The conduct of Lord Blencathra - Committee for Privileges and Conduct Contents

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 (appendix D).

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).

2012 investigation

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.[5] 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".[6]

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 services).

Key facts

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."[7] 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."[8] The contract further specified that Lord Blencathra would have "primary responsibility" for performing the services set out in that annex.[9] In consideration for these services Two Lions was paid £12,000 per month.[10]

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.[11] The above-quoted service did not appear in the successor contract.[12]

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 … A member 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 … the member 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.[13] 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."[14] Lord Blencathra stated that there were other activities listed in the annex to the contract which he did not undertake.[15] 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.[16]


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 parliamentary services.

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]

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.[18] 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.[19] 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 74). Back

6   Ibid., page 14. Back

7   Appendix D, recital (D). Back

8   Appendix D, paragraph 3.1. Back

9   Appendix D, paragraph 3.2. Back

10   Appendix D, paragraph 4.1. Back

11   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

12   The contract that began in November 2012 is not printed with this report. Back

13   Appendix F, paragraph 5. Back

14   Appendix F, paragraph 6. Back

15   Appendix F, paragraphs 7 and 8. Back

16   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

17   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

18   Appendix F, paragraph 9. Back

19   Committee for Privileges and Conduct, The Conduct of Lord Blencathra (5th Report, Session 2012-13, HL Paper 74), pages 12-14. Back

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