Crown Agents

Part of the debate – in the House of Commons at 12:00 am on 5th December 1977.

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Photo of Bernard Braine Bernard Braine , Essex South East 12:00 am, 5th December 1977

The hon. Member for Penistone (Mr. Mendelson) put a very powerful case to the House for the proposal that this grave matter should be the subject of an investigation by a tribunal and not left to be investigated privately. I am bound to say that I agree with the hon. Gentleman about the principle of openness.

I hope that from the debate we shall establish the lessons to be drawn from this sorry affair. One lesson surely is that the secrecy which has overshadowed this matter for so long should be swept away. The Fay Report has done a very useful service in that regard. I am not convinced that a tribunal would delay matters. It is surely not beyond the wit of the lawyers to devise a means of proceeding in a way which takes into account what has already been found by the Fay Committee and which safeguards the interests of those who may be brought before it. I therefore endorse the very frank statement made by my right hon. Friend the Member for Bridlington (Mr. Wood).

Another lesson to be drawn concerns the adequacy or otherwise of our own parliamentary procedures to investigate and control abuses. That is a point which the hon. Member for Nottingham, West (Mr. English) touched upon a moment ago. I must tell the House that there were difficulties when the Select Committee on Overseas Development, of which I was Chairman at the time, looked into the matter in December 1973. The Minister herself, in her very full and frank statement this afternoon, indicated that there were very real difficulties from her point of view in coming to grips with what the Crown Agents were doing betwen 1968 and 1974. So it was with the Select Committee.

The evidence we took, although reported in the House, was not published. With the advantage of hindsight, I can say now that that was a pity, but there were very good reasons for what was done at the time. I intervened a little earlier, Mr. Speaker, in order to make this point in case I failed to catch your eye later on. If the House wills, I see no reason why that evidence should not now be published. The committee comprised not only the right hon. Lady but the hon. Member for Islington, South and Finsbury (Mr. Cunningham), who has played an honourable part in focusing attention upon the matter over a good many years.

If that evidence is published, the House will see that the Select Committee did a useful job in revealing a very unsatisfactory state of affairs. I say this because there was an article in the Sunday Times yesterday which implied that the Select Committee—of which I was Chairman when the investigation began—behaved irresponsibly by deciding to suspend its inquiries in May 1974. The impression may have been created, therefore, that somehow or other a Select Committee of this House failed in its duty. That is a travesty of the truth, and I should like to say why.

In early December 1973, the Select Committee had agreed to a special report, which I proposed, setting out its subjects of inquiry for the Session 1973–74. The committee was proposing to discuss, first, trade and aid, debt, rural development, and allied matters; and, secondly, the affairs of the Crown Agents, with particular reference to banking and investment. Our small, hard-working committee agreed to meet twice a week in order to carry out that programme. We took evidence on two occasions in December on the subject of the Crown Agents: first, from the Ministry of Overseas Development and then from Mr. Claude Hayes, as he then was.

However, following the Select Committee's second meeting, two developments, which everybody seems to have forgotten, interrupted our inquiries into the Crown Agents. First, we went to the Indian subcontinent in pursuance of our other inquiry, because we had arranged that trip months before, and we were abroad when the news of the dissolution of Parliament was announced. Second, there followed a General Election and a change of Government. The Select Committee no longer existed. It was not until May 1974 that a new Select Committee met, and I was not its chairman.

However, there had been a significant development. On the change of Government, two distinguished members of the Select Committee, over which I had presided, became Ministers. The right hon. Member for Lanark (Mrs. Hart) became, for the second time, the Minister of State for Overseas Development. The right hon. Lady had taken an active part in and been a valuable member of the previous Select Committee. Frankly—I say this quite objectively—the members of that Select Committee were absolutely delighted that she had been entrusted with her new responsibility at the Ministry of Overseas Development. It meant that she was now in a position to take effective action, and she took it. The right hon. Lady lost no time. By the autumn she had appointed Mr. John Cuckney to replace Sir Claude Hayes. That was a wholly admirable appointment.

The new Select Committee, in communicating its decision not to proceed further with the inquiry undertaken by the previous Select Committee, referred in its report to the House that the Minister was taking action. The Committee therefore felt that it should get on with its other inquiry, for which it had already taken a great deal of evidence, and to resume the inquiry into the Crown Agents later, if necessary, in the light of what the Minister might do. The committee had high confidence in the right hon. Lady. I should like to point out that I still have high confidence in her in this regard.

The committee decided that, in view of the serious impact of the oil crisis in the autumn of 1973 and the months that followed, it should switch to a study of its implications on the economies of developing countries and on the British aid programme. That is what the Committee's terms of reference primarily required it to do.

After the second election in 1974, as the Minister set up the committee of inquiry, under a distinguished judge, there did not seem to be a need for the Committee to mount a further inquiry at the same time. It is always easy to be wise after the event, but I do not think that the Committee's decision was irresponsible.

Last Thursday the Minister quite rightly said that the action of the Crown Agents in fringe banking was one of the most serious betrayals of public accountability for many years. That was absolutely right. However, the Crown Agents, as we discovered in our investigations, are not to be compared with any other organisation. They were set up to undertake tasks on behalf of their principals which, at that time, were colonial dependencies. But in the 1960s most of the Crown Agents' principals were the Governments of sovereign, independent States. What is more, after the devaluation in 1967, the Crown Agents' principals were pressing for diversification out of sterling. Therefore, it was, and, I suppose, still remains, imperative that the Crown Agents should carry out their traditional tasks free of pressure from United Kingdom Ministers.

One can understand why there was this cloud over the fringe activities into which the Crown Agents had entered in the 1960s. No one wanted to disturb the traditional valuable relationship of the Crown Agents with their principals and with the economy of this country. That they carried out those traditional tasks well is evidenced by the fact that their principals' deposits in 1972 totalled £247 million. But, by the end of 1974, after all the publicity, the criticism, the investigations and so on—that is, after the scandal had begun to be exposed—those deposits totalled £806 million. I suggest that is eloquent testimony to what I have been saying.

The entry of the Crown Agents into fringe banking activities began long before the Select Committee decided to investigate. Incidentally, no one asked the Select Committee to investigate the Crown Agents. The committee decided of its own volition, with the encouragement of the hon. Member for Islington, South and Finsbury, to whom I paid a well deserved tribute earlier, to look into the matter. The Crown Agents' entry into these fringe activities began six years earlier in 1968 under the Labour Government and continued under the Conservative Government.