§ Order for consideration, as amended, read.
§ Question proposed, That the Bill, asamended, be now considered.—[Sir S. McAdden.]
§ 8.0 p.m.
§ Mr. John Ellis (Bristol, North-West)
History to some extent repeats itself. The hon. Member for Southend, East (Sir S. McAdden) has merely moved the Bill formally. When the Bill was taken before the Unopposed Bills Committee, present at that time were the Chairman, the hon. Member for Rye (Mr. Godman Bryant Irvine), the hon. Member for Spelthorne (Sir B. Craddock), the hon. and gallant Member for Wells (Lieut.-Commander Maydon)—all members of the Opposition—my hon. Friend the Member for Kingston-upon-Hull, North (Mr. McNamara) and myself.
On that morning we had had two Bills to consider. I mention the other one in passing—the Durban Navigation and Collieries Bill. Both these company Bills had the same aim, which was to move the registration of these companies from this country to South Africa.
The first Bill was disposed of very quickly. Only one question was asked: Does the Bill solely relate to the interests 130 of this company being solely in South Africa? We received the necessary assurances. I want to make clear that anything that I shall say is in no way critical of the South Africa Government. I cite as evidence the fact that the Durban Navigation and Collieries Bill went through smoothly with that undertaking.
On this Bill the Parliamentary agents said that it was merely formal and sought to put in order an existing situation in which the South African Breweries Company had done all its business for a considerable time in South Africa, that all its administrative offices were there, an so on.
I put the same question as before: Were all the activities of the company solely in play in the Republic of South Africa? I got an assurance that this was so. However, I had availed myself of a report of the company for 1967 from the Library, and the first thing that came to my eye was that in 1952, under an agreement with Rhodesian Breweries Ltd., premises of the South African Breweries Company at Ndola were sold to Rhodesian Breweries Ltd., the purchase price being 12,498,863 5s. shares in the company, which, with 701,137 shares issued for cash at par, resulted in South African Breweries Ltd. acquiring an 82½ per cent. holding in Southern Rhodesian Breweries. This is pertinent to our consideration of the Bill.
The only English director of South African Breweries then in attendance was summoned hastily to give evidence. He made his attitude perfectly clear. It would mislead the House if I said anything else about that. He was a non-executive director, and, therefore, on some of the ramifications of the activities of the company he could not enlighten us much. But is was ascertained that South African Breweries owned a major interest in Southern Rhodesian Breweries. We pursued this line of questioning, and it immediately became apparent that there were many things in the company report that required further investigation.
We adjourned the Committee to seek advice from the Treasury, the Board of Trade and the Commonwealth Office. We felt it important. We had a sanctions policy. The legislation is very complex. I could not be sure of all 131 the ramifications, but it seemed to me that what was in question at that time was the whole question of companies whether registered in this country or whether registered in South Africa and how the sanctions policy affected them. It seemed to me that in this case we were being asked to sanction the removal of a company from this country to South Africa where different laws applied when it was obvious that the company was one with direct interests in Southern Rhodesia, and it may be—it may still be; I maintain it to this day—that if we agreed to that it might be that the future policy of South African breweries might be regarded as giving aid and comfort to the illegal régime in Southern Rhodesia.
I do not wish to say whether we should have a sanctions policy or not—
§ Mr. Deputy Speaker (Mr. Sydney Irving)
Order. The hon. Gentleman is getting very wide of the consideration of the Bill. The discussion must be confined, as on a Third Reading, to matters in the Bill.
§ Mr. Ellis
I bow at once to your guidance, Mr. Deputy Speaker, but it seems to me that this is the nub of the argument. The House is being asked to give its approval to the transfer of a company to South Africa where it will come under different laws and it is apparent that the company has substantial holdings in Southern Rhodesia. We must probe what these holdings are and what the state of the sanctions policy is in order to ascertain that any action that the House may take tonight will not be in contravention of our existing policy and law. Subject to your guidance, Mr. Deputy Speaker, I suggest that we must look at what the sanctions policy is throughout in order to ensure that what we are asked to do is not against that policy.
When we received the reports from the three Ministries—my hon. Friend the Member for Kingston upon Hull, North will be seeking to catch your eye, Mr. Deputy Speaker, and I believe that he intends to go into the ramifications of the reports—we considered further what South African Breweries was doing and what its business was. At this stage the 132 President of the Company, Dr. Kronje, happened to be in London and was able to appear before us.
I make clear at this point for guidance one of the matters contained in the statement circulated by the agents of the South African Breweries Bill. It says:The Bill has been approved by the Committee on Unopposed Bills in your honourable House.We sought to make plain that we should raise this and challenge it tonight, because we felt it was a matter that ought to be put before the House.
The statement also says that Rhodesian Breweries Ltd.operates through its own Board of Directors and management and enjoys a wide degree of autonomy ".One can make of that statement what one will, but I do not think there is any doubt, having questioned the people concerned and read that statement, that Rhodesian Breweries is under the control of South African Breweries. Indeed, the Report of the company for 1967, the Directors' Report and the Chairman's Review make clear that that is so. The Chairman's review issued on 21st August, 1967, states:The Board is of the opinion that the profitability of the group will improve during the coming year.It gives a list of a whole number of subsidiary companies, including Southern Rhodesian Breweries.
At that point we are referred in the Report of the Company to the Chairman's review of the non-South African activities of the company. It states:Profit increase was mainly accounted for by higher dividends from Zambian co., Northern Breweries Ltd.That is another subsidiary of the company. It seems that it has extensive holdings and makes a great deal of profit in Zambia. Many people would find that interesting.There was a slight decline in brewing results and a falling off in property and dividend income of Rhodesian co., Rhodesian Breweries Ltd. Rhodesian Breweries Ltd. during the year entered Bantu Beer and processed food industry by investing R1 million in Heinrich's Chibuku Breweries Ltd. In Zambia, even by over-straining production facilities, Northern Breweries Ltd., was not able to meet the demand for beer in full.It seems that Chibuku Breweries is an investment made in Rhodesia and that 133 part of its enterprise is a process food division. We asked questions of the president on this aspect of the company's business, and it was said quite frankly that all the money which it was expected would be raised for this company would be raised in Rhodesia but that know-how would be made available to the Rhodesian company. Does this fall within the sanctions policy? Is this giving aid to an illegal régime?
My hon. Friend and I sought to obtain what information we could. The only thing which we were able to get which gave us, any insight into the ramifications of this company was the company report for 1967. When we questioned the directors who appeared before us, we were told first that this company had all its bus ness operations in South Africa. Then we discovered that there were subsidiaries operating. When we asked what kind of activities were being pursued, we were not given any explanation about the kind of business which this company did. We had to pursue the matter with the knowledge which we were able to gather from this one report and to investigate.
There are many more items to which I could point in this report, and I intend to refer to a few. We are told:Acquisition of entire issued share capital of Stellenbosch Farmers Wine Trust Ltd. by Monis Wineries Ltd. was completed during financial year. Company still retains its 67 per cent. of equity in Stellenbosch Wine Trust Ltd. as financial climate has not been considered suitable for disposal of sufficient shares in that company to reduce holding to 34 per cent. in compliance with conditons imposed by Minister of Justice when he gave his approval to merger. Twenty-nine new sub. companies were acquired during year, of which major subsidiary was Stellenbosch Wine Trust Ltd. (formerly Monis Wineries Ltd.). One minor property-owning company was disposed of, and six minor wine and spirit subsidiaries in Rhodesia ceased to be subsidiary companies as a result of reduction of Group's indirect percentage of equity capital in Stellenbosch Farmers Wine Trust Ltd.".I do not know where the six subsidiary companies have gone to. One knows that the report is only a shortened version of some of the activities of what we can regard as, and what has been proved to be, a holding company, which is a vast enterprise. We are told further:During year Barsab Investment Trust (Proprietary) Ltd. was formed in which Thomas Barlow and Sons Ltd. and company each hold a 50 per cent. interest. It is intention that Barsab Investment Trust (Pty.) 134 Ltd. shall be used as a vehicle for investment into activities not directly related to existing activities of either company or Thos. Barlow and Sons Ltd.Do we know that this company is an investment company? Will it invest in Rhodesia? Investment has taken place before and I should think it continues to extract profits from that company.
The Board of Trade or the Commonwealth Office may ask what the position is concerning the subsidiaries of this company in Rhodesia. They are frozen. Would it not be an embarrassment to the Rhodesia régime if the company transferred to South Africa? All these investments could then flow out and be used by the company in South Africa or elsewhere. One could argue in that way. But it would also be true to say that the company would be able to invest as much as it liked in Rhodesia, Zambia or anywhere else.
We are not satisfied in the Committee about the ramifications of the trade in which this company is engaged. We have been asked to agree to the transfer of this firm from this country. We are told that there are reasons for that. It is said that it labours under the slur from its competitors that it is classed as a foreign company. That has been true for a number of years. We should consider the position concerning the sanctions policy of this country.
I see that the Commonwealth Office and the Board of Trade are represented in the House tonight. I hope that those representatives will seek to intervene in the debate, because important questions concerning both Departments arise. I hope that we shall have a full account from the Board of Trade about whether it has been able to do what we have not been able to do, namely, to discover the ramifications of this holding company and exactly where its trading interests lie. It is a property company. It is concerned with footwear, paint manufacturing, and so on; the list seems to be endless. It has subsidiaries, not only in South Africa, but well outside South Africa.
I hope that I have demonstrated that there are matters about which the House should be satisfied. I think that we were right to bring this subject to the Floor of the House because the Bill raises grave problems with which people are concerned about how business operates, how 135 companies registered in this country and companies registered in South Africa which may have British nationals within them, as with this company, are affected by the sanctions policy. What policy is the Commonwealth Office pursuing? It seems to me that by agreeing to the Bill the House would allow this company to get rid of any control or obligations which it may have and indulge in unfettered trade with Rhodesia, as it has done in the past. I have demonstrated that it had control of investments through the Chibuku Breweries.
My hon. Friend the Member for Kingston upon Hull, North, should he catch you eye, Mr. Deputy Speaker, will relate his experiences. I believe that there is cause for alarm and that the House would be wrong in agreeing to the Third Reading of the Bill.
§ 8.20 p.m.
§ Mr. Kevin McNamara (Kingston upon Hull, North)
I am fortunate indeed to be able to take part in the debate at this early stage. My hon. Friend the Member for Bristol, North-West (Mr. Ellis) rehearsed many of the problems and difficulties with which we have been confronted in trying to trace the history of this company. All the help that we were able to get came from the copy in the Library of Moodies.
I want to deal with the effect of the first meeting of the Committee in calling upon the various Departments of State to submit memoranda on the whole issue. We have been very disturbed by the fact that in a matter of this kind there did not appear to be any memoranda from the various Departments. One would have thought that in view of the existing political situation with regard to Southern Rhodesia the Departments concerned would have done a little homework.
The Bill went through three Government Departments. Presumably their legal advisers saw it, and particularly those in the Board of Trade, because it was this Department which sponsored a Companies Bill—which my hon. Friends the Members for Bristol, North-west, Harrow, East (Mr. Roebuck) and myself were fortunate enough to be able to discuss in Committee—which amended the 1948 Companies Act. The Bill now before 136 us was considered in Committee, yet, having been through the legal department of the Board of Trade, it contained some of the provisions of the 1948 Act which had been repealed by the 1967 Act. That immediately made us suspicious about the amount of attention which had been given to it.
We then received three memoranda from the Government Departments concerned. Paragraph 2 of the Treasury's Memorandum said:If the effect of this Bill was to allow control of a Rhodesian company to pass from the United Kingdom to South Africa it would be contrary to the sanctions policy, but this is clearly not the case.Our comment on that is that formal and legal control of a British registered company will go to South Africa.
We then received the longest and most amazing memorandum of all, that from the Board of Trade. It was a surprising document, for a variety of reasons, First, it argued ade facto situation. Then it argued ade jure situation. I submit that the argument was wrong on both counts. The Department then argued that it did not matter what happened, or whether this House passed the Bill or not because, if sanctions breaking had been going on, it would go on anyway, and therefore it did not really matter what the House decided one way or the other. That was perhaps the nastiest thing about the memorandum.
Paragraph 2 says:As the Bill makes clear, the company is administered and operates from South Africa … the major portion of its issued capital is held by shareholders resident in South Africa, and no part of its administration or activities is carried on in the United Kingdom.That is true, but many of the company's shareholders are in the United Kingdom. Their shares are quoted on the Stock Exchange in this country, and people would be free to invest in them. If this company went to South Africa and it was used as a vehicle to break sanctions, people in this country would benefit from the breaking of sanctions. My hon. Friend has made it clear that this could have the result of unfreezing moneys which the illegal régime controls at the moment, but equally there could be a free flow of money into Southern Rhodesia via South Africa.
137 In paragraph 3 of its memorandum the Board of Trade argues:The legal position of the Rhodesian subsidiary company under the Southern Rhodesia (United Nations Sanctions) Order 1968, which applies to Rhodesian companies, will remain unchanged by the Bill.That is missing the point. The issue here is not what is the legal position of the subsidiary as a Rhodesian company, but the legal position of the parent company. South African Breweries, now registered in this country. I am sure that whoever was responsible for arguing first the practical and then thede jure will get a rocket.
The Board of Trade goes on to say in paragraph 3:It might at first sight appear that the transfer of the parent company to South African registration might facilitate collaboration between the parent company and its Rhodesian subsidiary, for example by enabling the former to give greater financial help to the latter.At first sight that might well be the case! But the memorandum goes on to say:Whether the Bill will have this effect depends on the extent to which the parent company has in the past been inhibited by its liability under United Kingdom law. In view of the facts set out in the Preamble to the Bill, the Board does not consider that the parent company is likely to have been so inhibited or that any Government action in the United Kingdom purporting to control the company would have had or could in the future have, any practical effect on its actions in relation to Rhodesia.On the basis of that, because we cannot do anything if they are operating in this way in South Africa, it seems that they should be granted that extra facility of being able to do legally in South Africa what they could not do in this country because it would be illegal. Surely that is not the kind of principle on which legislation can be based? Has something slipped through the machine which means that my hon Friends on the Front Bench are now saddled with something which, in retrospect, they feel they cannot tolerate?
In Committee I asked a number of questions about the organisation of the company. My hon. Friend talked about the various subsidiaries. I raised a matter in which I have been interested since reading Clive Jenkins on the Insiders, the question of interlocking directorships. I was pleased to see in the memorandum submitted by the agents for 138 the promoters of the Bill that reference is made to the fact that there are five Rhodesian and five South African directors on the board of the subsidiary company. According to the answers which I received from the chairman of the company, these five South African directors are executives of the South African company—not necessarily directors or large shareholders, but executives.
I put the question to him, because he spoke of the autonomy of the company:What would happen if South Rhodesian Breweries did something that you did not like? Would the great autonomy then operate?I must paraphrase his reply because in this Committee we do not keep a record of all the proceedings. He said:Well, we would be able to affect the issue. We would be able to see that the subsidiary did not get out of line.That was a reasonable sort of answer, and one which I had suspected that he would make. He was clearly indicating that the Rhodesian subsidiary, for all the talk of its having a wide degree of autonomy, is nevertheless as firmly under the control of the Board in South Africa as I.B.M. in the United Kingdom, for instance, is under the control of I.B.M. America.
I therefore put one final question to the chairman of the company, and I hope that my hon. Friends will pay careful attention to it. I said:Will you give an undertaking that no further investment will take place in Rhodesia until the illegal régime is replaced by a legitimate Government recognised by Her Majesty's Government?I wrote down the words that I intended to use because I wanted to have a record of what I had asked. The chairman of the company could not give me that undertaking. If he could not give me that undertaking I do not feel that we could pass the Bill even if someone now came forward and said that such an undertaking would be given. I would feel that an undertaking given here tonight in those terms could be changed quite easily if the company went back.
The chairman said that he could not give that undertaking without reference to his board. The important point is that if that undertaking could not be given at that time without reference to the board what was the board doing in asking us 139 to facilitate the passage of a Bill which would enable it to do so?
§ Mr. Neil Marten (Banbury)
I have no interest in this company, but the chairman of the company cannot give an undertaking such as that by himself.
§ Mr. McNamara
I agree. But the point is that one does not bring a highly contentious issue like that before a Committee of the House without being prepared to answer a question of that nature.
§ Mr. Alexander W. Lyon (York)
Does not my hon. Friend agree that the offence was even greater, in the sense that the Committee had raised this very point at the earlier meeting and the chairman had come along to the later meeting to deal with that point. If he could not have obtained instructions from his board in the interim the matter could have been deferred for a later occasion.
§ Mr. McNamara
My hon. Friend has made my point. I shall conclude shortly so that we can hear the wisdom of my hon. Friend the Member for York (Mr. Alexander W. Lyon) and many of my other hon. Friends. If I can persuade enough of my hon. Friends to speak we may have a galaxy of speakers.
I conclude with a statement made by the Commonwealth Secretary in respect of the Southern Rhodesia (United Nations Sanctions) Order in this House last week. He said:The right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home), who opened the debate for the Opposition, asked about the position of British firms and their directors in Rhodesia. Perhaps I might put the matter on record since it is, I know, of great concern to many business undertakings. The Rhodesian subsidiaries of British registered companies are within the scope of the Southern Rhodesia (United Nations Sanctions) (No. 2) Order that we are discussing.—[OFFICIAL REPORT, 15th July, 1968; Vol. 768, c. 1204.]It is my contention and the contention of my hon. Friends that we are speaking here of legal persons—that the South African Brewery Company is a legal person, and that we are in fact, by transferring this company—if we do it— to South Africa, taking out of the ambit of the authority of this House, however momentarily, the control of an important trading concern in Southern Rhodesia. Therefore, I urge hon. Members on both sides of the House to reject the Bill.
§ 8.34 p.m.
§ Mr. Alexander W. Lyon (York)
The House owes a great deal of gratitude to my hon. Friends who, by their perspicacity and assiduous researches, have been able to show the real nature of this application. I am glad that they have forced a discussion of the matter on the Floor of the House because, within the permitted rules of order, it allows us to probe the attitude of the Board of Trade to this example of sanctions breaking.
This company was incorporated in this country in 1895. Throughout its history, it has engaged in operations in South Africa and the southern part of Africa. Most of its operations are in, and most of its finance and workers come from, southern Africa. In 1951, management and direction of the company was almost completely controlled from South Africa, yet no move, between then and 1968, was made to transfer its registered office to South Africa. It is true that this is because they were not allowed by South African legislation to do so until 1967, but it is clear from the Memorandum of the supporters of the Bill that they were part of the pressure on the South African Government to introduce enabling legislation to allow this move.
It is curious to notice that the move in South Africa was made in 1967, a year after sanctions had begun. Why, then, are we troubled with this Bill? Why are we being asked to allow this company to move its registered office to South Africa? The company say, "It is because, in South Africa, we are regarded as a foreign company, and our business interests suffer as a result." But this is a company with a capital of £15 million. This is a substantial organisation in southern Africa and it is said that its trade suffers because it is called a foreign company.
Or is the real reason that this company recognises that, in fact and in law, whatever the Board of Trade thinks about it, it has been in breach of the original sanctions and is certainly in breach of the present sanctions Order? We cannot allow the argument that, "formally", this may be an English company but its operations are in South Africa. The legal persona is the British company because the registered offices are here. It is in breach of the sanctions Order, 141 not only in law but in fact. Why no prosecution has been made of the company I should like to know from my hon. Friend.
It is not much good the Commonwealth Office saying—I applaud the Government for having said this—"Now we will be tough with Rhodesia and no effort will be spared in our sanctions policy," if a soft underbelly at the Board of Trade says, "Oh, well, if our interference with sanctions busting might upset South Africa, we will not bother, because, although formally the company's offices are in London, actually it is in South Africa." What greater reason for interfering? If it is true—the Government have throughout maintained this policy—that we cannot afford to apply sanctions to South Africa and we therefore accept a big loophole in the policy, what greater reason could there be for closing this little loophole which we can seize upon?
But no. Far from prosecuting this company, the Government will help it to save a little money. The company could—if we pass the Bill—wind up its operations in this country and start a new company in South Africa, taking over all the assets of the existing company—at some cost, but not, I would have thought, a great cost, to the shareholders. The Board of Trade is so accommodating. It does not want to upset the shareholders in South Agrica by costing them a little of the profits. No, it will allow a Private Bill to go through the Houes of Commons to accommodate this company which, in fact and in law, is breaking sanctions.
This just is not good enough. With the greatest respect to my hon. Friend the Under-Secretary, I hope that she will not be as tardy in her replies as, apparently were the witnesses from the company and certainly as the Board of Trade Memorandum was. Of all the inept language, that Memorandum is a classic. It should go down in the annals of Whitehall as one of the most singlarly inappropriate explanations of Government action ever put forward by a Government Department. It is intolerable that we should be conducting an open economic war with Rhodesia and then find that the Board of Trade is making this kind of accommodation for a company which 142 is engaged in this activity. I intend to vote against the Bill.
Before I sit down—and I believe that this is in order—I want to ask why I am instructed under a two-line Whip to be here to support the Bill. This is a Private Bill, apparently nothing to do with the Government. Why has the Patronage Secretary—
§ Mr. Deputy Speaker
Order. The hon. Member is now out of order and I hope that he will come back into order. He may not discuss a three-line Whip or any other Whip on a private Bill.
§ Mr. Lyons
I am obliged to you, Mr. Deputy-Speaker, for bringing me back into order. Having made the point, I can move to the next point.
The Government's conduct on this Bill is singularly unfortunate. I hope that it was no more than negligence that they did not apprehend the points which were later apprehended by my hon. Friend. I hope that it was negligence and that whoever was negligent will subsequently receive his due reward. If it were more than negligence, if in fact this were known by the Board of Trade, I have very serious doubts about the effectiveness of a sanctions policy applied by that Department.
§ 8.42 p.m.
The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dun-woody)
Both my colleague at the Commonwealth Office and I have listened to several points raised specifically in connection with our Departmental responsibilities. It is my intention to intervene briefly on the purely legal arguments which the Board of Trade has deployed on the Bill and it is the intention of my hon. Friend from the Commonwealth Office to answer points raised in general on the question of the sanctions policy.
The South African Breweries Bill provides for the transfer to South Africa of the registered offices of the South African Breweries, Ltd. and its wholly owned subsidiary, Ohlsson's Cape Breweries, Limited. Both companies are registered in Great Britain and are owned as to 75 per cent. of their issued capital by residents of South Africa. South African Breweries, Ltd. has 16 directors of whom 13 are 143 South African. There is one non-executive director who is a resident of the United Kingdom.
There is no provision in the Companies Act for the transfer of a company's place of registration overseas. The normal procedure in such cases would be to wind up the company in Great Britain and to raise another company in the overseas country concerned. This procedure is complex and expensive and gives rise to legal difficulties, for instance with existing contracts, which would have to be redrawn. Several hon. Members have made the point that it is only recently that the company has endeavoured to move its registered offices, but it is only recently that South Africa has adopted legislation which would permit the transfer to that country of a company which is able under the legislation of the country of its existing registration, to transfer from that country without winding up.
The South African Breweries, Ltd. desire to provide for such transfer from Great Britain. As far as the Board of Trade are aware, all the requirements of the Companies Acts necessary to obtain members' approval of the transfer have been complied with. With regard to control of the activities of the Rhodesian subsidiary company, this will effectively remain with the South African directors and the majority shareholders whether the company is registered in Great Britain, is wound up and is re-registered in South Africa or is transferred to South Africa under the provisions of the Bill. The Secretary of the South African Breweries, Ltd. has told the Board of Trade that if the Bill is unsuccessful the company, despite any inconvenience and expense, will be wound up and re-registered in South Africa.
Some of the points raised in the debate will be dealt with in detail by my hon. Friend. My hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) said that memoranda should have been provided by the Board of Trade, the Commonwealth Office and the Treasury for the Committee stage of the Bill.
As a Private Bill, it was for the promoters to secure that it was passed through Parliament and there was no obligation on the Department to provide memoranda if the Department did not 144 consider that it had an interest in promoting or opposing the Measure. This was the situation when the Bill went into Committee.
§ Mr. Ben Whitaker (Hampstead)
Would my hon. Friend agree equally that, as a Private Bill, the Government should not enforce the Whip and that there should be an absolutely free vote?
I gladly concur with the opinion of my hon. Friend. This is a Private Bill and any vote that there might be will be a free one.
The memoranda that were asked for were submitted by the relevant Departments. My hon. Friend the Member for Kingston upon Hull, North then went into the question of the legal error in the Bill. I believe that he was referring to Clauses 4(2) and 5(2) as first presented. These Clauses related to fees payable for the registration of certain documents on the transfer of the company under the Companies Acts. Under the Companies Act, 1948, a fee of 5s. was payable for the registration of documents, but this was abolished in 1967. These Clauses were unnecessary and, accordingly, were deleted.
My hon. Friend then said that he was concerned at the fact that we had used ade facto argument in Committee in the first half and ade jure argument in the second. The Board of Trade memorandum was concerned to say three things: first, that the formal transfer of the company to South Africa did not offend against the Government's policy on Rhodesia; secondly, that the transfer made no difference to the actions of the company—these points will be gone into in greater detail when my hon. Friend replies to the debate—and, thirdly, refusing to allow the company to be transferred would have no effect since it would wind up in the United Kingdom and start up again in South Africa. These considerations are partly concerned with the legal position and partly concerned with the company's removal. They are all relevant to the issue.
We have listened with great attention to the arguments that have been adduced by hon. Members. I hope that I have dealt with the legal interpretations that the Board of Trade had in mind and I assure the House that my hon. Friend will 145 further elucidate the matter in relation to the Government's policy on sanctions.
§ Mr. Edwin Brooks (Bebington)
Would my hon. Friend qualify a point on which many of us feel anxiety? Arising out of the serious charge made by my hon. Friend the Member for York (Mr. Alexander W. Lyon), in which I understood him to be accusing this company of already having infringed Britain's sanctions policy, has the Board of Trade considered this possibility? If not, why not, and if it has, what conclusion has been reached?
This matter has been considered, but there is no evidence that the Rhodesian subsidiary of this company, when we are talking about South African Breweries itself, infringed the laws of this country.
§ Mr. Alexander W. Lyon
If it is true, as the Chairman of the company accepted in cross-examination, that South African Breweries provided spirits to Rhodesian Breweries, is not that a breach of sanction?
I would be prepared to consider this point, but I was not aware that this evidence had been given by the Chairman of the company. My understanding was that the assets of the Rhodesian company and the investments that it makes itself are financed privately, that moneys are raised in Rhodesia and that there is not any financial assistance from South African Breweries.
§ Mr. Ellis
My hon. Friend may be unaware that when asked this question about spirits in connection with the Rhodesian company, the director made it clear that the company was free to buy from wherever it wanted, whether or not the source was the parent company. Perhaps it did buy spirits from the parent company in South Africa; and I think that that is likely.
I confess that I was not aware of this. I hope that hon. Members will give me an opportunity to investigate the matter because it may appear that, in this instance, the company might have been in breach of some of the later aspects of the legal sanctions policy; but I would prefer my hon. Friend to deal with the matter in greater detail when he replies to the debate and comments on the subject of sanctions.
§ 8.50 p.m.
§ The Under-Secretary of State for Commonwealth Affairs (Mr. William Whitlock)
Like my hon. Friend the Parliamentary Secretary to the Board of Trade, I want now to reply very briefly to the debate. I cannot help feeling that much of the heat that has been engendered has. been engendered because hon. Members have felt that this was a Government Bill—[HON. MEMBERS: "No."] It is, of course, a Private Bill, for which the Government claim no responsibility at all. But I congratulate my hon. Friends the Members for Kingston upon Hull, North (Mr. McNamara) and Bristol, North-West (Mr. Ellis) on their diligence in seeking to pounce upon anything which they feel might lead in the end to sanctions breaking. However, I think that they have over-estimated our power over South African Breweries, because it is a company that is registered here. Its presence here is formal, and our power over it is quite formal.
In general, our policy is to prevent Rhodesian companies from passing out of British control, but experience has shown that the fact that the parent company is registered in London, or is even genuinely owned here, does not necessarily mean that the actions of its Rhodesian subsidiaries can be influenced. In the present instance, effective control has rested in South Africa since 1951. All the company's operations take place there, and the major portion of the capital is held there. The company has no assets in this country at all, and if the Bill were rejected the company would merely take steps to wind up its affairs here and recommence operations in South Africa, although that would cause it certain inconveniences.
In other words, this Bill is virtually an adoption provision: instead of the company being a child of an English Statute it would, if the Bill were passed, become the child of a South African Statute. Consequently, it would not be subject to our jurisdiction—[Interruption.] Perhaps hon. Members will allow me to make my point. Consequently, the company would no longer be subject to our jurisdiction in respect of acts committed outside the territorial limits of our jurisdiction. In so far as the company has no assets in the United Kingdom, our present jurisdiction is limited to the power 147 to wind it up if it were not to pay a fine imposed for some hypothetical breach of sanctions regulations—
§ Mr. Whitaker
Is my hon. Friend saying that these people are guilty of an offence but that there are no assets to sequestrate to enforce the fine?
§ Mr. Whitlock
Not at all. It is my hon. Friends who are saying that there might be a breach of sanctions regulations. All I am saying is that under the present regulations our jurisdiction is limited to the power to wind up a company in the event of some hypothetical breach of the sanctions regulations. That is all I am saying.
§ Mr. Whitlock
We have no evidence at all of the breaking of previous sanctions regulations. The company has not traded in the prohibited sectors so far and we have no evidence of the company investing in Rhodesia. As to any financial aspect of the company's emigration to South Africa, the Treasury consented to control being transferred to South Africa in 1951, since when it has for fiscal purposes been a resident of South Africa. The only practical effect of rejecting this Bill would be to prevent the company taking a particular course in the knowledge that other courses are open to it for the same ends. I hope that my hon. Friends will understand that in full.
It is suggested that one result of the transfer of South African Breweries registration from London to South Africa would be to enable Rhodesia Breweries to transfer its frozen assets to South Africa. That is likely to be one result of the transfer of registration. My hon. Friends might like to consider the view that it is better for those funds to be made available to individual shareholders, be they British shareholders or South African shareholders, than to allow those funds to be frozen in Rhodesia where they are at present at the disposal of the trustee of blocked funds who could dispose of them in the manner the 148 illegal régime will decide to the best advantage of that regime.
§ Mr. McNamara
I realise that my hon. Friend has a very difficult part to play here. Is he aware that in the Committee the Chairman of the company said that the actual part of the profits of the Rhodesian concern were infinitesimal and the company would not be bothered about them? But is he also aware that if in fact they are unfrozen there is a vast area in which funds could pour into Southern Rhodesia and through the actual mechanics of the market they could be invested in South Africa? Once the money had arrived in South Africa we would have no control over it.
§ Mr. Whitlock
That may be true but the position is very much along those lines now. The whole case is that if this House does not allow this Bill to pass through, the South African Breweries will take steps to ensure that what the Bill seeks to achieve will in any case be achieved by another method.
§ 8.57 p.m.
§ Mr. Roy Roebuck (Harrow, East)
I should like to join in the tribute paid by my hon. Friend the Member for York (Mr. Alexander W. Lyon) to the diligence and assiduity with which my hon. Friend the Member for Bristol, North-West (Mr. Ellis) and my hon. Friend the Member for Kingston-upon-Thames, North—[Laughter.] I must explain that I have not been indulging in the products of South African Breweries. I have been carried away by the eloquence of my hon. Friend the Member for Bristol, North-West, and my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara). In paying tribute to my hon. Friends I draw a sharp distinction between the work they have done on this Bill and the cursory examination to which it has been subjected by the Board of Trade.
Had it not been for the work of my two hon. Friends, this Bill would probably have slipped through the House on the nod, in spite of what we have heard of this disgraceful state of affairs. I shall not vote for the Bill, for two reasons. The first is because it is clear from what has been said by my two hon. Friends that the promoters have been less than frank with the House. It 149 may be that their attitude has not amounted to a contempt of this House but to a contumacious attitude to the inquiries which my hon. Friends sought to make on this issue. I draw attention to the fact that the Chairman arrived at one of the Sittings of the Committee and was not briefed on the very important question of what would happen if the Southern Rhodesia elements of this company decided to take certain action not in accord with the wishes of this House.
The second reason is that I am not satisfied from what my two hon. Friends on the Front Bench have said that we shall not in some way be assisting in breaking sanctions by passing this Bill. It is all very well for them to say that the passage of the Bill will have little effect because there are other avenues in which the promoters can seek their desired end, but this House should not in any way give the semblance of approval, or even assist the passage of a Bill which would give assistance, to the illegal régime in Rhodesia.
§ Dr. John Dunwoody (Falmouth and Camborne)
Would not my hon. Friend agree that a most serious effect of passing the Bill would be to create a precedent which this House subsequently would find very difficult to resist?
§ Mr. Roebuck
I entirely agree with what my hon. Friend has said. I make this criticism, in conclusion, of my two hon. Friends on the Front Bench. They have been at great pains to tell us that this is not a Government Bill, but we have had no firm expression from them of the Government's attitude towards the Bill. We do not know whether they are neutral, or whether, purely for the sake of administrative or bureaucratic convenience, they are prepared to see the Bill go through. I urge all my hon. Friends to vote against the Measure, even if there are other avenues available to the company, as an expression of disapproval of the illegal régime in Rhodesia and our determination to do nothing whatsoever to give it comfort.
§ Question put and negatived.