HC Deb 01 May 1939 vol 346 cc1645-58

Motion made, and Question proposed, "That this House do now adjourn."—[Captain Margesson.]

10.53 P.m.

Mr. Bellenger

I desire to raise a matter which has been before the House previously in the shape of Question and Answer, a matter of some considerable public interest and importance. It concerns the sale of three ships to Germany, the "Laleham," the "Peckham" and the "Meopham." May I say, by way of preface to my remarks, that I raise this matter because it is one of public interest, and I am quite disinterested in the business side of the question. On 18th April a question was put to the President of the Board of Trade, and in answer to supplementary questions he said: In other instances where shipowners have had offers from abroad and have approached the Board of Trade, being informed that we should prefer that, in existing circumstances and especially in view of, we hope, the passage by this House of legislation allowing this reserve of tonnage, the ships should remain on the British register, in those cases they have acceded to our request."—[OFFICIAL REPORT, 18th April, 1939; col. 155, Vol. 346.] I suggest to the House that the impression given to hon. Members by that reply was that the owners of those three ships had done something contrary to the advice of the Board of Trade, and, indeed, something which was perhaps unpatriotic. Subsequent supplementary questions put in this House were requests for the names of these directors to be given in this House, and they were so given. The impression which was left on the mind of hon. Members has also had some effect on the minds of the business community in the City of London, and particularly in shipping circles. I wish to place before the House some of the facts which were not in evidence when these questions were put. A lot of the information which I shall proceed to give to the House has already been given to the general public in the public Press. These are the facts in brief. The negotiations for the sale of these three ships to a German buyer commenced in November last, and the first offer that was received was higher than the offer at which they were subsequently sold. It was an offer as to 50 percent. in cash and 50 percent. by way of mortgage.

The legal position is that the Board of Trade has no power at the present moment to prevent owners of ships on the British register from selling to foreign buyers if they wish so to do, although the Board of Trade has given the information that it is prepared later to bring in legislation under which, I understand, owners will, first of all, have to offer their ships, if they want to sell them, to the Board of Trade. The company's representatives, as soon as they understood the attitude of the Board of Trade with regard to the original negotiations for the sale terminated them at once, and so informed the Board of Trade. Six weeks later the same German buyer made a different offer to the owners of these ships. That offer in total amount was less than the first offer, but it was a better offer because most of it was a cash offer of something like 90 percent. or there abouts in sterling, the balance to be paid by way of bills. On that occasion the company's representative again approached the Board of Trade, and, as I am informed, laid the matter before representatives of the Board of Trade and also informed the Board of Trade as to the nature of the offer. According to a statement issued by the solicitor to these two companies, the Board of Trade actually acquiesced. They even go further than that and say that the Board of Trade, in view of this better offer, advised the owners to sell. I should like to quote the public statement made by the solicitors to these two companies. They say in that statement that the Board of Trade gave them to understand that in view—

The President of the Board of Trade (Mr. Oliver Stanley)

The hon. Member says that the solicitor said that the Board of Trade gave them to understand, as if the solicitor were present at the interview at the Board of Trade. That was not the case.

Mr. Bellenger

I did not wish to give that impression. The Board of Trade or representatives of the Board of Trade gave the representative of these companies—I think he was the managing director—the advice that they could sell the ships, in view of the age and condition of the three vessels at the present offer, in sterling, and in view of the fact that the company proposed to utilise the proceeds of sale in the construction of new tonnage. At the same time, so I am given to understand, and in this case not only by this representative of the company, but by the solicitor acting for the company, that a definite statement was given to the company—

Mr. Stanley

Was the solicitor there or did the hon. Gentleman get the information from him?

Mr. Bellenger

Perhaps the right hon. Gentleman will allow me to finish my remarks. I am not sure whether the solicitor was actually there on this occasion, but I am informed that he was present on an occasion, and is prepared to swear on oath that this assurance was given by representatives of the Board of Trade.

It being Eleven of the Clock, the Motion for the Adjournment of the House lapsed, without Question put.

The remaining Orders were read, and postponed.

Question again proposed, "That this House do now adjourn."—[Captain Margesson.]

Mr. Bellenger

Not only the representatives of these two companies but, I am given to understand, the solicitor was present when the assurance was given by the representative of the Board of Trade that if these ships were sold the companies would not be prejudiced if they decided later on to go to the Government and ask for a subsidy, for the construction of new tonnage, when the Government had passed legislation. With regard to this assurance given to the companies on this matter I should like to refer to the answer of the right hon. Gentleman to a question put on 18th April by the hon. and gallant Member for Birkenhead, West (Colonel Sandeman Allen) who asked: Is my right hon. Friend prepared to see that no assistance is given by the Government to this Alpha Company in the building of the new ship? The right hon. Gentleman replied: That is certainly a point that I shall have in mind."—[OFFICIAL REPORT, 18th April, 1939; col. 155, Vol. 346.] In view of that assurance given by the right hon. Gentleman, I submit that he will be acting unfairly if at some future date he carries out what he intimated in that answer, if a request is made to him for a subsidy under the Act which will be passed later. The companies, in effect, protected the Board of Trade and the Government in every step in the second stage of the negotiations. The contract is dated 31st March, and delivery was effected on 12th April. I understand, and this has been published, that an inquiry was made of the Board of Trade representative as to whether the Government anticipated that they might want these ships by nth April. We are told that the answer was that they might want them by nth April. Consequently, a clause was inserted in the contract that it should not become operative before 11th April. Furthermore, a special proviso was inserted in the contract to this effect: This contract is subject to the British Government not withdrawing their consent to the transfer of the Vessels to a foreign flag. On the question as to the word "withdrawing" or "withholding" there is a conflict of evidence between the Board of Trade and the companies' representatives, but the fact which has emerged is that the Board were consulted on that proviso going into that contract, and they did give approval, if not to all of the clause, at any rate to a greater part of it. I would ask the House what more could these companies have done to protect the Government's interests and the legitimate interests of this country? I may inform the House that the Board of Trade could actually have purchased the ships if they had had the power—they have not the power so far—at a lower price than that to which they were sold to the German buyer.

The impression which the right hon. Gentleman has attempted to convey to the House that this company is alone in its unpatriotic action, is somewhat misleading. I have here a list of some other ships which have been sold in recent weeks by other companies, including one company which is well known in shipping circles, the Anchor Line. Within the last few weeks they sold to Greece the "Tuscania," of 17,000 tons gross, a liner, a ship which could have been of use to the Government. The steamship "Isleworth," of 5,000 tons, built in 1928, has been sold also to Greece recently. The steamship "Muneric," of 5,229 tons, has been sold to Japan; she was built in 1919. The steamship "Essex Envoy," of 8,300 tons, built in 1922, has been sold to Germany within the last week or so; and the steamship "Dun Staffnage," of 4,500 tons, built in 1922, has also been sold to Germany. I do not know whether the right hon. Gentleman is aware of these sales, but if he is. I should like to ask whether the Board of Trade were consulted and what advice they gave the owners. The average age of these ships is less than the average age of the three ships which form the subject of my remarks. Their average age is 24½ years.

The reason I have raised this matter to-night is that I think the right hon. Gentleman has given a misleading impression to hon. Members and to the public outside. Questions were asked as to who the directors were and whether one was a naturalised British subject. In his answer the right hon. Gentleman said "Yes," and a further question was put to him whether he did not think it was advisable to withdraw the naturalisation of that individual. I quite agree that there might have been substance in that question if this man had done something disloyal to the country of his adoption, but I maintain that the evidence is that nothing disloyal was done, and that what was done was with the tacit agreement and acquiescence of the Board of Trade. Therefore, I ask the right hon. Gentleman to put a different light on the matter to-night. It is obvious, and the right hon. Gentleman knows it, that these are not isolated circumstances. Other ships are about to be sold. These people are business men. There is only one market for these second-hand ships, and that is abroad; they cannot sell them in this country. They want to sell their old ships and build new ones. Does not the right hon. Gentleman think it would be only fair to the shipping community to tell them exactly the position he wants them to observe? I hope the right hon. Gentleman in his reply will give some indication as to whether he is prepared to tell British shipowners what they are to do in the interests of the country.

11.9 p.m.

Mr. Stanley

I must apologise to the hon. Member for being unable to be present when he put his question last Tuesday. If I had been present I should have said, in answer to the supplementary asking if I disputed the truth of the statement which appeared in the Press, issued by the solicitor to whom I referred, most certainly that I dispute, in certain very important details, the accuracy of the statement issued to the Press and therefore the accuracy of the account which the hon. Member has given to the House drawn from the same sources. He complained that I left the House under the impression that the owners of this vessel had acted against the desire of the Board of Trade in selling these ships to Germany. If I left the House under that impression, it was the impression under which I intended the House to be, because it was, in fact, the case that it was made perfectly plain to Mr. Geraci, the managing director of these companies—who alone was concerned with the Board of Trade—before the sales were effected—as I stated in answer to a question in the House—that in the circumstances, it was the desire of the Board of Trade that these ships should remain on the British register. It seems to me that the best thing I can do is to take the statement issued by the owners to the Press on 20th April, and comment upon it to the House. I do not want to read all of it, and perhaps it will be a little inconvenient for hon. Members to follow, if they have not copies with them, but I think I can summarise the points quite fairly as they arise.

The first point they make is the one made by the hon. Gentleman—only they make it in rather a different form. It is that originally they approached the Board of Trade in January with regard to the selling of these ships, when they had received a firm offer on the basis of part cash and part credit. But the reason given for approaching the Board of Trade is both a strange and an inaccurate one. This is how the statement reads: In view, however, of an announcement which had been made about that time by the Chancellor of the Exchequer regarding the grant of credits abroad, the companies thought it advisable, although this announcement contained no reference to the sale of vessels, to approach the Board of Trade in order to ascertain whether the Board had any objection to the proposed sale. The reply given was that, while the Board of Trade had no power to give or withhold their consent to the sale, they would prefer that the steamers should not be sold on these terms. In consequence, the company immediately terminated their negotiations and informed the Board of Trade accordingly. Hon. Members will realise that the implication of that statement is that the point about which they wanted to ask the Board of Trade was whether it was right for them to sell these ships on that credit basis, in view of the Chancellor's statement. Of course, the hon. Member, who follows financial matters very closely, will remember what was the Chancellor's statement. It dealt with the export of capital. Nobody could pretend for one moment that it had reference to something like the sale of a ship on part-credit terms, especially as at the same time this House was discussing a Bill which I introduced for the express purpose of enabling the Government, through the Export Credits Guarantees Bill, to guarantee something like £40,000,000 more on sales of this kind on credit. As a matter of fact, in the course of a telephone conversation which took place between an officer of the Board and Mr. Geraci, no mention was made of this question of whether it was all right to sell on part-credit terms. The clear statement of my officer that, under the circumstances, it was desired that these ships, if possible, should remain on the British register, was made without any qualification as to the fact that they were being sold partly on credit terms, and was a simple statement of that general proposition. It was accepted as such, during this telephone conversation, by the managing director, who then informed my officer that, in view of the Board's expression of opinion, the sale would not be proceeded with. That is the first point. I will read the next two paragraphs because, although I cannot see that they are very important, they contain two quite obvious inaccuracies, and the fact that there are these two obvious inaccuracies does help one to judge the strength of the other contentions that are put forward: Six weeks later, the same buyers again approached the companies, on this occasion offering a lower price but on a cash basis. As the hon. Gentleman knows, and has stated to the House, that is untrue. The implication is that the whole position had changed—that it was because the price offered in the first case was part credit and not cash that the Board of Trade withheld consent, whereas in March the offer was on a cash basis and therefore that objection disappeared. That is not true. It is correct that a larger portion of the purchase price in the second case was to be in cash and a smaller amount in credit, but it would be untrue to say that it was now on a cash basis, and wrong, therefore, to draw the implication which they try to develop in the first paragraph that now the Board's objection was being withdrawn.

Mr. Bellenger

I said that the cash basis was something like 90 percent. of the purchase price.

Mr. Stanley

I know the hon. Gentleman only wants to elicit the facts, but really the people who supplied him with that information cannot get away with that. In the first paragraph they say, in effect, "We came first with an offer of 50 per cent. cash and 50 per cent. credit." They try to make the argument

that that was turned down because of the credit. They then say, "We came with an offer on a cash basis." What is anybody who reads that to understand but that it was a 100 per cent. cash offer? Whereas there was a considerable proportion, larger than that to which the hon. Gentleman has referred, to be paid in credit. The statement goes on: At this time it was anticipated that the Government would shortly be announcing a scheme for the purchase of old tonnage for laying up as a reserve in case of emergency and for assisting British owners in the building of new tonnage in this country. The companies therefore, upon their own initiative again approached the Board of Trade. I do not understand the point of that. Actually the approach was made on the day after I had made the statement in the House of Commons. There was no question that it was anticipated that the Government would shortly be announcing a scheme; the scheme had been announced, and it was the day after that announcement, and in consequence of it, that Mr. Geraci, unaccompanied by solicitors, came round again to the Board of Trade. He saw there a different official from the one to whom he had telephoned on the previous occasion. Neither in this interview nor in the interview next day did he ever mention the fact that he had communicated with the Board of Trade earlier, though with different people, and had been given the view of the Board of Trade on this subject.

He saw this official because he wanted to know what the position would be with regard to the sale of these ships under the Government's scheme which had just been announced. He was informed, this time by a junior official, as he had been informed before that it was the desire of the Board of Trade that in the circumstances these ships should not be sold off the British Register. The very next day he came again and this time he saw the officer who had seen him before, in company with another officer. It is that interview which is referred to in the terms quoted by the hon. Member to the House. These are the terms: The Board of Trade representative at these interviews informed the managing director in response to a suggestion that the Government should purchase the steamers, that at that time the Government were not in a position themselves to buy these vessels even if they wished to do so. That, of course, is the case. Until the Bill is passed, I have neither power to compel owners to offer nor the power to purchase these ships. They go on to use the words which the hon. Gentleman read out: The owners would, in the view of the Board of Trade representative, be justified in proceeding with the sale. I can only say that both the officers concerned give the most emphatic contradiction to that statement. They say that never during the interview was there any suggestion made that this sale met with the approval of the Government or was there any departure from the statement which had been made to Mr. Geraci in January, the statement which had been made to him the day before and the statement which had been made to him again on this day, 30th March, that the Board of Trade preferred that these ships should not be sold from the British register. As a matter of fact, at a later date, when Mr. Geraci, after the old transaction was concluded, came round with his solicitor, he admitted in the presence of his solicitor, that upon that point that we desired the ships not to be sold from the register, there had been no change in the statement made by the Board of Trade. He then goes on in regard to a definite assurance that the sale in no way prejudiced the company in getting assistance at a later date for the construction of new tonnage. The version given of that by my officers is that on being asked by Mr. Geraci they said that the conditions under which the building subsidy would be given had not yet been determined, and they were therefore not in a position to tell him what the conditions would be, but no doubt each application would be examined on its merits. These officers neither had any authority to give such an assurance nor could they have given it, because in fact the whole question of the conditions to be attached to the grant of this shipbuilding subsidy had not yet been decided by the Department.

They then go on to the point which the hon. Gentleman made as to the inclusion in the contract of certain words which made it plain that the contract was to be subject to the Government's not withdrawing their consent. The origin of that contract was as follows: The Board of Trade representatives were asked when they thought this legislation would be introduced and the Government would therefore be in a position to compel the offer of these ships and to purchase them if they so desired. They were unable, of course, to give a date. Mr. Geraci then raised the question of what would happen to him if this power became operative in the time between the signature of the contract and the delivery of the ships. I notice that in that statement he says: The managing director thereupon suggested that for the protection of the Government a clause should be inserted in the contracts that they should be subject to Government permission to the transfer of flag. The Government did not want protection. After the Bill had been introduced and become law, that overrode the contract, and the ships would have had to be offered to the Government. This was to be inserted, not for the protection of the Government, but at the request of Mr. Geraci, who wanted it inserted for the protection of himself and his company, because the passage of the Bill during the period between the signature of the contract and the delivery of the ships had made impossible the delivery of the ships to the Germans, and he might, therefore, have been liable to indemnity. He asked what would be his position when my officers suggested that he should safeguard his own position, not the position of the Government, which needed no safeguarding, by inserting something in the contract which would meet a position of that kind. This is really a very curious episode.

Some discussion went on between him and the officers which centred round words such as "the contract is subject to the British Government not withholding their consent. My officers pointed out that they were inappropriate in the circumstances as they were then, because they had no power to give or withhold consent. Of course, if the Bill became law before the contract had been completed they would then be in a position to withhold their consent, and to that extent, of course, Mr. Geraci would be safeguarded against an action for breach of contract. The next day Mr. Geraci telephoned to say that he had decided to go on with this sale, and that the words, This contract is subject to the British Government not withholding their consent to the transfer of the vessels to a foreign flag were to be included in the contract. In the newspaper report it is said that this was subsequently approved by the Board of Trade. In this telephone conversation no approval was given, or otherwise. My officers said that the views of the Board of Trade had not changed and the position remained as it was. It was a little disingenuous to find in the statement: It should be stated, however, that there appears to have been a misunderstanding regarding the word 'withdrawing.' because we found, when the contract was signed, instead of it being "This contract is subject to the British Government not withholding their consent," it was "not withdrawing their consent." That is a different thing. You can withhold a consent even if you have not been in a position to give one and have never given one, but when you talk about withdrawing a consent it must mean that at some time or other that consent has been given. The curious thing is that they thought there had been some misunderstanding.

Mr. Bellenger

On your side.

Mr. Stanley

Yes. The admission was made by Mr. Geraci when some days later, after the whole of this had been made public, he came with his solicitor to say that the whole of the conversation proceeded on the basis of the word "withholding," and that subsequently he had altered the word into "withdrawing" because he said he thought it would strengthen his position with the prospective buyer. I submit that the alteration of the word to "withdrawing," with all the implications of the word, when the only word that had been discussed was the word "withholding," is some commentary on the whole of this affair. I am afraid that here there in a conflict of evidence as to what happened. I am satisfied that my officers maintained the position which I stated to the House, that the Board of Trade had made it quite plain that they did not desire these ships to be sold off the register—that they had, of course, no power to stop it, that they were not in a position to buy the ships; but they did maintain the position that they did not desire them to be sold—and I cannot accept the statement to the contrary, nor can I accept the hon. Gentleman's imputation that I gave the House any wrong impression of the facts of this particular case.

Mr. Dalton

Will the right hon. Gentleman deal with the point raised by my hon. Friend, that other younger and more valuable ships had been sold by other shipowners to foreign Powers, including Germany, and therefore these people, whether or not they were blameworthy, were not alike blameworthy?

Mr. Stanley

I am sorry that I have so little time in which to reply. I have wanted to deal with this case, and I have other questions on the subject to-morrow. There have been other cases. The "Tuscania," as I shall explain to-morrow, stands on a different footing. He did refer to two sales of ships to Germany and again I shall refer to them to-morrow. I do not say that these people are any more blameworthy than anyone else. The same advice is given to all—that in view of what is going to happen, in view of the Government legislation, we should prefer that these ships should not be re moved from the British register, and I cannot accept the hon Gentleman's assertion that it would not be right, in considering how this building subsidy is to be distributed, to ignore the fact that there may be some who at some monetary loss to themselves have followed the advice we have given, because others have taken advantage of exceptionally favour able offers from abroad and have secured a lot of money. If we have to discriminate as—

It being Half-past Eleven of the Clock, MR. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.