HC Deb 28 November 1985 vol 87 cc997-1000
1. Mr. Dalyell

asked the Chancellor of the Exchequer if he will set up a public inquiry into the Johnson Matthey banking affair.

The Economic Secretary to the Treasury (Mr. Ian Stewart)

No. The City of London police announced this morning that its investigations had discovered evidence of fraud upon JMB in 1981, and a fraud investigation group has accordingly been set up.

Mr. Dalyell

Given this morning's developments, and given what the Bank of England, the Director of Public Prosecutions and the Attorney-General knew, why did it take Ministers from October 1984 until July 1985 to call in the fraud squad? Why were they so tardy?

Mr. Stewart

It is not for Ministers to call in the fraud squad. I remind the hon. Gentleman of what my right hon. Friend the Chancellor of the Exchequer said in July when he made the announcement that a preliminary police investigation was to take place. He said that there was not, strictly speaking, prima facie evidence of fraud, even at that stage, although deficiencies of documentation created sufficient suspicion.

Sir Anthony Grant

Is my hon. Friend aware that criticism of this wretched banking company is not confined to the Opposition Benches? Is he aware that many of us deeply deplore the great worry caused to many decent people working in the Johnson Matthey company as a whole? To preserve the good name of the City, will he ensure that the matter is pursued with the utmost rigour?

Mr. Stewart

I believe that the police, and the fraud investigation group that is now in being, will pursue the matter with the utmost vigour, but I am glad that my hon. Friend has had the opportunity to say what he has said.

Mr. Penhaligon

Does the Minister believe that the public have the right to express some outrage at the fact that offences in the City rarely appear to result in anyone going to gaol, whereas people are often successfully prosecuted for minor offences in their own community?

Mr. Stewart

I take the hon. Gentleman's point. It is an unfortunate fact that the standard of evidence required to obtain conviction in cases of financial fraud has to be very high. My hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry commented on that fact in a speech yesterday. As the hon. Gentleman will know, Lord Roskill has, with his committee, been charged with considering the conduct of fraud trials.

Mr. Tim Smith

Instead of constantly demanding inquiries into these matters, should we not be concentrating on the need to give fraud investigators much more power to obtain the evidence to bring to book the people concerned? Will the Government ensure that such powers are introduced in the Financial Services Bill?

Mr. Stewart

I note what my hon. Friend said. The Financial Services Bill is not a matter for the Treasury, but I am sure that note will be taken of what my hon. Friend said. Indeed, my hon. Friend the Parliamentary Under-Secretary said yesterday that further powers would be contained in the Financial Services Bills to assist investigators.

Mr. Sedgemore

Does the hon. Gentleman accept that all hon. Members will be pleased with today's announcement, especially if it leads to criminals being brought to book, and allows me to get on next week with investigating the Lloyd's scandal? Should not the Chancellor of the Exchequer come to the Dispatch Box to explain how he said in statements on 20 June and 17 July this year that there was no prima facie evidence of fraud, yet parliamentary answers to me in the past two weeks have shown conclusively that the Attorney-General and the Bank of England could have advised him that those statements were untrue?

Mr. Stewart

I am glad to hear the hon. Gentleman's welcome for today's announcement. The statements in June and July by my right hon. Friend the Chancellor were absolutely true. Had prima facie evidence of fraud been available earlier, no doubt the whole process could have begun at that time.

Mr. Douglas Hogg

Does my hon. Friend accept that calls for a public inquiry have always been inappropriate, because an inquiry would have precluded the institution of criminal proceedings? Will my hon. Friend do what he can to ensure that the City of London fraud squad has sufficient resources to investigate frauds of this kind properly?

Mr. Stewart

The Government fully recognise that adequate resources are needed for the fraud investigation group. The proper way of investigating criminal offences is investigation through the police and not through a public inquiry—a point that was made clear not long ago by my hon. and learned Friend the Solicitor-General.

Mr. Skinner

Should not the Chancellor of the Exchequer answer these questions? Is he evading giving these answers? He knows that full responsibility at the end of the day should fall on him because as far back as 23 October 1984 and 11 November 1984, when I specifically called for the fraud squad to come in, he and the Attorney-General were dodging giving the answers. Is it not a scandal that the parent company, Johnson Matthey plc, has been able today to announce a dividend of £700,000 for a few of its shareholders, but it refused to bear the burden of its errant child, Johnson Matthey Bankers? The parent company allowed the brat, Johnson Matthey Bankers, to make money and to become involved in fraud, yet it got off scot free. Is it not time that the Chancellor resigned?

Mr. Speaker

Order. That was too long.

Mr. Stewart

The Johnson Matthey group had to inject a large sum—£50 million—at the time of the rescue. It would not be in its present condition if it, in turn, had not had a very large injection of cash by its own major shareholder, Charter Consolidated.

Mr. Skinner

That is right: Charter Consolidated.

Mr. Stewart

The hon. Gentleman may not like the answer, but it is necessary to put the record straight. As for the allegations against my right hon. Friend, it behoved anyone at any stage in this story to make available for investigation any available evidence. Random allegations by the hon. Members for Hackney, South and Shoreditch (Mr. Sedgemore) and for Bolsover (Mr. Skinner) do not amount to evidence.

Mr. Cockeram

Does my hon. Friend accept that many of us are concerned about the Johnson Matthey affair, especially about the handling of the matter by the Bank of England? However, it is an abuse of the privilege of the House for hon. Members to make insinuations in the House, whether about colleagues in the House or persons outside, when they have every opportunity to take their evidence to the appropriate authorities.

Mr. Stewart

I hope that Opposition Members will note what my hon. Friend has said about their conduct.

Dr. McDonald

Is the hon. Gentleman aware that the Government cannot be let off the hook as easily as that? Does not today's news underline the need for a full public inquiry, for which I called as far back as July and which the Prime Minister refused five days before the Chancellor's announcement of a fraud investigation? Is the hon. Gentleman aware that what is at stake is not just the issue of fraud, but, more important, the gross incompetence of the Bank of England in its supervision of the Johnson Matthey Bank and gross negligence by that bank? Will the hon. Gentleman ensure that a public inquiry is instituted into those aspects?

Mr. Stewart

Had the hon. Lady been listening earlier, she would have heard me answer her point by saying that the appropriate method for investigating criminal offences in this country is a police investigation, not a public inquiry. The hon. Lady can make any allegations that she cares to make about the behaviour and conduct of the Bank of England, but there is no obligation upon anyone else to do so.

Mr. Dalyell

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.