The present furore should have disabused those of the public who still believed the law and rules such as codes of conduct apply to the powerful as they do to the ordinary person. At present we are seeing how widespread-hacking by the media and the bribing of police by the media to gain information could go on uninterrupted by politicians doing anything about and the police failing to prosecute either their own people or the media people paying the bribes. (The most telling fact about the payment of police bribes is that no policeman or woman has come forward to say they reported such an attempt to their superiors).
The story below is another graphic example of how elites can get away with murder. It was published in the magazine The Individual in July 1999 under the title of ‘Elite Mischief’ (http://individualist.org.uk/pdf/1999julindiv_em.pdf.) It deals with Peter Mandelson’s gaining of a mortgage by making a false declaration to his mortgage provider and his taking of a £373,000 loan from a fellow minister in the Blair Government Geoffrey Robinson, a loan he failed to publicly declare as required by the Commons’ own rules.
The story exemplifies the way in those with power, wealth and influence manage to live outside the rules and laws which supposedly bind them. For elites laws and rules are for the “little people”, not them. In this instance politicians in the Government, the Labour Party and the Commons’ committee with responsible for disciplining MPs all failed to wholeheartedly condemn Mandelson, investigate his misbehaviour properly (especially the mortgage fraud) or impose appropriate penalties. The civil servant responsible for investigating complaints about MPs, the Parliamentary Ombudsman, refused to press the most damaging parts of the complaints (the mortgage fraud and the failure to declare the Robinson loan) and the police refused to open an investigation. To close the circle, the media also failed to press the matter of criminal charges and tellingly I could get none of the mainstream media to take up the story of the police’s refusal to investigate.
The outcome of the protection of Mandelson is that went on to twice return to the Cabinet, received a peerage and got an EU sinecure as one of Britain’s Brussels commissioners. He is now a wealthy man, having benefited from the capital gains on the property he obtained through the mortgage fraud and Robinson’s loan, the considerable salaries drawn from his return to a Cabinet position under Blair; his remuneration as an EU Commissioner and the considerable returns from his autobiography. Those are the wages of elite sin.
7 July 2011
The report of the Standards and Privileges Committee (henceforth “the Committee) on three complaints laid against Peter Mandelson is best described as incongruous. The complaints concerned irregularities involving more than £500,000 and the report’s content is damming. Two of the three complaints were found to have substance. Yet the Committee treated Mandelson’s serious misbehaviour as essentially trivial and concluded smugly “We recommend that no further action be taken”. The report is above all a classic example of how an elite controls matters for its own advantage.
Why is the report damning? It contains explanations and justifications from Mandelson so improbable that I would stake my life on the vast majority of human beings finding them incredible. Mandelson is also shown to be massively arrogant by the manner of his rejection of the complaints – he really cannot understand what all the fuss is about or why his private behaviour is under scrutiny. What if I did accept a massive loan secretly from a fellow Member of Parliament? What if that Member did became my junior minister? What if I did obtain a mortgage as the result of a failure to disclose all the relevant facts to the lender? What business is it of the public? So says Peter Benjamin Mandelson. The affair is extremely complex.
In the space available it is impossible to cover the detail as fully as I would wish. That being so, rather than give a blow by blow account, I have written an impressionistic piece which is designed to give the reader a flavour of the dominant themes - in particular, the palpable desire of all those engaged in the investigation and judgement to mitigate Mandelson’s misbehaviour by any means possible – while providing enough detail to allow the reader to understand the basics of the story.
To properly understand the matter even in outline, it is necessary to ingest a paragraph or three of facts which would bore a chartered accountant. Sorry about that. First the main players in the business. Apart from Mandelson and the ex-trade minister Geoffrey Robinson, these are the Parliamentary Commissioner for Standards in Public Life (Elizabeth Filkin), the firm of solicitors appointed by the Britannia Building Society to report on Mandelson’s mortgage application (Herbert Smith Solicitors), Mandelson’s solicitor (Stephen Wegg-Prosser of Wegg-Prosser and Farmer – WPF) and Mandelson’s personal aide (Ben Wegg-Prosser). Robert Sheldon was the Committee chairman. The two named complainants in the report were the conservative MP, John Redwood, and myself.
The Committee acted on Mrs Filkin’s submission after her investigation of the three complaints. The first concerned a failure to declare a flight taken by Mandelson at the expense Linda Wachner, chairwoman of a company (Warnaco Ltd) which had interests in the UK. The other complaints arose from Mandelson’s failure to declare loan of £373,000 from a fellow MP, Geoffrey Robinson, in the Register of Members’ Interests and irregularities in his application for a mortgage of £150,000 from the Britannia Building Society.
Mrs Filkin’s conclusions The Warnaco complaint concerned a potential conflict of interest arising from Mandelson’s position as Trade Secretary. Mrs Filkin found the complaint unproven because she judged that the flight was “offered to him as a personal friend rather than in his capacity as a Member of Parliament”. For reasons of space and the fact that the complaint involved benefits involving only a few thousand pounds, I will not spend any further time on Mrs Filkin’s dismissal of the complaint other than to reflect that politicians without great wealth are always suspect if they take favours from the rich, and that the public’s only guard against corruption in such circumstances is if the favours are public knowledge. The rules governing the Register of Members’ Interests need amending to make the receipt of any large benefit notifiable, regardless of the nature of the giver.
Mrs Filkin found the other complaints proven. Of Mandelson’s failure to declare the loan from Geoffrey Robinson on the Register of Member’s interests, she decided that Mandelson should have registered the loan because of the possible conflict of interest when he became Trade and Industry Secretary. The interesting thing about this judgement is that Mrs Filkin decided that it would have been acceptable not to declare the loan if he had not become Trade and Industry Secretary and consequently was subject to the Ministerial Code of Conduct. It was this latter code which necessitated the registration of the loan on the Members’ Register of Interests. This is a dangerous precedent.
The receipt or supply of large material benefits from one politician to another are self-evidently of public interest, for anything which can compromise their freedom of action is a matter of public interest. That applies as much to backbenchers as to ministers. Again, plainly the register rules need amending. But a declaration of interest is not enough for favours between MPs, because both the participants to such a transaction are directly involved in the political process, and therefore have the opportunity to illicitly manipulate matters from the inside, unlike interests and individuals outside Parliament. There needs to be a ban on substantial material favours between MPs.
Of the third complaint concerning the Britannia Building Society mortgage Mrs Filkin said this: “The mortgage was obtained on a basis outside normal commercial practice. Mandelson’s mortgage application was incomplete and inaccurate and therefore breached the Code of Conduct for Members of Parliament”.
The objective facts of the Britannia mortgage
The Britannia mortgage was used (with the Robinson loan) to fund the purchase of a property in Notting Hill, a district in the West of London. Mandelson made his mortgage application in August 1996 and completed his purchase of the Notting Hill property in October 1996.
At the time of the mortgage application for the Notting Hill property, Mandelson owned two properties: a house in his constituency (henceforth Hutton) and a flat in Clerkenwell, London (henceforth Wilmington). He had mortgages on both. Thus his application for the Britannia mortgage was, at the least, the third time he had made a mortgage application.
The Britannia interviewer (Mr Michael McDermott) completed the application form for Mandelson who then signed it. Mr McDermott was the branch manager and thus a very experienced employee. He was consequently unlikely to have made an error when completing the form.
When he made the mortgage application (30/8/96) Mandelson told the Britannia interviewer that the balance of the purchase price for the Notting Hill flat would be provided by his family. He also said that the purchase of the Notting Hill property would be simultaneous with the sale of his Wilmington flat.
Mandelson’s mortgage application form unambiguously shows a failure to declare his the Hutton mortgage and was thus false at the time he signed it. The application became further invalidated by two failures to keep the Britannia informed of changes in his circumstances, namely his acceptance of the Robinson loan and the failure to sell his Wilmington flat at the same time as he purchased the Notting Hill property.
Section D of the application form contains the questions “Do you have any hire purchase/loan agreements? (D1); “Have you any other outstanding commitments including maintenance payments (D.3) and “Do you propose to borrow any other money upon the security of the property to assist in the purchase of the property (D.5). Mandelson answered NO to all questions.
The declaration at the end of the form which was signed by Mandelson includes this statement: “I confirm that this form has been completed by myself or at my dictation and that the information given is true to the best of my knowledge and belief and all material information as explained above has been disclosed. I understand that if any answer has been written by any other person that person shall for that person be regarded as acting for me.”
The Robinson loan and Mrs Mandelson
Mandelson claims that when he signed the mortgage application on 30/8/96, he believed that his mother would give him, as a gift, the money he needed to bridge the gap between the proceeds of the Wilmington flat and Notting Hill. Amazingly, during his evidence to the Committee Mandelson admitted that he had not discussed the likely amount of the gift prior to committing himself to a mortgage. His mother’s subsequent rapid refusal of help shows how nebulous Mandelson’s expectation of a gift was, if it existed at all.
Mandelson first discussed the Robinson loan in May 1996. It was not finalised until October 1996 after Mandelson’s mother had refused to help Mandelson. Mandelson’s explanations Mr Mandelson shares a quality with Ronald Reagan, he is terribly forgetful. The report shows that he could not remember when he first discussed the loan with Geoffrey Robinson. He could not remember whether he mentioned the Hutton mortgage during his interview with Mr McDermott. He could not remember what he had done during his previous mortgage applications. He could not even remember in 1999 (this is my personal favourite) how much he sold his Wilmington flat for in 1997.
Mandelson is also apparently seriously lacking in intellect and basic general knowledge. According to the evidence given to the Committee, he did not even understand the meaning of such difficult questions as “Do you propose to borrow any other money on the security of the property to assist in the purchase” because at the time of completing the mortgage application he “would not…have understood what ‘security of the property meant”. 1
Translated into honestspeak most of Mandelson’s excuses and explanations amount to this: I, Peter Mandelson, a man deemed competent to sit in a British Cabinet, am so lacking in intellect and general knowledge that I cannot understand what every adult of normal intelligence in Britain is presumed by the law to understand, namely a mortgage application form, despite the fact that I had previous experience of obtaining mortgages.
Mandelson’s other excuses rest on blaming people such as his solicitor (WPF) and pleading overwork. The latter is special pleading; the former deserves attention. WPF in the person of Stephen Wegg-Prosser undoubtedly had a duty to inform the Britannia of the Robinson loan and the failure to complete the sale of the Wilmington flat on time. The question is why he did not do so. Wegg-Prosser accepted that he was grossly at fault but blamed it on family problems. Should we believe him? In other words, was there a conspiracy between Mandelson and Wegg-Prosser to keep the fact of the Robinson loan from the Britannia? Consider these facts and judge for yourself.
For a man with nothing to hide, Mandelson was remarkably reticent about his loan from Robinson. He failed to notify Tony Blair, the DTI permanent secretary, the cabinet secretary and the parliamentary commissioner of the Robinson loan. He failed to register the loan in the Members Register of Interests. He used the solicitor father of his aide Ben Wegg-Prosser to draw up the legal agreement with Robinson.
Such secrecy speaks of a desire to prevent not only the general public and his political opponents and colleagues from knowing the truth, but an intention also to prevent the Britannia Building Society from discovering the true state of affairs. Publicity for the loan would have revealed the illegality of the application. Thus Mandelson had a prime dishonest motive for silence and secrecy. If any of the other people directly involved in the loan from Geoffrey Robinson knew of Mandelson’s failure to declare the loan and/or his mortgage on the Hutton property, they would on the face of things be guilty of a criminal conspiracy to enable Mandelson to obtain a mortgage fraudulently.
Mandelson’s desire to keep the matter secret and his apparent willingness to lie to do so is further seen in his reply to a question put by the Evening Standard in April 1997. The Standard reporter, Mark Honigsbaum, asked Mandelson to explain the difference between the amount of money borrowed to finance the purchase of the house registered on the Land Registry and the purchase price of the Paddington house, ie the difference between the Britannia mortgage and the purchase price. Mandelson complained of an invasion of privacy (a rather rum do in a politician) to a more senior reporter, Alex Renton. However, he did tell Renton that the balance of the cost of his new house would be paid by the sale of his Clerkenwell flat and money from his mother (see folios 5/6). He failed to mention the fact that the purchase price had been met wholly by a loan from Robinson and the Britannia mortgage.
Behind the scenes
Although her findings were significant, Mrs Filkin studiously avoided the most serious and damaging issues which were posed by Mandelson’s behaviour, namely the questions of criminality and the relationship between MPs, both of which I asked her to consider in relation to Mandelson and Robinson.
I had a considerable correspondence with Mrs Filkin, yet after the publication of the report I discovered that the committee only saw the first letter I sent to Mrs Filkin. When I brought this to the attention of Robert Sheldon, the chairman of the committee, he refused to either reopen the nvestigation or show the additional letters to theCommittee members. This is urther evidence of the Committee’s intention to produce a verdict favourable to Mandelson come what may.
The Code of Conduct
In 19 July 1995 by a resolution of the Commons a Code of Conduct for MPs was adopted. Rather like the 1936 Soviet Constitution, the code is a model of democratic principle, regulating public duty, personal conduct, objectivity, accountability, openness, honesty and leadership. My experience with Mrs Filkin and the committee shows that it shares another quality with the 1936 Soviet Constitution: it is not worth the paper it is written on.
I suggested to Mrs Filkin that Mandelson had breached these parts of the Code:
Members have a duty to uphold the law and to act on all occasions in accordance with the public trust placed in them.
Members shall base their conduct on a consideration of the public interest, avoid conflict between personal and the public interest and resolve any conflict between the two, at once, in favour of the public interest.
Members shall at all times conduct themselves in a manner which will tend to maintain and strengthen the public’s trust and confidence in the integrity of Parliament and never take any action which would bring the House of Commons, or its members generally, into disrepute.
In any activities with, or on behalf of, an organisation with which a member has a financial relationship which may not be a matter of public record such as informal meetings and functions, he or she must always bear in mind the need to be frank with Ministers, Members and officials.
Holders of public office should promote and support these principles [of the Code of Conduct] by leadership and example. Mandelson has clearly breached these parts of the Code. Mrs Filkin concluded that he had done so, but only by his behaviour in obtaining a mortgage. Incredibly, she judged that Mandelson’s failure to register a loan eight times his salary did not breach the Code.
The Britannia Building Society
The failure of the Britannia to make a complaint to the police goes against their normal policy. The Daily Telegraph (26/12/98) ran this quote from a spokesman for the Britannia, Joanne Hine: “When fraud has been discovered in the past, then we have passed that to the police to deal with.”
The Britannia commissioned the solicitors Herbert Smith to produce a report on the Mandelson affair. This report was codenamed Offenbach. It is worth noting that the Committee Chairman had to quietly threaten the Britannia with his powers to requisition documents before a copy of the Offenbach report was supplied to the Committee.
Was a crime committed?
In their report for the Britannia, the solicitors, Herbert Smith, considered the question of mortgage fraud which falls under Section 16 of the Theft Act 1968. This runs:
“a person who by deception dishonestly obtains for himself or for another any pecuniary advantage is liable on conviction on indictment to imprisonment for a term not exceeding five years…”
The report continued by stressing that for an offence to exist, it is not necessary for the person deceived to have suffered a loss.
Peter Mandelson did profit from his irregular mortgage application because he obtained a mortgage unfairly. This allowed him to gain a further pecuniary advantage by acquiring a more expensive property, which enabled him to make a massive capital gain he would not otherwise have had the opportunity to make. Those facts would seem to fall within the Theft Act’s provisions.
Herbert Smith claimed that the Britannia’s money was never under threat from Mandelson’s failure to disclose his financial circumstances. This is simply false. It is true that if Mandelson kept to the terms of his agreement with Geoffrey Robinson, that is did not put any further charge on the property, the building society would have been safe. But what if Mandelson did not keep to the terms of the agreement? Suppose, for example, that he ran into severe financial trouble and took further loans against the property which exceeded the value of the property?
Such a scenario is plausible. Mandelson has shown himself to be, secretive, very reckless and spendthrift. The Commons report also shows how slender his means were in 1996 – he had to borrow money from his mother to tide him over the period when he had to pay not only the Notting Hill mortgage but also the mortgages on Hutton and Wilmington. A situation could have easily arisen whereby Mandelson had taken loans to the value of less than the value of the house at the time the loans were granted, but which exceeded the value of the property when the loans were called in. The most likely cause of such a situation would be a collapse in property values similar to that which occurred in the early nineties.
It is true that in such circumstances the Britannia might still be able to exercise first call on the property eventually. But they would at best have to go through a great deal of legal aggravation to make good their claim. At worst, they might not be able to sustain a claim if other loans taken by Mandelson had been given on the same basis as that give by the Britannia.
I submitted a complaint to the Metropolitan Police asking them to investigate Mandelson for gaining a pecuniary advantage by the use of false statements and embezzlement and for possibly engaging in a conspiracy to obtain a pecuniary advantage and embezzlement. I received this reply from Chief Supt Paul Scotney: “After careful consideration of all the facts outlined in your two letters, I have decided not to commit police resources to investigate this matter.”
Wonderful isn’t it? Pure insolence of office. Police officers have an obligation to investigate where they have reasonable grounds for believing that a crime has been committed. Patently they did in this case because of irregularities in Mandelson’s mortgage application. Failure to investigate amounts to a perversion of the course of justice.
What does all this show? It is classic elite behaviour in an ostensible democracy. A member of the elite was caught publicly in circumstances which were too serious and outlandish for the elite to simply ignore. Thus a charade was performed whereby an “investigation” took place with a predetermined outcome, namely that no meaningful punishment would be meted out to the errant member of the elite regardless of the evidence offered. The purpose of the charade was to allow the elite to make a pretence that justice had been done.
The Code of Conduct for MPs demonstrates beautifully the ease with which the elite can control things. The introduction of this code was a major constitutional change. Before then, there was precious little by way of formal restraints on MPs’ behaviour beyond the election rules of the Representation of the People Act and the rather toothlessregister of interests. Most extraordinary was the fact that an MP’s behaviour towards his constituents was unrestrained by anything other than convention, which were mostly the product of the Commons of the eighteenth and early nineteenth centuries which developed conventions in keeping with the aristocratic flavour of its membership which took Burke’s dictum that a member is not a delegate as its watchword.
Once the Code of Conduct was accepted by the Resolution of 24/6/96, in theory the game changed. MPs became obligated formally and the old conventions were superseded where the Code of Conduct impinged upon them. Yet for all the practical effect it had in the Mandelson case, it might as well not exist. As things stand, it is simply a propaganda tool for the ruling elite.
Only the House of Commons can meaningfully enforce the Code. The Code gives the appearance of an attempt to maintain public probity but that is all it is, the appearance. Elites in an ostensible democracy have to make a public playof honest dealing with members of the elite, but it is just that, a play. The reality is that elites ensure that justice is not done by controlling the bodies which make judgements of members of the elite. The people who investigated and udged Mandelson were a committee which had a majority of embers from Mandelson’s own party and a public servant whose appointment depended on the very politicians she was due to judge. Just to add spice to this elite sauce, Elizabeth Filkin was a non-excutive director of the Britannia until a few weeks before her appointment as Commissioner for Standards. Strangely, she did not feel that this disqualified her from investigating Mandelson. I asked to appear before the Committee. The request was refused. All very cosy, all very elite controlled.
Throughout this affair every person involved in the investigation has behaved to benefit Mandelson and mitigate his offence. Elizabeth Filkin refused to investigate the most damaging charges against Mandelson, those of criminality and of being under the influence of Robinson because of the loan. She refused to investigate Robinson at all. The Britannia’s solicitors, Herbert Smith, put the best possible gloss on everything Mandelson did or failed to do. The Committee concluded against all the evidence that Mandelson’s misbehaviour was trivial.
This affair raises the vital questions of equality before the law and democratic control. Both have been negated comprehensively. The general public have been treated as impotent fools. We have not a democracy but an elective oligarchy, which is as effective at maintaining control as any formal aristocracy.
1 Mniutes of Report para 51