ALLEGATIONS BY MR. MOHAMMED AL FAYED: CABINET SECRETARY'S REPORT (Hansard, 25 October 1994)

The Lord Privy Seal (Viscount Cranborne)

The text of the report is as follows:

"On 30 September you asked me to investigate certain allegations of impropriety against members of the Government, which had been brought to you in confidence on the previous evening and which, you were told, derived from Mr. Mohammed Al Fayed.

2. In reporting these allegations the informant said that Mr. Al Fayed wanted a meeting with the Prime Minister, principally because of Mr. Al Fayed's wish to have the DTI inspector's report on the takeover of the House of Fraser revised or withdrawn. He had made a number of allegations against the Government Minister and was contemplating passing them to others.
3. You replied that it would be impossible for you to see Mr. Al Fayed in these circumstances. You added that, if Ministers had been guilty of wrong doing, you were not going to make any sort of deal, regardless of the cost to the Government's reputation. You said that you would consider how to proceed and suggested that in the meantime your informant should make no response to Mr. Al Fayed.
4. The following morning you asked me to investigate. I carried out some immediate enquiries and on the evening of 30th September your Private Secretary reported to you that some of the allegations were familiar because they had surfaced before, had been previously investigated and had been strongly denied. However, some allegations were new. You then asked me on 3rd October to follow up all the allegations, whether old or new, with the Ministers concerned.
5. I had conversations with the Ministers named in the allegations in the week before the Conservative Party Conference, and I reported to you the outcome of these conversations, together with the results of other inquiries I had made, on Monday 17th October on your return from Bournemouth. In the light of that report, you asked the Chief Whip and me to clarify some points so that, in the interests of natural justice, there should be no risk of your acting unfairly. On 18th October, you WA 34 concluded that Mr. Smith's offer of resignation from the Government should be accepted later in the week when the Chief Whip's and my action was complete.
6. I should make clear that, in view of the circumstances in which the information reached you, I have not felt able to approach or interview Mr. Mohammed Al Fayed himself. I was reinforced in that view by information subsequently received that Mr. Mohammed Al Fayed has made available to others the information which was provided to you. It can therefore be assumed that if there is any further material which Mr. Al Fayed may have to substantiate his allegations it will come to light.
7. While the Chief Whip and I were taking the further steps agreed at your meeting on 17th October, two of the allegations passed on to you were made public in the Guardian of Thursday 20th October. These were that Mr. Neil Hamilton and Mr. Tim Smith were paid to raise questions on Mr. Al Fayed's behalf in the House of Commons.
8. I had previously enquired into both these matters and had asked Mr. Hamilton and Mr. Smith about them. Both sets of allegations may be the subject of other enquiries and, in the case of Mr. Hamilton, are the subject of legal proceedings against the Guardian newspaper. In these circumstances I should not deal with them in detail in this report, which I know that you envisage publishing.
9. Suffice it therefore to say here that Mr. Smith volunteered to me that, as he has subsequently confirmed publicly, he received payments from Mr. Al Fayed between 1987 and 1989, when he ended his activities on behalf of Mr. Al Fayed. He did not declare the necessary information in the Register of Members' Interests until just before the end of this period, and he acknowledged that he should have done so earlier. He offered his resignation from the Government.
10. Mr. Hamilton has emphatically denied throughout my inquiries, both in writing and subsequently in a public statement, that he received any payments deriving from Mr. Al Fayed. I have found no evidence which controverts Mr. Hamilton's assurances on these matters. He acknowledged that he had received hospitality from Mr. Al Fayed, as a private guest (as he believed), at a time well before he entered the Government. He had not thought it necessary to declare this in the Register of Members' Interests, for reasons which he explained in a letter to the Editor of the Guardian of more than a year ago, a copy of which he gave me. He also gave me an exchange of correspondence dated nearly a year ago in which he had amplified to the Chairman of the Select Committee on Members' Interests what he had said to the Guardian.
11. When Mr. Hamilton become a Minister in the Department of Trade and Industry, he declared his previous interest in matters concerning Mr. Al Fayed and has stood aside from involvement as a Minister in issues involving the House of Fraser.
12. There were other allegations passed on to you by your informant. I have looked into all these, so far as I am able, and the Chief Whip and I have put the allegations in detail to the Ministers concerned. In some WA 35 of them there are patent inaccuracies, and all have been denied explicitly, unequivocally and in writing.
13. I have found nothing which would cause me to throw any doubt on the validity of those denials. Moreover, the fact that there is reason to think that these allegations too have now been made available to others who have so far chosen not to publish them suggests WA 36 that they too may have found that there is a lack of evidence to establish their validity.
14. In those circumstances, while confirming that I am confident that the allegations either are demonstrably false, or, so far as I have been able to establish, are entirely unsubstantiated as well as being denied by the Ministers concerned, I do not think it appropriate to give them further currency by listing them in this report."