§ 5.3 p.m.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)
My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Chancellor of the Exchequer. He said:
"I told the House on 20th June that if further investigations into the affairs of Johnson Matthey Bankers were to turn up any evidence of fraud appropriate action would be taken. Investigations have been continuing since then. Although, strictly speaking, they have not so far established prima facie evidence of fraud, they have revealed serious and unexplained gaps in the records of Johnson Matthey Bankers including the possibility of missing documents relating to substantial past transactions on certain accounts that are the subject of large losses.
"In the light of this, Johnson Matthey Bankers have today requested the Commissioner of the City of London Police to conduct a preliminary inquiry with a view to establishing whether any criminal offences may have been committed. The result of this inquiry will be reported to the Director of Public Prosecutions who will advise what, if any, further action should be taken. The House will of course be kept informed".
My Lords, that concludes the Statement.
§ Lord Barnett
My Lords, I thank the noble Earl the Minister for repeating the Statement. Perhaps I may say to him that each successive piece of information we hear is turning this incredible affair into not far short of a scandal. It was always difficult to understand how such a large proportion of a bank's loans could be lost so quickly, but now we are told there is to be a police inquiry and there is another possible legal action in connection with a claim against the auditors.
Will the noble Earl the Minister agree that this matter is too serious to be left at that? The Bank of England clearly was involved in a most remarkable degree of incompetence and mismanagement in its primary task of supervision. In those circumstances, while one hopes that the new banking Act, when it reaches the statute book, will help, it must surely be—I hope the noble Earl will agree—in the public interest that when the police investigation is concluded there should be a wider and more general inquiry. Will he agree that only then could the public feel confident that such a scandal could not recur with possible 773 further losses to public funds and, more important, a loss of confidence to a wider community? I hope that the noble Earl and the Chancellor will agree to have such a wider inquiry.
§ Lord Taylor of Gryfe
My Lords, I should like to thank the Minister also for honouring the assurance on the subject of criminal proceedings that he gave to me in the original Statement of 20th June. The noble Earl will recall that the steps which were outlined in the Statement of 20th June were designed to restore the confidence and the status of the City of London. I think that the Statement this afternoon, which gives some assurance that the City is not above the law, will be welcomed in the City and by the general public.
Will the Minister, in pursuance of the question raised by the noble Lord, Lord Barnett, make some statement as to whether there will be a White Paper on this whole affair? The Bank of England report gave a thorough review of all the weaknesses and the lack of supervision that had arisen in this case, but it would be a further reassurance to us in deciding what degree of supervision is necessary if a White Paper were produced and if the Price Waterhouse report, which has been the basis of the steps now being taken, were made public, if that is possible.
The Earl of Gowrie
My Lords, my right honourable friend's Statement which I repeated to the House was of course in the nature of an interim Statement in order to honour my right honourable friend's pledge to keep the House informed. I am glad to have had the opportunity to keep your Lordships in the picture as well. I shall have to leave it at that, as investigations are under way. We shall have to see what they produce.
On the points raised by the noble Lord, Lord Barnett (and I think they were followed by the noble Lord, Lord Taylor of Gryfe), my right honourable friend has promised a White Paper on banking, and indeed a Bill. That would seem to me to be a reasonable undertaking. Obviously it will deal with matters rather wider than this issue, but I should have thought that that will be the time to consider whether what we know about this incident should cause amendment or should have an input into that legislation.
I hope that with those assurances, and in view of the fact that the Government are anxious to keep the House informed about this issue, we can for the moment leave it at that.