Select Committee on Standards and Privileges Third Report

Written evidence received by the Parliamentary Commissioner for Standards

1.  Sunday Times article, 27 March 2005

Tory MP in £1.5m diamond mine row

A SENIOR Tory MP who heads a Commons committee to alleviate poverty in the Third World has been accused of attempting to use his position to make up to £1.5m for his own company.

Tony Baldry, a former foreign minister, has been paid by a diamond firm to lobby the government of a west African country to secure valuable diamond concessions.

Baldry, chairman of the Commons international development committee, has close links with Sierra Leone, a war-ravaged country heavily dependant on British aid.

He has visited the country twice in the past year on behalf of Milestone Trading, a UK-registered company owned by two Israeli businessmen.

He has also written to Hilary Benn, the international development minister, asking for officials to give the company a "best practice" seal of approval.

His reward for the work on Milestone's behalf was a $75,000 (£40,000) payment into Red Eagle Resources plc, a company of which he is non-executive chairman and a one-third shareholder.

Baldry has in addition struck a deal for his firm to take a 3% share in Milestone when it is floated later this year. Milestone estimates that this could be worth £1.5m.

The letter to Benn was written on Commons notepaper. It disclosed that Baldry planned to become chairman of Milestone, but did not reveal the shareholding his company had negotiated.

Yesterday George Foulkes, the Labour MP who is a former international development minister, said he would be reporting Baldry's activities to Sir Philip Mawer, the Parliamentary Commissioner for Standards.

"This commercial activity is incompatible with his role as committee chairman, particularly now that select committee chairmen are paid," he said. "They should be scrupulous that they are not using their position for financial gain."

Foulkes believes that Baldry may have breached rules governing parliamentary advocacy on behalf of commercial clients by writing to Benn on Commons notepaper and failing to disclose his firm's financial stake.

Under Commons rules, MPs must declare not only paid directorships and overseas trips, but also any parliamentary advocacy on behalf of commercial clients. New rules for committee chairmen, after last year's decision to award them additional salaries of £12,750 for their roles, stated they could continue to have "outside interests, subject to full declaration."

Baldry's select committee is responsible for scrutinising the millions in government aid spent in countries such as Sierra Leone. A critical report by the committee can have an impact on whether such aid continues.

John Barrett, a Liberal Democrat member of the committee, said: "You are compromised if you are questioning [the secretary of state] as a member of the select committee but at the same time lobbying him for business reasons."

Baldry, a barrister, has been MP for Banbury, Oxfordshire, since 1983. A foreign minister in John Major's government, he now has extensive commercial interests and has been criticised in the past for his sporadic attendance in the Commons.

In March 2000, he was censured by the parliamentary commissioner for standards for failing to declare the receipt of a £5,000 personal loan from a solicitor shortly before he recommended him for an honour.

Baldry has long-standing personal links with Sierra Leone. He is a former colleague of President Ahmad Kabbah, who once practised in the same London chambers, and remains head of the chambers that acts for the Sierra Leone government in Britain.

According to Nissim Levy, the Israeli joint owner of Milestone, Baldry was hired on the advice of senior figures in the Sierra Leone regime who described him as the west African state's best friend in Britain. He came recommended by Sierra Leone's minister for mines, its vice-president and other cabinet ministers, according to Levy.

His initial role was to help Milestone smooth over allegations of links to the mafia. Levy's partner in Milestone, Gershon Ben-Tovim, had been a shareholder in a Namibian ostrich farm with Vito Pallazollo, who was wanted in Italy on mafia-related charges.

Levy said: "We came across, many times, this Tony Baldry, as a good friend who knew from the old days in chambers the president and vice-president and he is very well-respected. It was natural for us to contact him and ask for his services.

We wanted him to do some politics, PR, like that. It's always good in any country that you have very good contacts. He knows them very well."

Baldry made two week-long trips to Sierra Leone in November last year and this January, arranging meetings between Levy and Kabbah and other ministers.

His letter to Benn was to seek the government's seal of approval for the company. Baldry asked Benn if British officials in Sierra Leone would meet Milestone representatives and ensure the company is "fully 100% in accord ... with whatever 'best practice' [the department] would hope that mining companies in Sierra Leone would pursue".

Diamonds were an "emotive commodity", he said, but Milestone would be "a significant UK investor and to that extent not only Milestone's reputation but that of UK plc will rest on how Milestone performs".

Although he declared his plans to become Milestone's chairman when it is floated this year, he did not reveal his company's lucrative share deal.

Benn replied on February 14 saying the government could not "endorse an individual company's activities".

Baldry's approach set "alarm bells ringing" among Foreign Office officials who were asked to look into the company's affairs in Sierra Leone.

They discovered allegations of human rights abuses at its two alluvial diamond mines in Sandoh and Nimikoro provinces.

Despite Baldry claiming local communities were "very happy with Milestone", leaders of the United Mineworkers Union in Sierra Leone complained workers were paid only £1 per day and denied adequate water and accommodation.

Further allegations surfaced that local policemen were hired as security guards and used to intimidate workers who went on strike over "inhuman" conditions.

Ezekiel Dyke, the mining union's leader, said: "The management are grabbing the diamonds without doing anything concrete to create better conditions or assist in developing the area."

Baldry said he was under no obligation to declare his deal or payments to his company from Milestone in the MPs' register of interests. He said his work would benefit both Britain and Sierra Leone through jobs, investment and pledges to build a road, a school and a diagnostic clinic.

He rejected suggestions that his commercial interest in the company and his lobbying of British or Sierra Leone ministers had compromised his role as chairman of the select committee.

27 March 2005  Sunday Times

2.  Letter to the Commissioner from Mr George Foulkes MP

Could you look into the position of Mr Baldry and his correspondence with the Secretary of State for International Development? I have enclosed faxed copies.[24]

I understand that Mr Baldry's letters were sent on Commons headed paper from the House of Commons and that he has not declared an interest in Milestone.

It also raises the question of whether there are, or should be, particular requirements for both declaration and caution in making representations by Chairs of Select Committees now they are paid.

I would appreciate your investigations and observation.

28 March 2005  Rt Hon George Foulkes MP

3.  Letter to the Secretary of State for International Development from Mr Tony Baldry MP

Sierra Leone

As you and your Department know, I over the last two or three years have been visiting Sierra Leone from time to time. In part this is because a small NGO of which I am patron, "Friends of Africa", is doing work in Bontho; in part it was to complete a university Dissertation for an MA I have just completed at Sussex in International Development; and in part to see and keep up the spirits of my predecessor as Head of Chambers, Desmond de Silva, QC, who is prosecuting the war crimes in Freetown.

President Kabbah used to be a member of our Chambers and the Sierra Leone High Commission in London has instructed my Chambers in the Temple on a number of matters relating to property that the Government of Sierra Leone own in London and want to gain repossession.

As a consequence of this interest in Sierra Leone, with Roger Freeman, I have helped set up a Sierra Leone-UK Business Group.

I think because of a combination of all the above interest in Sierra Leone, I have been approached to become Chairman of Milestone Trading Ltd, which intends in the near future to go to the AIM Exchange here in London. I was interested to learn when I was in Freetown recently, that Milestone is already the largest single UK investor in Sierra Leone. Milestone is primarily a mining company which has entered into agreements with the Paramount Chiefs in the Nimikoro area of Sierra Leone to rework with very modern equipment, earth dumps from previous alluvial diamond workings and with the benefit of new equipment recovering diamonds that previously were not found.

One of the reasons that Milestone wants to go to the Stock Exchange is to raise venture capital to purchase and invest further machinery doing similar work in other areas of Sierra Leone.

The local communities are I think very happy with Milestone. The agreement with the Paramount Chiefs is that the communities received 30% of the profits, and of course Milestone is potentially a sizeable generator of employment. So, for example, they now employ some 500 people.

The licenses to mine are of course issued by the Government of Sierra Leone with whom Milestone is working closely—and of course the Government of Sierra Leone will benefit by tax revenue from the value of the diamonds retrieved.

I am very conscious that by definition, particularly in a country such as Sierra Leone, diamonds are a very emotive commodity, and I want to be confident that Milestone is exemplary in all of its undertakings. I am also aware that it even now, having invested, I think, approximately some £7 million in Sierra Leone, they are the largest UK investor, on the grounds that by the time Milestone have finished fund-raising for further investments, they will be a significant UK investor and to that extent not only Milestone's reputation but that of UK plc will rest on how Milestone performs.

I know that DFID officials have been much involved in advising the Government of Sierra Leone on diamond mining and the diamond industry and on the Kimberley Process. I wonder whether it would be possible for DFID officials in Freetown to meet up with the Milestone team "in country" to ensure that so far as the retrieval and recording of diamonds, their export and sale by Milestone—indeed everything relating to them—is fully 100% in accord with the requirement of the Kimberley Process and whatever "best practice" DFID would hope that mining companies in Sierra Leone would pursue. Would that be possible?

14 January 2005   Tony Baldry MP

4.  Letter to Mr Tony Baldry MP from the Secretary of State for International Development

Thank you for your letter of 14 January about the activities of Milestone Trading Ltd in Sierra Leone, and their approach to you to become their Chairman.

As you rightly say, diamonds in Sierra Leone are a very emotive commodity. I very much welcome schemes that share the profits from diamond sales with the local communities in the areas from which they are mined. I was very interested that Milestone is apparently pursuing such an approach. However, DFID does not have the means to carry out an investigation that could provide the assurance of best practice that you are understandably seeking. Nor, as you will understand, can we endorse an individual company's activities.

DFID officials have contacted the Government Diamond Office (GDO) in the FCO, which is responsible for the implementation of the Kimberley Process by the UK. They are unable to confirm whether Milestone Trading Ltd is abiding by the Kimberley Principles, as, to the best of their knowledge, there was no import of diamonds by Milestone to the UK in 2004.

As you are no doubt aware, a KP certificate, attesting that the stones came from legitimate sources, accompanies all exports of rough diamonds. In order to determine whether the company is adhering to the principles of the Kimberly Process, it would first be necessary to determine the destination of Milestone's exports and then contact the Government Diamond Office in that country. The GDO have contacted their Belgian and German counterparts. Their offices also have no record of imports from Milestone Ltd. It may be that Milestone only sells to buyers within Sierra Leone.

I hope this is helpful.

14 February 2005  Rt Hon Hilary Benn MP

5.  Letter to the Secretary of State for International Development from Mr Tony Baldry MP

Milestone Trading

Very many thanks for your letter of 14 February concerning Milestone Trading. I think the best thing is for me to ensure that Milestone gets in touch with the Government Diamond Office in the FCO as I want to be confident, as a "belt and braces", that they are so far as possible doing everything that they should be to comply with the Kimberley Process.

17 February 2005  Tony Baldry MP

6.  Sunday Times article, 3 April 2005

Top Tory in African contract inquiry

A SENIOR MP used his parliamentary position to lobby an African government over the award of a lucrative aviation contract to a company in which he is a big shareholder.

Tony Baldry, the Conservative MP for Banbury, Oxfordshire, could now face censure for exploiting his position in the Commons to further his business interests.

The Sunday Times has seen a series of letters sent on Commons notepaper by Baldry to Vice-President Solomon Berewa in Sierra Leone discussing the privatisation of the country's failed national airline.

He attempts to arrange meetings with Angel Gate Aviation, a British-registered company that is keen to schedule flights from London to Freetown, the capital of the west African state.

Companies House records show that Baldry owns 439,000 shares in Angel Gate, although he makes no mention of this in any of the letters. The firm has paid him £30,000 in the past year as its chairman.

Val Collier, Sierra Leone's anti-corruption commissioner, criticised Baldry's intervention. He said last week that Baldry was "immoral" in using his position as an MP to promote his own business.

"(The airline approach) has nothing to do with House of Commons matters," he said. "You cannot use high office to influence business negotiations. It's morally wrong and a bad example to countries like ours."

The revelations will increase the pressure on Baldry, a former minister in the Foreign Office. Last week, Insight revealed that he has been paid by Milestone Trading, a mining company, to lobby the Sierra Leone government for valuable diamond concessions.

He stands to make a substantial amount of money out of the deal. This is despite the fact that his business with Sierra Leone—a war-torn country heavily dependent on British aid—presents a potential conflict of interest for someone in his position.

As chairman of the Commons international development committee, Baldry is responsible for scrutinising the millions in government aid spent in countries such as Sierra Leone. Fellow committee members point out that their job is to help alleviate Third World poverty rather than try to profit from it.

Baldry also used Commons notepaper to write to Hilary Benn, the international development secretary, on behalf of Milestone.

The matter has been referred to Sir Philip Mawer, the parliamentary commissioner for standards, by George Foulkes, the Labour MP and former international development minister.

After seeing the latest letters lobbying for the aviation firm, Foulkes said: "This appears to show that his [Baldry's] business activities and his position as chairman of the select committee have become inextricably mixed in a way which appears to be a conflict of interest and breach of parliamentary rules.

"As a result, he should consider whether it is possible for him to continue as chairman of the committee."

In the letters to Berewa, Baldry says he has been negotiating with Abdul Turay, the country's privatisation commissioner, for Angel Gate Aviation to take over from the country's national airline.

"We have agreed the way forward for the airline project and I hope it may be possible for Mr Turay to meet [Angel Gate director Ramy Lakah] to finalise details of the proposed agreement, which can then be passed to the respective lawyers to draw up the necessary contracts," wrote Baldry.

"We fully understand that 'speed is of the essence' on this matter and that the government of Sierra Leone is anxious to see a viable airline operating between London and Freetown as soon as possible."

Although he declares his directorships and shareholdings in the register of members' interests, Baldry's letters give the impression his involvement is neutral. His shareholding in the firm is not even alluded to.

As it turned out, his lobbying for the company failed as the contract was awarded to another operator. He did, however, have more success when acting on behalf of Milestone.

Last year the company was blacklisted in Sierra Leone pending an investigation into links between one of its directors and two mafia figures wanted in Europe and South Africa. A report by Collier confirmed that Gershon Ben-Tovim, a partner in Milestone, had business links to Vito Palazzolo, a known mafia figure wanted in Italy. Milestone and Ben-Tovim reject the significance of those links.

Baldry wrote to Berewa on October 4 last year dismissing the links as "tangential".

The intervention undermined the objections made by Collier and cleared the way for Milestone to receive new mining licences. In return the MP's company, Red Eagle Resources, received a $75,000 payment, and the promise of a potential £1.5m shareholding in Milestone.

Baldry is now being asked to explain himself in front of his Commons committee. John Barrett, a Liberal Democrat member of the select committee, said: "If the allegations of a conflict of interest between business dealings and the work on the select committee are proved, then he should resign. I would certainly advise him to make a statement to the select committee on Tuesday."

Baldry is also to be interviewed by the commissioner for standards. Last week he declined to comment further until the investigation has been completed.

3 April 2005  Sunday Times

7.  Letter to the Commissioner from Mr George Foulkes MP

Further to my letter of 28 March, I enclose a copy of a further letter from Tony Baldry to the Vice-President of Sierra Leone which I hope you will take account of when giving consideration to this case.[25]

5 April 2005   Rt Hon George Foulkes MP

8.  Letter to Mr Tony Baldry MP from the Commissioner

Complaint by the Rt Hon George Foulkes MP

Further to my e-mail of 1 April, I am writing to seek your response to the enclosed letter of complaint which I have received from Mr Foulkes. The complaint focuses on your exchange of correspondence with the Secretary of State for International Development earlier this year about the activities of Milestone Trading Limited in relation to diamond mining in Sierra Leone. These matters were, of course, the subject of an article in the Sunday Times of 27 March, a copy of which I also enclose.

Mr Foulkes comments in relation to your letter of 14 January to the Secretary of State:

"I understand that Mr Baldry's letters were sent on Commons headed paper from the House of Commons and that he has not declared an interest in Milestone."

In order to help you in forming your response to the complaint, it may be useful if I identify the four possible issues that appear to be raised by it:

1.  Have you properly registered your interests in Milestone and other companies in the Register of Members' Interests?

As you know, it is a requirement of the Code of Conduct that Members fulfil conscientiously the requirements of the House in respect of the registration of interests. The Rules require that you register:

a)  any remunerated directorships, including directorships which are individually unremunerated but where remuneration is paid through another company in the same group;

b)  shareholdings which are either greater than 15% of the issued share capital of the company or 15% or less but greater in value than the current parliamentary salary.

Your current Register entry does not include any mention of Milestone. This may be because your interest in the company is prospective rather than current. Your entry does include your non-executive Chairmanship of Red Eagle Resources plc (mentioned in the Sunday Times) but does not list your shareholding in this company (said in the Sunday Times to be one third of the share-holding ownership of the company).

On a further point relating to the registration of your interests, according to the Sunday Times article you have visited Sierra Leone twice in the past year on behalf of Milestone UK. However, no reference to any such visit appears in the Register. Could you please say whether these visits took place and, if they did, why you have not registered them?

2.  Did you properly and fully declare your relevant interests when writing to the Secretary of State on 14 January?

The provision of the Code relating to the registration of interests also requires that Members:

"… shall always draw attention to any relevant interest in any proceeding of the House or its Committees, or in any communications with Ministers, Government Departments or Executive Agencies."

A further provision of the Code stipulates:

"In any activities with, or on behalf of, an organisation with which a Member has a financial relationship, including activities which may not be a matter of public record such as informal meetings and functions, he or she must always bear in mind the need to be open and frank with Ministers, Members and officials."

Section 2 of the Guide to the Rules on the Conduct of Members says (paragraph 56) that the rule relating to declaration of interests is broader in scope than that relating to the registration of interests, in that it embraces expected future (and past) as well as current interests. It includes the following sentence:

"Where, for example, a Member is debating legislation or making representations to a Minister on a matter from which he has a reasonable expectation of personal financial advantage, candour is essential."

Future interests should be declared:

"Where a Member's plans or degree of involvement in a project have passed beyond vague hopes and aspirations and reached the stage where there is a reasonable expectation that a financial benefit will accrue …"

In your letter of 14 January you make clear that you have been approached to become chairman of Milestone and that the company "intends in the near future to go to the AIM exchange here in London." You do not, however, mention any:

·  payment made previously to Red Eagle Resources plc by Milestone. The Sunday Times alleges that $75,000 (£40,000) has been paid to Red Eagle by Milestone in recognition of your work on Milestone's behalf;

·  arrangement under which Red Eagle would take a 3% share in Milestone when it is floated later this year. The Sunday Times alleges the existence of such an arrangement and that this could be worth £1.5 million when the company is floated.

Would you please comment on these points?

3.  Did your approach to the Secretary of State breach the ban on lobbying for reward or consideration?

Paragraph 76 of the Guide to the Rules provides:

"When a Member is taking part in any parliamentary proceeding or making any approach to a Minister or servant of the Crown, advocacy is prohibited which seeks to confer benefit exclusively upon a body (or individual) outside Parliament, from which the Member has received, is receiving, or expects to receive a pecuniary benefit, or upon any registrable client of such a body (or individual)."

It is clear from your letter of 14 January that your approach to the Secretary of State was intended to try to achieve reassurances that Milestone's operations in Sierra Leone were fully in accord with the requirements of the Kimberley Process and the "best practice" expectations of DFID. Your letter also mentions the potential risk to Milestone's reputation if it fell short of these standards. The Sunday Times article describes your approach as one "asking for officials to give the company a 'best practice' seal of approval," which, it could be argued, would give it a competitive advantage. Is this how you see the matter?

4.  Did you send the letter of 14 January 2005 on House of Commons headed paper and was it appropriate for you to do so?

The guidance given by the Department of the Serjeant at Arms states that 'House of Commons stationery, provided at public expense and the designs and symbols which authenticate communications from Members should not be used for purposes to which authentication is inappropriate.' The rules approved by Mr Speaker, on the recommendation of the Administration Committee, which amplify this guidance specify that House of Commons stationery 'which is provided at public expense should not be used for ... communications of a business or commercial nature.'

Your letter of 14 January clearly related to a company in which you have a commercial interest. How would you justify the use of House stationery in this context?

In accordance with the procedures agreed by the House in relation to the handling of complaints (which are fully set out in the enclosed note which I send to all Members who are the subject of a complaint), I should be grateful if you will let me have your response to the complaint, with particular reference to the four issues set out above. It would be helpful if in the course of this you would make clear the full extent of your past, present and future interests in relation to both Milestone Trading Limited and Red Eagle Resources plc, and any other relevant interests you may have. If you wish to discuss any of these matters with me, please do not hesitate to contact my office to arrange this.

There is one other matter I should mention. Mr Foulkes raises the question "whether there are, or should be, particular requirements for both declaration and caution in making representations by Chairs of select committees now they are paid". At present there are no such requirements: the obligations I have mentioned earlier apply to all Members. Whether there should be any such requirements is a matter which I intend to consider, in discussion with the Committee on Standards and Privileges, when the complaint against you has been resolved. It is not directly relevant to resolution of the complaint itself.

4 April 2005  Sir Philip Mawer

9.  Letter to the Commissioner from Mr Tony Baldry MP

Further to your letter of 4 April, as I have said, I will obviously respond in full to all the matters that you raise.

There is one matter on which I immediately acknowledge that I am in error, but entirely by oversight and not deliberately.

You observe that my entry in the Register of Members' Interests includes my Non Executive Chairmanship of Red Eagle Resources plc but does not list a shareholding in the company.

As I shall explain in detail in relation to the overall matters, when Red Eagle Resources plc was first established it was envisaged that it would involve a number of people and a number of shareholders, and I certainly never anticipated my shareholding to be in excess of 15%. What actually happened was that 3 founders shares were issued for the three directors, and there was never a formal allocation of shares. At the time the company was registered, and it again will become clear in due course, Red Eagle was exploring business opportunities and there was no value in the shares, and I think a combination of both those facts caused me to overlook as a "belts and braces", as I could quite easily have done, registering a shareholding in the company. It certainly was not deliberate and was entirely an oversight. I recognise that by definition if there are three directors and three founder shares, I am deemed to own a third of the company and it is therefore in excess of 15% and should be registered and I would be grateful if that could be done.

5 April 2005  Tony Baldry MP

10.  Note by the Commissioner of his meeting with Mr Tony Baldry MP on 7 April 2005

Meeting held in the Office of the Parliamentary Commissioner for Standards (PCS) on 7 April 2005.

Present, Sir Philip Mawer, PCS (PM), Mr Tony Baldry, MP (TB) and Ms Alda Barry (AM), Registrar of Members' Interests.

The meeting was held at the request of TB, who wanted to give PM as much information as possible before Prorogation. He accepted that PM might have further questions, to which he would be happy to respond in due course.

Letter to Vice-President of Sierra Leone

Some time towards mid-September 2004, TB had received a telephone call from Stuart Polak, Director of the Conservative Friends of Israel, regarding contacts of his who were having business difficulties in Sierra Leone (SL). Their company was Nimikoro, a subsidiary of Milestone.

TB had frequently visited SL for various reasons, had spent some time there, and considered both the President (HE President Kabbah) and Vice-President (Mr Berewa), with both of whom he was on first name terms, as friends.

Mr Polak's contacts had invested a great deal of money in SL and had an extraordinary story to tell TB when he met them. They seemed to him to have done the right things, but had met with a number of set-backs. One had been arrested and deported as a result of a confusion of identity caused, apparently, by his being mistaken for someone completely different—different name, different nationality—the only connection being that they were both Jewish. A South African mining engineer the company was seeking to use was unable to get an entry visa, apparently because of material posted on the internet by his ex-wife.

It seemed to TB that it would be churlish, in view of his known interest in Sierra Leone, to suggest that his contacts should approach their own MP. There was also another reason for his interest in that he was involved with Angel Gate Aviation, which had been negotiating with SL to help with setting up an airline. The Friday following his meeting with the Milestone personnel, TB was due to meet the Head of the Privatisation Commission of Sierra Leone (Mr Abdul Turay) at his request. The Commission had decided that it would not be possible to privatise aviation because of the extent of debt but was prepared to accept the provision of an aircraft in exchange for air traffic rights. The possibility that the Sierra Leone government was behaving capriciously in respect of a Western company naturally concerned TB in view of this interest, and he also believed that there was a wider public interest in assisting UK companies where he could.

Believing himself to have some influence with the President and Vice-President, TB had written on 29 September 2004 to the President saying that he had concerns about what was happening to Nimikoro. In the absence of the President the Vice-President had replied to him on 30 September, and his letter of 4 October (supplied by Mr Foulkes to PM) had been written in reply to this. If he had been writing to anyone else, he would have raised the question of Angel Gate in a separate letter, instead of which he had mentioned it at the end. He regarded his intervention in the matter of Nimikoro as the kind of problem solving that MPs do all the time.

At this stage he had not known anything about Milestone and in particular there had been no offer of a directorship in the company.

Red Eagle Resources, Milestone and the letter to Hilary Benn

In the summer of 2004, between July and September, Red Eagle Resources (which invests in agriculture and natural resources in Sierra Leone) had been approached by people wishing to take trawlers to Sierra Leone, a country with no indigenous fishing industry. As it had become clear to TB that the Milestone team was interested not only in diamonds but also in investment more generally (including investments in Eastern Europe) he had asked them if they would be interested in investment in fishing; not only were they receptive to this but they had suggested that they could bring in a Russian processing ship, a welcome development given the war-ravaged state of Freetown's cold storage facilities,

One of President Kabbah's priorities for Freetown was a diagnostic/treatment centre. The question of Angel Gate involvement in this had been raised in discussion with the President and Mr Abdul Turay in 2003, at the same time as discussions on the airline project, as an Angel Gate shareholder (Mr Ramy Lakah) was involved in a family business in that line in Egypt. Although a suitable site had been identified, the project had not been proceeded with. TB was concerned at the absence of such a facility. Mr Turay had been in London in October 2004 seeking investment and, since TB's interest extended only to the aviation question but he was anxious to help SL if he could, he (TB) had asked Milestone if they would be interested in funding the medical facility and was told that they would.

When in Sierra Leone in November 2004 on behalf of Red Eagle, TB had seen Mr Turay in the Privatisation Commission. They had gone through a list of topics, including the management of the state national lottery.

In early November, Red Eagle and Milestone had come to an agreement to help each other in Sierra Leone. The benefits to Red Eagle would include use of Milestone's office in Freetown. Milestone had already demonstrated its willingness to invest in Sierra Leone.

In January 2005, TB had returned to Sierra Leone on behalf of Red Eagle because he had not, on his November visit, been able to find all the people he needed to talk to about the fishery project, and he needed to identify a joint venture partner. On the last day of his visit he had met the in-country manager of Milestone, Mr Daniel Chen (partly because TB had wished to discuss a possible gap year placement for his nephew).

In the course of conversation, TB had asked about Nimikoro and compliance with the Kimberley process. Under the misapprehension that it was for the exporter of diamonds to show compliance (rather than the country of export), he had been concerned not to get as informed a response as he expected. Knowing that Milestone was a new company, and the largest UK investor in Sierra Leone, TB was worried about the potential for matters to go awry and, back in the UK he had written to the Secretary of State for International Development, Hilary Benn (letter of 14 January 2005 supplied by George Foulkes). He asked that the letter be read according to the normal meaning of the words used. In the last two paragraphs he had been asking only that DFID staff in Freetown should contact the Milestone staff to check that they were doing all that was necessary. He was not seeking commercial benefit or approval for the company. He expected nothing back except perhaps a letter saying 'If the Milestone team get in touch with them, DFID will arrange a meeting' (indeed, he believed that was exactly what had happened). He was asking for something which was in the mainstream of DFID activity. He would not be surprised to learn that DFID had been unaware of Milestone and its interest in Sierra Leone before his intervention.

By the time he wrote the January letter there had been discussions about TB becoming chairman of Milestone, and this he had declared in the letter. He could indeed have put also that he was a director of Red Eagle which had an agreement with Milestone to take a 3% share in that company when it was floated etc, but he believed that he had given enough information to show the Secretary of State that he had a commercial interest in Milestone.

His intervention might have been to the detriment of Milestone, since if DFID had found Milestone needed to take action to comply with the Kimberley process, that would have been to the company's cost.

TB was unclear on what paper he should have written to the Secretary of State if not on House paper. He was not a director of Milestone; he was not writing on behalf of Red Eagle. He could have written on his domestic paper, but he did not wish to pretend to be a private citizen and thought that if he had done so the true nature of his interest might in fact have been less apparent.

TB believed that it was legitimate for an MP to encourage and help a UK company to ensure that its activities were in order.

Mr Foulkes had not approached TB to say that he was lodging a complaint.

The Sunday Times had first approached TB on Maundy Thursday, and as he understood it they had been making allegations about Milestone. TB had explained his relationship to Milestone and Red Eagle, and, since most of their questions seemed to relate to Milestone's day to day business activities in Sierra Leone, had referred them to Dr Levy. The journalist had then said that the paper understood that TB had approached Ministers on behalf of Milestone. TB had faxed the ST a copy of the letter. Having spoken to Dr Levy, the paper had came back to TB on Friday with additional points, but other points in the article had never been put to him directly. The following week the Sunday Times had called with questions about Angel Gate and Invicta Africa, and TB had said that they should raise the matter with the Commissioner.

When TB had become aware of conflicts between his business interests and the work of the Committee on International Development, which he chaired, he had stood aside from the inquiry. In early 2004, after a committee visit to Somaliland he had been approached by friends to become a non-executive director of Invicta Africa and had immediately written to the committee clerk saying he would take no further part in the inquiry, and had also declared the interest.

In conclusion, Mr Baldry said that he did not think he had done anything improper. He handed PM a file of correspondence, etc which he invited him to consider, and said that he would be happy to make himself available to answer any additional questions which might occur to PM as a result of reading the material.

12 April 2005  Sir Philip Mawer

11.  Note by Mr Tony Baldry MP on his correspondence with HE the Vice President of Sierra Leone

Re: Letter to Vice President

On or about Monday 20 September 2004, I was telephoned by Stuart Polak, the director of the Conservative Friends of Israel, a friend and someone whom I trust implicitly.

I understood from him that he had business associates in London who appeared to be victims of a serious miscarriage of justice in Sierra Leone. Apparently, one of them had been expelled from the country in a pure case of mistaken identity, and this had put in jeopardy one of the largest investments of a UK company in Sierra Leone. Not unsurprisingly, I was astonished and agreed to see them with Stuart Polak at the Carlton Club the next day.

The meeting took place and Stuart Polak introduced me to Dr Nissim Levy and Mr Moshe Levy.

Dr Levy explained that his London office represented a company called Interlink and that he partially owned an English company called Milestone Trading; that Milestone Trading had invested a considerable sum of money—I understood it to be several millions of pounds—in equipment for alluvial mining of diamonds in the Nimikoro region of Sierra Leone.

Milestone had negotiated an agreement with the Paramount Chiefs and the community whereby the local community would receive one third of the profits of the mining operations. Milestone had already moved a considerable amount of equipment into the country, ready to start work. I understood this to be modern, South African mining equipment capable of reworking ground that had already been previously worked, in the hope of finding new deposits.

Dr Levy explained that they had run into the most extraordinary problem.

Moshe Levy, who I understand to be a former Israeli diplomat, had been in Freetown helping to set up the operation, and had seemingly without any particular reason, been arrested at his hotel, taken to the airport and deported.

In addition, they had a sub-contracting company called Gemfarm, the principal of which was Gershon Ben-Tovim and he was being refused entry clearance into Sierra Leone altogether. They explained that without Gershon Ben-Tovim it was extremely difficult to get the equipment going. Time was now of the essence because they had paid for the equipment, paid for its shipping and installation; they had taken on the work force, in good faith they had negotiated an agreement with the local community, and they were stuck.

Dr Levy explained that neither the UK High Commissioner in Freetown, nor the Sierra Leonean High Commissioner in London had been able to be of help to them; they had been unable to find anyone else in Freetown who could help them. Time was now of the essence because they were now losing money daily.

They asked me if I might be able to help them discover why they were being treated in this way. They explained that they had no desire to get involved in Sierra Leonean politics, but they were concerned as to whether unbeknown to them someone was talking badly of them in Freetown. I was told that Mr Levy had been mistaken for someone else, not only of a different nationality, but also a completely different name. The only connection appeared to be that they both had Israeli backgrounds. He was understandably outraged. Upon investigation, this was entirely true.

The overall impression that they gave was of a company and individuals being treated somewhat capriciously without proper explanation by the Government authorities in Freetown. Mr Polak endorsed these concerns.

I too was very concerned by what they told me for a number of reasons one of which was a personal concern.

As it happened, that Friday I was due to meet in London the Chairman of the Sierra Leonean Privatisation Commission to discuss proposals for a company of which I am a Director, Angel Gate Aviation Ltd, possibly to enter into a ten year contract with the Government of Sierra Leone. I was concerned that if the Government of Sierra Leone might be behaving capriciously with one UK-based company which had already made a substantial investment in Sierra Leone, there was no guarantee that they would not behave capriciously with another UK-based company.

During previous years, I had spent some time in Sierra Leone for a number of reasons:

·  visiting friends;

·  visiting projects by Friends of Africa, a small UK-based NGO which I support;

·  doing research for a university dissertation; and

·  business visits on behalf of Red Eagle Resources plc and Angel Gate Aviation Ltd.

Anyone can see that what Sierra Leone needs is investment and jobs. For there to be ongoing peace and stability, people have to see that standards of living are improving and that jobs are being created. Few UK or other companies have yet taken the plunge on investing in Sierra Leone and I knew from experience with Red Eagle Resources plc that raising venture capital for any project in Sierra Leone is extremely difficult because of perceived country risk. I was thus also extremely concerned that if companies like Milestone that were willing to invest, indeed had invested significant sums in the country, were running into such difficulties so soon, that this could only discourage others from risking investment in the country. In any event, I thought that Mr Moshe Levy had been subject to a serious miscarriage of justice. If they could get his identity wrong, what else could have been got wrong?

I therefore agreed to write to President Kabbah to try to get an understanding of why it was that Milestone were being handled in this particular way. (I attach at Document (1) a copy of my letter to President Kabbah dated 29 September 2004.)[26] I used House of Commons notepaper because the main purpose of my letter was to raise an objective concern about a UK company that I knew to have made substantial investments in Sierra Leone and whose business activity had effectively been ground to a halt and the circumstances of Mr Levy's exclusion.

I think it would have been churlish to have told them to go and track down whoever might be their own MP to help them. So far as I was concerned, here was a UK company that had made a substantial investment in a country which desperately needs inward investment and had got into difficulties and had had its business stopped. Much of my life as a Member of Parliament is spent problem-solving and this was a problem which I considered that I was in a position to help resolve.

Because President Kabbah was overseas, the Vice President responded on his behalf, setting out the Government's concerns in some detail (I attach at Document (2) a copy of his reply).[27]

I then had a meeting with Dr Levy and Moshe Levy and went through the Vice President's letter and enclosures in detail. I recall that there was a brief telephone call to speak to Gershon Ben-Tovim in South Africa, and I then wrote accordingly to the Vice President as requested, giving my best advice (I enclose at Document (3) a copy of my letter, which I again wrote on House of Commons notepaper because I was seeking to try and be helpful in sorting out a problem for a UK company).[28]

My recommendations were an attempt on my part to do my best by all concerned, to on the one hand try to clear up misunderstandings, to suggest a way forward and in so doing to demonstrate to Milestone that it had to be right for the Government of Sierra Leone to carry out the fullest proper enquiries before they granted entry clearance to anyone over whom concerns had been expressed.

I would refer you to the full text of the letters.

As to Moshe Levy, I observed that "... it has now been established beyond peradventure that Moshe Levy is a man of good character against whom nothing is known to his detriment but that it must be a matter for the Sierra Leonean High Commissioner in London, in consultation with Freetown, to decide whether to issue him with a further visa to enter Sierra Leone. I can see no possible reason why a such visa should be withheld."

As to Gershon Ben-Tovim, I advised that "on the basis of erring on the side of the maximum possible caution, I would suggest before a visa is issued to Mr Ben-Tovim, that the DFID consultant who undertook the report to the Anti Corruption Commission invites the DFID Office in South Africa and the UK High Commission in South Africa, through their contacts with the South African Police and Intelligence Services, to double-check the facts that I have set out above."

My concern was to help a UK company that was committed to investing in Sierra Leone and for reasons that I have explained above relating to Angel Gate Aviation, I was anxious to see how matters would be resolved by the Government of Sierra Leone.

The President and Vice President of Sierra Leone I consider to be friends. They address me by my first name and have known me for some time. I would imagine that whether my concerns are expressed on House of Commons notepaper or any other notepaper, would make no difference to how they are received. The reference to Angel Gate at the end of my letter was to a man who had direct responsibility for this project (please see a copy of Mr Turay's letter, dated 21 September, where it is clear that he is acting on the instructions of the President and Vice President).[29] I was not lobbying anyone in this letter. I was simply reporting on the outcome of a meeting that had taken place with Mr Turay which had been initiated by the Vice President and President themselves.

7 April 2005  Tony Baldry MP

12.  Letter to HE the President of Sierra Leone from Mr Tony Baldry MP

We are making good progress with the airline project. There is I think agreement in principle between Angel Gate Aviation Ltd and the Government of Sierra Leone as to the way forward and today I am having a meeting with Mr Turay and I hope that he will shortly be able to come to Paris to finalise details with my colleagues so that a clear proposal can be put to you and to the Government of Sierra Leone.

Obviously the investment by Angel Gate Aviation Ltd in this project is going to be substantial. It is going to require the commitment of at least one and possibly two aeroplanes for a number of years and my advice to my colleagues is that we should be prepared to invest in Sierra Leone's future.

I am however somewhat concerned by matters involving another UK company that have been drawn to my attention.

As you will know, quite apart from Angel Gate Aviation Ltd, Lord Freeman and myself have been and are working hard to promote Sierra Leone as a country in which UK companies can safely and securely invest.

I have been approached by a UK company, Milestone Trading Ltd, who I understand have already made a very substantial investment in Sierra Leone of some US$ 10 million and are seeking to employ some 500 people in the Nimikoro Chieftainship. This company assure me that they are willing to make further financial investment in Sierra Leone and to train local people, and to continue to enter into local Joint Ventures. They assure me that they are totally supportive of you and your Government and have absolutely no interest in any way getting involved in politics; they simply wish to develop their business in Sierra Leone in partnership with local businesses and local people. I suspect that this must be one of the largest investments or largest investment by any UK company into Sierra Leone in recent years and I am sure that you will understand that other potential UK investors are going to be watching or watched closely as to the progress of Milestone Trading.

You will recall that at the dinner that I hosted for you in London some months ago, *** was present. ***, as you know, is on the Board of de Beers, and I continue to persevere, with pressure through ***, to see if we cannot get de Beers to come back into Sierra Leone in a significant way.

Clearly, mining companies like de Beers will be watching closely to see if the progress of other exploration companies in Sierra Leone, particularly companies such as Milestone Trading, are seeking to make significant investment for the first time.

I understand that Milestone Trading have invested substantial sums of money in bringing in plant and equipment into Nimikoro for a minerals recovery project and have also invested substantially in logistics and recruiting local people.

To operate, they clearly need a mining licence.

I enclose a copy of a letter from the Ministry of Mineral Resources to the Nimikoro Mining Company Ltd where it is clear that there are no technical objections to this mining lease.[30] The reason given for not granting a lease was the suggestion that "... the major investor in the company Mr Moshe Levy was involved in an immigration problem with the Ministry of Internal Affairs."

I am concerned that the Ministry of Mineral Resources may unwittingly have been misinforming themselves on these matters.

I have made a number of enquiries. Firstly, Mr Moshe Levy is not the major investor in the company. The major investor in Milestone Trading is Dr Nissim Levy whose company is situated in London, he lives in London, works in London and is a man of extremely good character. As to Mr Moshe Levy and "an immigration problem with the Ministry of Internal Affairs". I understand, having spoken to Mr Moshe Levy, that he had been issued and was in possession of a perfectly valid visa to enter Sierra Leone, that no issue was taken with him when he entered the country, but that it was only subsequently that any questions were raised with him. From my understanding, such queries sound like complaints made by competitors anxious to thwart fresh investment into Sierra Leone.

As you will know, foreign direct investors, more than anything else in making a decision as to whether to enter a new market, want to be satisfied that the country concerned operates under predictable rule of law, and that executive decisions are not made capriciously and other than by proper administrative process.

Given the investment made so far by Milestone Trading in Sierra Leone, given that they have entered into a substantial local joint venture, given that the Ministry of Natural Resources appear to have no problems with this application other than Mr Moshe Levy's immigration status, and given that that would appear to have been based on a misunderstanding, I would very much hope that it would be possible for the Government of Sierra Leone to issue the Nimikoro Mining Company Ltd with a mining lease in the very near future.

I am sure you will understand it is going to be very difficult otherwise for Lord Freeman and myself and others, to seek to persuade UK companies that they should be investing substantially in Sierra Leone if UK companies that have invested substantially find that they are unable to progress their business.

And on a personal level, there must be a question mark for Angel Gate Aviation Ltd in committing millions of pounds-worth of planes to Sierra Leone if there is any scintilla of a suspicion that Government Ministries are maybe behaving capriciously, because if there is capricious behaviour with one UK company, then there is always the danger that at some time in the future another Ministry could behave capriciously so far as Angel Gate Aviation Ltd is concerned.

As you know, I am completely committed to doing whatever I can to advance the best interests of Sierra Leone and I very much hope that it will be possible for the matters concerning Milestone Trading to be resolved in the near future. I am sure that must be in the best interests of Sierra Leone.

29 September 2004  Tony Baldry MP

13.  Letter to Mr Tony Baldry MP from HE the Vice President of Sierra Leone

His Excellency the President has had to travel to Abidjan, Ivory Coast this morning just after he had received your letter of the 29 September. He has had to travel to Abidjan in order to make some efforts in moving forward the stalled peace process in that country. The need to share with the Ivorians his experience in our own situation in Sierra Leone has proved invaluable in the similar situation which now obtains in the Ivory Coast.

Because of the importance of the subject matter of your letter, H.E. would not delay a reaction to it until his return. It is for this reason that he has instructed me to reply personally as I too am privy to the matters you have referred to in your letter.

Indeed Mr Moshe Levy attempted to enter Sierra Leone and he was not allowed entry by the Immigration Authorities on the instructions of the Government. The Government acted the way it did on the basis of information and materials then in its possession. It was not simply an immigration matter as we do not normally unnecessarily prohibit the entry into Sierra Leone of foreigners, especially potential investors.

As you are aware the diamond industry in Sierra Leone was one of the factors which fumed the conflict in this country and its proceeds provided arms for the rebels. In spite of the reputation of this country as a diamond rich nation, there has not been commensurate benefit enjoyed by the people of this country from this industry. Diamond as we know is also the easiest means of effecting money laundering. It was for the purpose of getting rid of all these negative aspects of the industry that the British Government through DFID conducted a study into the diamond trade in Sierra Leone. This study produced recommendations on the best way forward. The Prime Minister of Britain, Mr Tony Blair, on his visit to Sierra Leone over two years ago personally handed to His Excellency the President a copy of the Report of that study with a request from him that the contents of the Report were to be treated seriously and that the President was to pay special attention to matters relating to the diamond industry if he wanted Sierra Leone to forge ahead and not slide back into hostility. In addition to this personal intervention by Mr Blair, the United Kingdom Government assigned a Consultant to advise and guide our Government on matters relating to the diamond industry. From all these, the Government had been prompt to react to any information which may lead, however remotely, to the use of this industry again as an instrument for instability, gun-running or money-laundering in this country. The information the President received in relation to Mr Moshe Levy just before he attempted to enter Sierra Leone was, in the President's assessment, enough to put the Government on its guard and to take the type of action that was taken against him.

Towards the end of July, the President received information followed by the copy of a newspaper editorial mentioning a Mr Lev Leviex in terms not so complimentary with regard to his activities in the diamond business. That information and newspaper article was enough to put the Government on notice that if a Mr Lev attempted to enter Sierra Leone for the purpose of engaging in the diamond trade, he was not to be allowed entry. The Immigration Authorities were alerted accordingly. It was in these circumstances that Mr Moshe Levy was prevented from entering this country. This was a precautionary measure the Government took and it was taken in abundance of caution having regard to what I have already stated above.

But the matter did not end with speculation or rumour only. The President directed an investigation by the Inspector-General of Police into the allegation that Mr Levy was involved in the diamond trade in a manner that was not acceptable. The newspaper article and whatever other relevant material available were all handed over to the Inspector-General to form the basis for the investigation to determine whether or not Mr Levy was connected with any undesirable practices to justify the refusal of his entry into this country.

On the 23 August, 2004 the Inspector-General submitted a report of his investigations and a photocopy of that report is attached to this letter.[31] That report exonerated Mr Levy of involvement in unacceptable practices.

The President further requested the Anti-Corruption Commission to conduct an independent investigation into the same matter. A DFID employed British Consultant attached to that Commission is an expert in such matters and he conducted the investigations. A copy of the report containing his findings is also attached to this letter.[32] In essence, Mr Levy was also exonerated of any criminal behaviour personally within the past 7 years, but he was found to have very close business relationship with two persons, Mr Vito Pallazollo, an Italian national resident in South Africa, and wanted by the Swiss Government and Italian Government for money laundering and drug related crimes, and with Mr Silvio Polera who is wanted by the South African Government for drug and gun related crimes.

On the basis of these findings, the President thought that there was enough material to put the Government of Sierra Leone on its enquiry. It therefore decided to act cautiously and prudently by taking the only safe course of action, and that was to exclude Mr Levy from entering Sierra Leone. In our peculiar circumstances and because of our desire not to permit any activity in this country which might cause embarrassment to our Government and displeasure to the British Government and to you, our good friends, who have been strenuously espousing and promoting our course, the President decided to err on the side of caution.

Now that the entire facts are known to you, the President has asked that you be kind enough to give your own views and appraisal of this matter as you see it to enable him to take a final position on it. He will consider those views seriously. The President does not wish this issue to be in any way linked with the Angel Gate affair or with the efforts you, Lord Freeman and others have made to restore the image and economy of this country. We have now started seeing the result of these efforts.

The President will be back in Freetown on Sunday 3 October He will appreciate it very much if you can send your reaction to this letter as early as possible.

30 September 2004  H.E. The Hon Solomon Berewa

14.  Letter to HE the Vice President of Sierra Leone from Mr Tony Baldry MP

Nimikoro Mining Company Ltd

Very many thanks for your letter of 30 September. I am sure that there is much that can be shared with the Ivorians of Sierra Leone's experience in restoring peace and stability and I very much hope that President Kabbah's visit is successful. It would be very good if stability could return to the whole region.

I have spent some considerable time over the past few days carrying out my own enquiries into the matters to which you refer in your letter.

As you know, the UK Government, DFID and all of us who care about Sierra Leone have always been anxious and keen to ensure that the diamond mining industry in Sierra Leone is carried out to the highest possible degree of integrity and that the Government and people of Sierra Leone are properly rewarded from the benefits of this natural resource of the country. So I entirely understand and support the President's, your and the Government's policy that in any matter relating to the diamond industry the Government should err on the side of caution and that if ever there is an issue of concern, those concerns should be resolved before moving forward.

The issue here is whether a mining licence and lease should be issued to the Nimikoro Mining Company Ltd by the Ministry of Mineral Resources and Government of Sierra Leone.

I understand that the Nimikoro Mining Company Ltd is a joint venture owned 70% by Milestone Trading Ltd of the United Kingdom and 30% by the Nimikoro Paramount Chiefs and local community.

Milestone Trading Ltd is a UK registered company, straightforwardly operating in the UK from substantial offices near Marble Arch. Milestone is a company that has successfully and responsibly invested in commodities in a number of countries.

The principal shareholder in Milestone Trading is Dr Nissim Levy. As you will have seen from the work carried out by the Anti Corruption Commission and DFID Dr Nissim Levy is a man of excellent character, running a responsible business.

Milestone Trading employs Mr Moshe Levy. Moshe Levy is a retired diplomat, having worked for the Government of Israel; he is a man of exemplary character as was again confirmed by the Police Reports, the Anti Corruption Commission Report and DFID's investigations.

There appear to have been two substantial misunderstandings:

Firstly, when Mr Moshe Levy sought to enter Sierra Leone, there was clearly a misunderstanding and he was confused by the Immigration Authorities as Mr Lev Leviex. I am satisfied there is absolutely no connection whatsoever between Milestone Trading, Dr Nissim Levy and Mr Moshe Levy with Lev Liviex. This was clearly an issue of a case of mistaken identity by the Immigration Authorities, confusing Moshe Levy for Mr Lev Leviex and I think that misunderstanding has now been sorted out by the investigations by the Inspector-General of Police, and by the Anti Corruption Commission.

There appears, however, to have been another misunderstanding and that relates to Mr Gershon Ben-Tovim.

My understanding is that Gershon Ben-Tovim is an engineer whose company, Gem Farm, is a sub-contractor to Milestone Trading and thus a sub-contractor to the Nimikoro Mining Company Ltd. Gem Farm has expertise and experience in mining diamonds both on land and offshore.

Gershon Ben-Tovim is the owner of Gem Farm.

The suggestion in the Anti Corruption Commission's report is that Gershon Ben-Tovim has had a "... close business relationship with two persons, Mr Vito Pallazollo, and ... Mr Silvio Polera."

I have looked into these allegations in some detail and I believe that they arise from misunderstandings I think such contact as there has been between Mr Ben Tovim and Mr Pallazollo has been extremely tangential. As an offshore diamond dredging operator, Mr Ben-Tovim was well known to the Government of Namibia as a person of some substance. The Government of Namibia suggested to him that Mr Ben-Tovim might like to provide bridging finance for an ostrich farming venture which was being set up in an effort to improve Namibia's rural economy. Mr Ben-Tovim agreed and put up a substantial loan on terms whereby he would receive shares in the venture in the event of default on repayment of the loan.

As it happens, Mr Pallazollo was one of a few private individuals who owned shares in the ostrich farming business through a nominee called Mr S Phelps.

I understand that Mr Pallazollo through Mr Phelps originally held a 10% stake subsequently acquiring a further 10%. He was never a director of the company and never was involved in the running of the company.

The ostrich venture could not repay Mr Ben-Tovim's loan so in due course the loan was converted into a 35% stake in the venture.

Subsequently Mr Ben-Tovim petitioned to wind up the company and in due course purchased the assets quite legally from the liquidator, without the involvement of Mr Pallazollo or any other individual shareholders.

As you will know the business community in Namibia is not that large and clearly Mr Ben-Tovim knew of Mr Pallazollo but they have never been friends, they have never worked together in business, they have never been business partners, nor business associates.

The tangential "connection", such as it was, between Mr Ben-Tovim and Mr Pallazollo, was only ever raised because of a vindictive press campaign by Mr Ben-Tovim's estranged wife. Mr Ben-Tovim was a lender and then later a shareholder when that loan was defaulted on, in a venture in which Mr Pallazollo was a minority shareholder, but simply a shareholder.

I am attaching an extract from the funding request for the venture "NACOCO" as evidence of the above facts.[33]

Mr Ben-Tovim's company has carried out considerable work for many reputable diamond companies throughout the world and has carried out substantial work for de Beers.

There came a time in September 2003 when the Institute for Security Studies in Namibia published a monograph on "Business organised Crime in Southern Africa" and posted that monograph on the internet (The article can be found at

If one reads that website, it is clear that it is collection of any rumour, suggestion or innuendo against anyone from any source and there has been no real attempt to properly investigate, verify, or weigh the truthfulness or strength of any such allegations and the website makes it clear that insofar as there is any comment about Mr Ben-Tovim it is "... according to his estranged wife Sarah ...".

There is absolutely no evidence whatsoever of Mr Ben-Tovim ever having had any connections with Silvio Polera. In my presence Ben-Tovim was telephoned in South Africa and made clear that he had never heard of Silvio Polera let alone ever having met him or had any business dealings with him.

It would appear that the way in which Polera's name has come into this is that in the website article to which I refer, Silvio Polera is mentioned as being an Associate of Vito Pollazollo.

In short, I am satisfied that Gershon Ben-Tovim has never met and never had any contact with Silvio Polera and that his contact with Vito Pallazollo has been entirely tangential and simply arose because the latter was a shareholder in a company to which Gershon Ben-Tovim made a loan at the behest of the Government of Namibia.

In your letter to me of 30 September, you say that Mr Levy was exonerated of any criminal behaviour but was found to have "very close business relationships with Pallazollo ... and ... Polera". I think that clearly arose from a misunderstanding of the Anti Corruption Commission and DFID's Report. I don't think there has ever been a scintilla of a shadow of a suggestion that Moshe Levy in his life has ever even met either of these two people. The only shadow of a suggestion about contact with these two individuals was in relation to Gershon Ben-Tovim and I hope I have dealt with those allegations above.

It is clear from the report of the Anti Corruption Commission and from DFID that Gershon Ben-Tovim is a man of good character.

In your letter to me you say that His Excellency the President has asked me for my views and my appraisal as to how the Government of Sierra Leone should move forward.

The Nimikoro Mining Company Ltd, through Milestone Trading Ltd, has already made a very substantial investment and commitment to the future of Sierra Leone. As I said in my last letter to the President, they have invested some $10 million in kit and equipment and hope to employ some 500 people in the near future, and they have clearly established a constructive and purposeful joint venture with the Nimikoro Paramount Chiefs and as you will see the Regent Chief Ki Buffa wrote to the Minister of Internal Affairs saying "... we have negotiated a joint venture agreement with Gem Farm acting on behalf of Milestone for the processing of our Number 5 Tailings Dumps. This agreement stands to benefit our people not only in our immediate post war development efforts but in laying a solid foundation for future development".

The inability of the Nimikoro Mining Company Ltd to operate is costing the company some $12-15,000 per day in lost wages and in kit and equipment they are unable to use. Clearly they cannot continue to sustain those sorts of losses indefinitely.

I respectfully make the following recommendations to His Excellency the President:

·  Moshe Levy. I think it has now been established beyond peradventure that Moshe Levy is a man of good character against whom nothing is known to his detriment, but that it must be a matter for the Sierra Leonean High Commissioner in London in consultation with Freetown to decide whether to issue him with a further Visa to enter Sierra Leone. I can see no possible reason why such a Visa should be withheld.

·  Gershon Ben-Tovim. There is, I understand, no pressing immediate need for Gershon Ben-Tovim to return to Sierra Leone. I understand that there are two of his Engineers in the country who can give the necessary direction and leadership to Gem Farm for the immediate future. However, in the longer term it would obviously be desirable for Gershon Ben-Tovim to be able to re-enter Sierra Leone. It is he who has designed and developed much of the mining equipment and in due course his expertise is going to be of value. On the basis of erring on the side of the maximum possible caution, I would suggest that before a Visa is issued to Mr Ben-Tovim that the DFID consultant who undertook the report for the Anti Corruption Commission invites the DFID office in South Africa and the UK High Commission in South Africa, through their contacts with the South African Police and Intelligence Services to double check the facts that I set out above.

Given these caveats and suggested procedures in relation to Moshe Levy and Gershon Ben-Tovim, I see no reason why in these circumstances, and given that there has now been the most comprehensive and thorough investigation of Milestone Trading Limited, Dr Nissim Levy and the Nimikoro Mining Company Ltd, in which nothing otherwise has been found to their detriment, and indeed, quite the contrary, here is a substantial UK Company that has made a substantial investment in Sierra Leone properly entering into a real and deep joint venture with local people, that the Ministry of Mineral Resources be instructed to issue a Mining Licence and Mining Lease to the Nimikoro Mining Company Ltd without delay to enable them to commence work.

On other matters, I had a very useful meeting with Abdul Turay on his way through London to the USA and I think that in principle we have agreed the way forward for the airline project and I hope that on his way back from the USA it may be possible for Mr Turay to go via Paris so that he can meet *** and *** to finalise details of the proposed agreement, which can then be passed to respective lawyers of Angel Gate Aviation Ltd and the Government of Sierra Leone for them to draw up the necessary contracts and we fully understand that "speed is of the essence" on this matter and that the Government of Sierra Leone is anxious to see a viable airline operating between London and Freetown as soon as possible.

As you know, there are other UK investors who are keen to move forward both on the fisheries project and on the possibility of purchasing the Mining projects and I again discussed these with Mr Turay so that he could make further and better enquiries from the respective Ministries in Freetown of the information that we need.

I have to go to India for a large part of October, leading the International Development Select Committee on an enquiry we are undertaking into UK Development Assistance to India but I hope it will then be possible for me personally to come to Freetown early in November and to bring representatives of these potential investors with me and of course I hope by then we will have made some continuing progress on their airline project.

I hope that my investigations and advice contained in this letter will enable His Excellency the President to feel confident to issue the Nimikoro Mining Company Ltd with a licence to mine so that they can start to work and bring benefit to the people of that region and Sierra Leone.

4 October 2004  Tony Baldry MP

15.  Letter to Mr Tony Baldry MP from HE the Vice President of Sierra Leone

Nimikoro Mining Company Limited

I referred your letter of 4 October to His Excellency the President. He wishes me to express to you his thanks and immense appreciation for your sustained efforts in attracting investors to Sierra Leone, and for our shared interest in ensuring that we allow in only investors who will contribute positively to the economic development of Sierra Leone. Your two letters on the matter and my reply sent on behalf of His Excellency clearly bear this out.

After careful consideration of the issues raised in your letter as well as the reports from the Police and the Anti-Corruption Commission, the President has decided that the following is the best way forward in the case of the Nimikoro Mining Company Ltd:

i.  that Mr Moshe Levy is allowed to return to Sierra Leone;

ii.  that the licence be issued to Nimikoro Mining Company;

iii.  that the decision not to allow Mr Gershon Ben-Tovim to enter Sierra Leone stand pending further investigations by the Anti-Corruption Commission.

In the light of the above Mr Moshe Levy can apply to the High Commission in London to be issued with a visa to enable him travel to Sierra Leone to put in place mechanism to start the operations in the Company.

As regards the matter relating to Angel Gate Aviation Ltd, I am asked to inform you that Government just last week received from Gold Coast Aviation (PTY) Ltd, a South African Company, an offer to salvage the Sierra National Airlines (SNA) by liquidating its huge liabilities and reactivating the Company by providing an aircraft to fly its traditional Freetown/London route and to other destinations. This South African Company is prepared to implement its offer as soon as it is given the go-ahead by the Government. In addition, it will be the national carrier, retaining the name, Sierra Leone National Airlines and its logo and colours. Government is inclined to accept this offer as, above all, it will relieve us of the liabilities which have been incurred by SNA and which at the end of the day would have had to be met by the Government of Sierra Leone.

We are sure that you will understand the reason behind our intention to proceed with the Southern African Company. We thank you for the time and effort you have put into resolving the problem relating to SNA and to alleviate the need to have dependable direct and regular air connection with London. We shall appreciate it if you will be kind enough to explain to the Proprietors of Angel Gate Aviation the reason for our intention to now pursue a different course of action. And please express our gratitude to them for their willingness to allow their aircraft to operate from Sierra Leone.

The matter relating to the establishment of a diagnostic facility in Freetown is one that we are still asking that you help us to push through. His Excellency the President had even identified premises for this purpose. We look forward to our successful collaboration in this particular venture.

11 October 2004  H.E. The Hon Solomon Berewa

16.  Note by Mr Tony Baldry MP on his correspondence with the Secretary of State for International Development

Re: Letter to Hilary Benn

These are my observations in response to the complaints made by the Rt Hon George Foulkes, in relation to the letter I sent to the Secretary of State for International Development on 14 January 2005.

The implication in Mr Foulkes' complaint is that in some way I have acted improperly.

I hope that I can demonstrate that it was not my intention to act in any way untoward: I do not believe that I have.

I have for some time had entered in the Register of Members' Interests the fact that I am a Director of Red Eagle Resources plc which specifically makes mention of the fact that Red Eagle's area of interest and activities is in Sierra Leone.

I have already written separately to explain why, entirely by oversight, I had not registered a registerable shareholding in relation to Red Eagle Resources because although at that time we anticipated a number of shareholders, I had never anticipated my shareholding being in excess of 15% and as at the time the company was a start-up company, my single founder share clearly did not represent anything other than a nominal amount by way of value.

I am not a director of Milestone Trading.

I do not hold any shares in Milestone Trading.

I have never received any money from Milestone Trading and I have not visited Sierra Leone on behalf of Milestone Trading. All trips made by me on private business to Sierra Leone were paid for by me.

Red Eagle Resources plc has a contract to participate with Milestone in suitable business opportunities in Sierra Leone.

So, Red Eagle has introduced Milestone to the opportunity of taking forward a diagnostic centre in Freetown; of undertaking work for Milestone on the possible privatisation of the management of the National Lottery in Sierra Leone, and Red Eagle has been in its own right taking forward a fisheries project but where Milestone intends to become a Joint Venture partner and in particular contribute a processing ship to the overall package of the project which is envisaged to include trawlers, a contribution to sea fisheries protection, and the processing ship. Milestone's participation is one among a number of necessary participants.

Milestone has been in discussion about going to the AIM Exchange, but I understand that is still some way off. Brokers have not yet been appointed. I have been approached to see whether at that stage I might agree to become Chairman of the company and if and when a time were to come when I became a director of Milestone, that clearly would be a matter that I would enter in to the Register of Members' Interests at the appropriate time At present I have no interest in Milestone and therefore nothing to register.

As part of the business participation agreement Red Eagle Resources plc would obtain 3% of the shares of Milestone in the event of flotation. Until successful flotation, Red Eagle would not, indeed does not, have any shareholding whatsoever in Milestone.

In the event of successful flotation Red Eagle's 3% would be 3% of the value of Milestone's shareholding at that time and if it occurred. There has not at present been any valuation of Milestone and I understand Milestone await a geologist's report.

To date, in relation to various work that Red Eagle Resources has undertaken with Milestone, Milestone have paid Red Eagle Resources approximately £18,000.

Red Eagle Resources plc has been engaged in general trading in Sierra Leone. Some of the projects mentioned earlier indicate its diversity and intention to invest in job creating projects relating to natural resources. It has no skill, inclination or function in providing any public relations role for Milestone or otherwise. But to develop its own business activity in participation with Milestone and others.

It may be helpful if I set out the background to why I wrote to the Secretary of State as I did on 14 January.

I visited Freetown from 3-6 January 2005. This was a visit made on behalf Red Eagle Resources plc.

Red Eagle paid my air fare. Red Eagle paid my hotel bill.

The purpose of the visit was to take forward a substantial fisheries project on which Red Eagle is taking the lead.

During the three days, I had meetings on behalf of Red Eagle Resources with the Minister of Marine Resources, and with officials from the Department of Marine Resources. The purpose of those meeting was to understand as much as possible about fish licences, fish quotas and a potential sea fisheries protection regime.

Part of the purpose of the visit was also to identify a potential overall Sierra Leonean Joint Venture partner for the fisheries project, which I did.

I had also intended to spend a day in Bonthe looking at the prospects for establishing part of any fisheries project.

Within the time available, the only way to get to Bonthe was to charter a helicopter from Freetown. This I had done on behalf of Red Eagle on the middle day of my visit. The helicopter company, whose main activity is ferrying passengers from the international airport to Freetown normally has two helicopters operational. Unfortunately on that particular day one of them developed a fault and so I spent much of that day patiently waiting at the helipad to see whether it would be possible to get to Bonthe. In the event it wasn't.

During the course of my three day visit—I think on the last day—I had a meeting with Daniel Chen, who has overall responsibility for Milestone's operations in Sierra Leone. The reason that I wanted a meeting with Daniel Chen was that my nephew was keen to visit Sierra Leone during his "gap" year and I wanted to see if Milestone could arrange any assistance. Daniel Chen wanted to show me some offices that were being built in Freetown which he envisaged becoming Milestone's offices and at which Red Eagle would be able to "hot desk" when we were in Freetown.

I recall asking Daniel how progress was going at Nimikoro, and he indicated that they were starting to produce some diamonds. I asked him about compliance with the Kimberley process. I had it in my mind that the responsibility for demonstrating that diamonds had been produced in accord with the Kimberley process lay on the exporter. As it happens, that was a mistake on my part, in that I now understand the responsibility for demonstrating that diamonds have been produced and are being exported in compliance with the Kimberley process rests on the country of origin, in this instance Sierra Leone.

I cannot remember the conversation verbatim, but I went away concerned as to whether everything was being done to comply with all proper paperwork.

I was conscious that many of those involved with the Milestone operation had been involved in mining for many years, but the company overall I knew to be a new company and I was anxious that every procedure be got right at the outset.

I was also very conscious, from my knowledge of Sierra Leone, that investment that had already been put into the country by Milestone would have made it one of the largest UK investors in Sierra Leone overall and certainly one of the most significant new investors in the country post conflict. If there was any controversy or difficulty it would set back British investment in Sierra Leone and the prospects of that country attracting other investment, but in development terms it seemed to me whatever could be done to check Milestone's procedures was important to Sierra Leone's fragile economy.

This was the background against which I wrote to Hilary Benn.

My letter wasn't intended to try to achieve written reassurances that Milestone's operations in Sierra Leone were fully in accord with the requirements of the Kimberley process.

I wasn't expecting, nor wanting, any written assurance or otherwise on this point.

What I was simply asking for and I believe that the letter makes this clear, was a straightforward request that DFID officials in Freetown met up with Milestone's representatives in country and seek to ensure that Milestone were doing what was necessary with regard to the requirements of the Kimberley process and to check that Milestone's procedures were in accord with DFID would expect from UK companies. It was a straightforward request for a check that proper procedures were being followed.

I was not expecting, nor wanting, a letter back from the Secretary of State reporting on the outcome of such a meeting.

I had expected a letter from the Secretary of State along the lines of "if representatives of Milestone got in touch with "whoever the nominated official might be" in Freetown, they would be willing to discuss these matters with them."

I did not see my request as being in any way inherently unreasonable and it certainly wasn't intended to elicit some written response from the Secretary of State or officials giving an evaluation of Milestone's performance and in all honesty I cannot see that my letter could conceivably be construed in that way. It was intended to ensure that any omission could be corrected and every process tested by those who had a knowledge of the system. Indeed, in any event, as I understand it, officials from DFID have recently visited Milestone's operations in Sandoh, where I imagine exactly the sort of discussions that I was suggesting might take place, have taken place.

Nothing in my letter could be conceivably construed as requesting the Secretary of State or DFID to give Milestone a "best practice" seal of approval.

That is clearly to take words out of context and to twist them.

I used the phrase "best practice" entirely in the context of requesting officials to have a meeting with Milestone representatives, to check so far as possible that they were delivering on what DFID would hope for by way of best practice. I most certainly was not expecting an endorsement in any way—indeed, I wasn't expecting there to be any written report of any such meeting whatsoever. I simply wanted to ensure that DFID officials in Freetown were plugged in to the Milestone in country team, so it was most certainly not my intention that the Secretary of State, or DFID, should in any way "confer a benefit", exclusively or in any way on Milestone.

This was a new company, recently set up in country, yet a significant UK investor. I wonder whether DFID had actually heard of Milestone's operations prior to my writing to the Secretary of State. What I was concerned about was what I considered to be in the mainstream of DFID's responsibilities generally and I think that the fact that DFID officials have since visited Milestone's operations demonstrates that fact.

I was not writing to request anything exceptional and if I had thought it were in any way exceptional, or that I was making an exceptional request, I would not have written.

I of course recognised that there was a responsibility on me to be open with the Secretary of State about my having a clear commercial link with Milestone. I had thought that I had made that commercial link clear in the letter to the Secretary of State, and indeed he acknowledges that fact in the first paragraph of his reply.

Clearly, I could have written "I am a director of Red Eagle Resources which has a contractual relationship with Milestone under which, if Milestone floats on the London Stock Exchange, Red Eagle may receive a percentage of the shares of the floated company and I have been approached to become Chairman." So far as I was concerned, I was seeking straightforwardly to put the Secretary of State and officials on notice that I had a commercial interest in Milestone; I wasn't seeking to write a company report and in all honesty I thought I had discharged my responsibility for making the Secretary of State aware of my commercial interest.

Lastly, there was clearly no other way in which I could write this letter to the Secretary of State than it being about Milestone and declaring my commercial connections with Milestone, but as I explained above, the purpose of my letter was not to seek to obtain some benefit in any way for Milestone and indeed, so far as I was concerned, the purpose of my letter was not commercial. I was concerned that here was a new, significant, UK investor into Sierra Leone, investing in probably one of the most emotive commodities so far as the country was concerned. It was an issue on which I happened to have particular knowledge. I believed it pro bono in the interests of the UK and Sierra Leone that Milestone's operations were such that DFID would hope such operations might be in a country such as Sierra Leone.

I repeat my earlier question, I would be interested to know whether prior to my taking this matter up with the Secretary of State, DFID knew of Milestone's presence in the country. My genuine motivation for this letter was the overall public interest. The key two paragraphs are the final two paragraphs—the rest is really preamble explaining my knowledge and how I come to be writing the letter.

In fairness, given the concerns I was seeking to raise, what other notepaper should I have used?

As I have explained, I was not seeking to write this letter on behalf of, or for the benefit of Milestone, and even if I was, which I wasn't, I am not a director or officer of Milestone, so it would have been inappropriate to use Milestone notepaper.

I wasn't seeking to raise the matters on behalf of Red Eagle.

It is not Red Eagle's role to "lobby" on behalf of Milestone, and if I were to have written on Red Eagle notepaper, that would neither have accurately presented Red Eagle or Milestone's positions and, most importantly, it would not have reflected the real reason why I was writing, which was a concern that a major new UK investor into Sierra Leone, should be complying with the appropriate regulations.

I wrote on House of Commons notepaper because the fundamental purpose of my writing was to seek to ensure that DFID were confident that a new and substantial UK investor in Sierra Leone was following proper procedures.

I could, of course, have written on my own domestic residential notepaper, but on the basis of having a duty to be open with Ministers, I should of course have had to have made it clear that I was the person writing, so the Secretary of State and his officials would have immediately known that it was Tony Baldry MP writing to them, and for the reasons set out above the text of my letter would have been no different.

So far as I am concerned, the fundamental point here is that I was not seeking to get any commercial advantage for Milestone and I genuinely do not see how asking that officials might meet with Milestone confers any commercial benefit on them at all and, as I say, my understanding is that in recent time that is exactly what DFID officials have done in the normal course of their work.

I suspect it may well be as a consequence in any event of picking up on the existence of Milestone from this letter to the Secretary of State so DFID do not seem to have considered what I was asking to be untoward. My letter was not in any way seeking "... an assurance of best practice", nor in any way, an endorsement of an individual company's activities; that was not requested, not intended, and I do not believe from any reasonable reading of my letter that that could be reasonably inferred, so I submit that if one looks at the motivation as to why I was writing the letter, it was not inappropriate to use House of Commons notepaper.

7 April 2005   Tony Baldry MP

17.  Letter to Dr Nissim Levy from the Commissioner

As the independent person appointed by the House of Commons to consider complaints against Members of Parliament I am writing to seek your help in relation to a complaint I have recently received against Mr Baldry from the Rt Hon George Foulkes. Since Parliament is currently dissolved I will not be able to complete consideration of the complaint until the new Parliament meets after the general election but I have been in touch with Mr Baldry about the complaint and I have told him that that I am in contact with you.

Briefly, the complaint concerns correspondence Mr Baldry had with (1) the Secretary of State for International Development in January of this year on behalf of Milestone Trading Limited, of which I understand you to be joint owner, and (2) the Vice-President of Sierra Leone last October, again on behalf of Milestone. These matters were the subject of articles in the Sunday Times on 27 March and 3 April 2005 respectively.

The issues raised by the concerns put to me are:

·  Whether Mr Baldry had properly registered and declared his various interests in relation to the correspondence.

·  Whether it was right for him to use House of Commons notepaper when conducting the correspondence.

·  Whether Mr Baldry's activities on behalf of Milestone broke the ban on a Member using his Parliamentary position to lobby for the exclusive benefit of a body (or individual) from which he has received, is receiving or expects to receive a pecuniary benefit.

Mr Baldry has given me an extensive account of the context in which he wrote both his letters to the President and Vice-President of Sierra Leone and his letters to the Secretary of State.

As a result of considering Mr Baldry's account and the articles which appeared in the Sunday Times (in the first of which you are said to be quoted), I have a number of questions which I should be grateful if you would answer. As the enclosed procedural note of guidance makes clear, your answers may eventually be published as part of any report I make to the House's Committee on Standards and Privileges but until that point they are confidential and they remain at all times covered by Parliamentary privilege.[34]

My questions are as follows:

1.  Would you please describe briefly your interest in Milestone Trading Limited?

2.  Mr Baldry says that the first contact he or his company Red Eagle Resources plc had with Milestone was when he met you and Mr Moshe Levy along with Mr Stuart Polak on or around 21 September 2004. Is that correct?

3.  Would you please describe Mr Levy's interest in the company?

4.  Am I correct in thinking that during the period of his correspondence with the President and Vice President of Sierra Leone, Mr Baldry did not have any actual or prospective financial interest in Milestone?

5.  Did Mr Baldry receive any payment from Milestone in connection with the correspondence?

6.  It appears from Mr Baldry's explanation that at some point between October 2004 and January 2005 a business participation agreement was signed between Milestone and Red Eagle Resources plc. What was the date of the agreement and what did it cover?

7.  Mr Baldry is said by the Sunday Times of 27 March to have visited Sierra Leone in November 2004 and January 2005 during which he arranged meetings between you and the President and Government ministers of Sierra Leone. Mr Baldry says that Red Eagle, not Milestone paid for these visits. Did Red Eagle or Mr Baldry receive any money from Milestone in connection with these visits?

8.  The Sunday Times alleges that Red Eagle received $75,000 (£40,000) in return for work on behalf of Milestone. Mr Baldry says the sum received to date by Red Eagle is £18,000. Which is the correct sum?

9.  The Sunday Times says that the agreement between Milestone and Red Eagle involves the latter acquiring 3% of the shares of Milestone when, as expected, the company floats on AIM later this year. This would be worth £1.5 million. When is the flotation expected? How is the valuation of £1.5 million arrived at?

10.  Mr Baldry acknowledges that it has been suggested he becomes chairman of Milestone on its flotation. Is this correct? When was this suggestion first made?

I am sorry to put such a long list of points to you but will be grateful for your response and for any other comments you may wish to make. If you would prefer a word, please do not hesitate to get in touch. A reply by early May if possible would be very helpful as I know that Mr Baldry will be very keen to have this matter resolved as soon as possible after Parliament re-assembles.

21 April 2005   Sir Philip Mawer

18.  Letter to the Commissioner from Dr Nissim Levy

Thank you for your letter of 21 April. The answers to your questions are as follows:

1.  I have a 20% interest in Milestone Trading Ltd.

2.  Milestone had invested several million pounds in Sierra Leone. We had negotiated contracts with the local Paramount Chiefs in Nimikoro and Sandoh. We had shipped mining equipment from South Africa to Sierra Leone and had taken on both expats and local people to work for us at Nimikoro. Everything was proceeding in a straightforward fashion when our company was plunged into crisis. My colleague Moshe Levy who had been running the project in Sierra Leone was suddenly one day arrested at his hotel and deported for no apparent reason and the sub contractor who we had employed to run the mining operation was denied entry clearance into the country. This effectively brought our business to a complete standstill. Moreover, we were losing money daily as we were obviously employing people without being able to undertake any work or production whatsoever. We approached the Sierra Leone High Commission in London and they didn't seem to be able to give us any help. No one in Freetown appeared able to give us any help. In desperation, I asked a friend of mine, ***, who was a potential investor in Milestone, if he knew of anyone who could help us. He put me in touch with Stuart Polak. Stuart Polak said that he would try and find and track down a Member of Parliament who knows something about Sierra Leone and might be able to help us. I think he came back and mentioned that he thought either Lord Freeman or Tony Baldry might be able to help. In the event Stuart Polak kindly set up a meeting for us which took place in the Carlton Club.

We knew Tony Baldry to be a Member of Parliament. We didn't particularly know anything else about him. We explained our problems to him. We were by now very concerned about what was happening in Sierra Leone.

At our first meeting in the Carlton Club we were obviously interested to know what involvement Tony Baldry had with Sierra Leone. I recall that he explained that someone who had been the former Head of his Chambers was prosecuting the War Crimes in Sierra Leone and that President Kabbah had once been a member of his Chambers and that he had been visiting Sierra Leone reasonably regularly to see friends and because he was involved with a charity doing some work in Sierra Leone. I think he also explained to us that he was very concerned to hear our story because he was involved in a business that was possibly going to enter into a contract with the Government of Sierra Leone to provide some air link between London and Freetown.

Throughout the meeting we considered Tony Baldry in no other capacity than as a Member of Parliament who happened to have some good knowledge of Sierra Leone.

Whilst Tony Baldry mentioned his connections with the airline business, at the first meeting, no mention was made of Red Eagle Resources and it wasn't until some time later that we learned of Tony Baldry's involvement in Red Eagle and Red Eagle's involvement in fisheries project in Sierra Leone. We were very grateful that here was an MP who was prepared to help us by getting in touch with President Kabbah when no one else seemed to have been able to have been of any help at all.

At that meeting we gave Tony Baldry as much information as we could. He took a careful note, promised to write to President Kabbah, which he did. Very shortly afterwards we understood that he had received a reply from the Vice President. He kindly came to our office. We went through the letter and there was a brief telephone call with Gershon Ben Tovim in South Africa and we assumed he then went away and wrote a letter to the Vice President.

Throughout this time we thought of Tony Baldry only as a Member of Parliament who we were fortunate to have found in that he clearly knew Sierra Leone and importantly it was possible that the Government of Sierra Leone would at least consider what he had to say.

3.  Moshe Levy works with me but has no shareholding interest in Milestone.

4.  During the correspondence with the President and the Vice President, our only interest in Tony Baldry was that he was a Member of Parliament who was able to help. We had made a considerable investment in Sierra Leone, perhaps one of the first UK companies to make a truly significant investment in the country since the end of the conflict there and our business was in crisis. Tony Baldry didn't have any actual or prospective financial interest in Milestone. None was mentioned. None was asked for and none was offered.

It didn't seem unreasonable to us to expect or request an MP who had a particular knowledge of a country and moreover good contacts in that country, to help a UK company in difficulties, and we don't understand how it can possibly be wrong for us to seek the help of a Member of Parliament in this way and, as we say, we were grateful that we had found someone who was willing to help us with our problem.

5.  Tony Baldry has not received any payment whatsoever from Milestone in connection with these letters. Indeed, Tony Baldry has received no payment direct from Milestone at any time.

6.  Some time later in October, I think we then learned more generally about what Tony Baldry was doing in Sierra Leone, and my memory is that he asked us if we would be interested in investing in and helping take forward a diagnostic health centre in Freetown. We said we would be interested because our trading company Interlink had been involved in supplying medical disposables and diagnostic equipment in Eastern Europe.

Tony Baldry asked us if we would also be interested in investing in a fisheries project in Sierra Leone. We were clearly investing a lot of money in the country. We were going to have to set up an office in Freetown and if there were other commercial opportunities, we were certainly willing to look at them and we made it clear that we thought through our contracts in Eastern Europe in general and Russia in particular we might be able to contribute a processing factory ship to such a venture.

We understood from Tony Baldry that he and his colleague Tony Lawson were due to travel to Freetown in the middle of November and it seemed sensible to us for us to go to Freetown at the same time so that we could investigate further the potential of a diagnostic project and see if there was any other project that we could also take forward.

Some time during the middle of November we went to Freetown where we met up with Tony Baldry and Tony Lawson.

Tony Baldry took us to see the President where almost all the discussion was focused on the President's desire for there to be a diagnostic centre in Freetown and our trying to understand what was needed and what support the Government of Sierra Leone itself would give to such a project. At the end of the meeting, the President asked a Cabinet colleague of his to liaise with us to take the project forward. At present, it seems that an Iranian company is the favoured supplier, but we are offering to build an assembly line for basic pharmaceuticals in Freetown.

Tony Baldry also took us to see Mr Turay the Head of the Privatisation Commission. We went through all the projects the Privatisation Commission were trying to take forward. Some of them were fairly hopeless; some of them were just simply too big for us to even consider undertaking, but we were interested to see whether we could get involved more broadly in Sierra Leone and undertook to look at the possibility of bidding for the management of the Sierra Leonean National Lottery and we agreed with Tony Lawson that he would commission a report for us on this particular project. Clearly the Sierra Leone Lottery isn't like the UK National Lottery— it is done differently and is much more close to the NHS lottery in the UK and Mr Lawson and Red Eagle in due course did produce the report for us.

So far as we were concerned, on this visit we, that is Moshe Levy and myself, were the Milestone Team and Tony Baldry and Tony Lawson were there representing Red Eagle.

During our visit to Freetown there was some discussion about our working together, i. e. about Red Eagle and Milestone working together and when we got back to the UK Tony Lawson for Red Eagle and David Bressloff, in-house lawyer, negotiated a contract.

From our point of view, it looked as if Red Eagle could introduce us to other business opportunities in Sierra Leone, commercial opportunities where we could work together. They had complimentary skills and strengths to us and in the contract ensured that if Red Eagle undertook to work for us on these commercial projects they would be paid. At that time we envisaged all of Milestone's activities in Sierra Leone being under on umbrella and we agreed with Tony Lawson that if Milestone should ever float, in consideration of Red Eagle's helping us to build up the number of Milestone projects in the country they would have 3% of the shareholding of any floated company.

At the time we had in the back of our minds that at some stage we would hopefully want to float Milestone but we had no immediate plans so to do.

The date of the agreement was the 23 November 2004.

So far as we were concerned, it was a joint participation agreement between Milestone and Red Eagle whereby we would be helping each other get established and moving forward in Sierra Leone.

It has to be remembered that there are very few UK companies that have so far ventured back into Sierra Leone.

7.  Moshe Levy and myself travelled to Freetown at approximately the same time as Tony Baldry and Tony Lawson in November 2004. We did not pay for their air travel. We were never asked to pay for their air travel and assume that they paid their own air fares. Likewise, we made no contribution to their hotel bills which they settled themselves.

Yes, Tony Baldry and Tony Lawson did help set up meetings for us with the President and the Head of Privatisation Commission but those were commercial meetings to discuss the diagnostic centre with the President and privatisation opportunities with the Head of the Privatisation Commission. It was clear to us from the discussions and the body language that the President and other officials, and head of the Privatisation Commission, saw and treated Tony Baldry and Tony Lawson as business people who themselves were seeking to do business in Sierra Leone in their own right.

We didn't go with Tony Baldry to Sierra Leone in January. He went on his own to take forward work on the fisheries project. We understood that he went to have meetings with officials and the Fisheries Minister and to identify a Sierra Leone company that could act as a partner for the overall project. Whilst he was in Freetown, we know that Tony Baldry met up one day with our in country Manager, Daniel Chen, but our understanding was that was because he wanted to see whether Daniel could take his nephew to work with him for some time during his gap year between school and university. Again, we made no contribution to Tony Baldry's air fare for this visit, or his hotel bill, and none was offered and none was ever asked for. Tony Baldry has received no money from Milestone in connection with these visits and indeed, as we explain above, Tony Baldry has received no money from Milestone whatsoever.

8.  Some time during late November, I think shortly before or shortly after the Lottery report had been given to us, Tony Lawson negotiated a payment for Red Eagle with our Finance Director, ***. We wanted the payment to be in US dollars and a figure of $37,000 was agreed, which is in £ sterling somewhere between £18-19,000. The purpose of this payment was to reflect the fact that Red Eagle had led us to a number of commercial opportunities in Sierra Leone. So far that work had been done by them entirely on trust and we consider this to be a one off payment to demonstrate good faith and our wanting to work with the Red Eagle team and other potential partners, such as those in the fisheries project to whom they were introducing us. The invoice for that payment from Red Eagle was dated 15 December and paid shortly afterwards.

9.  The agreement between Milestone and Red Eagle states that "... in order to ensure the continuity of the relationship between Red Eagle and Milestone, Milestone irrevocably agrees to procure a nominal 3% shareholding for Red Eagle for no further consideration in the new floated entity in the event that Red Eagle so desires." The figure of £1. 5 million came about because the Sunday Times journalist asked me what I believed would be the valuation of Milestone Trading when we eventually floated I said that I hoped it would be somewhere in the region of £50 million. That is a hope, not a firm figure.

At the present moment, we are in the process of talking to a number of brokers about a floatation and are undertaking a geological survey of the land to which we have licences in Sierra Leone. Until that is completed it is difficult to know when we are going to be able to float but we are wanting to do so as soon as possible as we wish to raise venture capital to make further investment in Sierra Leone.

10.  For some time we had hoped to raise venture capital from individual investors or partners, but late last year/early this year we came to the view that it would be more sensible to try to float the company and we were encouraged by the success of at least one other company working in Sierra Leone that had gone to the AIM Exchange. I am not sure when I first talked with Tony Baldry about the possibility of his becoming Chairman of Milestone if it were to float; it was either just before or just after Christmas break. We thought then and still think that he would make an excellent Chairman of a public company. Again, there are not that many people who are willing to travel to Sierra Leone. It is not an easy country in which to do business but as of yet Tony Baldry has no direct involvement whatsoever in Milestone. He is not a shareholder. He is not a director. He is not involved in the day to day management of the business, here or in Sierra Leone.

I hope these answers are helpful and if there are any further questions which you may have arising from these answers, or anything else, please do not hesitate to come back to me.

One last point. We understand from the Sunday Times article that Tony Baldry had written to the Secretary of State for International Development. We never asked him to write such a letter. Indeed, I don't think he even mentioned to me that he had written such a letter but I can understand his being concerned that we were doing the rights things in Sierra Leone and DFID officials have been to visit our operations and as far as we understand, they are satisfied with what that we are doing. We have never looked for any endorsement from DFID nor would we have expected one. However, as a group we operate in several countries around the world and would expect UK officials where possible and practicable to help ensure that we're complying with the rules, particularly so in Sierra Leone where we are conscious that we are, as I mentioned before, one of the first and most sizable UK investors into the country.

27 April 2005   Dr Nissim Levy

19.  Letter to Mr Tony Baldry MP from the Commissioner

Complaint by Rt Hon George Foulkes

Thank you for your letter of 18 April in reply to mine of 12 April.

I have adjusted the draft note of our meeting on 7 April in the light of the points you make and enclose a copy of the final version.[35]

In my letter of 12 April I said that I would write again should I have any questions as a result of reading the folder of material you handed me when we met on 7 April. While I shall fully understand if you are unable to respond to this letter until after 5 May, I thought it might be helpful to set out now the few questions which have occurred to me.

11.  You say that Red Eagle Resources has a business participation agreement with Milestone. Can you please tell me when this contract was signed? Did it arise out of your initial assistance to Milestone in relation to the grant of a mining licence and lease?

12.  You say that Red Eagle Resources has to date received £18,000 from Milestone for work done with Milestone. What was the nature of the services provided Milestone by Red Eagle which justified this payment and when were they undertaken?

13.  Do you know (or can you speculate) where the figures of $75,000 (£40,000) and £1.5 million mentioned in the Sunday Times article of 27 April came from and to what they relate?

14.  Am I correct in assuming that your meeting on 21 September 2004 with Mr Polak, Dr Levy and Mr Levy was the first contact between you and Red Eagle Resources plc (or any other company in which you have a registered or declarable financial interest) and Milestone?

15.  Am I also correct in assuming that at the time of your correspondence with the President and Vice-President of Sierra Leone, there was no suggestion that you might be invited to become chairman of Milestone and that this suggestion came later? When was it made?

I shall be grateful for your answers to these points.

I am in touch with the Serjeant at Arms in relation to your use of House of Commons stationery in connection with the correspondence at issue in the complaint and will let you know when I have his observations. I have also written to Dr Nissim Levy to obtain his account of events and will let you know should anything relevant emerge.

21 April 2005  Sir Philip Mawer

20.  Letter to the Commissioner from Mr Tony Baldry MP

Complaint by Rt Hon George Foulkes

Thank you for your letter of 21 April in which you raise a number of questions.

I enclose a further folder of material which I hope you will find helpful as it tries to set Red Eagle's involvement in Sierra Leone into a proper chronological context. The documents I hope help answer a number of your questions.[36]

16.  The contract between Red Eagle Resources and Milestone was signed on 23 November 2004. It did not arise out of any assistance that I had given to Milestone as I explained. My initial assistance to Milestone was as a UK Member of Parliament seeking to help a UK company clearly in difficulties in a country in which no-one else was seemingly able to assist and where I believed that I could be of help. The contract between Red Eagle and Milestone came about some time later when both Milestone and Red Eagle recognised that there would be benefits in collaborating together in Sierra Leone.

17.  This is explained in the last three paragraphs of the accompanying statement but essentially post mid November 2004 Red Eagle was helping Milestone discover and develop other commercial opportunities in Sierra Leone in addition to the mining business which they already had.

18.  To be honest, I don't know. I can only speculate. My recollection is that in the first telephone conversation that I had with Dean Nelson of the Sunday Times, when I explained the relationship between Red Eagle Resources and Milestone, he asked me what benefits that contract had brought Red Eagle and what, if any, money had been paid by Milestone to Red Eagle. I think I must have replied that my recollection was that Red Eagle had received some $40,000 from Milestone (as you can see, it was in fact $37,500) and somewhere in the reporting, dollars seem to get converted into £ sterling. The reason why I was somewhat hazy about the exact amount was that the actual payment had been negotiated by my colleague Anthony Lawson who had issued the invoice. I also explained that under the contract between Red Eagle and Milestone, Red Eagle would be entitled to 3% of the shareholding in the event of Milestone floating on the Stock Exchange. As I understand it, the next day, the journalist Dean Nelson went and interviewed Dr Levy. I can only speculate that he asked Dr Levy what Dr Levy estimated the market capital value of Milestone might be if and when it floated. I don't know what valuation Dr Levy put on the company or how that valuation was arrived at as my understanding is that there is yet to be a detailed geological survey carried out of the licence holdings owned by Milestone, but I can only speculate that whatever figure was given, the journalist calculated that 3% would equal £1.5 million.

19.  Yes I have known Stuart Polak for many years but the first contact I had with Dr Levy, Mr Levy and Milestone in any way was on the 21 September 2004.

20.  Yes. There was no suggestion of any financial nexus or involvement whatsoever between myself and Milestone or Red Eagle and Milestone. Throughout the correspondence with the President and the Vice President, my only interest and my only locus was that of a Member of Parliament trying to solve a problem for a UK company, concerned that having spent some time helping to encourage UK companies to invest in Sierra Leone, if this was the way that significant investors were being treated, that was obviously not going to encourage further UK companies to venture into the country and I saw this as a problem that needed to be resolved and staggeringly no-one else seemed to have got to grips with it.

21.  I cannot recall exactly when it was first mooted that if Milestone were to float that I might become Chairman. I think my recollection was that it was shortly before Christmas 2004, when as I understand it, Milestone had decided that they wanted to raise venture capital from a broader base and had thus decided to go to the Stock Exchange.

As for the Serjeant at Arms, presumably he will have seen a copy of the statement that I gave you regarding the letter I sent to Hilary Benn.[37]

Finally in relation to Angel Gate Aviation Ltd I enclose at the back of the folder a copy of a letter that I sent to the Vice President on behalf of Angel Gate Aviation Ltd on 9 February 2004.[38] You will see that it clearly states that "I am writing this letter in my capacity as Chairman of Angel Gate Aviation Ltd which is a United Kingdom company and owns Air Horizons and Euralair in France …".

You will see that the letter was copied to the Ministry of Transport, the Chairman of the Privatisation Commission, the Managing Director of SNA, and the High Commissioner for Sierra Leone in London. I don't think that there can be any doubt in the mind of the Vice President or indeed any other relevant person in the Government of Sierra Leone that when I was referring to the airline project, I was doing so in my capacity as Chairman of Angel Gate Aviation Ltd.

Throughout 2004 the Government of Sierra Leone were seeking to find a way forward on their airline; their difficulty was that at some point their contract with Icelandic Air would come to an end and with it any direct air service between London and Freetown. I seem to recall during the latter part of the summer of 2004 receiving telephone calls from the Sierra Leonean High Commissioner in London asking if Angel Gate Aviation Ltd were in a position to help and my letter to the High Commissioner of the 8 September was a re-statement of the fact that Angel Gate Aviation Ltd were prepared to help but on the understanding, as set out in my earlier letter, that this would be a contract whereby we would undertake contractually to provide a level of service in exchange for traffic rights over a period of time and it was to that continuing proposal first set out in February 2004 that Mr Turay responded and on which he wished to have a meeting, which indeed took place in London, between him, myself and ***, at which meeting I had thought we had come to an agreement but as I explained earlier, events intervened in that pretty much simultaneously a South African company was offering the Government of Sierra Leone in Freetown a seemingly too good to be missed opportunity of paying off the debts of SNA, etc. In the event, the South African deal never came off, the Sierra Leoneans now have no airline of their own; the only connection between London and Freetown is a UK private airline based at Gatwick and I only observe that what I had negotiated with colleagues would have delivered to Sierra Leone a contract-based air service for ten years at no cost whatsoever to the Sierra Leonean exchequer.

Lastly, the Sunday Times have sought to set the whole of my actions as being hypocritical—in championing Africa whilst at the same time having business in Africa. To this I would simply observe that Sierra Leone like much of Africa is desperate for foreign direct investment to create jobs.

Take Bonthe in Sierra Leone as an example. Its warehouses have closed down; ships no longer stop for bunkerage; the piassava industry had collapsed; the electricity supply broke down a number of years ago and has never been repaired; there are few, if any, jobs—which leads to a double migration; those with "get up and go", get up and go to Freetown; and those in Freetown with "get up and go", seek to migrate overseas—either to Britain or to the US.

Even a couple of fishing trawlers based at Bonthe would start to transform the area and likewise elsewhere where a Sierra Leonean fishing industry can get established.

Likewise, health provision in Freetown is so poor that for Foreign Office officials, for example, Freetown is an "unaccompanied post". A new diagnostic health centre is not going to be able to serve the whole of Freetown's medical needs but it is a step in the right direction.

Improving the management of the National Lottery in the great scheme of things may not necessarily be of huge benefit but it should lead to more money being generated for the Government of Sierra Leone to spend on priority areas and again hopefully encourage other investors to think about entering the country.

26 April 2005  Tony Baldry MP

21.  Letter to the Commissioner from Mr Tony Baldry MP

Thank you for your letter of 11 June.[39]

As to the specific queries that you raise on items 1 and 3, I have now had the opportunity of discussing these matters with Tony Lawson.

(1) This is confusing. I had always thought that there had been a single payment in respect of a single invoice and indeed, there has only ever been one payment made by Milestone to Red Eagle and that was the payment made in response to the invoice issued on the 15 December. A second invoice was issued subsequently in January 2005 by Tony Lawson, but cancelled almost immediately because Milestone told him that they wanted to see what further work needed to be done and was done on the Lotteries project, the fisheries project and with the possible diagnostic centre.

The first time I saw the amount of the possible valuation of Milestone was in the article in the Sunday Times. I still suspect that the valuation figure is pure conjecture.

As to (3), there were discussions about the various ways to try and establish a long term agreement that was fair to both Red Eagle and Milestone.

At the time of the agreement, Milestone had made it clear that they intended in due course to put their mining and non mining interests in Sierra Leone into one public company. At that time of the agreement, we believed that this would be some time off. It was some time later that Milestone started to talk about the possibility of seeking an earlier listing on AIM but my recollection is that it was at the end of 2004 when they decided they needed to raise more venture capital.

On 2, I enclose a statement from Stuart Polak which clarifies matters as he recalls them, as I think it is important that you and the Committee understand the context within which I sought to help Milestone.[40]

I of course cannot put myself in Dr Levy's, or anyone else's mind, but nothing that was said at the first meeting, or subsequently, gave me the impression that Milestone wanted me for my contacts, "to do some politics, PR (things) like that", which, if they had, I would not have undertaken.

Milestone presented to me a serious problem which they asked me help to try and resolve and I was willing to help, as I would have for any UK organisation in difficulty. It occurs to me that colleagues would not unreasonably say that this was not an immediate "constituency" case. I would simply ask that it is borne in mind that during the last Parliament, there was barely a working day that went past when I didn't have a pressure group, an NGO, Parliamentarians, a UK company, or some organisation coming to seek my advice and help in relation to some development issue somewhere in the world. I think many of those who came and saw me would have thought it incredibly churlish if I had simply said to them "Go and seek out your own Member of Parliament" but instead I would seek to help any organisation experiencing legitimate problems, by listening to the problem and trying to work out how best to take forward the issues and that was the mindset in which I tackled the problem raised by Milestone.

As to the response by the Serjeant at Arms, I have previously explained to you my actions and motivation in full.

So far as the letter to the Vice President was concerned, I was not trying to influence anyone, I was simply seeking to set out the facts as I understood them, although I fully appreciate that a "stream of consciousness" ramble about an airline project, even if the Vice President was well aware of the background and context of those comments, laid me open to criticism.

As to my letter to Hilary Benn, I can only observe that this letter must have been very poorly written by me if objective and dispassionate readers conclude that I was "seeking DFID checks for business reasons". As I have explained, that was not my purpose: I simply wanted to ensure that a new and substantial UK investor in Sierra Leone, in a sensitive commodity, was complying with the rules, and that DFID was aware of this company's existence and operations. I have explained in detail why and how these letters came to be written and I am disappointed, having read those explanations, that the Serjeant at Arms concludes that there was a "business imperative" in everything that I did. That was most certainly not the case, nor my intention.

However, I fully accept that the perception of an MP's conduct is important and if I have managed to give the Serjeant at Arms that perception from these letters, then I fully understand and accept why the Serjeant at Arms has come to the conclusion that I have broken the current rules of the House and the guidance on the use of stationery given by the Administration Committee. I fully accept his adjudication and I apologise unreservedly.

13 June 2005  Tony Baldry MP

24   WE3, 4 & 5. Back

25   WE 14. Back

26   WE 12. Back

27   WE 13. Back

28   WE 14. Back

29   Not appended by the Commissioner.  Back

30   Not appended by the Commissioner.  Back

31   Not appended by the Commissioner. Back

32   Not appended by the Commissioner. Back

33   Not appended by the Commissioner. Back

34   Parliamentary Standards Procedural Note 4. Back

35   WE 10. Back

36   Not appended by the Commissioner. Back

37   WE 16. Back

38   Not appended by the Commissioner. Back

39   Not appended by the Commissioner.  Back

40   Not appended by the Commissioner.  Back

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