HC Deb 09 February 1976 vol 905 cc9-11
6. Mr. Skinner

asked the Secretary of State for Trade whether his Department's investigations into London and County Securities Limited is due to be published; and if he will make a statement.

Mr. Shore

The report was published on 29th January 1976.

Mr. Skinner

Does my right hon. Friend agree that the report was buried by another Press romp which came out on the same day? Is he prepared to comment on the statement in the report that leading politicians should not become involved in these matters? If, in fact, politicians should not become involved in these institutions, is it not right that nobody should become involved in the setting up of these secondary banks? Will my right hon. Friend introduce legislation to outlaw the practice?

Mr. Shore

My hon. Friend has drawn attention to the findings of the inspectors, and it is true that they spoke of it as a cautionary tale for politicians. As for the more general question of part-time directors, I am certain that what the inspectors said has a much wider relevance. The whole report——in common, incidentally, with other recent reports from the Department of Trade—indicates clearly the need for much stronger regulating powers not only in the company sector generally but specifically in relation to secondary banks.

Mr. Hordern

Does the right hon. Gentleman accept that one of the worst features of the affair—apart from the fact that the shareholders lost all their money, which has been seldom pointed out—is the fact that the auditors passed the accounts of this organisation? Will the right hon. Gentleman hold consultations with the accountancy profession to see that proper accounting standards, common throughout the profession, are soon adopted?

Mr. Shore

The report contains several references to the role of the auditors at different stages. There were several different accounting and auditing exercises, as the hon. Gentleman will recall. On some of these the report had critical remarks to make. As I understand it, it is the practice of the professional accountancy bodies to set up a sub-committee whenever auditors are criticised by the Department and in a report. They are doing so in this case.

Beyond that, I shall certainly consider much more carefully the whole role of auditors in this matter.

Mr. Richard Wainwright

Is the right hon. Gentleman aware that, according to the inspectors' finding, the auditors were repeatedly deceived by Mr. Caplan, although the same distinguished firm remained auditors to the company up to the time of the crash?

Mr. Shore

I am aware of that. As I say, it is important to distinguish between two different stages at which the auditors were involved. In reference to some of the activities the auditors are criticised to some extent by the inspectors. In other activities in which they were engaged they are not criticised. However, I take what the hon. Gentleman said. As the report indicates, the auditors were dealing with an extraordinary degree of deception and deviousness.