§ 3 p.m.
§ Lord Williams of ElvelMy Lords, I beg leave to ask a Question of which I have given private notice; namely, to ask Her Majesty's Government:
Whether they will now publish the DTI inspectors' report into the affairs of the House of Fraser in view of the fact that extracts have been widely circulated and overseas publication would appear to be imminent.
§ Lord Young of GraffhamMy Lords, I thank the noble Lord, Lord Williams of Elvel, for giving me the opportunity of answering this Question. I am very glad to do so. As noble Lords will be aware, in April of 1987 my predecessor appointed inspectors to investigate the affairs of the House of Fraser Holdings plc. They reported to me on 23rd July last year.
The matters they disclosed were of such a nature that I had no choice but to refer the report to the Serious Fraud Office and to the Director of Public Prosecutions. This step was meant to ensure that due process of law was applied to the inspectors' findings. Despite this, Lonrho plc, led by Mr. Tiny Rowland, their chief executive, has since then been relentless in seeking publication of the report, which is still premature, and a reference to the Monopolies and Mergers Commission of the takeover of the House of Fraser in 1985.
The Court of Appeal recently upheld, by a unanimous judgment, my decision not to publish the report for the time being, and not to refer the takeover to the MMC. I was nevertheless prepared to assist Lonrho in agreeing to a provisional reference under the Fair Trading Act 1973, to become effective only if the House of Lords ruled in its favour at the appeal hearing which begins on Monday of next week.
The reasons for my present stance are well known. There are no public interest grounds for a reference to the MMC. As regards publication, I am determined that this should take place as soon as possible. Indeed, it is my dearest wish; and I have 898 no interest in delaying the process. But it was clear as soon as I received it that there would have to be inquiries by the prosecution authorities. They have taken some time, but they are now well advanced and are proceeding as swiftly as possible under the superintendence of the Attorney-General.
Publication now of the full report, before the prosecuting authorities have completed their inquiries, would interfere with the principle that all citizens of this country are entitled to a fair trial of any criminal charges that may arise from such a report and might hamper their inquiries. Indeed, the prosecution authorities have told me that their inquiries might have to stop if there were publication now. My stance in all this was fully endorsed by the Court of Appeal recently and I cannot and I will not change it now, least of all in response to the antics of the Observer newspaper and Lonrho.
I turn now to the part in this affair which has been played by the Observer and Lonrho in recent days. On 30th March, the Observer issued a special edition reproducing large parts of the report and commenting on it at length. I understand that Lonrho received a copy of the report on or about 23rd March, but extracts from it were not published by the Observer until 30th March which happened to coincide with the date of the annual general meeting of Lonrho which are the proprietors of the newspaper. I note that the Observer was even prepared to go without advertisements and to bear the full cost of the issue by allowing newsagents to keep the whole of the 25p charged for it. So much for commercial good sense and editorial independence. Indeed, if I could quote from the original prospectus of the Observer, as recalled recently by a former deputy editor of that newspaper, from which I fear it has sadly departed of late, I shall be.
unbiased by prejudice, uninfluenced by faction, and my whole principle is independence".My Lords, I greatly deplore the Observer's action which was both unlawful and irresponsible. I also greatly deplore Lonrho's use of the special edition at their annual general meeting. Lonrho state that they did not solicit a copy of the inspector's report and had it from an anonymous source. I am making urgent inquiries to establish the facts. But even if Lonrho's account is true, it does not exonerate them or the Observer. Far from it. Both know well that only I have the lawful authority to publish that report; that Lonrho's copy was improperly given to them, and improperly used by them; that use by them and the Observer would amount to a grave breach of confidence and of Crown copyright; and, last but not least, would be likely to prejudice next week's legal proceedings before the Judicial Committee of your Lordships' House in which Lonrho are the appellants.It was for all these reasons and for those which I have outlined above that shortly before noon on 30th March I obtained an injunction restraining the Observer and Lonrho from any further publication of the special issue. A similar ban was enforced in Scotland later that day. I shall make every effort to maintain these restrictions, and I shall therefore resist any attempts by the parties in the High Court or elsewhere to discharge the injunctions.
899 Next week the House of Lords begins to consider Lonrho's appeal against the unanimous judgment of the Court of Appeal in my favour. The Judicial Committee of your Lordships' House is the proper forum for deciding these issues, and the Government will not be compelled to change their stance by improper pressure from any other quarter. The rule of law will prevail.
It has been rumoured that copies of the report are being published in Germany and elsewhere and it is asserted that this removes the reason for withholding publication here. It may well be that German readers of any such document may find it interesting, although I have my doubts. However, they will not of course be invited to be on any English jury and no question of further prejudice can therefore arise.
As many in your Lordships' House may well be aware, Sir Edward du Cann, the chairman of Lonrho, has refused to return all the leaked copies of the report in Lonrho's possession or to give me voluntarily a sworn affidavit stating just how a copy came into his hands in the first place. I believe this shows an extraordinary lack of respect for the due processes of law and is even more surprising in view of the battery of lawyers said to be advising Lonrho and the Observer on this matter. Sir Edward is a Privy Counsellor and a former Minister in my department. He is well aware that there can be no excuse for such conduct. The report ought immediately to have been returned to me, although I can understand the temptation to glance at it first.
My counsel is today applying to the High Court for an order for the return of the remaining copies of the report, together with damages and an affidavit. I wish to assure noble Lords that urgent and thorough inquiries are now going on to establish the source of the leaked report.
In conclusion, noble Lords will wish to know that Lonrho and the Observer will not be successful in their attempt to cast me in the role of the Duke of Wellington. I shall not publish and I shall not be damned. It is not my independence or my reputation which is at stake, but that of a prominent newspaper and a prominent public company. I shall not be persuaded by the antics of commercial interests engaged in a private vendetta to compromise the public interest. They will not succeed in diverting me from the correct path, which is to ensure that the prosecution authorities are not impeded in the proper course of their duties. In that context, I shall publish the report as soon as I can, and I repudiate the suggestion that I wish to hide its contents or that it criticises my department.
I have given in this Answer as full an account of the circumstances as I can within the constraints put upon me by the current High Court hearing and next week's proceedings in the House of Lords.
§ Lord Williams of ElvelMy Lords, the House will be grateful to the Secretary of State for his Answer to my Question. At the outset I wish to say that I regret the use of this House for personal attacks on people who are not Members of the House. I believe we have to deal with this matter on a reasonably rational basis.
900 Do not the Government recognise that there is an element of absurdity in the present situation? Is not the noble Lord aware that all interested parties must by now know what is in the report, and most of them know precise chapter and verse? The noble Lord referred to rumours about publication. Is it or is it not the case that copies of the report are at this moment being printed in Switzerland and elsewhere? If that is the case, is it not utterly ridiculous that it is not now officially available in the United Kingdom?
Furthermore, does the noble Lord recognise that tomorrow I shall be tabling amendments to the Companies Bill to strengthen takeover regulations along the lines of the inspector's recommendations? Judging from the variation which was allowed by the High Court this morning to the Government's injunction, the proceedings of this House will be fully reportable in the press. If the noble Lord wishes to know how I know what these recommendations are, I would refer him and other noble Lords who are interested to the Library of this House, which, as I found this morning, has a copy of the special edition of the Observer of last Thursday.
§ Lord Young of GraffhamMy Lords, first, I should say to the noble Lord, Lord Williams of Elvel, that I refute utterly his suggestion that I am hiding behind the proceedings of your Lordships' House. There is nothing I have said in my statement that I would be afraid of repeating outside. Indeed, there is nothing I have said that has not been said in public comment elsewhere.
Secondly, I am afraid the noble Lord misses the essential point of what I have said. What is at stake here is the whole principle of English common law—the right of an individual to a free trial. The Swiss, the Germans, the French and the Dutch may read all about the report in full measure, if their minds so take them. But the essential single point is that we should be able to find, in the fullness of time, an English jury who can consider the matter and give—if anyone should be charged—a fair trial. It is that which is at stake, and not the prurient satisfaction of those in the press.
§ Lord EzraMy Lords, I too from these Benches wish to express appreciation to the noble Lord for the considered statement which he gave in response to this Question. However, I wish to ask him three short questions. First of all, the noble Lord said that the legal proceedings presently in train would be prejudiced if there were early publication. However, the knowledge of the contents of this report is now so widely spread that it is difficult to see how, if there is to be prejudice, that prejudice has not already been created. Would it not therefore be much simpler to publish the report so that all could see it in a proper manner, rather than clandestinely as at present?
Secondly, is the noble Lord aware that there is a degree of public concern about the cost of legal proceedings incurred by the Government in trying to prevent publication of documents which are already widely known? This of course is not the first instance of that, and I shall not refer to the previous one. I merely say there is concern that a fairly lavish 901 expenditure of money is being incurred to try to prevent something which has already occurred anyway. Perhaps the noble Lord can give some indication of the cost of these proceedings.
Thirdly, this clearly would not have happened if the legal proceedings to which the noble Lord referred had been quicker. This is not the only case subject to legal proceedings of this kind. It is a matter of surprise to those who are at any rate lay members of the public and not involved in the legal profession, or that part of it which is involved in these matters, that these proceedings should take so long. If the proceedings had been completed earlier, we could have had publication of the report and the recommendations of those who looked into these matters, and this situation would not have arisen.
§ Lord Young of GraffhamMy Lords, I am grateful to the noble Lord, Lord Ezra, for his comments. I decided not to publish the report, and the Government resisted publication of the report not so much to impede present legal proceedings but rather because it would impede the prosecuting authorities in the discharge of their duties when they decide whether or not to bring criminal proceedings.
This is not my decision. Happily, we have a system of government in this country in which I am separated from those who decide whether or not prosecutions should be brought. That is the way it should and must be. It is a matter solely for the judgment of the Serious Fraud Office or the Director of Public Prosecutions whether or not to bring proceedings. The length of time involved, again, is a matter for them. Although I believe the Attorney-General has asked them to expedite the matter, they must be sure that the standard of proof they have will stand up in a criminal court and not merely be sufficient—should there be any evidence of wrongdoing—for a report by inspectors from my department.
The noble Lord, Lord Ezra, mentioned the cost of legal proceedings. There have been two sets of legal proceedings. First, a judicial review was brought by Lonrho. That is a matter in which I have had to appear in aid, although I did not instigate it. That is not a matter for the Government.
Secondly, I wish to refer to an injunction we took on Thursday morning to stop publication by the Observer. That could hardly be called expensive. We do not intend to go round the world stopping publication. As I said to the noble Lord, Lord Williams of Elvel, we simply wish to ensure that, should the occasion arise, there is a jury to hear this matter.
§ Lord Orr-EwingMy Lords, when the Observer was taken over by Lonrho was it not a condition of that takeover that independent directors should be nominated? Were those independent directors consulted before this special edition was published, and if not, why not? Can my noble friend say whether as a result of this report it has been possible to include in the Companies Bill currently going through this House some of the points which arose?
§ Lord Young of GraffhamMy Lords, in 1981 when the Observer changed hands it was part of the arrangements of that time that there be five independent directors whose job it was to ensure that the editor had total independence from the proprietor. It was quite properly thought at the time—this is absolutely right—that that independence should not be a matter for government. Indeed, when the day comes that a government have a say in the independence or otherwise of newspapers it will be a very sorry day indeed for all of us.
I read in the newspapers that one of the independent directors said that the first he knew of this special edition was when he heard about it on the radio. That is a matter for the independent directors and not for me.
As regards the other part of my noble friend's question, I believe we are now satisfied that any lessons to come out of this report will be covered in the present proceedings going through your Lordships' House.
§ Lord MishconMy Lords, while I am in no way expressing one word of sympathy with the action of the Observer, or Mr. Rowland or anybody connected with him, will the Minister confirm whether I am right or wrong in saying that the variation of this morning made by the High Court with regard to the injunction on publication, which favoured the Minister, was that any detail of the report could be reported by the press if it was spoken of in Parliament? If that is the case, is it not: correct that if I cared to read passages from the report—I have no intention of doing so—the report would be released? I cannot speak for the responsibility of other Members of your Lordships' House or of anyone in another place tomorrow.
My first question is: if my knowledge of the variation is right, is it not an absurdity for the report not to be published? My second short question is this: is it not a pity that when the Secretary of State received a report in July 1988 and immediately saw that it was suitable subject matter for the Serious Fraud Office, no decision from the Serious Fraud Office has been reached by April 1989?
§ Lord Young of GraffhamMy Lords, the noble Lord, Lord Mishcon, is quite correct. Any Member of your Lordships' House who cared to stand and read all 752 pages of the report to your Lordships might find that the House would perhaps become slightly short-tempered. That is not the question. It is true that if parts of the report are read in this House they can be issued because proceedings of your Lordships' House must stand inviolate.
So far as concerns the noble Lord's second point, it is very much a matter for the prosecuting authorities. I received the report on 23rd July last year. I sent it to the prosecuting authorities on 26th July. Since that time the report has been with the authorities and it is a matter for them to decide. The standard of proof is very different in a criminal matter than it is in a Department of Trade inspector's report, as the noble Lord, Lord Mishcon, knows better than I. It is a matter which only the prosecuting authorities can judge.
§ Lord Hailsham of Saint MaryleboneMy Lords, perhaps I may ask the noble Lord the Leader of the House whether, if any Member of this House were to be so irresponsible as to publish that which would prejudice a fair trial, it would be open to me or any other Member of the House to move that the noble Lord be no longer heard?
§ The Lord Privy Seal (Lord Belstead)My Lords, it is always open to the noble and learned Lord to move that particular Motion. However, I hope that on this occasion he will not.
§ Lord Taylor of GryfeMy Lords, from these Benches we should like to thank the Minister for his very firm statement this afternoon. We welcome also his assurance that he will publish the report as soon as possible and we accept that that is a matter of judgment in which he will be guided by the law officers. We understand his problem and his dilemma.
We also welcome the assurance that some of the matters that have arisen from the proceedings will be taken care of in the Companies Act and in the City code since it is obvious that the same disciplines relating to the details which have to be submitted when making an offer for a company do not apply to non-corporate bidders as to corporate bidders. It would be useful if, as a result of these proceedings and the experience of the past few weeks, some aspects of the City code and of the Companies Act were to be amended to avoid a recurrence of the problems.
I presume that within the noble Lord's department there is someone who looks at the whole question of abuse of press power. There is no doubt that press independence has been seriously prejudiced by the activities of the owner of at least two newspapers, the Observer and the Glasgow Herald.
Perhaps I may make one final point, which has already been raised, about the delay in dealing with these matters in the Serious Fraud Office and in his department. I declare an interest in this regard. About two and a half years ago inspectors from the DTI entered the office of a reputable merchant bank. They are still considering and pursuing their investigations. In the meantime the reputation of individuals, as well as the standing of the financial institution concerned, is seriously affected by inquiries that have taken two and a half years to emerge. Perhaps I may ask the Minister, in view of the implications of the inquiries, whether he can give some assurance that there will be more expeditious action not only in the case to which I have referred but in general in such matters, so that companies and individuals affected by such investigations may be protected.
§ Lord Young of GraffhamMy Lords, I am very grateful to the noble Lord. There is a difficulty. There is a great desire to ensure that the lessons to be learnt from reports such as this should be passed on in order that the behaviour of the market can be moderated. They are important matters which often affect the behaviour of institutions. They are matters in respect of which I suspect that parties concerned 904 have long since learnt the lesson and so moderated their behaviour.
On the other hand the rights of individuals are affected and there is a difficult balance to be maintained. Nevertheless I shall bear in mind what the noble Lord has said and I hope very much that the procedure can be streamlined as much as other procedures have been streamlined.
§ Lord Cledwyn of PenrhosMy Lords, is the noble Lord aware that the undoubted confusion which has developed over this case has been greatly exacerbated by the delay since the report was delivered to him in July last year? Can he tell the House when the report was transferred to the Serious Fraud Office? Was it transferred immediately?
Secondly, as he declines to publish the report now, can he say more precisely when he thinks that he will be able to publish the report? As he said the report is now in the hands of the Serious Fraud Office, it is in the hands of the Director of Public Prosecutions and it is also being considered by the law officers of the Crown. Is he now saying to the House that he will publish immediately he hears from the Serious Fraud Office?
Furthermore, and lastly, will he assure the House that when he receives the report from the Serious Fraud Office he will make a further statement to the House?
§ Lord Young of GraffhamMy Lords, I can tell the noble Lord the Leader of the Opposition that I received the report on 23rd July and I sent it to the prosecuting authorities on 26th July. I think that that was sufficiently immediate action.
I checked only on Friday of last week whether I could yet publish the report. The advice from the prosecuting authorities was that I cannot. They told me that if I did so it would stop them taking any further action. As I said in my statement, it is my dearest wish to publish the report so that all can see it. I shall do so the day I am told by the prosecuting authorities that they no longer wish me not to publish. I cannot wait for that day to arrive.
The Earl of HalsburyMy Lords, will it comfort the noble Lord to know that I could not care less which of two takeover manipulators has outmanoeuvred the other? So far as concerns publication, I shall await the noble Lord's convenience with that patience which is said to be one of the cardinal virtues. That patience is being overstrained not by delay in publication but by the fact that we have taken 27 minutes on this subject.
§ Lord Mason of BarnsleyMy Lords, the fact is that the report has been leaked and is in the hands of the Observer which has published most of it. The tide of opinion is running against the Al Fayed group—"exposed, the phoney Pharoah". The matter will be aired further and that tide of opinion will put the Al Fayed group in the dock until the noble Lord publishes the report. Would it not therefore be better for all the parties concerned for the report to be published now in order to neutralise what may be a false opinion which is running wild?
§ Lord Young of GraffhamMy Lords, I very much regret that Lonrho or the Observer, or both, decided to post copies of the report to all Members of your Lordships' House and I believe to all Members of another place and a large number of opinion-formers in the country. However, I am happy to say that I am advised that the circulation of the special supplement of the Observer was not such as to prevent there being a jury able in the event to form a fair and clear view of any trial proceedings. That must be the only test. We have injunctions today to stop the Observer publishing the report in the future. We should rest content at this point. I should love to publish the report. I cannot do so and I await the day when I am told that I can.
§ Lord Bruce-GardyneMy Lords, first, I declare an interest as a scribbler in a rival publication. I want to follow up the question of my noble friend Lord Orr-Ewing. As my noble friend pointed out, and as my noble friend responded, undertakings were given by Lonrho at the time of the acquisition. Is it not hard to see how those undertakings square with the activities of a collective gentleman whom one might describe as Sir Edward du Trelford? If that is the case, what happens? Does the Monopolies and Mergers Commission call in of its own momentum the directors of Lonrho, including the independent directors, and adjudicate upon the case again? Does my noble friend have to refer it again to the Monopolies Commission? Does the Monopolies Commission have no remit in those circumstances?
Having said that, I also ask my noble friend whether he will recognise that those of us on this side who are not lawyers and are perhaps scribblers find it a little hard to understand the circumstances that continue to prevent publication. I fear that we are bound to wonder not about my noble friend's motives and reasons—for me, and I am sure for all other Members of the House, those are completely beyond question—but about that famous national monument, Sir Humphrey's face. Can we be sure that there is no element of protection of Sir Humphrey's face in the continuing decision not to publish?
§ Lord Young of GraffhamMy Lords, there could be little doubt that the easiest road for me to take would be to publish the report. That would immediately take me out of the firing line, but I must tell noble Lords that that would be wrong. I am advised by the prosecuting authorities that I could not, should not and must not publish the report. When the report is published, noble lords will judge whether I am protecting the Government or the department. As I should not comment on the contents of the report, all I can say is that my conscience has never been clearer on any matter than it is on this one.
§ Lord Bruce-GardyneMy Lords, perhaps my noble friend will answer my first question, following on from that of my noble friend Lord Orr-Ewing, about the position of the Monopolies Commission.
§ Lord Young of GraffhamMy Lords, I think that it would be a sorry day when Ministers started to question the independence or otherwise of 906 newspapers. That would set a precedent which could lead on to rather difficult territory. It may well be that the Monopolies Commission, of its own volition, has a locus in this matter and that the Director General of the Office of Fair Trading has a position in it, but it is not for me to say and it is not a matter that I intend to do anything about.
§ Lord MayhewMy Lords, is it not time that proposals were brought forward to loosen the control over our newspapers and television of the two or three thoroughly unsuitable persons who exercise it at present?
§ Lord Young of GraffhamMy Lords, perhaps the noble lord knows who those people are, but I cannot recognise them.