HC Deb 13 July 1988 vol 137 cc355-8
15. Mr. Day

To ask the Chancellor of the Duchy of Lancaster if he will undertake to compensate investors in Barlow Clowes at an early date in respect of any responsibility borne by his Department which may be discovered in the course of the current investigation.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude)

It would be wrong for me to prejudge the outcome of the consideration my right hon. and noble Friend and I shall give to the Barlow Clowes case, including the report of Sir Godfray Le Quesne's inquiry into the facts.

Mr. Day

Is my hon. Friend aware that in 1983, following the intervention of the parliamentary ombudsman in the case of the collapse of Langford Scott—a holder of a Department of Trade and Industry licence, which was a key element in the ombudsman's recommendations that the DTI pay compensation—his Department did, indeed, pay compensation? Will he take account of that precedent in dealing with the case of Barlow Clowes?

Mr. Maude

I am aware of the case to which my hon. Friend referred, but he will understand as well as anyone that no two cases are the same. I do not think that I can add to what I have already said. We shall have to await the outcome of the report and consider what to do then.

Mr. Alfred Morris

Has the Minister read the ombudsman's comments to me on this major scandal? Is he still satisfied that a Department of Trade and Industry inquiry is enough, when at least one other Department may be involved in the scandal? More important still, can he tell me what immediate help he can offer my constituent, Leslie M ullard, who, in his mid-70s, has lost his life savings?

Mr. Maude

The Parliamentary Commissioner has felt unable to comment on the terms of his correspondence with the right hon. Gentleman, as it was written to the right hon. Gentleman in confidence. I was surprised to read reports in today's newspapers that the Parliamentary Commissioner had felt able to conclude that there was an apparent case of maladministration for my Department to answer. I gather that he has since clarified his views in a statement issued earlier today. He stressed that any decision that an investigation is warranted in principle in no way indicates a view as to the merits of the case. Indeed, it could not possibly do so. The Parliamentary Commissioner had not been in contact with my Department at all and the statements by Ministers on which he is reported to have based his view carried no implication of maladministration. It is entirely a matter for the Parliamentary Commissioner whether he investigates individual cases. He is not in any way inhibited from undertaking his own investigation by the independent inquiry that is being undertaken by Sir Godfray Le Quesne.

Mr. Redwood

Is my hon. Friend aware that several leading financial institutions wrote letters to many people encouraging them to invest in Barlow Clowes? Is he further aware that one of my constituents received a letter from the head of marketing of Age Concern, which gave him considerable comfort in becoming an investor in that organisation? Will my hon. Friend give a pledge that the DTI inquiry will look into the activities of intermediaries, financial institutions and charities, such as Age Concern, in this saga?

Mr. Maude

The activities of intermediaries is obviously an important matter in the investigation and it is certainly an area which has been carefully examined. My hon. Friend will be aware that FIMBRA has already taken steps in respect of two intermediaries which applied for membership of it.

Mr. Campbell-Savours

Does not the principle of compensation in the case of Barlow Clowes have implications for the wider over-the-counter market? Will the Minister reject the comments of Mr. Wilmot, of Harvard Securities, who talked about the loss of one third of an investment portfolio as being acceptable? Is it not clear that the over-the-counter market is just a gigantic con? Will he close it down before many thousands of small investors lose more money that way?

Mr. Maude

It is only fair to say that a good many small companies manage to raise money and create jobs by the over-the-counter market, but it is nevertheless well understood to be a risky form of investment. Those who sell securities on the over-the-counter market make that clear.

Mr. McLoughlin

Has my hon. Friend seen the leader in The Times today, and is he aware that it says that his Department's inspectors are good at producing colourful, well-researched reports after the event, but are poor at prevention? What steps will he take to improve his Department's performance on that?

Mr. Maude

One development is that we now have a completely new regime of investor protection, which is being undertaken by organisations outside my Department. Lessons from the developments which have taken place recently will be an important aspect of our considerations. We shall need to look at what happened and what the outcome of the investigations is, and decide what steps we need to take.

Mr. Beith

How many people invested their redundancy money through this organisation and saw their only prospect of a cushion in retirement being lost, relying when they did so on the existence of the DTI's inspection system'? Will the Minister take that into account when considering the issue of compensation?

Mr. Maude

I am certainly well aware and, I suspect, better aware that most hon. Members, of exactly how many people invested all their spare money in this company and of the anxiety and distress that has been caused. It is important to make a distinction between the two companies involved: Barlow Clowes Gilt Managers, which was United Kingdom-based and subject to United Kingdom regulation, and Barlow Clowes International, which was Gibraltar-based and not subject to United Kingdom regulation.

Sir Peter Emery

Will my hon. Friend make it absolutely clear to the House that whatever the Parliamentary Commissioner may or may not have said, he would want to ensure that the report of Sir Godfray le Quesne is with him in September or October, so that this matter can be brought to some sort of finalisation as soon as humanly possible?

Mr. Maude

I entirely agree with my hon. Friend that it is important that these matters move fast, and they are moving fast. The Parliamentary Commissioner may well prefer to wait for Sir Godfray's report before undertaking his investigation, but that matter is entirely for him. He is not in any way inhibited from undertaking his own investigation before then.

Mr. Gould

Is not the Barrow Clowes case yet another instance of the unacceptable face of capitalism? What comfort can the Minister offer the thousands of people, many of whom are retired, with life savings at stake, who relied on his Department's supervision and who suffered calamitous loss as a result? Does he accept that what they require of him is not that he should take refuge in the delaying tactic of a departmental investigation, but an acknowledgement of his Department's responsibility in this matter and its willingness to compensate them for the loss of their life savings, which they have suffered by virtue of his Department's default?

Mr. Maude

It is pretty disgraceful that the hon. Gentleman seeks to exploit the genuine distress that many people have suffered in this way. It is frankly outrageous that he should suggest that my Department is in any way seeking to delay matters. We have been extremely frank. We have set up an independent inquiry headed by someone of great distinction and independence, and for the hon. Gentleman to say that we should give our response to that inquiry at this stage is manifestly absurd. We must wait to see what it says—wait for an authoritative version of what happened—and we shall decide what to do then.

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