Campbell-Savours

  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 sufficiently—and I say this in all honesty—on 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 errors—Mr 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 McDermott—if that is an accurate reflection of what happened at this meeting—was 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 meeting.
  (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 wanted—what I was there for—what 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 Millbank—probably for something that had happened—heaven 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.

Mr Bottomley

  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——

Mr Campbell-Savours

  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 form.

Mr Campbell-Savours:  We have got it.

Mr Levitt

  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.

Mr Campbell-Savours

  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.


 
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