Examination of Witness (Questions 180
TUESDAY 18 MAY 1999
180. When you borrowed the ten per cent
(Mr Mandelson) Perhaps it would have been helpful
if he had. Perhaps if he had said "For crying out loud, what
the hell are you doing getting involved in that", but he
did not. It was not his responsibility to do so, it was my responsibility.
181. So your first real commitment was to
just the ten per cent. Did you realise, and please correct me
if I have got this wrong, some of my colleagues know much more
about the law than I do, once you had committed the ten per cent
you stood to lose that ten per cent if the deal fell through?
Before you accepted the cheque for ten per cent did you make sure
that the other 90 per cent was there otherwise you could have
lost the ten per cent and had no security to pay it back?
(Mr Mandelson) But it was there.
182. How did you know?
(Mr Mandelson) Because either I was going to be
able to persuade my mother or Geoffrey's offer was always there.
Geoffrey did not say "I will give you the money for the deposit
but not for the completion". That conversation never took
place between us.
183. A final point, one quick question,
something Peter referred to and we have been a bit puzzled over.
Switching back to the letter from Herbert Smith, the second paragraph
on the second page of the deposition which has been referred to,
where it says "Had he not reached this conclusion",
that you still believed your mother was going to help you with
the balance, "we are instructed that he would not have exchanged
contracts." You say you did not say that. I think that fits
in with the whole pattern of the paragraph. If you look at the
paragraph it says "Mr Mandelson confirmed... Mr Mandelson
explained... Mr Mandelson believed..." When we come to this
sentence, which is a very important sentence, it says, "...we
are instructed", in other words we are advised, "that
he would not have exchanged contracts." You said in reply
to Peter that you did not say that.
(Mr Mandelson) I do not recall saying that to
them. If I said something that yielded that interpretation, although
I am not absolutely sure what that would have been
Herbert Smith were extremely thorough in this.
184. Was it, in fact, a correct statement?
This is advice your solicitor, we think, gave to the building
society's solicitor. It seems important in conditioning their
thinking later on. Was it correct to say that?
(Mr Mandelson) I am not sure what the importance
is of this.
185. It is the answer I want, I do not need
to explain the importance to you because I will not know until
I get the answer.
(Mr Mandelson) Could you put the question to me
186. Yes. What it says is had you not reached
this conclusion, ie that your mother's change of mind was only
temporary, "we are instructed", that is the building
society's solicitor by, we believe, your solicitor, "that
he would not have exchanged contracts". Was that a correct
statement for your solicitor to make to their solicitor or not?
(Mr Mandelson) Do you mean that I would have pulled
out of the sale having paid the deposit, having given the £40,000.
Mr Bottomley: No,
at the time of exchanging contracts.
187. It says "...would not have exchanged
contracts." "...we are instructed that he would not
have exchanged contracts." What they are saying is that unless
you were convinced that your mother was going to change her mind
again you would not have got as far as the exchange and that was
what they told the building society's solicitor. Is that the correct
(Mr Mandelson) I do not see how it can be I am
188. That is fine. I am not disputing your
honesty, I promise you.
(Mr Mandelson) What that seems to suggest is that
unless I knew my mother was going to finance this I would not
(Mr Mandelson) How can that be true because I
did exchange and the deposit was made possible by Geoffrey Robinson?
190. Yes, but what they say is that "Despite
his mother's change of mind, Mr Mandelson believed this to be
only temporary and concluded that at completion she would put
up the necessary monies."
(Mr Mandelson) What that means is that whilst
Geoffrey put down the money for the deposit, it was still possible
that my mother would provide the balance for the purchasing price,
191. But it then goes on to say "Had
he not reached this conclusion,..." which you clearly did,
"he would not have exchanged contracts". That is not
true, is it?
(Mr Mandelson) At what stage would I have
Mr Williams: What
they are saying is
Mr Campbell-Savours: I
wonder if we could let Peter read the paragraph himself, I think
it would help him.
192. Yes, please do, and take all the time
(Mr Mandelson) Which page?
193. It is sheet three, the second paragraph.
It is the second half of that paragraph that is the relevant bit.
(Mr Mandelson) No, what they are saying there
is that before exchanging contracts I believed my mother would
finance it and she wobbled but I was convinced I could persuade
her back into her original position and if I had thought that
I was unable to persuade her I would not have proceeded with the
exchange of contracts.
194. That is what they are saying, yes.
(Mr Mandelson) I do not think that is true.
195. Neither do I. I do not mean that you
have said anything wrong. I just wanted to clarify it. Peter made
it earlier, because what it boils down to here is that your solicitor,
acting on your behalf, gave them advice which was actually inaccurate.
It was based on no advice you had given them and, indeed, is contrary
to the whole stream of what you have been arguing, which was that
you always knew Geoffrey was in the background and, therefore,
you would have been able to able to go and exchange?
(Mr Mandelson) And that is right.
196. So all I wanted to clarify for my own
satisfaction there is that whoever said thisand it looks
as if it must have been your solicitormust knowingly have
misled the building society's solicitor. It is not your fault,
it is nothing to do with you?
(Mr Mandelson) I do not accept that my solicitor
would knowingly mislead anyone.
Chairman: I think
that concludes it unless there is some further supplementary.
I would prefer if you keep them brief. We have had Peter here
for well over two hours, which is a long time.
197. Chairman, I have one little thing to
ask. Just to be fair to you as a witness, is there anything that
you feel you want to say more about the Commissioner's report?
(Mr Mandelson) As far as the question of registration
is concerned, I must say I feel pretty strongly that our understanding
of registration and the rules governing registration is that they
do relate to outside interests. I know the part of the Code that
the Commissioner quotes about financially material benefits but
the point is that Geoffrey Robinson did not give me this loan
as a Member of Parliament, he gave it to me as a friend. If I
had not been a Member of Parliament he would still have given
me this loan, and I think with a new Commissioner coming in, as
she is fully entitled to do and I entirely respect her position
in this, making an interpretation of the Code which is tougher
and harder than the previous interpretation and previous convention
that is related to Member-to Member-transactions is not fair on
me. I do not think it is right that I should be retrospectively
censured or penalised. After all, when I discussed this with Mr
Willoughby earlier this year he was quite clear in his view that
Member-to-Member transactions of this sort did not need to be
registered. It was only when the Commissioner wrote to me saying
that I should, that I did. Secondly, the Commissioner in her report
says that doubt existed about the registration of Member-to-Member
transactions. In fact, the Commissioner, when she wrote to me
on 19 January this year, said: "I accept that there is considerable
doubt about this." We know that there have been other
I know because I have been told, for obvious reasons, that there
were previous examples when Conservative Members of Parliament
received perfectly legitimate loans from colleagues, from other
Tory MPs. They did not register those and the Thomason case is
not a precedent for this. That is quite different, as Mr Willoughby
explained to me when I saw him earlier in the year. I think, having
accepted that there is considerable doubt about the need to register,
then to elide the Ministerial Code in with the House of Commons
Code in order to catch me I just do not think is fair. I think
at least it is highly arguable that you should elide the Ministerial
Code with the House of Commons Code in the way that the Commissioner
has done. After all, I am not being judged by this Committee in
relation to the Ministerial Code. I am being judged in relation
to the Commons Code. I have already said that I accept what my
actions should have been in relation to the Ministerial Code but
to transfer that to the Commons I just think is not reasonable.
I do not think it is fair to be punished retrospectively and I
think the Commissioner, in writing to me, using the words "considerable
doubt" should continue to use the words "considerable
doubt" and not lose the "considerable" in her report.
As far as the building society is concerned, I would just want
to emphasise three things. First of all, there is no evidence,
there is no logic really, that the Britannia mortgage was anything
other than a purely commercial loan. It was not a concession made
to me and indeed, no evidence has been supplied by the complainant.
In fact, no evidence has been supplied by any of the complainants.
If you look at their letters all their letters are based on media
reports, nothing else, nothing other than that, but there is no
evidence that the building society acted in anything other than
a commercial way and they assert that very vigorously indeed,
and I would draw your attention to what Herbert Smith said on
their behalf. The second is that I would draw your attention again
to my answer to question No. 5, D5. It relates to a borrowing
on the security of the property. The answer I gave, the information
I supplied, in relation to that question is absolutely correct.
It was correct at the time of completing the application form
and my signing that and it has been true ever since. It was always
unsecured. Thirdly, in relation to the Hartlepool property, the
idea that I should knowingly not tell them about my constituency
homeand it is so obvious and so well-known that I had a
constituency home, that I should have imagined that I could hold
that information from them, having had two mortgages perfectly
happily in Hartlepool and London for all that time, I should think
that if I did give them that information it might affect their
judgment as to whether they should give me a loan or mortgage
or not, it just does not stand up, and I think when you look at
the facts surrounding the Hartlepool home, which are not set out
in the Commissioner's report, incidentallyI do think that
context might have been spelled out as I went into it in some
detailthe fact that I was not asked a question, the fact
that the building society form is not designed in a way to elicit
that information, as they themselves have acknowledged to me,
I think counts for something. It certainly does not mean that
because I did not tell them about Hartlepool the building society
were granting me a mortgage on favourable terms. That just does
not stand up, not least because, as I said before, they did not
have that information, so how could they be making an exception
for me? I think that if anyone were allegingand I notice
the Commissioner is not alleging thisthat I misled the
building society, that I was dishonest in my actions, that I tried
to cheat or defraud the building society in some way, then I think
that would be a very serious charge, a very serious offence, which
I would expect you to take very seriously and if you found it
were true, then obviously I would have to be very severely censured
and punished. But nobody is suggesting that I did knowingly mislead
anyone or that I did act in any dishonest way. In effect, what
the Commissioner is doing in her report, if I may say soand
I respect her right and role to do it, it is her job, not a nice
jobis to try and trip me up or to knock me out on a technicality,
and I think considering the price I have paid so far in losing
my job in the Cabinet, in selling my house and all the ignominy
that I have gone through, to find me again guilty of a technicality
with all the consequences that would have, the media treatment
of me and my standing in the House, I think would be very unjust.
198. Are you aware that during your time
here you have accused the Commissioner of both saying that you
were dishonest and of saying that she has not.
(Mr Mandelson) I am sorry, I thought that I had
said I acknowledged that the Commissioner had said that she was
not saying that I knowingly misled people and that I had been
dishonest. That was the basis of my remark to you.
199. Do you think that the mortgage application
at the time you filled it in was complete and accurate?
(Mr Mandelson) Yes, it was.