House of Fraser (Hansard, 20 March 1990)

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to(a) clear demarcation of responsibility, (b) knowledge of one's client, (c) appropriate procedures for advisers, (d) relationships with the media, (e) relationships with the regulatory authorities and (f) loopholes in the code: 25.1.3 (p503).

§ Mr. Ridley
I refer the hon. Member to the answers to her questions Nos. 111 to 134 and 137.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to false evidence to inspectors: 1.29, p. 11.

§ Mr. Ridley
The giving of false evidence orally on oath or under affirmation is an offence under section 1 of the Perjury Act 1911. Similarly where false information has been submitted in written form but is subsequently adopted under oath, there is also an offence under section 1 of the Perjury Act 1911.
There is no present need to amend the legislation.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry (1) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the Companies Act 1985 as amended that the statutory language needs to be reconsidered in the context of the power to require oral evidence: 1.26 p. 10;
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(2) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the powers of inspectors to require the production of documentary evidence: 1.26. p. 10;
(3) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the powers of inspectors to require the production of documentary evidence.

§ Mr. Ridley
Contrary to the implications of these questions, the concerns expressed by the inspectors in paragraph 1.26 of their report have been met by section 56(3) of the Companies Act 1989.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to take any action in response to the House of Fraser Holdings plc report which—25.1.2 p. 503—concluded that to give Government clearance to a controversial hid, such as that for the House of Fraser, put intolerable strain on the Office of Fair Trading and the Department of Trade and Industry.

§ Mr. Ridley
I am satisfied that under present legislative and administrative arrangements both my Department and the Office of Fair Trading are equal to the demands placed on them in scrutinising mergers, controversial or otherwise, which qualify for investigation.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry (1) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to advisers who give evidence or references to the Office of Fair Trading and the Department of Trade and Industry: 25.6.3. p. 515;
(2) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the role and responsibilities of parties appearing before the Office of Fair Trading: 25.6.3. p. 515;
(3) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the Office of Fair Trading time and limits for the provision of evidence on identified public interest issues: 25.6.3. p. 515.

§ Mr. Ridley
With regard to the recommendation on time limits in paragraph 25.6.3(ii), there is always a balance to be struck between allowing enough time to weigh up the facts and acting quickly to remove market uncertainty. Within these constraints, it is for the Director General of Fair Trading to determine when he is in a position to submit his advice to me. New procedures under the Companies Act 1989 are to come into force next month under which companies which voluntarily pre-notify mergers can usually expect a decision from the Secretary of State within 20 days of notification.
The recommendation in paragraph 25.6.3(iii) relates to the role and procedures to be followed by advisers. It contains good advice which I am sure advisers will wish to consider and act upon.

§ Ms. Mowlam: To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the procedures available to inspectors to ensure the confidentiality of their p
1.30, p. 12.

§ Mr. Ridley
Experience shows that the circumstances which can arise vary widely from case to case and the need 589W for legislation is not readily apparent and in any event might be difficult to enforce. However, in the light of the inspectors' comments, the position will remain under review.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the role of the Secretary of State: 25.6.3.p. 516.

§ Mr. Ridley
I entirely agree with the suggestion that I should reach my decisions on merger situations on the basis of facts found by others. That is what already happens.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry (1) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the need for a practice note by the takeover panel on the standards of care in the preparation of offer documents: 25.7.9, p. 517;
(2) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to standards of care in the preparation of offer documents: 25.7.9, p. 517.

§ Mr. Ridley
One of the general principles set out in the takeover code states that any document about an offer must, as is the case with a prospectus, be prepared with the highest standards of care and accuracy. This is supplemented by specific rules about offer documents. These rules are clear and are well understood, including by financial advisers. The question of an additional practice note is a matter for the takeover panel.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the giving of false evidence to Companies Act inspectors: 1.31, p. 12.

§ Mr. Ridley
Where, under section 8 of the Company Directors Disqualification Act 1986, a court has to determine whether a person's conduct in relation to a company makes him unfit to be concerned in the management of a company, the court will have regard to the matters mentioned in part I of schedule 1 to that Act. Among the matters there mentioned areany misfeasance or breach of any fiduciary duty or other duty by the director in relation to the company". However, schedule I is not an exhaustive list of categories of unfitness and the court could also take other conduct in relation to the company into account in determining a person's unfitness.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry (1) why he has decided not to implement the recommendations of the House of Fraser Holdings plc report relating to the internal procedures to be followed by financial advisers: 25.4.6. p.511;
(2) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the position of a financial adviser acting on his client's behalf—specifically: 25.3.7. p.508;
(3) why he has decided not to implement the House of Fraser Holdings plc report on the recommendations relating to the financial advisers' acceptance of instructions from clients: 25.4.5 p.510;
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(4) why he has decided not to implement the recommendations of the House of Fraser Holdings plc report relating to the process of taking on new clients: 25.4.2 p.509;
(5) why he has decided not to implement the recommendations of the House of Fraser Holdings plc report relating to the acceptance of written material from other advisers: 25.4.4 p.510;
(6) why he has decided not to implement the recommendations of the House of Fraser Holdings plc report relating to the process of financial advisers taking on clients' references: 25.4.3 p.509;
(7) why he has decided not to take any action to implement the House of Fraser Holdings plc report which concluded—25.2.6 p.506—that more care will have to be given in future to defining more clearly the respective roles and responsibilities of each adviser, and to define more clearly what is, or what ought to be, expected of them in the role, in relation to the City code and the interaction with the regulatory authorities and more generally;
(8) why he has decided to take no action to respond to the conclusion in the House of Fraser Holdings plc report—25.3.3 p.507—that there is a need for a clear definition of the extent of the responsibilities of the financial adviser to be sure of his facts before he makes such statements in the name of his bank.

§ Mr. Ridley
These recommendations are not addressed to the Government. They concern the role and procedures to be followed by professional advisers in relation to their clients. They contain good advice which I am sure advisers and those responsible for setting standards of conduct for advisers will wish to take into account.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the Office of Fair Trading: 25.6.3. p.515 and public interest issues, other than competitions, in a proposed merger.

§ Mr. Ridley
It is already the practice of the Office of Fair Trading to discuss with the parties any public interest issues relevant to a merger, not just competition aspects.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the need for the City code to apply to non-corporate owners of shelf companies: 25.7.2 p.516.

§ Mr. Ridley
The takeover code does not lay down specific rules for offers by non-corporate owners of shelf companies. However, following a review of the provisions of the code, the takeover panel has for some time in practice required non-corporate offerers to provide more information about their finances and the key individuals. I understand that the panel's existing guidance on this will shortly be reflected in amendments to the code.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the powers of inspectors to have access to private bank accounts in order to trace money which has gone out of or into a company: 1.28, p. 11.

§ Mr. Ridley
Contrary to the implications in this question, the concerns expressed by the inspectors have 591W been met, so far as is possible under United Kingdom law, by amendments to section 434, 436 and 452 of the Companies Act 1985 introduced by section 56(3) and (6) and section 69(3) of the Companies Act 1989 and by the repeal of section 435 of the 1985 Act.

§ Ms. Mowlam
To ask the Secretary of State for Trade and Industry (1) why he has decided not to implement the recommendations of the House of Fraser Holdings plc report relating to the need for a code of standards of responsibility to be observed by advisers appearing before the Office of Fair Trading: 25.6.2. p. 514;
(2) why he has decided not to implement the recommendations in the House of Fraser Holdings plc report relating to the operation of the Office of Fair Trading: 25.6.2. p. 514.

§ Mr. Ridley
Section 151 of the Companies Act 1989, which will come into effect on 1 April, makes it a specific criminal offence to mislead the competition authorities. This should strengthen the position of the Office of Fair Trading. The question of a code of standards is a matter for the Director General of Fair Trading.
Additionally, as paragraph 25.6.3 of the report makes clear, it is the duty and responsibility of advisers to give evidence or references only about facts of which they have knowledge. I am sure that they and their professional bodies will wish to consider and act upon this advice.

§ Mr. Shore
To ask the Secretary of State for Trade and Industry what consideration he gave in deciding not to use his discretionary powers under section 8 of the Company Directors Disqualification Act 1986 against the directors of House of Fraser plc to whether the public interest aspects were affected by the absence of outside shareholders in that company; and if he will make a statement.

§ Mr. Ridley
[holding answer 15 March 1990]: I gave appropriate consideration to the shareholder position and to other factors.

Mr. Alan Williams
To ask the Secretary of State for Trade and Industry on how many occasions and for what role Kleinwort Benson has been commissioned by his Department since he received the report on the House of Fraser.

§ Mr. Ridley
[holding answer 12 March 1990]: None.