House of Commons - Standards and Privileges

Select Committee on Standards and Privileges Third Report

APPENDIX 1

(1) The Complaints against Mr Vaz involving Mr Sarosh Zaiwalla

285. The allegations made by Mr Milne against Mr Vaz which relate to Mr Zaiwalla were as follows:

(i) that in 1994 a cash payment of £2,000 intended for Mr Vaz was collected from Mr Zaiwalla's office by a "young man" from Mr Vaz's office; and that Mr Vaz had failed to register this payment;

(ii) that Mr Zaiwalla made other payments to Mr Vaz, always in cash and at Mr Vaz's request, which were not registered;

(iii) that after the general election in 1997 Mr Zaiwalla had asked Mr Vaz to intervene on his behalf in an Inland Revenue investigation into Mr Zaiwalla's tax affairs and that, after Mr Zaiwalla had reminded Mr Vaz about the cash payments to him, Mr Vaz had agreed to help;

(iv) that Mr Vaz had agreed to recommend Mr Zaiwalla for a peerage in the knowledge (by implication) that he (Mr Vaz) had accepted cash payments from Mr Zaiwalla.

(i) The allegations that Mr Zaiwalla made payments to Mr Vaz which were not registered

286. Evidence has been provided of payments by Mr Zaiwalla to, or on behalf of, Mr Vaz in four different categories:

— support of £500 each for two gala dinners associated with Mr Vaz in the summer of 1998

— a payment of £250 to Mr Vaz's office account in January 1993

— a payment of £200 to help defray the costs of publishing a constituency calendar.

287. Both Mr Zaiwalla (initially) and Mr Vaz (almost throughout)[170] have denied that any payments were received from Mr Zaiwalla by Mr Vaz either personally or for his benefit or that of his office.

a) Cash payments in 1993 or 1994

288. Mr Milne says that a cash payment of £2,000 intended for Mr Vaz was collected from the premises of Zaiwalla & Co by a young man from Mr Vaz's office. Mr Milne's recollection is that this payment was made in "April or May 1994", but he adds that it was only one of a number of such payments to Mr Vaz.

289. Mr Brown also recalls a payment to Mr Vaz in 1994, although he thinks it was for £1,000 rather than £2,000, as stated by Mr Milne. He says it was handed directly to Mr Vaz, not to his assistant. There is more agreement over timing, with Mr Brown, whilst not remembering the exact date, placing the payment "prior to May 1994"—when Zaiwalla & Co moved to new premises. Both men also agree that the payment they are able specifically to recollect was intended to support Mr Vaz's office in some way.

290. Mr Brown's evidence, however, shows a degree of uncertainty and confusion. For example, commenting in his letter to me on the suggestion in a newspaper report that Mr Vaz had refused to accept a payment from Mr Zaiwalla in the form of a cheque and had instead insisted on cash, Mr Milne says: "This may or may not be the case, I simply cannot be certain, though I suspect that could be the case".

291. Similarly, during his tape-recorded conversation with Mr Milne, Mr Brown initially disclaims any knowledge of a payment to Mr Vaz. When Mr Milne puts it to him: "You certainly did hand over an envelope at some stage", Mr Brown replies "Or so I am told, but I still don't remember it." Only after Mr Milne mentions the fact that he has been questioned by The Sunday Telegraph specifically about alleged cash donations to Mr Vaz by Mr Zaiwalla does Mr Brown support Mr Milne's account, but with the difference that Mr Brown maintains that the payment which he remembers was handed to Mr Vaz personally.

292. Moreover, Mr Milne's evidence that the payment was collected on Mr Vaz's behalf by a young man from his office called Mark is contradicted by Mr Vaz, who points out that no one by that name worked for him during the period in question.

293. The only documentary corroboration of any payment by Mr Zaiwalla to Mr Vaz of the kind (and the amount) alluded to by Mr Milne and Mr Brown[171] is the extract from Zaiwalla and Co's cashbook for 9 February 1994, indicating that a cheque was drawn for £1,000 and that it was ascribed in the 'narrative' column to "cash (K Vaz)". However, no receipt for the payment has been produced, even though Mr Zaiwalla says it would have been normal practice to request one in such circumstances.

294. After his initial blanket denial of any payments "by cash, cheque, [or] in kind" to Mr Vaz, Mr Zaiwalla's explanation for the reference to a £1,000 cash withdrawal is that it was a donation to a charity suggested by Mr Vaz. Mr Vaz's recollection is not so clear, but he thinks that this is the likeliest reason for the payment. However, neither he nor Mr Zaiwalla recall the identity of the charity, nor have they retained, or sought to retrieve, any records which might have assisted their memory, although Mr Zaiwalla thinks the intended recipient may have been an Indian disaster appeal fund.

295. It is possible that Mr Milne and Mr Brown are recounting different versions of the same event. But this is unlikely given that the divergences in their evidence are on material points—the amount of the payment and who collected it. Certainly, Mr Milne believes, despite his encouragement to Mr Brown to "get our story straight", that Mr Brown is talking about a different payment. To complicate matters further, Mr Zaiwalla's evidence concerning the cash payment of £1,000, which he now acknowledges, is that it was collected by two men from acting on Mr Vaz's authority—not one as recalled by Mr Milne.

296. Mr Zaiwalla says that Mr Milne is actuated by malice because of the circumstances of his departure from Mr Zaiwalla's firm and the continuing legal dispute between them. In turn Mr Milne, somewhat surprisingly in view of his attempt, during their telephone conversation, to co-ordinate his evidence with Mr Brown, challenges the latter's credibility by stating that he, after he left Zaiwalla and Co in 1994, served a term of imprisonment for theft from the firm.

297. In summary, the evidence that a series of payments was made to Mr Vaz by Mr Zaiwalla is inconclusive. In so far as their recollections are specific, Mr Milne and Mr Brown diverge over material details. They could be describing a single event from differing perspectives—but that seems implausible. If they are referring to separate occasions on which a payment was allegedly made, the force of their evidence is weakened by its mutual inconsistency and lack of corroboration. Mr Vaz strongly denies receiving payments from Mr Zaiwalla intended for him personally. With one exception, I have seen no documentary evidence of the payments which Mr Milne and Mr Brown say they either witnessed or helped to arrange. The exception is the cash withdrawal of £1,000 which Mr Zaiwalla says was intended as a donation to a charity nominated by Mr Vaz, an explanation which Mr Vaz accepts as likely to be the case.

298. I am satisfied, on the basis of the information I have received, including the documentary evidence, that Mr Zaiwalla did make a cash withdrawal of £1,000 in February 1994 which in his mind was connected with Mr Vaz. Both Mr Vaz and Mr Zaiwalla say this sum was intended as a charitable gift, and Mr Zaiwalla gives as the reason for recording Mr Vaz's name on the cheque stub the fact that it was Mr Vaz who had suggested to Mr Zaiwalla the idea of such a donation.

299. The evidence which might have clarified the purpose of this transaction has not been provided to me. Mr Vaz has said that he wished to encourage Mr Zaiwalla to become more involved in the Asian community and that may well be the case. For his part, Mr Zaiwalla may have felt (or may have been told) that this was what was expected of him by virtue of his position as a prominent Asian businessman. What remains odd, and as yet unexplained, is the fact that Mr Zaiwalla handed over a substantial amount, in cash, to a person (or persons) he assumed to be acting with Mr Vaz's authority, without apparently taking any steps to ensure that the money actually reached its intended recipients. Nor has any adequate explanation been adduced as to why a charity would wish to receive such a donation in cash.

300. I am bound also to record my surprise that both Mr Zaiwalla and Mr Vaz, when first asked by me, denied that Mr Zaiwalla had made any "cash payments of any kind" to Mr Vaz. Even if my question was interpreted literally as referring only to a payment meant for Mr Vaz's personal benefit, I would have expected both Mr Zaiwalla and Mr Vaz to have mentioned Mr Zaiwalla's £1,000 donation to a charity nominated by Mr Vaz in any reply intended to be comprehensive and helpful to my inquiry.

301. Neither Mr Vaz nor Mr Zaiwalla have been able to assist me in discovering the identity of the charity which received Mr Zaiwalla's donation. I have, however, been provided with no evidence that Mr Vaz, either personally or through his Parliamentary office, benefited from Mr Zaiwalla's £1,000 payment in February 1994.

b) The two Gala Dinners in 1998

302. Mr Zaiwalla says that, in July 1998, he supported two events organised by the Asian Business Network, in each case by purchasing a table at a gala dinner for £500. This is confirmed by photocopies of the cheques and counterfoils provided to me by Mr Zaiwalla. Mr Vaz, as the Honorary President of the Asian Business Network, was a supporter of both events; beyond that it is not clear what his role was in persuading Mr Zaiwalla to sponsor them. The second dinner, at any rate, was sufficiently closely associated in Mr Zaiwalla's mind with Mr Vaz for his name to have been noted on the cheque counterfoil.

303. I have no reason to question Mr Vaz's motives in helping to organise the two gala dinners. But in any case there is no evidence that Mr Vaz received a registrable benefit, either personally or in the form of support for his office, from Mr Zaiwalla through his sponsorship of the dinners.

c) The payment of £250 in January 1993

304. Some months after his initial denial, Mr Zaiwalla provided me with documentary evidence, in the form of an entry in his office cashbook, of a payment of £250 made by him in January 1993 to Mr Vaz's "office account". It remains unclear, however, whether the payment was made in cash or by cheque.

305. Mr Vaz, at the outset of my inquiry, was equally categorical in denying that he had ever received cash payments of any kind from Mr Zaiwalla. Having been provided, however, with the evidence of Mr Zaiwalla's cashbook entry, Mr Vaz has come very close to accepting that such a payment was, indeed, received by him or his office. Mr Vaz now says:

172

306. But these words are weakened by the following sentence:

"This is speculation because [I] simply [do] not know."

307. It seems unlikely that Mr Zaiwalla would, in his cashbook, have described a donation to a charity by reference to Mr Vaz's "office account". The second of the two possible explanations offered by Mr Vaz for the payment is less implausible—namely that it related in some way to the calendar. But the most probable reason for the donation is the straightforward one given in Mr Zaiwalla's cashbook entry: support for Mr Vaz's Parliamentary office.

308. Given Mr Zaiwalla's evidence for this payment and, in particular, its documentary corroboration by the office cashbook entry, it is surprising that Mr Vaz's own financial accounts have not enabled him to provide me with the relevant information about the purpose of the payment, or that his memory has not been stirred sufficiently to enable him to give an unequivocal answer on this point. It is also a matter of concern that Mr Vaz's reference to an advertisement in the calendar contradicts his earlier assertion that it contained no advertising.[173]

309. But in any case Mr Vaz has accepted (and it is confirmed by his letter to the then Commissioner in January 1996) that the income from the calendars was intended to support his personal staff or office equipment. A financial contribution, for whatever precise purpose, towards the cost of producing the calendars was therefore a form of sponsorship, the effect of which was to enable Mr Vaz to maximise this source of funding for his Parliamentary office.

310. There has been some inconsistency in the terminology used by witnesses to describe Mr Vaz's office in the constituency. Part of the confusion has arisen from the fact that the Constituency Labour Party's office was for a time run from Mr Vaz's house at 146 Uppingham Road, Leicester and Mr Vaz's Parliamentary office was located in his adjoining property (number 144).

311. In the light of the information provided by Mr Zaiwalla, including the cashbook entry mentioning Mr Vaz by name, I am persuaded that a payment of £250 was made by Mr Zaiwalla in January 1993 and that it was intended in some way to support Mr Vaz's own (ie Parliamentary) office. I believe that Mr Vaz could have been more candid and forthcoming in his replies to my questions on this point.

312. However, even though this payment by Zaiwalla did, in my view, constitute a benefit to Mr Vaz, he received advice from the then Registrar in October 1994—based on the interpretation of the rules at the time—that support for the calendars from individual donors did not have to be registered unless it was made on a regular basis and their contributions exceeded £500. Although this advice was couched in terms of payments for advertising space, Mr Vaz was entitled to assume that it also applied to other forms of sponsorship of his office—whether directly, or indirectly through the calendars. It is not clear why Mr Vaz did not seek advice from the Registrar about the first payment by Mr Zaiwalla (the £250 in January 1993). But on the assumption that he would have been given the same advice as he received after the second, I do not think it would be fair to regard him as having failed to register a registrable benefit.

d) The payment of £200 in September 1994

313. The evidence for the second of the two smaller payments allegedly made by Mr Zaiwalla is, as with the first, Mr Zaiwalla's own statements, corroborated by the office cashbook entry for 29 September 1994, which indicates that a cheque for £200 was drawn on Mr Zaiwalla's account on that day. The purpose of the payment is given as " Wildberry[174] (K Vaz Calendar)" and in the description column of the cashbook the word "advertising" appears. Again, as with the earlier payment of £250, it is not clear whether the cheque was actually made out to Wildberry or to Mr Vaz, or whether it was used to draw cash from Mr Zaiwalla's account.

314. Mr Vaz's account in relation to the £200 payment has followed the same pattern as his evidence concerning the earlier donation of £250 by Mr Zaiwalla. An initial, strongly worded denial has been modified by Mr Vaz, in the light of the documentary evidence of the cashbook entry, into a partial acknowledgement that a payment was made for a purpose linked with himself. As Mr Vaz now puts it: "Doubtless, the second payment by Mr Zaiwalla related to the calendar ...". But as in the case of the earlier payment, this statement is qualified by the following sentence: "This is speculation because [I] simply [do] not know."

315. I again express my surprise that, despite being prompted by the documentary evidence, Mr Vaz is unable to make a more unqualified statement on this matter.

316. I am satisfied on the basis of Mr Zaiwalla's evidence, supported by the cashbook entry, that the second of these two payments, of £200, was made by Mr Zaiwalla in September 1994 and that its purpose was to help defray the costs of producing and publishing a calendar. Given that Mr Vaz was personally associated with the calendar (as is evident from its content and format), this could reasonably be seen as a form of sponsorship of Mr Vaz in his capacity as a Member, although for the reasons given earlier,[175] Mr Vaz was entitled to believe that it was not a registrable benefit. I consider more fully the question of the calendars later in this part of my memorandum.[176]

(ii) The allegation that Mr Vaz intervened on Mr Zaiwalla's behalf with the Inland Revenue

317. Mr Milne alleges that in 1997 Mr Zaiwalla told him that he was "going to ask" Mr Vaz for his assistance in "putting pressure" on the Inland Revenue to accept a token settlement of Mr Zaiwalla's outstanding tax liabilities. Mr Milne added that, according to Mr Zaiwalla, Mr Vaz agreed to do this. Mr Milne's evidence varies somewhat on this point. In his original letter of complaint he says that Mr Zaiwalla approached Mr Vaz after the general election (that is, after May 1997), whereas in his letter of 4 April he states that Mr Zaiwalla claimed to have spoken to Mr Vaz in early 1997.

318. Both Mr Zaiwalla and Mr Vaz strongly deny this allegation.

319. Mr Milne's evidence suffers from two serious deficiencies. It is based on what he claims to have heard Mr Zaiwalla say about a conversation with Mr Vaz, rather than on Mr Vaz's first-hand account to Mr Milne. More importantly, Mr Milne has not produced evidence that, even if such a course of action had been agreed between Mr Vaz and Mr Zaiwalla, Mr Vaz took any steps to carry out his promise to intervene on Mr Zaiwalla's behalf.

320. There is, in fact, evidence that Mr Vaz did no such thing, in the form of the statement by the Chairman of the Board of the Inland Revenue.

321. The evidence that Mr Zaiwalla approached Mr Vaz to seek his assistance with his tax affairs is at best inconclusive and comes down to Mr Milne's word against that of Mr Zaiwalla and Mr Vaz. I am, however, satisfied that Mr Vaz did not make any approach to the Inland Revenue on Mr Zaiwalla's behalf.

(iii) The allegation that Mr Vaz recommended Mr Zaiwalla for a peerage knowing that he had accepted payments from Mr Zaiwalla

322. There is no dispute that Mr Vaz recommended Mr Zaiwalla for an honour, once in August 1996 and again in March 1997, but it is not clear whether the proposed honour in question was a peerage in both cases. This fact is confirmed both by the Permanent Secretary at the Lord Chancellor's Department and by Mr Vaz himself (although Mr Vaz initially refused to provide the information on the grounds that it was confidential).

323. Two issues arise from this aspect of Mr Milne's complaint:

— whether Mr Vaz had a financial interest in his relationship with Mr Zaiwalla which ought to have been declared when Mr Vaz made his recommendation on behalf of Mr Zaiwalla.

324. It is implicit in The Sunday Telegraph article of 9 April 2000, which was based on an extract of a taped conversation between the newspaper and Mr Zaiwalla, that the latter had had discussions with Mr Vaz about the possibility of an honour for Mr Zaiwalla and that Mr Vaz had advertised his intention to make such a recommendation. Both Mr Vaz and Mr Zaiwalla deny this.

325. Analysis of the transcript provided to me by The Sunday Telegraph scarcely bears out the interpretation placed on it by the newspaper. Whilst Mr Zaiwalla accepts that Mr Vaz mentioned the question of honours, he makes clear in his conversation with The Sunday Telegraph that this was a standard approach by Mr Vaz and that the tone adopted by him was frequently jocular.

326. In his interview with me Mr Zaiwalla says he viewed Mr Vaz's references to honours as "a PR exercise in what he considered to be his Asian constituency". Mr Zaiwalla certainly does not appear to have viewed Mr Vaz's remarks as tailored personally for his consumption. In that context, he points to the fact that, some years earlier, Mr Vaz had circulated a standard letter to members of the Asian community enclosing a copy of a letter he had written to the then Prime Minister, Mr John Major, appealing for the inclusion of more Asian people in the honours list.

327. In my view, the evidence does not support the allegation that Mr Vaz held out to Mr Zaiwalla the prospect of an honour either in return for a benefit he had already received from Mr Zaiwalla or in expectation of some future benefit. I am not persuaded that these factors were uppermost in Mr Vaz's mind when, during conversations with Mr Zaiwalla, he alluded to the honours list. It is more likely that Mr Zaiwalla's explanation is correct, namely that this was part of Mr Vaz's general attempt to cultivate good relations with prominent members of the Asian community.

328. The fact remains, however, that when he recommended Mr Zaiwalla for an honour Mr Vaz did have a financial relationship with Mr Zaiwalla as a result of the two payments made respectively to his office account in 1993 and in support of the constituency calendar in 1994—both purposes associated with Mr Vaz in his capacity as a Member. The second payment was made less than two years before Mr Vaz's first recommendation on Mr Zaiwalla's behalf. There is no evidence that the information about the donation from Mr Zaiwalla was declared by Mr Vaz when making his recommendation of an honour for Mr Zaiwalla.

329. At the very least Mr Vaz should have asked himself, as should any Member of Parliament in the same circumstances, whether there was any relevant information about his relationship with Mr Zaiwalla which he ought to disclose as part of the honours scrutiny process. Even if, as I accept, the benefits Mr Vaz had received from Mr Zaiwalla were not the reason for his decision to recommend him for an honour, Mr Vaz had a duty under the Code of Conduct to "bear in mind the need to be open and frank with Ministers, Members and officials" about any financial relationship with a person or organisation on behalf of whom he made representations.

Mapesbury Communications and the Annual Calendars

330. Mapesbury Communications was established by Mr Vaz as a vehicle for receiving both the income generated by the annual calendars and Mr Vaz's own earnings from outside Parliament. Mr Vaz has said that the revenue was intended to be spent in support of his personal staff or on the purchase of office equipment. However, the calendar project was not a success and was subsequently abandoned.

331. After the company was set up Mr Vaz wrote in January 1996 to the previous Commissioner, Sir Gordon Downey, to seek advice about its registrability. Mr Vaz told Sir Gordon that, at that point, no income from the company had been spent "on any Parliamentary duties". He said that the directors of the company were his wife and mother-in-law. Mr Vaz added that he had "always... registered the calendar in previous years".

332. The calendar was first registered in July 1994. Thereafter, in each year until January 1999, Mr Vaz's Register entry records income received from the calendar and the expenditure it funded (in general terms, research work for the Asian community), with the added rider in 1996 and 1997 "no payment made to me". In 1999, however, the entry changes so that it no longer states the purposes on which income from the calendar was spent, but instead records the fact that a contribution towards the cost of production was made by a Mr A P Patel. Mr Vaz presumably decided to register Mr Patel's donation to the calendar project because it exceeded £500—in line with the advice he had been given by the then Registrar.[177]

333. In response to Mr Vaz's request for advice on the registrability of Mapesbury Communications, the previous Commissioner told him:

"Your current entry now shows your employment as radio presenter, your membership of BPRI's panel and your income from the calendar. Assuming you do not receive any personal income or benefit from Mapesbury Communications, the present entry would seem to be satisfactory."

334. I have not been able to establish from Mr Vaz, now that the calendar project has been abandoned, where Mapesbury's income comes from and what it is spent on. Mr Vaz has referred me to information available from Companies House in the form of the annual report and accounts. These documents do not, however, specify either sources of income or the main objects of expenditure funded by it. The amounts involved are not negligible. For example, the turnover of the company in the latest year for which figures are available was £73,764 in 1997-98 and £51,428 in 1998-99.

335. Another aspect of Mr Vaz's involvement with Mapesbury which remains unexplained is why Mr Vaz said that after the calendar project was abandoned the company continued to trade with new officers and its own[178] activities, when two members of his immediate family have been directors throughout and the address for the register of members is given as Mr Vaz's London home.

336. As I have indicated, on the basis of the information he provided to the then Commissioner and Registrar and the advice he received from them, Mr Vaz decided not to register Mapesbury Communications, or the two payments of £250 and £200 made by Mr Zaiwalla. On that basis, I express no criticism of Mr Vaz. Nevertheless, I remain concerned about several aspects of the way in which Mr Vaz dealt with my specific questions, as well as the general way in which he gave his evidence, on these matters.

337. Amongst my concerns are the following:

— Mr Vaz's failure, despite requests from me, to clarify the confusion caused by his statement that the calendars contained no advertising—which is contradicted by the examples of the calendar for 1994 and 1995 supplied by him to the Registrar— giving rise to the possibility, not acknowledged by Mr Vaz, that there were in fact two separate kinds of calendar associated with him[179]

— Mr Vaz's unwillingness—ostensibly on the grounds that he had no involvement with the company—to provide details of the expenditure and income of Mapesbury Communications, when it was he who set it up and its officers, from its inception until the present date, have been mainly members of his immediate family.

338. The lack of co-operation from Mr Vaz on the last of these matters is especially troubling since it has prevented me from establishing whether any of the income of Mapesbury Communications has been used to support Mr Vaz's Parliamentary office in any way. I have received no evidence that this is the case, although Mr Vaz told the then Commissioner in 1996 that this would be the main purpose of the company. Mr Vaz was in a position to clarify this uncertainty and chose, for whatever reason, not to do so.

170 See paragraphs 77 and 78. Back

171 That is to say, excluding the two smaller payments of £200 and £250 allegedly made by Mr Zaiwalla to, or on behalf of, Mr Vaz (see paragraphs 304 to 316). Back

172 The calendars associated with Mr Vaz are dealt with more fully later in this section of my memorandum (See paragraphs 330 to 338). Back

173 See paragraph 337. Back

174 a publishing company Back

175 See paragraph 312. Back

176 See paragraphs 330 to 338. Back

177 See paragraph 100. Back

178 Emphasis added. Back

179 In his formal response to my draft memorandum, Mr Vaz offered clarification of the position regarding the calendars (Annex 56A, paragraph 26). See also paragraphs 455 to 458. Back