The Conduct of Lord Paul - Privileges and Conduct Committee Contents

The Conduct of Lord Paul


1.  The Sub-Committee on Lords' Conduct has investigated the conduct of Lord Paul. The Sub-Committee's report is printed as an Appendix to this Report.

2.  The Sub-Committee's investigation into the conduct of Lord Paul should be read in parallel with its investigations in the conduct of Lord Bhatia and Baroness Uddin. All three cases arise out of articles originally appearing in The Sunday Times, and each raises similar issues. Each of the Sub-Committee's reports contains similar background analysis (for instance, of the rules governing the Members' Reimbursement Scheme[1]).

3.  But, however similar the issues, the facts of each case are wholly distinct and have required separate consideration. The Sub-Committee, and we ourselves, have therefore prepared three separate reports.


4.  The process followed in this case is summarised in paragraphs 5-6 of the Sub-Committee's report. The original allegations against Lord Paul appeared on 11 October 2009; a complaint was made the same day by Angus Robertson MP. The initial investigation was conducted by the Clerk of the Parliaments as Accounting Officer, but was then suspended while a separate investigation was conducted by the Metropolitan Police Service. On 3 March 2010 the Metropolitan Police Service notified the Clerk of the Parliaments that a decision had been made "to not proceed with the investigation at this time". The Clerk of the Parliaments resumed his own investigation, and on 5 March asked the Sub-Committee "to investigate and determine the facts of the case".

5.  The procedure in these cases follows that agreed by the House in December 2008[2], whereby the Clerk of the Parliaments can request the assistance of the Sub-Committee in investigating complaints which he considers "complex or serious". As a Sub-Committee of the Committee for Privileges and Conduct, the Sub-Committee on Lords' Conduct normally reports to the parent Committee. But, as this case was referred to the Sub-Committee by the Clerk of the Parliaments, the Sub-Committee reported to the Clerk of the Parliaments. He, given the nature of the sanctions recommended by the Sub-Committee, forwarded the report in turn to this Committee.

6.  The Sub-Committee, following an investigation which had been interrupted by the dissolution of Parliament, sent its report to the Clerk of the Parliaments on 28 July. The Sub-Committee also recommended that, in order to preserve confidentiality, the Clerk of the Parliaments should not disclose the report to any other person until late in the summer recess. He accordingly forwarded the report to the staff of this Committee in late September, and a copy was at once sent to Lord Paul, on 21 September. He was at the same time notified of his right to appeal against the Sub-Committee's findings to the Committee for Privileges and Conduct. He submitted his appeal on 29 September, also indicating his wish to appear in person before the Select Committee at its meeting on 11 October.

7.  Although the Sub-Committee's report was forwarded to this Committee in its entirety, certain matters covered in it relate to the administration of the Members' Reimbursement Scheme (for instance, the changes which the Sub-Committee indicates were made to the Scheme in April 2009, referred to in paragraphs 20 and 42-43 of the Sub-Committee's report), rather than to the privileges of the House or the Code of Conduct. It is for the House Committee, as the body responsible for the Members' Reimbursement Scheme, to take forward these matters, on which we make no recommendations.

8.  Our responsibility is to address the conduct of Members who are alleged to have breached rules agreed by the House, and, where appropriate, to recommend sanctions to the House as a whole. The House has previously resolved that it "possesses the same disciplinary powers in respect of breaches of the Members' Reimbursement Scheme as in respect of breaches of the Code of Conduct or of other rules of conduct adopted by the House".[3] It is a Member's responsibility to ensure that claims for expenses are properly made, which includes an obligation to take reasonable steps to ensure that amounts being claimed are properly payable under the Scheme and that information provided in connection with claims is complete and accurate. A Member who makes a claim without taking such steps may be found to be liable to sanction by the House.

The Sub-Committee's findings

9.  The focus of the investigation has been Lord Paul's use of the Members' Reimbursement Scheme from late 2005 onwards. In particular, the Sub-Committee considered whether during this period Lord Paul correctly designated two successive properties (until the end of July 2006, The Cottage, Bignell Park Hotel, Chesterton, Oxfordshire, and from August 2006 The Grange, Beaconsfield, Buckinghamshire) as his "main residence" for the purposes of the Scheme.

10.  Notwithstanding its name, the Oxfordshire property is a one-bedroom flat in the Bignell Park Hotel, which is owned by Lord Paul's company, Caparo Holdings. The minimum requirement endorsed by the House Committee for determining whether a property could be designated as a Member's "main residence" under the Scheme is the requirement that it be visited for a minimum of one weekend per month over the year when the House was sitting and for periods during recesses. The Sub-Committee interpreted the term "visit" in this context as requiring an overnight stay. Lord Paul has freely admitted that he never spent a night at The Cottage. The Sub-Committee therefore concluded that Lord Paul wrongly designated The Cottage as his main residence.

11.  The Grange in Buckinghamshire is a family home, which Lord Paul contracted to buy in March 2006, designating it as his main residence in August of that year. Since that time Lord Paul has regularly spent weekends at The Grange, and the Sub-Committee accepted that Lord Paul's designation of The Grange as his main residence through the period in question met the minimum requirement endorsed by the House Committee.

12.  As a result of his designation of the Oxfordshire property as his "main residence", Lord Paul was able to claim sums under two separate headings within the Scheme. He claimed night subsistence in respect of overnight accommodation in London while away from his "main residence"; he also claimed travel expenses in respect of journeys between his "main residence" and Westminster.

13.  Immediately after the original allegations appeared, Lord Paul referred himself to the Clerk of the Parliaments for investigation, and at an early stage in this investigation he offered to repay any money wrongly claimed. With the assistance of the Finance Department, Lord Paul calculated that he had claimed £41,982 in night subsistence and travel expenses over the period from January 2005 (when he first designated The Cottage as his main residence) to July 2006. He repaid this sum (a greater sum than the House could have required him to repay, given that the investigation was only able to go back four years, to 11 October 2005) to the House in late 2009; there is no further money owing to the House.

14.  As the Sub-Committee acknowledged, as well as repaying the money Lord Paul has also apologised, in his oral evidence, for his mistake in wrongly designating the Oxfordshire property and claiming money on that basis (Q 150, p 103). At no stage since he was first contacted by The Sunday Times has Lord Paul claimed that he ever spent a night in The Cottage.

15.  Thus far there is broad agreement between the Sub-Committee and Lord Paul. The difficulties in this case arise in determining the third issue addressed by the Sub-Committee, namely whether, given that the Oxfordshire property was wrongly designated, Lord Paul acted in good faith in making his designation and claims.

16.  The Sub-Committee's view was that Lord Paul did not act in good faith. The Sub-Committee stated that "no reasonable person could hold Lord Paul's understanding of 'main residence' in relation to the scheme". The Sub-Committee therefore concluded "that Lord Paul's designation of the Oxfordshire property was a deliberate misrepresentation of his domestic arrangements made with the intention of enabling Lord Paul to make use of the night subsistence element of the members' reimbursement scheme" (paragraphs 57-58). With respect to travel expenses, the Sub-Committee concluded that "Lord Paul made the claims for the mileage allowance for journeys by car from and to the Oxfordshire property with the intention of adding verisimilitude to his designation of that property as his main residence" (paragraph 60).

17.  On the basis of these conclusions, the Sub-Committee's recommendation was "that the House sanction Lord Paul by requiring him to make a personal statement of apology to the House and thereafter suspending him from the service of the House for six months." (paragraph 63).

Lord Paul's appeal

18.  Lord Paul has appealed against the Sub-Committee's findings only on the third issue, namely that he acted in bad faith. He states that, given his apology, his co-operation with the investigation, and his prompt repayment of the money, the Sub-Committee's sanction is based solely upon the finding that he acted in bad faith.

19.  Lord Paul points to the absence of guidance during the period in question as to the meaning of "main residence"; to his prompt and voluntary repayment of the amount wrongly claimed and subsequent co-operation with the investigation; and to his apology. He maintains that in the absence of an agreed definition of "main residence", and given his cultural background, his interpretation was at the time a reasonable one; he further states that even if his interpretation were to be found to be "unreasonable", this would be a "wholly inadequate basis" for the Sub-Committee's finding that he acted in bad faith, or engaged in "deliberate misrepresentation". Finally, he compares his case with that of Lord Clarke of Hampstead (as indeed does the Sub-Committee at paragraph 62), from whom only an apology was required, and argues that he is being treated harshly in comparison. He asserts that "there are a number of [other cases], involving in some cases much greater amounts of money, which have I believe not even been investigated".

20.  Lord Paul appeared before the Select Committee on 11 October 2010. A full transcript of his evidence is printed in this volume (see p 110). The essence of his appeal is set out in his opening statement:

    "The basic facts are not in dispute. I made claims which, with the benefit of hindsight, I should not have made. For that I apologise. As soon as I appreciated my error, I volunteered and made repayments. I never pretended to anyone that, in the event, I spent nights at the property in question. It was, however, a residential property of mine that was available to me. It is all a matter of interpretation as to what constitutes a main home—a matter of interpretation that may differ between persons with, for example, different cultural backgrounds. I am now one of those who disagrees with my interpretation at the time both in relation to the main residence and in relation to the journeys. But I most steadfastly maintain that these were entirely honest interpretations on my part." (Q 2)

The views of the Committee

21.  We agree with Lord Paul that the Sub-Committee's finding that he acted in bad faith is the key issue in the appeal and in the Sub-Committee's report. There is no question that Lord Paul should not have designated The Cottage as his main residence, and that he was wrong to claim night subsistence and mileage allowances in respect of that property.

22.  Thus Lord Paul's motivation lies at the heart of the case and his Appeal. The Sub-Committee's analysis of his motivation is set out in paragraphs 54-58 of the report. The key conclusions are as follows:

    57. Even if Lord Paul's definition of "residence" were reasonable, his lack of regard to "main" is unreasonable. We consider that no reasonable person could hold Lord Paul's understanding of "main residence" in relation to the scheme.

    58. We find that Lord Paul's designation of the Oxfordshire property was a deliberate misrepresentation of his domestic arrangements made with the intention of enabling Lord Paul to make use of the night subsistence element of the members' reimbursement scheme.

23.  In oral evidence before us, Lord Paul repeated his claim that "I genuinely believe that a place that is available to me for living is my residence" (Q 7). Such an understanding essentially empties the term of meaning. Nevertheless, Lord Paul went so far as to apply this understanding even to his current "main residence" in Buckinghamshire, which the Sub-Committee, and we, accept satisfies the minimum criteria for designation: "I still do not consider in real terms that my house in Beaconsfield is a main residence. To me, it is a place where I love to go whenever I can and I like to spend time with my children and grandchildren, but I do not differentiate between my London home and that residence." (Q 7) If this were true, it would seem that Lord Paul's designation of one or other residence as his "main residence", properly or improperly, is a matter largely of chance.

24.  Lord Paul explained his interpretation of the term "main residence" by reference to his cultural background. He insisted that "anyone coming out of India would not understand what main residence means" (Q 8). He accepted that he had "not once" looked at the guidance on the back of the claim forms (Q 22). Yet he clearly had a good understanding of domiciliary status (QQ 11-17).

25.  In summary, Lord Paul's understanding of the term "main residence" is barely an understanding at all; it demonstrates rather a continuing failure to understand that the term has any specific meaning that may be applied to his personal circumstances. We therefore endorse the Sub-Committee's conclusion that "no reasonable person could hold Lord Paul's understanding of 'main residence' in relation to the scheme". The Sub-Committee's further conclusion that Lord Paul's designation of the Oxfordshire property as his main residence must have been done in bad faith is entirely understandable. We therefore dismiss his appeal, except to the extent indicated below.

26.  It is our responsibility, in reviewing the Sub-Committee's findings, not only to consider specific grounds of appeal, but to "decide whether, on the balance of probabilities, we endorse the conclusions of the Sub-Committee".[4] On this occasion we have borne in mind, on the one hand, the fact that Lord Paul's definition of "main residence" was and is inherently unreasonable, and that, as a Member of the House and a successful businessman, he must be presumed to act as a reasonable person. On the other hand, we are aware that he has at no stage since the allegations first appeared sought to misrepresent his connection with the Oxfordshire property, for instance to pretend that he ever stayed there. It is a matter of fact that he immediately referred his case to the Clerk of the Parliaments and has co-operated with the investigation throughout; that he has repaid all money wrongly claimed (a larger sum than that covered by the Sub-Committee's investigation); that he has repeatedly apologised for his mistake; and that he persists in applying the term "main residence" in ways that could be interpreted unfavourably to himself. Lord Paul's actions throughout the investigation have been consistent and, so far as we can tell, honestly meant.

27.  We do not feel justified in finding, on the balance of probabilities, that Lord Paul acted dishonestly or in bad faith. However, his actions were utterly unreasonable, and demonstrated gross irresponsibility and negligence. They therefore render him liable to sanction by the House.

28.  In mitigation, Lord Paul has apologised and repaid the money wrongly claimed.

29.  We recommend that Lord Paul be suspended from the service of the House for four months, starting on the date on which any suspension motion is agreed by the House.

1   All references in this Report to the Members' Reimbursement Scheme refer to the Scheme that applied up until 30 September 2010. As a result of a motion agreed by the House on 20 July 2010, the day subsistence, night subsistence and office costs elements within the Scheme were combined in a new daily allowance, with effect from 1 October 2010. Back

2   The Code of Conduct: procedure for considering complaints against Members, Committee for Privileges, 4th Report, session 2007-08 (HL Paper 205). Hereafter referred to as the "Report on procedure". Back

3   The conduct of Lord Clarke of Hampstead, Committee for Privileges, 4th Report, session 2009-10, HL Paper 112, paragraph 8. Back

4   Report on procedure, paragraph 35. Back

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