Annex 1: Report from the Commissioner for Standards
Summary of the complaint and investigation
1.I received a complaint dated May 2016 from Mr Martin Williams about Lord Bhatia.1 The complaint included allegations about several MPs and peers; this report deals only with the allegations about Lord Bhatia, and only the parts of the complaint which related to Lord Bhatia are printed.
2.The complainant alleged that Lord Bhatia had breached the Code of Conduct in two respects in relation to his being a director of the British Muslim Research Centre (BMRC). Firstly, by removing it from the Register of Lords’ Interests in June 2013 although he continued to hold the position after that date. Secondly, by not declaring it in a speech he made in the House of Lords on 19 November 2013 during a debate on a statement by the Prime Minister about Islam not justifying acts of terror.2
3.I carried out a preliminary assessment of the complaint. I dismissed the second allegation (about non-declaration) at the preliminary assessment stage because, having read Lord Bhatia’s speech on 19 November 2013 in full (the complaint contained only an extract), I did not think that his directorship of the BMRC could reasonably be considered to have influenced the speech. The allegation that I dismissed is not covered further in this report.
4.When I received the complaint, Companies House records indicated that Lord Bhatia was still a director of the BMRC. Therefore I decided it was appropriate to investigate the first allegation (that Lord Bhatia breached the Code of Conduct by removing his directorship of the BMRC from his entry in the Register of Lords’ Interests in June 2013).
5.On 21 April 2016 Lord Bhatia was suspended from the service of the House for eight months.3 The suspension ends on 21 December 2016. Although Lord Bhatia was suspended when I received the complaint, the alleged conduct complained of preceded his suspension. Paragraph 4 of the Code of Conduct4 states that the Code does not apply to members who are suspended. However, the Code and Guide to the Code are silent on whether a suspended member may be investigated for alleged misconduct occurring before the member was suspended. I therefore sought guidance from the chairman of the Sub-Committee on Lords’ Conduct on whether I should proceed to investigate Lord Bhatia at that stage or await his return to the House in December 2016.5 The chairman saw no impediment to my investigating Lord Bhatia at that stage if he agreed to co-operate, but he could not be required to co-operate with an investigation until he returned to the House.6
6.I therefore wrote to Lord Bhatia on 29 June 2016.7 He replied on 26 July 2016.8 The clerk who assists me emailed Lord Bhatia on 24 August 2016 to seek clarification on a matter.9 Lord Bhatia replied on 1 September 2016.10
Key facts and Lord Bhatia’s response
7.Under paragraph 10(a) of the Code of Conduct members must “register in the Register of Lords’ Interests all relevant interests, in order to make clear what are the interests that might reasonably be thought to influence their parliamentary actions”. Interests are registered in 10 categories. In category 10 members must register unremunerated directorships. Paragraph 50 of the Guide to the Code makes clear that all directorships (remunerated or unremunerated) must be registered.
8.Paragraph 13 of the Code of Conduct states that members are responsible for ensuring their registered interests are accurate and up-to-date. The corollary of that is that a member should not remove an interest from the Register if the interest is ongoing. Only expired interests should be removed.11
9.The British Muslim Research Centre is a company limited by guarantee which was incorporated on 31 December 2002. Its articles of association12 state that Lord Bhatia was a founder director and chairman of the company. He duly registered the interest in the Register in Lords’ Interests as an unremunerated directorship from 2003 until 19 June 2013, when he removed it from the Register.
10.At the time I began my investigation Companies House documents suggested that Lord Bhatia was still a director of the BMRC.13 The issue in this case was whether Lord Bhatia was correct to remove the interest from the Register on 19 June 2013 if he continued as a director of the BMRC after that date.
11.In his response to me Lord Bhatia stated that he resigned as a director of the BMRC at its board meeting on 14 May 2013. The resignation was accepted by the board. He enclosed a copy of the relevant board minutes, which confirmed as much.14 Lord Bhatia stated that as thereafter he was no longer on the board it was for the remaining board members to notify Companies House of his resignation. He enclosed a letter from the remaining board member, Sir Iqbal Sacranie, who confirmed that his office had erred in not notifying Companies House of Lord Bhatia’s resignation as a director soon after the board meeting on 14 May 2013. Sir Iqbal said that Companies House had now been notified of the resignation and enclosed confirmation of the notification.15
Finding
12.Following Lord Bhatia’s response the issue for me to decide was whether his resignation as a director took effect when he tendered it, and it was accepted, by the board of directors on 14 May 2013, or whether it did not take effect until Companies House was notified. If the latter, Lord Bhatia should have kept the interest on the Register of Lords’ Interests.
13.A director’s resignation is legally effective if it complies with the company’s articles of association.16 Paragraph 52(c) of the BMRC’s articles of association provides: “The office of a member of the Board shall be vacated … if by notice in writing to the Board he resigns his office”. The Board is defined in paragraph 1(i) as: “The Board of Directors (Governing Body) for the time being of the Company”.
14.Lord Bhatia resigned as a director at a meeting of the board of directors on 14 May 2013. It is possible that the resignation was submitted and accepted orally, rather than by way of a written notice.17 Nonetheless, a resignation given orally by a director at a meeting is effective in law if it is accepted by the company.18 Therefore Lord Bhatia’s resignation took effect when he submitted his resignation to, and it was accepted by, the board of directors on 14 May 2013. At that point his obligation to register the interest in the Register of Lords’ Interests ceased, so he was correct to remove it from the Register the following month. The fact that a notification of the resignation was not sent to Companies House for three years did not affect the validity of the resignation.
15.I find that Lord Bhatia did not breach the Code of Conduct by removing his directorship of the British Muslim Research Centre from the Register of Lords’ Interests on 19 June 2013.
Lucy Scott-Moncrieff CBE
Commissioner for Standards
1 Appendix A. The complaint was addressed to the Parliamentary Commissioner for Standards in the House of Commons, but it was also sent to the House of Lords Commissioner for Standards.
2 HL Deb, 19 November 2013, cols 391–92.
3 For the avoidance of doubt, the case covered in this report is unconnected to the breach for which Lord Bhatia was suspended. I have considered this case solely on the evidence before me.
4 Fifth edition: July 2016 (HL Paper 40). All references to the Code and Guide in this report are to the fifth edition.
5 Appendix B.
6 Appendix C. Paragraph 22 of the Code of Conduct requires members to co-operate with investigations by the Commissioner, but the Code does not apply to suspended members.
7 Appendix D.
8 Appendix E.
9 Appendix F.
10 Appendix G.
11 A change to the Guide made in 2015 means that expired interests now stay on the Register for one year after the interest ceases: paragraph 42 of the Guide. However, that is not relevant to the present case.
12 The articles of association are on the Companies House website.
13 An annual return dated 1 December 2015 (available on the Companies House website) listed him as one of two directors.
14 Appendix E.
15 The confirmation notice incorrectly referred to Lord Bhatia resigning on 14 May 2015 (rather than 2013). In subsequent correspondence the company’s auditors (who filed the termination with Companies House) confirmed that this was an error; it should have referred to 14 May 2013. Please see appendices F and G.
16 Companies (Tables A to F) Regulations 1985 (SI 1985/805), made under the Companies Act 1985. The BMRC was incorporated under that Act.
17 See item 2 of the minutes of the board meeting and paragraph 1 of the letter from Lord Bhatia dated 26 July 2016: appendix E.
18 Latchford Premier Cinema Ltd v Ennion [1931] 2 Ch. 409; Halsbury’s Laws of England (volume 14 (2016)): “Companies”, paragraph 556.