Annex 2: Report from the commissioner
for standards |
Summary of the complaint
1. On 24 March 2014 an article was published
in The Independent newspaper entitled "Revealed: Conservative
peer Lord Blencathra's lobbying contract for tax haven Cayman
Islands" (appendix A). On that date Lord Blencathra referred
himself to my office on the basis of the article (appendix B).
Also on that date I received a complaint from Paul Flynn MP (appendix
C), which also was based on The Independent article. Mr
Flynn forwarded a copy of the contract which featured in the article
2. In accordance with paragraph 103 of the Guide
to the Code of Conduct, I sought the agreement of the Sub-Committee
on Lords' Conduct to investigate Lord Blencathra's self-referral.
That agreement was forthcoming and I proceeded on the basis of
both that self-referral and Mr Flynn's complaint.
3. I wrote to Lord Blencathra on 26 March 2014
(appendix E) advising him that I had decided to investigate the
matters which gave rise to his self-referral and Mr Flynn's complaint,
and inviting him to provide a full and accurate account. I supplied
him with a copy of the newspaper article and associated contracts
and emails. I invited him to review the evidence he submitted
to me in July 2012 and either to confirm that he stood by it,
or to amend it as he saw fit in the light of the allegations in
The Independent article. Lord Blencathra responded in a
letter dated 7 April 2014 (appendix F).
4. In 2012 Mr Flynn made a complaint about Lord
Blencathra's conduct as the Director of the Cayman Islands Government
Office in the United Kingdom. The complaint alleged that in this
capacity Lord Blencathra had provided parliamentary services in
return for payment or other reward. The complaint specified four
instances in 2011-12 in which it was alleged that parliamentary
services had been provided. I investigated the complaint. I found
no breach of the Code of Conduct by Lord Blencathra in 2012, as
the evidence did not establish that he had provided parliamentary
services. In his submission
to my investigation in 2012 Lord Blencathra wrote, "none
of my work involves lobbying Parliament or seeking to influence
either House. I made that clear when I took on the role that I
would not do that".
5. Mr Flynn's letter dated 24 March 2014 highlighted
what he believed were discrepancies between Lord Blencathra's
evidence to my investigation in 2012 and information in The
Independent article. In particular, the article was based
on the contract under which Lord Blencathra worked for the Cayman
Islands Government in 2011-12, and alleged that the contract required
Lord Blencathra to lobby Parliament (i.e. provide parliamentary
6. The article in The Independent was
based on a copy of an "advisory and consultative agreement"
which had been disclosed to the newspaper (appendix D). That agreement
was between the Government of the Cayman Islands and Two Lions
Consultancy Ltd. The agreement was dated 9 November 2011 and would
last until 1 November 2012. In the agreement Two Lions Consultancy
was described as "headed by Lord Blencathra."
Lord Blencathra signed the contract on behalf of Two Lions.
7. The agreement provided that "Two Lions
will provide consultancy services to the [Cayman Islands Government]
and will have direct responsibility for the provision and
management of the services set out in Annex 1."
The contract further specified that Lord Blencathra would have
"primary responsibility" for performing the services
set out in that annex.
In consideration for these services Two Lions was paid £12,000
8. 14 services were set in Annex 1. Service (c)
was the one which attracted the attention of The Independent
and formed the basis of Mr Flynn's complaint. It reads:
"Promoting the Cayman Islands' interests in
the UK and Europe by liaising with and making representations
to UK Ministers, the FCO, Members of Parliament in the House of
Commons, and Members of the House of Lords, Members of the European
Parliament, European Governments, and the EU Commission, the Commonwealth
Countries Association and the Overseas Territories Association."
9. Mr Flynn also supplied me with a copy of the
successor contract between the Cayman Islands Government and Two
Lions. This agreement commenced on 1 November 2012.
The above-quoted service did not appear in the successor contract.
10. At issue in this case, therefore, is whether
Lord Blencathra breached the Code of Conduct by entering into
a contract which ran from November 2011 to November 2012 which
involved agreeing to provide the services quoted above.
11. Under paragraph 8(d) of the Code of Conduct
members "must not seek to profit from membership of the House
by accepting or agreeing to accept payment or other incentive
or reward in return for providing parliamentary advice or services."
12. This is elaborated on in paragraph 21 of
the Guide to the Code, which states that members "may not,
in return for payment or other incentive or reward, assist outside
organisations or persons in influencing Parliament
may never provide parliamentary services in return for payment
or other incentive or reward." Paragraph 20 of the Guide
recognises that "a member may exceptionally give parliamentary
advice to an organisation or person with whom the member has a
financial interest, provided that the member can demonstrate that
he or she does not receive payment or benefit in return for the
provision of parliamentary advice or services
should, where possible, ensure contractual agreements specifically
exclude the provision of parliamentary advice or services".
Lord Blencathra's response
13. Lord Blencathra was quoted by The Independent
as saying "My compliance with the law or Lords rules takes
precedence over anything which was in my contract, I made clear
that I would not be lobbying in Parliament or MPs. Indeed, even
that initial contract made no mention of lobbying. That was firmly
understood between us."
14. He elaborated on that in his submission to
me. He stated that the contract of November 2011 "was the
first time that the completely new role of Director was being
established" with someone other than a Cayman civil servant.
He explained that the role and tasks he undertook have changed
considerably over time. He continued, "Although I made clear
in statements that I could not and would not lobby MPs and Parliament,
with hindsight I regret that I did not press for the reference
in item (c), which could be construed as lobbying by some, to
be deleted from that first trial contract of November 2011. Because
I knew I would not be making representations to MPs and Parliament,
I did not consider their inclusion to be important. I accept that
was probably a mistake and that it might have caused the wrong
perception and I am very sorry about that."
Lord Blencathra stated that there were other activities listed
in the annex to the contract which he did not undertake.
His central point was that even though the contract of 2011-12
mentioned making representations to MPs and Parliament in reality
he did not do so.
15. During my investigation no fresh evidence
has been provided which demonstrates that Lord Blencathra may
have actually provided parliamentary services under the 2011-12
contract with the Cayman Islands Government. The issue, therefore,
is whether he agreed to accept payment in return for providing
16. It is now well-established that a member
breaches the Code of Conduct if he or she expresses a clear willingness
to breach the rules, even if (for example) no contract is signed
and no money changes hands.
17. This case involves one step beyond the expression
of a "clear willingness" to breach the Code. In this
case, a written contract between Lord Blencathra and the Cayman
Islands Government was agreed. The contract included a requirement
for Lord Blencathra to have "primary responsibility"
for providing services which included "liaising with and
making representations to
Members of Parliament in the
House of Commons, and Members of the House of Lords". There
has been no suggestion that the fees payable to Two Lions were
not fully honoured. Thus, there was an agreement for payment to
be made in return for specified services.
18. Lord Blencathra argues that he never provided
parliamentary services to the Cayman Islands Government, notwithstanding
the terms of the 2011-12 contract. No evidence has been produced
that Lord Blencathra did actually provide parliamentary services
and I have no reason to question his assurances in that regard.
However, the fact remains that he signed a contract under which
he agreed to provide such services. Paragraph 8(d) of the Code
prohibits members from agreeing to provide parliamentary services
in return for payment.
19. Lord Blencathra did not share the 2011-12
contract with me when I conducted my 2012 investigation. In his
submission to this investigation he said that he did not do so
as it was irrelevant to the specific allegations then made against
him; he said that it never crossed his mind to send it.
I understand his argument with regard to the specific allegations
made by Mr Flynn in 2012 (which related to particular instances
in which it was alleged that parliamentary advice or services
had been provided). However, in my letter to Lord Blencathra in
2012 advising him of my investigation I requested a full and accurate
account of the matters in question; I also quoted paragraph 8(d)
of the Code and paragraph 21 of the Guide.
Thus, I think it is reasonable to conclude that the existence
of a contract apparently requiring the provision of parliamentary
services in return for payment should have been considered potentially
relevant, and therefore should have been disclosed to me. I highlight
that the purpose of the Code of Conduct is inter alia "to
provide the openness and accountability necessary to reinforce
public confidence in the way in which members of the House of
Lords perform their parliamentary duties." That said, there
is no evidence that Lord Blencathra deliberately sought to undermine
the integrity of my investigation in 2012.
20. In respect of the current investigation I
find that Lord Blencathra breached paragraph 8(d) of the Code
of Conduct by entering into an agreement between November 2011
and November 2012 which involved him agreeing to provide parliamentary
services in return for payment. The parliamentary services that
were agreed were "liaising with and making representations
to" MPs and members of the House of Lords. I reiterate that
no evidence has been identified to contradict Lord Blencathra's
statement that he did not actually provide such services. However,
I find that the mere existence of the contractual obligation is
at variance with paragraph 8(d) of the Code of Conduct.
21. I have dealt with the suggestion that Lord
Blencathra did not properly co-operate with my investigation in
2012 above. In respect of this investigation, I should report
that Lord Blencathra co-operated fully.
Paul Kernaghan CBE QPM
Commissioner for Standards
5 Committee for Privileges and Conduct, The Conduct
of Lord Blencathra (5th report, session 2012-13, HL Paper
Ibid., page 14. Back
Appendix D, recital (D). Back
Appendix D, paragraph 3.1. Back
Appendix D, paragraph 3.2. Back
Appendix D, paragraph 4.1. Back
The agreement was scheduled to last until 1 November 2015, but
was terminated by mutual agreement on 31 March 2014: appendix
F, paragraphs 39-41. Back
The contract that began in November 2012 is not printed with
this report. Back
Appendix F, paragraph 5. Back
Appendix F, paragraph 6. Back
Appendix F, paragraphs 7 and 8. Back
Appendix F, paragraph 9. Lord Blencathra's response went on to
describe in some detail recent activities he had undertaken under
the successor contract. He said he appreciated that such matters
were not germane to the current complaint. Accordingly, the material
that he appended to his submission in support of such matters
is not printed with this report. Back
The House recently agreed that a provision about members being
in breach of the Code if they express a clear willingness to breach
the Code should be expressly included in the Guide: see Committee
for Privileges and Conduct, Amendments to the Code of Conduct
and Guide to the Code (13th Report, Session 2013-14, HL Paper
123), paragraph 7. Back
Appendix F, paragraph 9. Back
Committee for Privileges and Conduct, The Conduct of Lord
Blencathra (5th Report, Session 2012-13, HL Paper 74),
pages 12-14. Back