Financial Malpractice: Control Measures (Hansard, 28 January 1987)

§ Lord Molloy
My Lords, at the request of my noble friend Lord Dean of Beswick, I beg leave to ask the Question standing in his name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, provisions of the Financial Services Act 1986 relating to the conduct of investment business will be brought into operation during the next 12 months. A Bill to strengthen the system of banking supervision is before Parliament. The Criminal Justice Bill before Parliament contains a range of measures for dealing with fraud including the creation of the Serious Fraud Office.
The Secretary of State for Trade and Industry is considering the Report of the Committee of Inquiry into Regulatory Matters at Lloyd's.

§ Lord Molloy
My Lords, that is a somewhat encouraging reply, but is the Minister aware that there are people in trade, industry and commerce, not to mention shareholders, who believe that that part of the City is in a similar condition to the Augean stables and needs completely clearing out? During the recent scandals the Governor of the Bank of England seemed hopelessly ineffective, and the takeover panel appeared to be moribund. There should be direct ministerial intervention when required. Will the forthcoming legislation make it absolutely clear that there will be ministerial examination and action taken to prevent the terrible scandals which have taken place recently in the City of London?

§ Lord Lucas of Chilworth
My Lords, the recent action taken by my right honourable friend the Secretary of State for Trade and Industry in appointing inspectors illustrates the seriousness with which we consider matters of this kind. Such action also demonstrates the firmness with which the Government intend to deal with malpractice wherever it takes place.

Lord Bruce of Donington
My Lords, is the noble Lord aware that, although many noble Lords may have reservations as to the adequacy of the existing enactments and regulations, we consider it is much more important that there should be the impartial maintenance of law and order? When can the country expect that prosecutions will eventuate against some of 1326 those who have already committed crimes in connection with operations at Lloyd's? When are we to have action by the Attorney-General and the Director of Public Prosecutions in relation to individual allegations of people committing these offences against the Companies Act and being accessories to such offences?

§ Lord Lucas of Chilworth
My Lords, inquiries into a number of matters, not one of which the noble Lord mentioned specifically (he will know what I mean, as I think I know what he means), are taking place and the appropriate action will be taken when all the relevant information is gathered.

Lord Bruce of Donington
My Lords, will the noble Lord give the House an assurance that action will be taken in all appropriate instances and before the people concerned leave Her Majesty's jurisdiction?

§ Lord Lucas of Chilworth
My Lords, I cannot give the noble Lord an assurance in the terms he asks for because neither I nor my right honourable and honourable friends can command the free movements of individuals. I have given an assurance that the Government (as demonstrated by their actions) seek to take a firm stand wherever evidence of malpractice or misdemeanour is brought to our attention, and the rest follows from that.

Lord Paget of Northampton
My Lords, is it in order to inquire in this House about individual cases which have been referred to the Director of Public Prosecutions?

§ Lord Lucas of Chilworth
My Lords, my understanding is that noble Lords may inquire about anything at all. What the answer is may perhaps be a little different.

§ Lord Molloy
My Lords, is the Minister saying that no action is to be taken to defend shareholders or other people who may have been hurt by these scandals which have been shown on television and have been in all the newspapers and which have concerned the entire nation? Everyone knows that much of what happened was illegal and that there was some form of appalling misdemeanour and misbehaviour.

§ Lord President of the Council (Viscount Whitelaw)
My Lords, following the remark made by the noble Lord, Lord Paget, I hope that the noble Lord, Lord Molloy, appreciates that to make firm statements about a whole lot of things which may have happened but which have not yet in any way been before a court of law or been proved is a dangerous move to make in your Lordships' House. I am sure he will be the first to understand that.

Lord Paget of Northampton
My Lords, there is such a thing as contempt of court.

Lord Wallace of Coslany
My Lords, is the noble Lord aware that control of certain operations in the City would be welcomed? I am sure he can assure us that in future we shall be spared the absolutely nonsensical and noisy ballyhoo that took place in the 1327 region of the Strand and Charing Cross last night in connection with the British Airways flotation.

§ Lord Lucas of Chilworth
My Lords, I do not feel able to comment on that matter. It is very wide of the original Question.

§ Lord Diamond
My Lords, will the Minister have regard, when they are available, to all the conclusions which the Government may reach as a result of the inquiries and other activities at present taking place? Will they have regard to the overriding interest of this nation that the City should be regarded, if justified, as fully sustaining the responsibilities which it carries?
Is not the good will of so many financial centres in different parts of the world of enormous benefit to our balance of payments and to our various activities? Is it not a great pity that the one thing that we seem to be doing rather better than most other people in the world should be continually derided in this irresponsible way?

§ Lord Lucas of Chilworth
My Lords, I am grateful to the noble Lord for his question as it underlines the importance of the City. I can certainly tell him that the interests of the nation, to which he draws attention, are indeed the same as the interests of the Government in that connection.

§ Lord Broxbourne
My Lords, arising from the question of the noble Lord, Lord Paget, and the answer given thereto, is it not at all times desirable to avoid conflicts between the undoubted sovereignty of Parliament and the equally constitutionally entrenched jurisdiction of the courts?

§ Lord Lucas of Chilworth
My Lords, I am grateful to my noble friend for his question, and I confirm that he is quite right. Perhaps I ought to have said to the noble Lord, Lord Paget, at the time I answered him that of course questions other than those which are sub judice are normally allowable in your Lordships' House.

§ Lord Glenamara
My Lords, while we all appreciate and understand what the noble Viscount said, the Government must appreciate that people are beginning to believe that there is one law for the rich and powerful and another law for the rest of us. Does the noble Lord agree that if a local councillor had accepted a meal or a holiday from a building contractor, he would have been charged and given five years in gaol long ago?

§ Viscount Whitelaw
My Lords, I hope that I can properly, as Leader of your Lordships' House, confine myself to the point that I made and not seek to go further. It was simply that if it was a question of deciding at this stage whether someone was guilty before he had been before the courts, or indeed had had an opportunity of stating his case, that is something that I am sure your Lordships' House would not wish to do.