Examination of Witnesses (Questions 140
- 159)
TUESDAY 29 JUNE 2004
SIR MICHAEL
JAY KCMG, MR
DICKIE STAGG
CMG, MR SIMON
GASS CMG CVO AND
MR DAVID
WARREN
Q140 Mr Maples: I hope you are not
employing them any more because it does not seem that they were
giving you very good advice. I do not think one needs a lot of
advice to come to the conclusion that this is a sort of uncovered
option, is it not, it is a pretty dangerous transaction to enter
into? Instead of making several million dollars, we have lost
a few hundred thousand.
Sir Michael Jay: We lost a few
hundred thousand on the transaction.
Q141 Mr Maples: Can I ask you about
one other specific transaction and that is Dublin. We are told
in one of the tables that you have provided to the Committee that
seven houses in Dublin were sold between 1998 and 2004 and one
house was bought and the gain was £2.5 million. It does not
say that those seven that were sold included the main residence,
although we are told somewhere that one of the purchases was the
main residence. I think what happened in Dublin was that the residence
was sold and repurchased, and that is not clear at all from the
figures that we have been provided with. I wonder if you could
either tell us or let us have a note on exactly what happened.
I think it was sold and then you found you had to buy it back.
Sir Michael Jay: What happened
was that we sold the house, Glencairn, and the land, and we bought
another property which we believed was going to be better value
for money and more secure. It then turned out that the property
we had bought, Marley Grange, was going to be more expensive than
we had thought to redo and also the security situation in Dublin
changed and construction of roads around the old residence, Glencairn,
meant that access to the centre of town was easier. We redid the
value-for-money calculation a couple of years ago and came to
the conclusion that the right thing to do in value-for-money terms
was to repurchase the original house but with much less land.
What we have done is gained substantially on the sale of the land
but at the moment we are in the process of selling the house we
had bought and completing the purchase of Glencairn.
Q142 Mr Maples: We could have just
stayed with Glencairn and sold the land and achieved exactly the
same result, is that right?
Sir Michael Jay: We could have
done. The judgment made at the time was that was not the right
thing to do because of the security concerns surrounding Glencairn.
Q143 Mr Maples: The purchase price
of the residence is given in one of the answers to us from your
Department as £6.325 million and there is no mention of the
sale anywhere, and we are finding it very difficult from these
figures to get to the bottom of this transaction.
Sir Michael Jay: It was bought
for £6.25 million in 2000.
Mr Gass: If I could just add to
that, it has not yet been sold.
Q144 Mr Maples: It was sold, Glencairn.
Mr Gass: Glencairn was sold. I
thought you were talking about Marley Grange.
Sir Michael Jay: We bought Marley
Grange for £6.25 million; we have not yet sold Marley Grange.
Q145 Mr Maples: So we bought a house
for £6.3 million which turned out to be too expensive to
renovate. Did we not make some estimate of the cost of renovating
it before we paid £6.3 million? That is a lot of money to
pay for a house, even for an ambassador.
Mr Gass: We did make estimates
of the cost of renovation but two things were not logged at the
time. One was that there was substantial asbestos in the house.
The house was occupied at the time and, therefore, it was difficult
to get a very intrusive survey of the house to identify the fact
that it had asbestos. Also, I think I am right in saying that
there was subsequent lobbying by the Georgian Society in Dublin
for the refurbishment to be carried out in a particular way which
also pushed up the costs.
Q146 Mr Maples: I know none of you
are individually responsible for this but I just picked two big
residence sales in which we seemed to have made a major screw-up.
I do not know whether we lost money in Dublin, we cannot get to
the bottom of that, it depends what we sell Marley Grange for,
I suppose. We have these incredibly valuable assets which are
our residences in foreign countries, which we would not buy because
they are far too expensive, and we do things like this with them.
I just mentioned two but in both cases the transactions were screwed
up, were they not?
Sir Michael Jay: The first one
was a victim of circumstances, as I explained. In retrospect,
with the second one it would have been better if we had stayed
in Glencairn.
Mr Gass: I was just going to add
to that that the FCO property portfolio is about £1 billion,
it has got about 3,500 properties in it of which over the last
five years we have sold about 170.
Q147 Mr Maples: Most of these are
staff . . .
Mr Gass: You are absolutely right.
I was going to go on to say that only six of those residences—Bonn
was one—were sold because the post was no longer needed.
It is not that we are selling masses of residences. You have picked
two examples where there is absolutely no doubt we would have
wished that things had turned out differently and you may be sure
that we have asked ourselves internally some very searching questions
about how those two happened.
Q148 Chairman: Two of the six.
Mr Gass: Two of those six, but
I am also talking about the other major properties where we have
sold. I do think that those are two exceptional circumstances.
I would not want to leave the Committee with the sense that that
was the result of our usual property management, because I do
not think that would be fair.
Q149 Mr Maples: They amounted to
£11 million or £12 million.
Mr Gass: Indeed, it is a lot of
money.
Q150 Mr Maples: Could you let us
have a note about exactly what happened in Dublin, what Glencairn
was sold for and bought back for, so that we know what you made
on the land, and what the situation with Marley Grange is. Permanent
Secretary, I do think that you really ought to reflect, or if
the policy is being set by somebody else they ought to reflect,
on what the consequence of this is. Here are six residences, one
of which this Committee had serious questions about, the San Francisco
one, on which you did not make a lot of money and this Committee
felt very strongly that was a mistake, and on two others we have
managed to make a really serious mess of the transactions. Somebody
buying a £100,000 house out there does not make those sorts
of mistakes, they find out whether there is asbestos in it, they
see whether English Heritage is going to stop them changing the
colour of the windows or something. They do not sign a contract
to purchase one when they have not sold the other; banks will
not lend you money to do that. I really think the Department ought
to ask itself how it made these mistakes and it ought not to enter
into any other transactions for major residential property sales
before it feels that it has got a handle on this, that it is going
to manage it better next time.
Sir Michael Jay: We will let you
have the note you ask for, Mr Maples.[11]
Mr Maples: At some point I would like
to come back to the confidentiality question.
Q151 Sir John Stanley: Sir Michael,
I want to turn to another aspect of departmental administration
and that is the issue of communications. I want to raise communications
at official level between your Department and the Ministry of
Defence, and also within your own Department between officials
and ministers. The first one I want to raise is not bringing up
the reasons for going to war in Iraq but because of the issues
it has brought out in terms of communications at senior official
level, not least between the Permanent Secretary in the Ministry
of Defence and yourself as the Permanent Secretary in the Foreign
Office. This arose in the context of the crucial information as
to which of Saddam Hussein's weapons the 45 minute claim related.
This was a critical piece of information because depending on
the answer was the question as to whether or not there was a threat
to British interests in an immediate time horizon. If the intelligence
related to battlefield weapons, then, of course, that represented
no immediate threat to British interests. If it related to the
longer-range ballistic missiles which Saddam Hussein supposedly
had, then the 45-minute claim related to the British bases in
Cyprus, the significance of which you will be very much aware.
When I tabled a question to the Defence Secretary, he replied
to me on 4 March that his Permanent Secretary became aware that
the intelligence on which the 45 minute claim was based was in
relation to the battlefield weapons only possessed by Saddam Hussein
and the Permanent Secretary in the Ministry of Defence became
aware of this shortly after the publication of the Government's
dossier on Iraq's weapons of mass destruction, in other words
in approximately September 2002 or shortly after that date.[12]
When I tabled the same question to your own ministers, it transpired
that you yourself as Permanent Secretary of the Foreign Office
only became aware that the 45 minute claim related to battlefield
weapons in June 2003 and in the meantime, of course, your own
Foreign Secretary had made his own speech at Chatham House on
21 February 2003, again referring to the 45-minute claim and,
again, in ignorance as to which weapons of Saddam Hussein that
claim related. The question I put to you is, are you satisfied
or not that there was a nine month gap between the Permanent Secretary
in the Ministry of Defence knowing to which weapons of Saddam
Hussein's the 45-minute claim related and you yourself becoming
aware of that, with the Permanent Secretary in the Ministry of
Defence being aware of that six months before the war started
and you and your Foreign Secretary only becoming aware of it some
six weeks or so after the war ended?
Sir Michael Jay: The position
as far as the Foreign Secretary and I am concerned is as you have
described it, Sir John. I cannot really answer for Sir Kevin Tebbit.
We have regular conversations about these sorts of issues, clearly
we did not discuss this particular point.
Q152 Sir John Stanley: Can I just
press you further. Surely you feel, I hope, a sense of some considerable
discomfort that this crucial piece of information held at official
level in the Ministry of Defence was not passed on to you over
a critical period of some nine months. If you do feel some discomfort
about that, perhaps you can tell the Committee what you are doing
with Sir Kevin Tebbit and his officials to ensure for the future
very much better communication at official level on these sorts
of matters?
Sir Michael Jay: We learn lessons
all the time from these kinds of issues and the relations which
I have with Sir Kevin Tebbit, which the Foreign Office has with
the Ministry of Defence, is now extremely close. We have regular
meetings between the Chiefs of Staff and the top management in
the Foreign Office. My deputy, the Director General for Defence
and Intelligence, regularly attends the Chiefs of Staff weekly
meeting. I cannot imagine a similar issue arising in the future.
Q153 Sir John Stanley: I am glad
you said that. Can you point to any specific procedural changes
you have made at official level between the Ministry of Defence
and your own Department to see that this could not happen again?
Sir Michael Jay: As I say, there
are regular informal contacts but there are also the structured
contacts, our meetings with Chiefs of Staff, weekly meetings attended
by my Director General, the Director for Defence and Intelligence,
at which these kinds of issues are regularly discussed. I also
believe that in the future they would be aired at the Joint Intelligence
Committee and we would all be informed as a result of that.
Q154 Sir John Stanley: Can I just
turn to the second issue which arises within the Foreign Office
itself and this is really the issue of communications between
officials and ministers on very sensitive and important issues.
I want to raise this in the context of the terrible prisoner abuse
scandal in Iraq. This surfaced in the media quite early on in
this calendar year, 2004. Indeed, it is the case that I raised
this specific issue in formal evidence in this Committee with
Mr Bill Rammell when he came in front of the Committee on 24 February.[13]
We now know that the key meeting that took place at which the
International Committee of the Red Cross (ICRC) formally presented
their report on prisoner abuse took place on 26 February in Baghdad.
We also now know that the following day, 27 February, Sir Jeremy
Greenstock's office sent a telegram reporting on the ICRC's report
and the meeting that had taken place the previous day. Furthermore,
we know that report, which was a telegram, was circulated to ministerial
private offices. Despite that, and despite the massive volcanic
nature of this particular issue, we also now know, and this is
in Mr Rammell's reply to me of 20 May, that the Foreign Secretary
was not made aware of the ICRC report until the weekend of 8/9
May. He then promptly read it on 10 May. Sir Michael, I must ask
you, how did it come about that in your own Department there was
this huge gap between the arrival of Sir Jeremy Greenstock's office's
telegram on 27 February on a massively explosive and important
issue and it was not until the weekend of 8/9 May that anybody
briefed the Foreign Secretary?
Sir Michael Jay: As I understand
it, the reason why it was decided not to mark the copy to ministers'
attention was the emphasis that we were putting on the ICRC report
was the allegations concerning UK forces and we knew from our
contacts with the Ministry of Defence that the allegations concerning
UK forces were being followed up and investigated.
Q155 Sir John Stanley: But you know,
Sir Michael, as well as I do that when those allegations in relation
to UK forces were made, which were widely publicised in the British
press (there was very full coverage in the Independent on Sunday,
for example, on 22 February), whether it had been dealt with by
the Ministry of Defence or by some other department, this was
going to have the most monumental impact worldwide on the whole
perspective with which the coalition's operations were being conducted
in Iraq. Surely that was a critically important matter to bring
to the attention of your ministers?
Sir Michael Jay: I think in retrospect
it would have been better if it had been brought to my attention
and brought to the ministers' attention as well.
Q156 Sir John Stanley: What steps
are you taking to make certain that this does not happen again?
Sir Michael Jay: We have drawn
our staff's attention to the need to be very sensitive to all
human rights allegations and to make sure that those are brought
to the attention of senior officials and ministers.
Q157 Sir John Stanley: Just that?
Sir Michael Jay: I hope that will
ensure in any similar case, and I very much hope there will not
be a similar case, the papers would indeed be marked to senior
officials and ministers. That is what we need to ensure happens
in future.
Q158 Sir John Stanley: In your own
Department, how high was the telegram from Sir Jeremy Greenstock
circulated at official level?
Sir Michael Jay: The telegram
was circulated at a senior level, as I think is made clear in
answers which the Foreign Secretary gave in the House towards
the end of May. It was circulated to ministerial offices and senior
officials, it was not drawn to ministers' attention.
Q159 Sir John Stanley: Or to your
attention?
Sir Michael Jay: Or to mine.
11 Ev 63-64 Back
12
HC Deb, 4 March 2004, column 1051W Back
13
Foreign Affairs Committee, Fourth Report, Human Rights Annual
Report 2003, HC 389, Q39 Back
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