Sir Bob Russell|
1. We have received from the Parliamentary Commissioner
for Standards a memorandum reporting on his investigation into
a complaint that Sir Bob Russell, the Member for Colchester, made
claims against parliamentary allowances for the rental of his
constituency office from 2002-03 to 2009-10 when that accommodation
was owned by a company in which he and a family member held shares.
The Commissioner consults the Committee about any complaint which
goes back more than seven years, and did so in this case.
2. The Commissioner's memorandum is published at
Appendix 1 to this report. In accordance with the Committee's
usual procedure, we supplied Sir Bob Russell with a copy of the
Commissioner's memorandum and invited him to give evidence. He
has submitted a written memorandum.
The Commissioner's Findings
3. Members of Colchester Liberal Democrats and others
formed the Magdalen Hall Company Limited in 2002. That company
bought Magdalen Hall on 30 April 2002. Sir Bob Russell was the
largest single shareholder, with £25,000 of shares; smaller
shareholdings were held by others, including his sister-in-law.
The company leased the hall to the Colchester Liberal Democrats,
who sub-let part of it to Sir Bob Russell for use as his constituency
office. Sir Bob Russell's shareholding was listed in the Register
of Members' Financial Interests up until June 2010, when he gave
the shares to Colchester Liberal Democrats.
4. The complainant in this case alleged that Sir
Bob Russell was in breach of the rules relating to the Incidental
Expenses Provision, specifically those prohibiting the renting
of constituency offices from organisations in which the Member
had an interest. This rule was first set out in the 2003 edition
of the Green Book, and was in force until the Green Book was substantially
rewritten in 2009. The rules also stated that where a Member rented
constituency offices from the constituency party, an independent
valuation of the property should be lodged with the Department
of Finance and Administration. These rules are set out in the
Commissioner's memorandum. 
5. Due to the passage of time, neither the House
authorities nor Sir Bob Russell had complete records of the discussions
that took place in advance of Sir Bob Russell entering into the
arrangement for his constituency offices. Sir Bob Russell, in
evidence to the Commissioner, stated that the Fees Office had
been fully aware of the arrangement in advance of the purchase
of the hall by the company, and had approved the arrangement.
The Director-General of Human Resources thought that had staff
been aware of Sir Bob Russell's shareholding in the company in
June 2003 they would have ruled that the arrangement did not comply
with the rules and would have approached Sir Bob accordingly.
Former officials of the House could not recall having been made
aware of the shareholding at the time Sir Bob Russell entered
into the arrangement.
6. The Commissioner identified the issues for him
to resolve as whether Sir Bob Russell's claims for his constituency
office between 2002 and 2010 were within the rules of the House
at the time; whether or not the Fees Office had been in possession
of all the relevant facts when approving the arrangement and whether
Sir Bob Russell had provided an independent valuation for the
property prior to 2010.
7. The Commissioner found that on the balance of
probabilities, there was not sufficient evidence to say that Sir
Bob Russell had not provided information about his shareholding
to the Fees Office. While there was a difference in recollection
of the events, the evidence was not sufficiently strong to permit
him to conclude that Sir Bob Russell was wrong in his recollection
that he had provided the Fees Office with information about his
shareholding. In evidence
to the Commissioner, Sir Bob Russell stated that he had acted
on advice from the House authorities in relation to the arrangements
for his constituency office, and would have taken a different
course of action had he been advised to do so.
In the Commissioner's judgement, a Member is not absolved of responsibility
for compliance with the rules, even when acting in accordance
with advice from senior officials as to their interpretation where
such advice is inaccurate. We agree with the Commissioner that
it does however act as substantial mitigation, to which Sir Bob
Russell is entitled.
In relation to the shares held by his sister-in-law, in the Commissioner's,
and indeed in Sir Bob Russell's view, it was more likely than
not that Sir Bob Russell did not provide the Fees Office with
information about this shareholding in discussing his constituency
8. On the issue of whether Sir Bob Russell had provided
an independent valuation of the property prior to 2010, Sir Bob
Russell in evidence to the Commissioner said that an independent
valuation must have been provided to the Fees Office, although
he could not recollect having done so.
While there was no evidence to show that a valuation was provided,
nor was there any evidence to the contrary, and the relevant records
had been disposed of, in accordance with usual practice. On that
basis the Commissioner found that Sir Bob Russell was not in breach
of the rules in this respect.
9. In relation to the claims for his constituency
office, in the Commissioner's judgement it was open to Sir Bob
Russell to claim the rent for sub-leasing his constituency accommodation
from an organisation in which he had a major shareholding from
May 2002, when his arrangement started, until the end of March
2003. Equally, the
2009 Green Book was silent on such arrangements, and the Commissioner
found no evidence to suggest that Sir Bob Russell was in breach
of the principles set out therein, "that claims should be
above reproach and that they must not provide a benefit to a party
political organisation or give rise to an improper personal financial
10. The Commissioner however did find that Sir Bob
Russell was in breach of the rules between April 2003 and March
2009 by virtue of his and his sister-in-law's shareholding in
a company which owned a property in which he sub-let accommodation
for his constituency offices.
Sir Bob Russell was clear in his evidence that he believed that
the determining factor was whether or not he or others had benefited
financially from the arrangement. In the Commissioner's judgement,
this was a misreading and misunderstanding of the rule.
However, the seriousness of the breach was in the Commissioner's
view strongly mitigated by the finding in relation to the disclosure
of information to the Fees Office.
11. We agree with the Commissioner's conclusions,
both as to the fact of a breach of the rules, and to the strong
mitigation for that breach. Sir Bob Russell maintains that the
arrangements had been disclosed to the Fees Office, and we note
his interest in the Magdalen Hall Company was properly registered.
12. Sir Bob Russell told us
I am grateful to you for taking the time to read
the Commissioner's Report. From this you will have noted that
I have not personally made a financial gain from the arrangements
for my constituency office; rather that I have made a significant
personal financial contribution to provide an office which is
fit-for-purpose at no additional cost to the public purse.
I thank the Commissioner for his Report. I recognise
that this shows there has been a Breach of the Rules, for which
I obviously apologise. That said, I hope that the Committee will
accept that I did not deliberately or knowingly do so having taken
considerable effortmore than 10 years ago!to discuss
with officials at that time precisely what was permitted.
He also contended:
It is Parliament's intention that no MP should
gain a financial benefit from the receipt of public funds for
his or her constituency office. I have not done so. A narrow interpretation
of the word "interest" is, I submit, unfair in this
context when it is clearly Parliament's intention that "interest"
means "financial" or "beneficial" interest.
13. The transfer of these arrangements to IPSA means
that in future such cases will depend on their guidance. We have
to consider the meaning of the rules at the time to which the
complaint relates. We do not agree with Sir Bob Russell's submission
on the interpretation of interest. The Commissioner's reasoning
in finding a breach is set out in paragraphs 122 to 132 of his
memorandum. We agree with the Commissioner that the rule that
"the allowances must not be used to meet the costs of leasing
accommodation from ... any organisation in which youor
a partner or family memberhave an interest" was in
addition to the rule prohibiting profits being made from such
arrangements and "were the rule intended to be simply that
Members must not make a profit from their arrangements, there
would have been no need to include the leasing restriction".
14. A shareholding is a financial interest, whether
or not a dividend is paid. While we accept that Sir Bob Russell
received no financial benefit from his shareholding, and was not
necessarily aware of his sister in law's share holding, nonetheless
he was in breach of the rule. But there is substantial mitigation.
The interest in the Magdalen Hall Company was properly registered.
Sir Bob Russell maintains he discussed the arrangement with the
House authorities; he was right to do so and appears to have acted
in good faith throughout.
15. We note the Commissioner's finding that:
Sir Bob Russell received no personal financial
benefit from the arrangement at any time. And the evidence suggests
that the rent charged by his constituency party for Sir Bob Russell's
offices was a fair market rent.
Sir Bob Russell considers his arrangements meant
"I have made a significant personal financial contribution
to provide an office which is fit-for-purpose at no additional
cost to the public purse." We see no evidence to dispute
this, or to suggest that Sir Bob Russell made his arrangements
from any motive other than to provide the accommodation he felt
appropriate. The Member has accepted he breached the rules, albeit
not deliberately or knowingly, and has apologised. We have recorded
the breach of the rules. We do not recommend any further action.
1 Appendix 1, para 105. Back
Appendix 1, para 106. Back
Appendix 1, paragraphs 8-20 Back
Appendix 1, para 76. Back
Appendix 1, para 110. Back
Appendix 1,. Paras 112 and 113 Back
Appendix 1, para 142. Back
Appendix 1, para 75. Back
Appendix 1 para 144. Back
Appendix 1,para 143. Back
Appendix 1, para 145. Back
Appendix 1, para 146. Back
Appendix 1, para 124. Back
Appendix 1, para 125. Back
Appendix 1, para 147. Back
Appendix 1, para 128. Back
Appendix 1, para 149. Back
Appendix 2 Back
Appendix 1 para 128 Back
Appendix 1 para 150 Back