Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Clinton-Davis: My Lords, why are they likely to be any less forthcoming in giving evidence on these issues than witnesses in Companies Act investigations? Precisely the same situation arises. They go through a very similar process. What is the essential difference in principle?

Lord Inglewood: My Lords, as I have already explained, we are talking about two slightly separate things. In the context of these investigations, we believe for the reason I have given that on balance it is inappropriate to do so. It would delay the progress of inspections considerably.

Inspectors have a duty to act fairly. It is for the inspectors themselves, in the light of their knowledge of a particular case, to decide what is required of them in order that they act fairly. It is, however, inevitable that, if the results of their investigations were likely to be published, they would wish to engage in greater consultation than at present with those whom they were minded to criticise. Our experience is that fairness procedures of this sort in Companies Act inspections, when reports are usually published, typically extend the time an inspection takes to complete by as much as 12 months. In the case of the average insider dealing inspection, this would double, or more than double, the length of time spent on the investigation.

Thirdly, the prosecution of insider dealing offences—a difficult enough matter already—would become even more difficult. Potential defendants would be forewarned, long in advance of any trial, of the case likely to be made against them. Trials already delayed by inevitably protracted inspections would have to be delayed still further to ensure that potential jurors were not prejudiced by anything they might have seen on television or read in the newspapers concerning the contents of the report.

Lord Clinton-Davis: My Lords, I am sorry, but this is an important issue. We are dealing with an important Bill and the Minister must be clear. If in fact there was to be a prosecution, then presumably the report would not be published. If there were no prosecution, a totally different circumstance arises. The Minister is saying here that the reason why they do not publish the report is that a prosecution will ensue and therefore it would all be very unfair. The Minister misses the point altogether.

Lord Inglewood: My Lords, no, that is not the case. When the process begins, nobody can know where it will lead to. As the matter proceeds, things develop in turn. I do not believe that in this context the noble Lord's criticism is really appropriate.

Such delay might in turn lead to injustice as witnesses' memories faded. After all, these cases largely depend on recollections and the intention to commit an insider dealing offence is rarely committed to paper. In

3 May 1995 : Column 1471

any event we would expect applications made by the defence concerning these issues to add to the length of trials.

Finally, in cases where inspectors' reports did not lead to proceedings, those named would inevitably suffer as a result —in some cases through "trial by press". I should like to take a moment to expand on this.

It is entirely proper that, when inspectors conclude that an offence has been committed and the lawyers in the Department of Trade and Industry and, where appropriate, independent counsel conclude that there is a realistic prospect of conviction in accordance with the Code for Crown Prosecutors, the matter should proceed to a criminal investigation and be tried in court. It is in that forum that the facts will be exposed, tested and commented on by both prosecution and defence. Of course, they then go into the public domain.

If, on the other hand, the inspectors conclude that an offence was not committed or if the evidence is, in the opinion of the inspectors, department lawyers and independent counsel, insufficient to secure a conviction, then I invite your Lordships to conclude that it is unjust for the reputation of the individual concerned to be jeopardised by publication of the report.

Reference was made to the so-called Archer case. I should like to put on record and firmly refute the suggestion that any law was broken by the DTI. It is normal practice that the appointment of an inspector is not announced at the time when it is made. However, announcement is considered if it is in the public interest; for example, if public officials are thought to be involved or there has already been publicity for an investigation and it is judged appropriate in the circumstances that the existence of the investigation should be acknowledged. That is what happened in the case referred to.

For all the reasons I have given, the Government consider that legislation to provide for the publication of insider dealing reports would be unhelpful to the detection and prosecution of insider dealing offences. I should like to join with noble Lords opposite in saying that we too consider these to be very serious offences, let there be no doubt about that.

Lord Clinton-Davis: My Lords, I am sorry. The Minister has said that he refutes what I say and that all the Department of Trade and Industry did was to indicate that an inquiry had been set up. That is not simply what happened. What happened was that on the 8th July the noble Lord, Lord Archer, was specifically mentioned. That is why I say there was a breach of the law by the Government and the Minister must deal with that point. Why was the noble Lord, Lord Archer, mentioned and under what statutory authority was he mentioned specifically by name?

Lord Inglewood: My Lords, I merely reiterate that we do not believe that there was any breach of the law

3 May 1995 : Column 1472

on the part of the Department of Trade and Industry at that time. I do not wish to go into the matter further at this point.

When prosecutions do not follow inspectors' reports, prosecution could be unfair to those on whom suspicion has fallen. Therefore, I must tell the noble Lord, Lord Haskel, that the Government will be unable to support the Bill, but I shall not oppose its Second Reading.

9.39 p.m.

Lord Haskel: My Lords, I thank the Minister and my noble friend Lord Clinton-Davis for taking part in this short debate. Noble Lords, particularly on this side of the House, know that we are very short of assistance in these matters and those who work in the House are very hard pressed. We on this side of the House rely on voluntary help from outside the House, and I am most grateful for the assistance I have received, particularly from Lucy Moorman, who helped to draft the Bill and who did some of the background research.

My noble friend Lord Clinton-Davis told us about the follies of secrecy. The purpose of the Bill is to give the Secretary of State flexibility. If there is to be a prosecution, he does not need to publish the report. The Act assumes that there will be secrecy. If the matter comes out and is reported in the press, the Minister is free to report what the investigators have said and, in that way, the whole matter is cleared up. Unless that happens, the whole thing is left in limbo.

By not supporting the Bill, the Minister is showing that he is out of touch with public opinion because I am sure that public opinion would like the Minister to have the flexibility to report the facts.

I also think that the Minister is making a basic error. The purpose of an investigation under the Finance Act is to discover the truth. The Minister's error is to confuse that with the adversarial nature of criminal proceedings, which is an entirely different matter. Sir Richard Scott made that very point last night when defending his inquiry into the arms to Iraq case. The same argument applies here. I beg the House to give the Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

Merchant Shipping Bill [H.L.]

Reported from the Joint Committee with amendments and recommitted to a Committee of the Whole House.

Shipping and Trading Interests (Protection) Bill [H.L.]

Reported from the Joint Committee without amendment and recommitted to a Committee of the Whole House.

        House adjourned at eighteen minutes before ten o'clock.

3 May 1995 : Column 1471

Next Section Back to Table of Contents Lords Hansard Home Page