Sir Bob Russell - Standards and Privileges Committee Contents


Sir Bob Russell


Introduction

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.[1] 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.[2]

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. [3]

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.[4] 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.[5] 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]

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.[7] 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.[8] 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.[9] 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 office arrangements.[10]

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.[11] 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.[12]

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.[13] 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 benefit."[14]

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.[15] 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.[16] 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.[17]

Conclusions

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 effort—more 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.[18]

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 you—or a partner or family member—have 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".[19]

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.[20]

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

2   Appendix 1, para 106. Back

3   Appendix 1, paragraphs 8-20 Back

4   Appendix 1, para 76. Back

5   Appendix 1, para 110. Back

6   Appendix 1,. Paras 112 and 113 Back

7   Appendix 1, para 142. Back

8   Appendix 1, para 75. Back

9   Appendix 1 para 144. Back

10   Appendix 1,para 143. Back

11   Appendix 1, para 145. Back

12   Appendix 1, para 146. Back

13   Appendix 1, para 124. Back

14   Appendix 1, para 125. Back

15   Appendix 1, para 147. Back

16   Appendix 1, para 128. Back

17   Appendix 1, para 149. Back

18   Appendix 2 Back

19   Appendix 1 para 128 Back

20   Appendix 1 para 150 Back


 
previous page contents next page


© Parliamentary copyright 2012
Prepared 10 September 2012