Examination of Witness (Questions 120
TUESDAY 18 MAY 1999
120. So when he said, "What position
do you now hold?"
(Mr Mandelson) I would have said Member of Parliament.
121. And he writes the word "MP"
on the form and then above it "Minister of Parliament".
You do not know how it came about that he changed it?
(Mr Mandelson) I do not. I have no idea. I never
took away the application form. I never saw the application form
until I went into Herbert Smith to be interviewed by them earlier
this year. I had never seen it.
122. Are you quite certain that when you
got to the end of the interview, did he then say, "This looks
okay," or "Sign here"? Can you remember what sort
of words he used at that point?
(Mr Mandelson) They were comforting, they were
very friendly. There was never There was not even a, "Well,
this may be difficult" or, you knownothing. It was
so matter of fact. It was almost in and out except that it took
about 40-45 minutes.
123. Forty-five minutes is actually a very
long time. Are you wedded to that?
(Mr Mandelson) I felt it was. I do not know how
long it was. I felt it was a thorough meeting. I felt it was quite
long but it is my guess that it was about 40 minutes. I suppose
it could have been half an hour but it just seemed a long enough
period to do what we needed to do. There was no question of my
saying, "Look, I'm terribly sorry, I've only got 10 minutes
because I have to get back to the office." I did not say
that. There was no question of that.
124. They used the word "rushed"
in the report. Where do you think that could possibly have come
(Mr Mandelson) I think because he may have felt
rushed but I do not really see any reason for him to have felt
rushed because I was not saying to him, "I'm sorry, I have
a fixed period of time and I have to leave at the end of it."
I was not saying that. It is true that Ben came in towards the
end and he might have been slightly sort of impatient and wanting
to get me out and on to what I had to do next. I am not sure whether
"rushed" is the right word. I think possibly he was
a bitI was going to say flustered but he was not flustered
in the sense that he was not coherent, kind of thing.
125. There was a change of circumstance
between 30 August and when you completed. We all know that now,
that is a fact. Did you at any time feel you had an obligation
to tell the lenders of that change of circumstance or did you
regard it as irrelevant?
(Mr Mandelson) I regarded it as irrelevant. I
did not realise that it was of concern to them. It never occurred
to me, nor did anyone suggest to me, that it was a matter of relevance
126. Your solicitor, we all know from the
papers, did have an obligation to bring that change to the building
society's attention. Did he ever discuss that with you?
(Mr Mandelson) He never discussed it with me.
I think both of us felt that as it would make no material difference
to the building societyit was not as if I was replacing
one unsecured loan or gift for a mortgage or a charge on the propertythat
never arose and I do not believe it ever occurred to my solicitor,
who is a fairly fastidious person. I do not think that it would
have occurred to him "I should tell them but I am not",
he is just not that sort of person.
127. Of course it may be irrelevant what
he thought but as far as you are concerned are you satisfied that
he knew about the change, the solicitor obviously knew about the
(Mr Mandelson) He knew about it.
128. And he did not advise you to tell the
(Mr Mandelson) No, he did not.
129. Peter, some of us anyway are struggling
with this whole process. I find it quite difficult in a sense
to justify what we are doing here but we are all on the Nolan-Neill
treadmill now and it seems that we are forced to go through the
process and it is very much in that spirit that I believe we have
got to do it. What fascinates me and what I need putting in perspective
is how the scale of the financing came about. If we go back to
the original discussions that I think you had with Geoffrey in
May with the idea in mind that you wanted to move and the brief
discussion about the loan and then the involvement of your mother
and so on, how did you end up looking at houses in that sort of
price bracket? What did you have in your mind in terms of financing
at that stage?
(Mr Mandelson) That is a very, very good question.
I looked at flats. The first thing "what was I doing in that
area in the first place", it is an expensive area and it
was too expensive for me. I was there because of the original
desire having been introduced to the area by my friends, having
originally intended to rent their flat during the week but then
when that did not happen, because Gill became pregnant and they
had another kid and did not want to take on a flat in London,
I continued to want to live in that area. The area was expensive,
not nearly as expensive as it is now. Considering what prices
are now it was almost modest by Notting Hill standards. I looked
at flats. The flats were incredibly expensive for what they were
and they were not in great shape. I did look at a whole lot of
flats. I made an offer for one flat, had the offer accepted, then
I was gazumped and I lost it. That happened on at least two occasions.
By July/August I was getting worried because I was running out
of time. I did not want to be involved in looking for a house
or a flat or moving in the autumn because that to me was the election
period. I wanted to do it during the summer. I wanted to do it
before we got intensely under way in the autumn. Partly because
flats were so expensive, and actually the houses were not that
much more expensive than some of the flats I was looking at, partly
because I was not being shown any flats that I wanted, although
I very much wanted the original flat that I tried to buy and if
I had been able to buy it none of this would ever have happened,
partly becauseand this is a personal thingI was
a bit reluctant to live in a flat where there were going to be
other people. That is an entirely personal thing.
130. Okay. Can we go back to our friend,
section D, because you very interestingly talked about D5. I am
actually more interested in D3 because it strikes me that there
the question "Have you any further outstanding commitments
including maintenance payments?" is a much more all-embracing
open sort of question of the kind that one might expect would
sweep up almost anything. That might have been the point at which
going through it at whatever pace was happening at the time might
have sparked off a different response. After all, you went through
the mortgage process in 1990 with Hartlepool, you went through
another mortgage process in Clerkenwell, and here you were going
through this mortgage process. Did that question not spark any
different responses at all?
(Mr Mandelson) I am afraid it did not. I do not
know how he explained "maintenance payment". I do not
know what he said to me a maintenance payment was. It is like
number one. If you look at D1 "Have you any hire purchase/loan
agreements?" I have asked myself many times since in relation
to Hutton Avenue because of the question that has been raised
about it there, why did I not see Hutton Avenue as a loan agreement
and I am afraid I did not.
131. Or as an outstanding commitment?
(Mr Mandelson) To me a hire purchase or a loan
agreement is when you want to buy something and you put it on
the "never never". If it had said "Have you any
hire purchase or other mortgages", it would have immediately
said to me Hutton Avenue, but it did not I am afraid and I did
not relate the two.
132. One of the things you said which intrigued
me at one stage was that there was no reason for Britannia not
to agree a mortgage. That leaves me wondering what the now increasingly
famous Mr McDermott had in his mind when this discussion was taking
place because he knew what your income was, he knew by now what
you were and, as you have said, you wanted to see what the maximum
was you could borrow against that background. What do you think
he thought was going to fill the difference between the sort of
property value that you were looking at and what was visibly there?
(Mr Mandelson) He thought it was going to come
through personal resources and personal arrangements.
133. That was the extent of his interest,
he was satisfied that was it?
(Mr Mandelson) He never asked me any follow-up
questions. He never asked me any searching series of questions
at all about how I would pay the balance of the purchase price.
134. Just in passing, and this will sound
like a debating point but I must make it, you said that you cannot
possibly have been treated specially by Britannia to whom you
were just like any other member of the public. You did say earlier
that he had come in especially on his day off. There was a factor
there, I am not saying it would have been a material factor.
(Mr Mandelson) I think there was a factor there
but I do not think it yields the interpretation or the conclusion
or the construction that the Commissioner has placed on it. I
most vigorously think that is just not logical, it is not true,
and there is no evidence to support it at all, that the building
society had made an exception for me in some way or had given
me favourable treatment that led them to vary their normal procedures
or criteria. Put it this way: if the building society did not
know of this information which I had not provided them with they
did not know that anything was exceptional that would cause them
to give me a favourable or concessionary mortgage. You cannot
have it both ways, with respect. Either the building society had
this information and decided that they would overlook it or they
would make an exception because I am an MP, or they did not have
the information because I withheld it from them, in which case
they were not making any exceptional arrangement for me. You cannot
have it both ways I would suggest.
135. Like others I find going over your
personal financial details particularly difficult. First of all
I want to begin with just a couple more questions about this filling
in of the mortgage application form with Mr McDermott. Having
now seen the application form is it your recollection that in
relation to the questions, and there are an awful lot of them
where he has written that things are not applicable, etc., did
he read them verbatim would you say now you have seen the form?
(Mr Mandelson) Did he, Mr McDermott, read it verbatim?
136. Yes. Is your recollection that because
(Mr Mandelson) He did put the questions to me.
He did say He did ask me. He asked me questions. He did
not read out all these words, no, because we would have been there
probably half the morning. No, he did not do that but he did put
the questions to me.
137. Also the timing of this, 30 August,
which I think you have said was a Friday. I know from one of the
other complaints that we have before us about the flights that
you, in fact, went to Long Island just a couple of days after
this, 2/3 September, something like that?
(Mr Mandelson) I may well have done. What happens
is thator what happened then, not now, was that in August
other people go away for their holidays. The Leader of the party
goes away, his press secretary goes away, everyone goes away in
August. I stay at home in August. I then deal with whatever it
was that summer and I cannot quite remember what awful things
were happening that summer. I think Clare Short gave an interview
to the New Statesman in which she denounced people living
in the dark and saying that New Labour was just a fabrication
and it was not real and then, as I say, that was one week's stuff
that I dealt with and then the Conservative Party followed up
with the devil's eyes advertisement, which produced another ten
days of furore, all of which I dealt with by myself. Nobody else
was there to deal with it. I dealt with it all. They then come
back from their holiday, fit and tanned. I then go away, and this
happened on three summers in a row, including the summer by which
time I was a minister in 1997, when my over-active defence of
the Government and lust for publicity led me to push myself forward
time and time again, which apparently robbed me of my seat in
the NEC elections of that year. All I can say is that when people
go off on holiday and leave somebody to sweep everything up and
cope with everything, it is very intensive, it is very pre-occupying,
and you have a lot to juggle, you have a lot on your plate, and
if I was overly pre-occupied with that rather than the detail
of my mortgage application, then I am sorry. I do not excuse myself
for it but that was the context.
138. But we have got this report, the report
from Herbert Smith, saying it could be rushed. Obviously here
you are at the end of August, you were going away in September
and you were away for a fortnight or so?
(Mr Mandelson) I doubt very much if it was a fortnight.
I am afraid I cannot remember the dates of my holidays.
Chairman: Can we just
disclose that it says "rushed towards the end". In their
summary they just use the word "rushed" but in the full
description it is "rushed towards the end".
139. Moving on from that, you have made
it perfectly clear what you thought of Alex Renton. Also a lot
has been written in the press and certain allegations have been
made about the mortgage in the book by Paul Routledge.
(Mr Mandelson) I have not read that book.