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House of Lords

Tuesday, 13th June 1995.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Coventry.

The Earl of Morton—Sat first in Parliament after the death of his kinsman.

Mr. Ian Hay Davison

Lord Peyton of Yeovil asked Her Majesty's Government:

    When they expect the action they initiated 10 years ago in the American courts against Arthur Andersen, arising out of the De Lorean affair, to come to trial; and whether they are now prepared to consider Mr. Ian Hay Davison (a partner in Arthur Andersen at the time of the affair) as eligible for any such government appointment as may be appropriate.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley): My Lords, Arthur Andersen and Company has filed a Motion for summary judgment in this action. No date for trial will be set until the United States Federal Court has decided that Motion. While the proceedings continue, it would not be appropriate to offer any public appointment to anyone who participated in Arthur Andersen's work for De Lorean Motor Cars Ltd.

Lord Peyton of Yeovil: My Lords, I wish to ask my noble friend a straightforward question. Does he really believe that it is fair or respectable to keep a British citizen, Mr. Ian Hay Davison, effectively in quarantine for as long as 10 years while the action which they have launched in the American courts winds its labyrinthine way towards a trial, and to do so at the behest of an American lawyer who simply fears that Mr. Ian Hay Davison's evidence, as a witness for the defence, might be more valuable as a result?

Lord Henley: My Lords, obviously I have no control over the speed at which the American courts process this matter, but, as I said in my opening remarks, while it is before the courts it would be prejudicial to the proceedings against Arthur Andersen to offer any public appointment to anyone who took part in Arthur Andersen's work for De Lorean. That obviously includes Mr. Ian Hay Davison.

Lord Dean of Beswick: My Lords, is the Minister aware that I have a Question on the Order Paper, not dealing with the person involved in this Question, but with the company? Is the Minister further aware that the Arthur Andersen company was pretty heavily involved in the nonsense and lack of probity that took place in the Wessex Regional Health Authority? Is the Minister also aware that, as I understand it, that company has just been awarded another government contract for over £300

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million by, I believe, the DSS? What criteria are the Government using in awarding contracts, particularly to a company with a reputation of this kind?

Lord Henley: My Lords, I am not aware of the noble Lord's Question. But I can tell him that in 1985 an understanding was reached between Arthur Andersen and the Government in relation to the firm's appointment to undertake public sector assignments while the US action continued. The Government agreed to treat those arrangements as confidential and I cannot go further than that.

Lord Peyton of Yeovil: My Lords, does it not seem rather unjust that Mr. Ian Hay Davison, who was not a party to that agreement, should be penalised as a result of it?

Lord Henley: My Lords, I am very sorry, but I do not believe that it is unjust. The simple fact is that Mr. Ian Hay Davison will be a witness and I do not believe that I can go further than what I said in answer to my noble friend's first supplementary question.

Lord Eatwell: My Lords, can the Minister tell us how much was lost by the taxpayer because of the De Lorean affair; who was the Minister responsible at the time and what proportion of that loss does he believe is attributable to the activities of Arthur Andersen and Company?

Lord Henley: My Lords, that is another Question, but I can tell the noble Lord that the earliest decisions in terms of lending money to De Lorean were made by, I believe, the party represented by the noble Lord opposite. I believe that they were made while the noble Lord's noble friend, the noble Lord, Lord Mason of Barnsley, was Secretary of State for Northern Ireland.

Lord Pearson of Rannoch: My Lords, does my noble friend agree that there must be many members of Lloyd's who look back on Mr. Ian Hay Davison's period there with affection and gratitude?

Lord Henley: My Lords, I am sure there are, but I believe my noble friend will appreciate that that is another Question.

Money Laundering: Gibraltar Discussions

2.43 p.m.

Lord Harris of Greenwich asked Her Majesty's Government:

    What discussions they have had with the Gibraltar Government on money laundering.

The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we have frequent discussions with the Government of Gibraltar on this important issue. We believe that the introduction of effective anti-money laundering legislation is crucial to help Gibraltar build a successful financial services industry.

Lord Harris of Greenwich: My Lords, in thanking the noble Baroness for that Answer, with which I very much agree, may I ask whether she is aware that it creates a very difficult situation when this Parliament passes legislation

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dealing with money laundering in terms of the proceeds of serious crime and the Gibraltar authorities have not taken appropriate action? Is she further aware that there is serious concern about this matter? Is she also aware that the sooner this matter comes to a satisfactory conclusion, the better pleased we shall all be?

Baroness Chalker of Wallasey: My Lords, I very much agree with the noble Lord. The United Kingdom is determined that Gibraltar will implement the necessary legislation. We now believe that Gibraltar is of the same mind, and that progress can be made through co-operation and constructive dialogue. The only way that Gibraltar can ensure that it maintains its position as a competitive and reputable financial centre is by passing the legislation.

Lord Clinton-Davis: My Lords, is not this the third time that the Government have made entreaties to the Gibraltar Government to take realistic action to curb money laundering, which, as the noble Lord, Lord Harris, has indicated, is tied up also with international crime of the most sinister kind? Why does the Minister feel that on this occasion those entreaties are likely to receive a more fertile response?

Baroness Chalker of Wallasey: My Lords, I cannot tell the noble Lord whether it is the third, fourth or fifth time. I have lost count, to be honest. What I do know is that it is necessary. Gibraltar has made some regulations to implement the directive to deal with the laundering of drug money. She must now do so for the proceeds of other crime. The reason I am more hopeful this time on this issue than I have been in the past stems from the discussions, which must remain confidential, which my right honourable friend the Foreign Secretary had with Mr. Bossano last month.

Lord Merrivale: My Lords, will my noble friend consider that Mrs. Jean Cooper on secondment from the Bank of England as Financial Services Commission banking supervisor recently said that she agreed with the Chief Minister that there is no significant money laundering through the Rock? Will she also consider that the Gibraltar Government could need further assistance regarding the extension of the directive making laundering of drug money illegal so as to cover the many other criminal activities to which my noble friend has just referred?

Baroness Chalker of Wallasey: My Lords, I should have thought that if there were no significant money laundering operation there could be no possible reason for not passing the legislation. However, it is clear that in all our dependent territories there is an effort to deal with money laundering. That is something that we are taking up in all parts of the world for which we have any jurisdiction. It is also critically important to prevent money laundering. By having the legislation, one prevents bad things from getting started.

Lord Whaddon: My Lords, is the Minister aware of international reports being carried by the international media that Her Majesty's Government intend to impose

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direct rule on Gibraltar on or about 15th July? Does she agree that that would be inappropriate at this stage, and will she categorically deny such reports?

Baroness Chalker of Wallasey: My Lords, I would hope very much that such action would not be necessary. As I have made clear in answer to earlier questions, we believe that Gibraltar is now taking the sensible path of introducing the legislation that is important for its own future. If Gibraltar passes that legislation, I see no reason why one would have to consider such measures as mentioned by the noble Lord, which are pure press speculation.

Lord Bruce of Donington: My Lords, while I concur completely with the Minister's observations that it is essential that the legislation should be in place in Gibraltar to deal with the problem, does she agree that one of the greatest problems is that of enforcement, and that there are many capitals of the world, including our own, where enforcement may not be as adequate as it should be?

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