Serious Fraud Office: Bryan Evans

Huw Irranca-Davies Excerpts

Wednesday 3rd February 2016 Westminster Hall

[Byron Davies]

I am grateful for that intervention, which goes to prove that there are many ongoing cases.

Mr Evans believes that Mr Harlow was determined to prevent him from refinancing with another bank as Lambert Smith Hampton would lose the contract for the development, which could in turn lead to Poolman and Harlow having to reimburse Lambert Smith Hampton for that loss, which is commonly referred to as a clawback.

Mr Evans engaged Geldards solicitors in Cardiff. Over a period of time, Mr Karl Baranski of Geldards discovered that Barclays had no legal charge over EPL’s land and therefore its actions to date could be challenged. Mr Baranksi also pointed out to Barclays that Lambert Smith Hampton was in a conflict-of-interest situation.

[Huw Irranca-Davies (Ogmore) (Lab)]

I congratulate the hon. Gentleman on securing this important debate. As I listen to him laying out the particulars, it seems to me that we are hearing the same plot, although with different characters, as in our recent debate with the Minister and in the point made by the hon. Member for Wycombe (Mr Baker). When I asked the Minister, who is a good friend, about when the Serious Fraud Office gets involved, he helpfully laid out its statement of principle. It considers

“whether there is new species of fraud…whether actual or potential economic harm is significant…whether the actual or potential financial loss involved is high”

and so on. I suggest that that threshold has been passed.

[Byron Davies]

I thank the hon. Gentleman for his intervention.

Mr Baranski also pointed out to Barclays that Lambert Smith Hampton was in a conflict-of-interest situation. In a shocking twist, Lambert Smith Hampton assured Barclays that it had never represented EP Leisure or Mr Evans. Mr Evans says his solicitor then presented Barclays with irrefutable evidence to the contrary, which it subsequently ignored.

At that time, Mr Evans took his case to the police. Detective Inspector Runnells and Sergeant Owen of South Wales police interviewed Mr Evans with regard to his allegations. The two detectives then interviewed Karl Baranski and Jonathan Griffiths of Geldards. As a result of those interviews, Mr Sainsbury of Barclays bank was informed by Sergeant Owen that they would be travelling to London to see a report written by Bob Harlow in October 2009.

On arrival in London, Mr Sainsbury was represented by Mr Jonathan Hoey of TLT Solicitors. Mr Hoey was told that if he sat in on the interview, he could no longer represent Lambert Smith Hampton. He assured the police that he was now “100% the bank’s man”. As will be shown later, that was not to be the case. At the meeting, the bank refused to show the police the report, and this is where Mr Evans’s story takes a rather unwelcome turn: the police returned to Swansea and decided to take no further action, with DI Runnells stating that he did not think fraud had been committed.

Mr Evans says he has asked the police on numerous occasions how they can conclude there is no case to answer if the evidence at the centre of the fraud has been withheld. He believes that the police have more than enough evidence to seek a production order for that report, but to this day they have shown a great reluctance to do so.

Mr Evans is of the opinion that the police have spent an inordinate amount of time and public funds to avoid seeking a production order, which would have had no financial cost. He has dealt with several senior officers of South Wales police—in fact, they are too numerous to mention. At present, Mr Evans is dealing with a new inspector, Detective Inspector Hough. Mr Evans states that the situation has got to the point where Barclays bank now says it cannot release the report as it belongs to Lambert Smith Hampton, which in turn says that it cannot release the report as it belongs to Barclays—a farcical situation, to say the least. One may ask why, if this report is so innocuous and could vindicate the actions of both Lambert Smith Hampton and Barclays, they will not release it.

Returning to the situation with Barclays, in May 2012, after a lengthy period of negotiations, Barclays, in order to “reflect what had transpired”, offered to reduce EP Leisure’s debt by £1 million, lift the receivership and refinance the outstanding balance of around £1.25 million for 12 months. During that period, EP Leisure would seek to refinance with another bank, give Barclays legal charges over the property and make monthly payments of £3,600. The deal was to run until June 2013. Mr Evans also had to sign a confidentiality agreement.

At this point, it should be noted that Mr Jonathan Hoey of TLT Solicitors, despite the assurance he gave to the police in London, was now representing Barclays bank, the two named receivers and Lambert Smith Hampton. Mr Evans tells me that during the negotiations, Mr Hoey tried to force Mr Evans into dropping his allegations against Lambert Smith Hampton as a condition of the deal with Barclays. Mr Evans refused to do so and reported Mr Hoey to the Solicitors Regulation Authority for abuse of power and conflict of interest, but it was unwilling to take any action, saying, “I know you think it’s blackmail Mr Evans, but it’s just business.” Mr Evans has stated unequivocally that the SRA introduced the word “blackmail” and he did not.

During the following 12 months, Mr Evans discovered that the receivers had acted illegally by signing contracts in the name of EP Leisure and registering for VAT in the name of EP Leisure. That registration has now been voided, but those actions made it impossible for Mr Evans to refinance. He kept Barclays fully informed of the situation and carried on making the agreed monthly repayments after the June 2013 expiry date. Indeed, payments were made in July, August and September and were accepted.

In October 2013, Mr Evans received a letter from Barclays asking for full repayment, otherwise action might be taken to recover the debt. Just two days later, EP Leisure, without any warning, was placed into administration by Barclays, with TLT once again acting for both the bank and the administrators. EP Leisure’s land was sold within days and it has now been wound up, despite Mr Evans telling the administrator that the company could well be owed substantive damages. Mr Evans believes that that is just a sinister ploy to silence him and prevent the truth from being exposed. He intends to reinstate the company and pursue all claims. Furthermore, Mr Evans has reported the circumstances of the sale to the police, who say they intend to investigate, but I am sure Members will appreciate that Mr Evans has dwindling faith in their intentions.

The domino effect of the aforementioned action has resulted in Mr Evans and his family losing absolutely everything, including his house. He poses the following questions, which need to be answered. Why have the police prevaricated and refused to properly investigate serious allegations of fraud? Why have the police refused to seek a production order? Why has the SFO also refused to take any action? How can a solicitor—in this case, Jonathan Hoey of TLT—represent Barclays bank, Lambert Smith Hampton, the two named receivers, Andrew Hughes and Roger Poolman, and the administrators without a conflict of interest?

How can a firm of valuers that had been representing EP Leisure for many years devalue EP Leisure’s assets significantly then become receivers and take control of EP Leisure’s land and income? How can Jonathan Hoey of TLT, as an officer of the court, negotiate a settlement with EP Leisure on behalf of Barclays bank with the knowledge that the settlement could not be honoured? For instance, he would have known that the receivers had possibly acted illegally, hence his insistence that as a condition of the settlement, Mr Evans would take no action against them.

This case and others give rise to wider questions surrounding the motives and actions of the banks and receivers involved in such cases, and whether there has been collusion and fraudulent representation. What we are dealing with here has had a devastating effect on the victims and their families, with a trail of devastation and ruined lives. These cases must be answered, and it must be ensured that the law on such matters is upheld by the Government.

In conclusion, Mr Evans believes there has been a conspiracy to defraud, but to date, no one has been held accountable. He continues to seek justice for himself and to reinstate his business. The whole episode remains, frankly, a mess that could easily have been resolved by the relevant actors performing their roles with transparency and diligence throughout the whole sorry affair. It is not too late, and I have secured this debate in the hope that we will receive positive action for Mr Evans.

--- Later in debate ---

[The Solicitor General]

I know that the hon. Gentleman raised that point in an intervention in the September debate, so he has consistently advocated on behalf of his constituent. It would be wrong of me to start prejudging or second-guessing what the independent prosecutorial authority should do—that would be inappropriate—but I can tell him that the co-ordinated work that he, his constituent and other similarly affected people do, of course, improves the intelligence picture. It cannot do anything but assist the authorities in understanding the true extent of frauds of this nature, so I am grateful to him.

[Huw Irranca-Davies]

The Solicitor-General is giving a very helpful answer. Is he struck, as I am, by the incredible system similarities between the case outlined today by the hon. Member for Gower (Byron Davies) and the case that my hon. Friend the Member for Cardiff Central (Jo Stevens) and I outlined? The parallels between the two cases are incredible, and I know of at least half a dozen more out there that other Members of Parliament have raised.

[The Solicitor General]

I have heard the hon. Gentleman and my hon. Friend the Member for Gower. Although I do not want to start making evidential judgments about similar fact evidence, I take the point.

In the brief moments I have left, I turn to the specific allegations that my hon. Friend has made today. It is, of course, unusual to comment in detail on specific allegations, but I want to say a few brief words about the case.

As has been explained, Mr Evans had obtained a secured loan from the bank in relation to a land development in 2007 on the basis that the land would be turned into a mixed leisure development. It was valued accordingly at between £4 million and £6 million. However, by 2009, due in part to some planning permission issues, the development had not been carried out. The bank appointed a receiver and the value of the land, which was security for the loan, was reassessed and subsequently put at the dramatically different figure of £1 million. The allegation is that this was an orchestrated devaluation by the bank and the receiver.

The reason why the SFO has not opened a formal investigation relating to Mr Evans’s allegations is that they do not, of themselves, amount to the type of matter that the SFO is there to investigate. That is not to minimise the seriousness of the allegations. The situation would have a significant impact on most of us if it happened to us, but in the context of the SFO criterion, the potential scale of the loss is somewhat limited and the allegations are not complex. They relate to one surveyor falsifying a valuation on behalf of a bank, and therefore I have to be honest and frank and say that the issue of the wider public interest does not actually apply, so the situation would not call for an SFO investigation.

However, as I have said, the SFO will keep the allegations and the information that it has received on file, and will consider the matter again if further information comes to light. In particular, given the points that hon. Members have made today, if there is evidence to suggest that the allegation is part of a more widespread issue, the matter will be revisited.

I hope that what I have said gives my hon. Friend the Member for Gower some assurance that the Serious Fraud Office has fully considered the allegations referred to it and will consider any further evidence, but, for perfectly proper reasons, at this stage has decided not to investigate the allegation.

Question put and agreed to.

Alun Richards and Kashif Shabir: SFO

Huw Irranca-Davies Excerpts

Wednesday 16th September 2015 Westminster Hall

[Huw Irranca-Davies (Ogmore) (Lab)]

It is a pleasure, as always, to serve under your stewardship, Mrs Main. I thank my hon. Friend the Member for Cardiff Central (Jo Stevens) for securing this debate and for laying on the record a comprehensive and detailed view of how her constituent has been affected. That is what I intend to do for my constituent, Mr Alun Richards, regarding a related issue. The story, the allegations it contains and the impact that it has had on him and his family are shocking. At best, there is a conflict of interest, with evidence of duplicity; at worst, there is evidence of collusion and real criminality that could go beyond these two cases. The points that my hon. Friend has put to the Solicitor General will help to establish the scale of the problem.

Alun Richards comes from a well-established and successful farming family of long pedigree in the Amman valley in west Wales. He is an award-winning farmer and former Wales young farmer of the year, representing the UK at European levels. His farming business expanded over years, but he knew, as many farmers do, that he had to diversify to grow further. Milk quota changes, mad cow disease, foot and mouth, milk prices and global dairy competition forced Alun to move out of milk production. Farmland was turned to crop production and farm buildings freed for other uses, initially largely funded by family money. It was successful, and the business grew and prospered. While the family had been long-term customers of NatWest RBS, other banks were keen to secure Alun’s growing business, among them Lloyds TSB.

To secure Alun’s custom, Lloyds gave him an attractive offer of the type reserved for the very best businesses: 1% over base rate. That, combined with further family money, allowed Alun to convert farm buildings and the original farmhouse into offices and meeting rooms to be let out. Further expansion included a conference centre. The original farmyard became the Tycroes business park, a beacon for employment in the area that was opened by His Royal Highness Prince Charles. Over time, the business expanded into other property, including an office block in Swansea. It was based on solid foundations and steady growth. It was successful, solvent and profitable every step of the way. The office block was financed through Lloyds, a link that originally came through Alun’s successful business being identified and snapped up by local and regional agricultural managers at Lloyds. Alun’s accounts had now been transferred to Lloyds and all was going well. Tenants were queuing up for the business park and Alun was being introduced as Lloyd’s best customer at the Royal Welsh show.

At the same time, however, the regional manager had identified a failure by the local manager, who should, the regional manager said, have consolidated seven existing loan accounts into one and should have created an overdraft as part of those consolidated loans. Despite the issue being identified, the consolidation and overdraft rearrangement never happened. That failure became the reason that Lloyds used as the justification for Alun’s booming business—to which Lloyds was lending at premium rates for trusted and successful customers--being transferred into recoveries. To be clear, the lender, Lloyds, had identified that a consolidated loan was needed, but it was not arranged, which subsequently became the reason for the business being transferred to recoveries. That itself seems remarkable, but it was in recoveries that my constituent alleges that the real abuses took place. Let us look in detail at how the transfer to recoveries of a successful business happened.

In 2008, Alun was telephoned and told that his account was being taken over by a new manager. Alun believed that his Lloyds account was progressing to a higher level of management—it was a successful business. After two weeks, Alun had heard nothing from his new manager, so he decided to telephone his original manager to ask who his new manager was. The manager informed Alun that he had been transferred to the recoveries department at Bristol. That was a complete shock. Alun then made contact with recoveries, which asked Alun if he could enlighten them as to why his account had been sent there. Alun was told that recoveries only dealt with dead and dying accounts, not accounts that were alive and kicking like Alun’s. Recoveries duly sent Alun’s files back to Alun’s manager and his regional agricultural manager. Recoveries were amazed when Alun’s manager and regional agricultural manager quickly returned Alun’s files. Recoveries told Alun that his files could be parked on a desk for three months and that he would be able to find a new bank or a new Lloyds manager. However, Alun quickly found that, behind the scenes, the banking sector was in meltdown and that that was affecting decisions.

As this was happening, Alun’s business was slowly grinding to a halt, so he engaged his then MP, my hon. Friend the Member for Llanelli (Nia Griffith), who wrote to the chairman of Lloyds bank. Alun then had a visit from a Mr Holliday and Mr Miles, who introduced themselves and presented business cards showing that they were managers in the Bristol recoveries department of Lloyds bank. Mr Miles assured Alun that everything would be resolved. In the presence of two qualified accountants, Mr Miles was asked about his background at Lloyds, because they had not met before. He went to great lengths to provide a history of his employment at Lloyds. He stated that his career had been in the branch network and that he had only recently transferred to recoveries. He produced business cards stating he was a Lloyds manager and carried on stating that he was Alun’s manager on Lloyds-headed notepaper and in emails from his Lloyds address for the next two and a half years.

It was only by pure chance that Alun later discovered that Mr Miles was in fact a qualified chartered surveyor and member of the Royal Institute of Chartered Surveyors —RICS—and also an equity partner in Alder King, which was never officially disclosed to Alun at the time. All correspondence to Alun from Mr Miles was signed in his capacity as a Lloyds manager. It was not stated that Mr Miles was on secondment from Alder King to Lloyds, and Alun has an internal emails, obtained by a subject access request to Lloyds, confirming that no secondment agreement exists between Alder King and Lloyds. Mr Holliday then insisted that Alun’s debt to Lloyds had to be repaid within 10 years, not the 20 years that was in the original loan agreement. Soon after, Alder King was appointed as LPA receivers over Alun’s business.

Alun was shocked to find out that Alder King was previously owned by Lloyds and contacted the receiver, a Mr Hughes. Mr Hughes had previously been a managing director at Alder King and past chairman of the Association of Property and Fixed Charge Receivers, or Nara. He was also a chartered surveyor and member of RICS, so he was well-qualified to understand the Law and Property Act 1925. Alun attended a meeting at Alder King’s offices in Bristol with Mr Hughes and Mr Holliday and Mr Miles from Lloyds. Alun was supported by his accountant, who took minutes. At no point was it made clear that Mr Miles was a chartered surveyor, a RICS member or an equity partner at Alder King. He was always introduced as a Lloyds bank manager. Mr Hughes should have made Mr Miles’ position and the potential conflict of interest quite clear.

On hearing Alun’s story, Mr Hughes immediately resigned his position as receiver, despite discussions with Mr Holliday, who insisted that Mr Hughes remain appointed. It was clear that Mr Hughes was aware of not only the conflict of interest, but potential criminal fraud and the misrepresentation of his business partner Mr Miles. There was financial profit in this situation. Another three months passed with little activity from Lloyds recoveries. Mr Smith from Alder King was appointed as LPA receiver, along with the reappointment of Mr Hughes.

By March 2011, two years on from the shock meeting with Mr Holliday and Mr Miles from Lloyds recoveries, Alun’s life and business were grinding to a halt. As a result, Alun, along with his MP, went to the main Lloyds offices in Gresham Street, London. Alun’s then MP presented a letter to request a meeting with António Horta Osório, Lloyds’ new chief executive officer. A Mr Young met them and listened to the story and stated that there

“had to be a resolution”.

By now, Alun was dealing daily with Mr Young, who had given him direct access via landline, email and mobile. Mr Young gave an ultimatum to recoveries to resolve matters with Alun or the case would be taken over by Mr Cumming, the global managing director, with overall responsibility of Bristol recoveries. After that, however, Alun was locked out of his business park, with Lloyds having sold the property as mortgagee not in possession.

Two of the tenants of the Tycroes business park bought the property for £70,000. Although Alun Richards had in his possession a valuation for the same business park of more than £2 million, carried out by surveyors Lambert Smith Hampton only two years previously, LSH had reportedly provided Lloyds with a zero valuation of the same premises. The business park had 12 units, two office blocks, a large conference centre and 5 acres of future development land—but a zero valuation.

Notification to Alun of the sale came via solicitors TLT. It transpired that TLT was acting for Lloyds bank, Alder King, Mr Smith and Mr Hughes. Is that not a conflict of interest? Alun’s then MP, my hon. Friend the Member for Llanelli, arranged a meeting with Mr Young and Mr Cumming at Lloyds headquarters in London. Subsequently, Mr Cumming took sole responsibility for Lloyds’ actions and agreed to visit the farm to see at first hand the damage that had been caused to Alun and his family.

An auction of the remaining farmland had been planned for that evening, but was cancelled by Mr Cumming. That was strange, as Lloyds had appointed an LPA receiver to take charge of all the properties. A further property, Mansel house in Swansea, which Alun had purchased as his pension fund, had a valuation of £600,000 and a loan of £480,000 secured with Lloyds. The LPA receiver sold it at auction in London for £125,000, two years after it had been bought by Alun. Of the £125,000 realised for the property, Alder King took a commission of £50,000, realising a loss of £405,000 to taxpayer-owned Lloyds bank.

Mr Cumming kept his word and visited Alun’s farm to see the damage. Again he took full responsibility, and he declared that he would be back within a week to return Alun’s business to the position it was in before this fraud began. Alun had now had a high-profile managing director in Lloyds bank travel to his farm in rural west Wales and state that he would return Alun’s business to its original position, but the next week came and went. After three weeks, Mr Cumming wrote to state that he had decided on an independent investigation into his department’s action.

Mr Cumming appointed solicitors Hogan Lovells to lead the investigation, but over the next year Hogan Lovells parked it in the long grass. Lloyds then decided to sell the rest of Alun’s portfolio by auction—the fourth attempt to sell the properties, as the previous three had been cancelled. Alun’s father bought all the lots, but Bristol recoveries, Alder King and the other RICS auctioneers who were now involved were furious and used an opt-out clause in the small print to cancel the sale. They then sold the farmland on a first come, first served basis at a knockdown price. Shortly afterwards, Alder King resigned as receivers. Alun had started out with a portfolio valued at £5 million and a successful business, with borrowings of £1.3 million; he has ended up bankrupt and with nothing.

Where is Alun’s case now? Alun Richards and Kashif Shabir had their first meeting with the Serious Fraud Office on 11 November 2013, when they presented what they believe to be overwhelming evidence of criminal fraud. Another meeting was held one year later. I understand the file to be open and awaiting progress—that is what we are seeking. Alun made separate but identical complaints to RICS—as did Kashif Shabir—regarding his personal circumstances, which involved an additional set of regulated members. RICS refused to take the bundles of evidence from Mr Richards, but then somehow concluded that there were no breaches of its code. RICS relied solely upon the representations of its members. It would therefore not be unfair to assume that it is offering a degree of protection to its fee-paying members. Where is the professed protection for the customer?

The Select Committee on Business, Innovation and Skills looked at the case on 4 March 2015, under the chairmanship of my hon. Friend the Member for West Bromwich West (Mr Bailey). In attendance were principals from five independent industry regulators, including Eve Salomon, chair of the regulatory board of RICS, Graham Stockey, principal surveyor for RICS, Julian Healey, chief executive officer of Nara, and Daniel Hardy, chairman of Nara.

I echo the comments made by my hon. Friend the Member for Cardiff Central, who referred to the evidence given at the hearing being entirely in opposition to the practices adopted by Lloyds and Alder King working in unison, giving the appearance of collusion. Furthermore, when parties with a mutual financial interest are working in conjunction with each other, there are obvious opportunities for abuse. It is just such an abuse that I wish to highlight and that I believe my constituent Mr Richards is the victim of. In addition, it is known that Alder King, as I touched on, was the recipient of substantial fees, amounting to hundreds of thousands of pounds in this case. The incentive is obvious. In Alun’s case alone, Alder King was able to charge more than £400,000 in total fees for acting as receiver.

What about the Solicitors Regulation Authority? The general case is further exemplified by the fact that both Alder King and the bank were utilising the services of not only one law firm, but specifically Mr Hayllar of TLT solicitors, who was representing both the bank and the receiver simultaneously. What chance does the customer have when facing a united front from a tripartite relationship and he is not even invited to the party? In fact, his exclusion is what makes the party happen. The consequences of the alleged criminal fraud of Lloyds recoveries in Bristol, along with Alder King, are far reaching, because more than 3,000 customers were with the Bristol recoveries at one time. Such fraud could have cost the British taxpayer hundreds of millions of pounds of the bail-out money that was available to Lloyds bank.

In conclusion, there is more to these cases than my hon. Friend and I have said today. Allegations have been made against individuals and organisations such as the Association of Chartered Certified Accountants, which appears complicit because of its failure to step in and act when concerns and allegations against its members were raised. ACCA will now only communicate with my constituent via a solicitor.

Surely now is the time for the Serious Fraud Office to take action. Now is the time to shine a spotlight on the allegations of criminality, collusion and corruption. What the two cases illustrate might be the tip of the iceberg. The SFO surely has a duty to pursue the matter, to see whether the allegations are substantiated and, crucially, whether there are more cases like this out there—we have heard that there are, with more victims suffering in silence and believing themselves helpless after their profitable businesses have been destroyed. The SFO has the power, authority and remit to do something—to make inquiries of the regulator, Alder King and the bank, and to quantify the extent of the situation. We could be talking about millions of pounds, but only the SFO can uncover this. Far from being responsible banking practice, this looks like daylight robbery. A thorough investigation is needed and it is needed now.

--- Later in debate ---

[The Solicitor General (Robert Buckland)]

It is a great pleasure to serve under your chairmanship, Mrs Main. I pay warm tribute to the hon. Members for Cardiff Central (Jo Stevens) and for Ogmore (Huw Irranca-Davies) for bringing this important debate to the Chamber and for having not only the courtesy but the sense of co-operation to approach me before it so that I could clearly understand the cases that would be raised. I hope, in the light of that, to offer an appropriate response. My response has to be calibrated bearing in mind the nature of the office I hold and the importance of having an independent prosecutorial service, and I know that Members on both sides of the House understand that.

I also pay tribute to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) and welcome her to her post as shadow Attorney General. I was delighted to hear her remarks. Although no doubt we will disagree about some issues, I am sure we will be able to work constructively together in the finest traditions of the Law Officers and shadow Law Officers, and their unique role within Government.

The issues that have been raised—it is almost axiomatic, but it is important to say it—are important. They are wide-ranging and the presence of the hon. Member for West Bromwich West (Mr Bailey) has been helpful, because, as he reminded us, he was the Chair of the Business, Innovation and Skills Committee that took oral evidence in March. I am grateful to him for coming to the debate. He will appreciate that issues of regulation are for other arms of Government, but one function of debates such as this is for the House to hear the bigger picture, so that all arms of Government are fully aware of Members’ concerns.

The hon. Member for Cardiff Central asked for a general review. As she will know, there have been a number of reports and reviews on specific aspects of this type of alleged misconduct. We heard reference to the Tomlinson report, which, in itself, gave rise to what is termed the skilled persons report under section 166 of the Financial Services and Markets Act 2000. That report is due to be produced at the end of the year. It relates to another bank, but the type of alleged activity is highly germane to the issues that we have been discussing.

I hope that hon. Members will forgive me for confining myself to the debate’s terms of reference. What I aim to do, first, is to offer strong reassurance to hon. Members about the importance with which the SFO regards all allegations and the threshold test that it must apply.

I listened to the shadow Attorney General’s remarks with great interest. I disagree with her about the very nature of what is a demand-led service and the importance of having blockbuster funding to allow for the flexibility that the SFO needs, in terms of hiring or engaging staff, and larger numbers of staff at different times, particularly to deal with finite inquiries. There is also the impracticability of maintaining very large staffing numbers at all times because of the inevitable pressures that will exist upon its budgets, whatever the economic weather. With respect, the point that the hon. Lady was missing was the terms of reference within which the SFO was set up, and it is important to remind the House about those, because they are highly germane to the test that has to be applied to all allegations of fraud.

Those of us with a long memory will remember the Roskill report of 1986. It was groundbreaking because it made important recommendations about the investigation of serious fraud that gave rise to the Criminal Justice Act 1987. The Roskill model, which was the embedding of investigators and prosecutors together in one group, gave rise to the Act and setting up the Serious Fraud Office.

The sort of cases that the SFO deals with are what I, and I think all of us, would regard as the very high-profile, big-risk cases involving huge sums of money, large numbers of victims or new types of fraud, whether the manipulation of LIBOR rates, or allegations involving major companies such as GlaxoSmithKline, Barclays, Tesco and Rolls-Royce. This is a particular type of serious fraud for which the threshold has to be high and, in fact, it is set out in the Act. We therefore have to recognise that, sadly, not all cases of alleged fraud are going to fall to the SFO to investigate. As I said, it can only formally commence investigation if the criteria and circumstances set out in legislation are met.

The police have the primary responsibility for investigating crime here, and Action Fraud has been established as the national reporting centre to which reports of alleged fraud should be referred in the first instance. The SFO’s role is limited to the investigation and prosecution of cases of serious and complex fraud. However, I can assure the House that when referrals are made to it, a member of the SFO assesses every single one. That task is not to be underestimated. The vast majority of referrals to the SFO are not about matters that it can properly investigate, but it takes every single referral seriously, and it will give each one due consideration and pass on details to other agencies that may be more suited to dealing with it or placing particular cases. It also retains the material that it has been given, using that for intelligence purposes to help inform other agencies and, indeed, sometimes in its own work to identify those top-tier cases that are appropriate for it to investigate.

[Huw Irranca-Davies]

I thank the Minister for the helpful way in which he is laying out his points. He mentioned the threshold test. If evidence was to be gained that this went beyond two individual cases and that there were far more, would it pass the threshold test? If that is the case, rather than relying on the CPS or on individual prosecutions, would it be, in the light of the questions asked by my hon. Friend the Member for Cardiff Central, appropriate—or, in fact, necessary—for the SFO to make inquiries of Lloyds, RICS, and Alder King in relation to how many examples of conflict of interest and potential financial gains along the way this could affect? If we are talking about thousands of people—my apologies for the length of this intervention, Mrs Main—I suspect we are in SFO territory.

[The Solicitor General]

I hope that the hon. Gentleman can be forgiven for the length of his intervention, because he asked a very pertinent question. Although I cannot prejudge the precise parameters of what might happen in the future, circumstances may well change, and the SFO, keeping matters under review as it does, would then have to be guided by that change in circumstances. In other words, we cannot rule that possibility out. It would be wrong of me to do that.

Dealing, then, with the specific allegations, I have to acknowledge that it would be unusual for me to comment in detail about allegations either leading towards an individual or made by an individual or a company, but I am aware of course that Mr Shabir and Mr Richards have raised their allegations with a wide range of people and organisations, and I do not underestimate their importance. The two gentlemen clearly have had a very difficult time. The consequences of what has happened are extremely serious for them. That said, I have to stress that these remain allegations. It is not for me to comment on their merits or whether they are well founded. I have to acknowledge the effect of allegations that are made, and that is an important point when discussing them in a public forum such as this. Those are the constraints within which I think I should operate.

Although Mr Shabir and Mr Richards have presented their cases together, they are making slightly different allegations. It is right to say, as has been said in the debate, that the SFO has met the gentlemen on more than one occasion; the allegations have been considered in great detail; and there has been close liaison with other law enforcement agencies and regulatory bodies to gather any relevant material that they may hold. However, the SFO has explained to both gentlemen that their cases, individually, would not meet the threshold and would not be investigated, because as stand-alone allegations, they do not come into that top tier. That has been made clear. We have already—I am grateful to the hon. Member for Ogmore—started to outline and discuss what might or could happen to change that position, but that is the status quo.

I have said that it is important to recognise that the SFO does not investigate every case of alleged fraud—that is not its purpose—and I know that despite referrals to other organisations, no proceedings have yet been brought. However, the material provided by Mr Richards and Mr Shabir is being kept or has been kept under active consideration by the Serious Fraud Office, and this matter is kept under review as new information may arise. It is not a closed file, but obviously at this stage the threshold has not been reached.

This is exactly what the SFO should be doing. It is seeking to make intelligent and intelligence links to identify cases of serious or complex fraud. To seek to investigate every case would defeat its purpose and overwhelm its resource, and frankly it would have no statutory footing on which to do so. I argue strongly that the current director has demonstrated that he is prepared to take on difficult and high-profile cases. The seriousness of the investigations to which I have referred will, I hope, demonstrate to hon. Members the sort of case that the SFO should be taking on. In other words, the office has a specific role that Parliament has given it. If the SFO can put all these allegations together with other intelligence to establish a case of serious or complex fraud, it will do so, and that is why it has decided to keep this significant matter under review.

Welsh Assembly Legislation (Attorney-General)

Huw Irranca-Davies Excerpts

Tuesday 15th October 2013 Commons Chamber

[Paul Flynn]

I remember it vividly. It was a painful experience but one that resulted in promotion to Cabinet rank for my right hon. Friend. I saw the former hon. Member for Cardiff, Central today. At that time it meant challenging some of the views of the Labour party in Wales, which were not always progressive.

We got to the stage where Wales had the chance to make laws on its own soil, not for the first time in history, but for the first time in 1,000 years. Laws were made by Hywel Dda between 942 and 950, and they were very progressive. One stated that if a wife caught her husband in bed with another woman for the third time, she could divorce him and get compensation for the previous two occasions. Women had the right to own land, which was progressive in 942. There was also a law—it is rather better than the bedroom tax and other measures we have now—stating that if a person had passed through three villages asking for food but not been fed, he or she could not be punished for stealing food. That was progressive Welsh legislation, and it should have inspired the Government to realise that, as the great Welsh proverb states: Hawdd cynnau tân ar hen aelwyd—it is easy to kindle a fire on an old hearth. The old hearth was there, because we were law-makers in the past, and good law-makers at that.

Boldly the Welsh Assembly Government put forward their first law, which had the romantic title of the Local Government Byelaws (Wales) Bill. They took it through the Assembly and it became an Act. One would not have expected it to cause an enormous amount of excitement, because it just cleared up a few other laws to allow local government to pass their own byelaws, which they have been doing without trouble for a long time. There was no hesitation and no excitement, but for some reason—I am sure that the Solicitor-General will explain it when he replies—that modest Bill, the first for 1,000 years to bear the royal Welsh seal, which made it significant, even if its content was not, was opposed by the Attorney-General’s office.

[Huw Irranca-Davies (Ogmore) (Lab)]

My hon. Friend might want to recollect that before that we had the procedure for legislative competence orders, which he has referred to. The first one I dealt with, along with my right hon. Friend the Member for Neath (Mr Hain), was the LCO on red meat. Although it was delayed, subject to parliamentary scrutiny that was a little over-onerous, we did not delay the red meat LCO too long, because otherwise it would have gone off.

[Paul Flynn]

Yes, it was a difficult period when we had the LCOs, which were a new legislative monstrosity that we were stuck with and that puzzled us, but as a result of certain ingenuity they did mean that some sort of law was made in Wales, even if in a cack-handed manner. They are now a footnote in history.

The Local Government Byelaws (Wales) Bill went through because it was uncontroversial, and there was a little bit of ceremony because we were proud to be making laws in the land of our own country for the first time in more than 1,000 years. Why on earth was it opposed? The First Minister called it a

“ridiculous situation that has arisen on what is a totally uncontroversial piece of legislation…The primary policy objective of the Bill is to simplify and rationalise how local authorities make byelaws to deal with nuisances in their areas…So why the UK government has decided to take this to the Supreme Court, at the last minute, is inexplicable.”

--- Later in debate ---

[Huw Irranca-Davies]

Before my hon. Friend continues on to another Bill, may I suggest that there might be an interpretation of what justified the Westminster intervention and challenge on this? It is as simple as this: for local government, a devolved area in Wales, read England.

[Paul Flynn]

Absolutely. This is part of the long history of the neglect of Wales and the undervaluing of Welsh life by the British Government over the years that now has a chance of being corrected.

A Bill about the Welsh language was proposed that offered equal status to the two languages. While there were quibbles from the national Government about this, they did not take it to the High Court. We now have a farm workers wages Bill—a splendid Bill in many ways—that has had great support even from the farm unions in Wales. That is because there are farm wages boards in Scotland and in Northern Ireland, and the Bill tried to get the board continued in Wales. Farm workers along the borders in Wales are already exposed to market forces and do not have the protection that the 13,000 farm workers in Wales have. The Agricultural Wages Board set pay rates that gave a modest amount of protection to farm workers, whose wages have never been generous and were hardly generous under the Bill, but are certainly exposed to greater cuts now.

The UK Government warned that there were important questions for the Supreme Court to resolve as to whether the Assembly acted within its powers on that matter. Yet whatever powers the Welsh Assembly got, they certainly included agriculture. There is no question about that, because it was the decision of this House under the Acts that were passed here. However, for some twisted reason the Government decided that this was to do with employment, and by that chicanery challenged the Bill.

[Huw Irranca-Davies]

Does my hon. Friend share my shock at the fact that the Welsh Government Minister, Alun Davies, had repeatedly made it clear to the Secretary of State for Environment, Food and Rural Affairs that he wanted to carve a different path in Wales and was simply seeking a dispensation in order to do that, and yet he was told, “No, we will abolish the whole structure of the Agricultural Wages Board and then fight the battle over whether you can reinstate something that looks like it”? What sort of respect for devolution is that?

[Paul Flynn]

My hon. Friend gives a splendid example. This is the reverse of devolution, the very opposite of what the new Minister of State at the Cabinet Office said the other day about local opinion and good ideas. Wales has a stronger case for an Agricultural Wages Board, perhaps, than many parts of England, so we should be able to make a different decision, but the Government object.

--- Later in debate ---

[Paul Murphy]

There are two ways of looking at it. There are party political differences because of the different parties in the different countries, but I also experienced that when Labour was in government and other state Departments were not necessarily sympathetic to what the Welsh Government were doing. It was my job to say, “You might not like it, but you’ve got to do it because that is what devolution is all about.” Otherwise, what is the point of having it in the first place?

[Huw Irranca-Davies]

When I served under my right hon. Friend as Under-Secretary of State for Wales, a signature of his tenure in office was that at all times such resolutions were dealt with early and within our mechanisms. It was a signal failure if something had to escalate to another constitutional mechanism, and it did not go at all to the Supreme Court.

[Paul Murphy]

I am grateful to my hon. Friend for his remarks, and there is machinery within the Government system for resolving disputes between the devolved Administrations and their Parliaments, and the United Kingdom Government. That has been set up for nearly 16 years and is precisely to deal with those areas of considerable difference. In my view, that includes whether there is a dispute, and whether something is intra vires or ultra vires. I repeat: to take the issue to the courts is to press the nuclear button and could cause immeasurable damage to the devolution settlement.

--- Later in debate ---

[Huw Irranca-Davies (Ogmore) (Lab)]

I congratulate my hon. Friend the Member for Newport West (Paul Flynn) not only on introducing the debate and on his excellent peroration on the stymieing of legislation and policy in Wales by the current Westminster Government, but on expounding on the narrative history of the Chartists and why it is relevant. I can only share his disappointment that we have so little time to debate this—we could go overnight, but, in compliance with the wishes of right hon. and hon. Members, we will try to avoid that situation.

The legislative competence order process was a previous mechanism for producing legislation in Wales. It was slightly cumbersome and convoluted, and required a great deal of detailed scrutiny in Parliament. However, it passed some cognisance of the growing authority of the Welsh Government. LCOs were much criticised at the time—rightly, in some ways, because they caused delay and were complex, even for the very good officials in the Wales Office in London and in Cardiff, and for Welsh Government officials, who worked through the minutiae. The intention—to afford proper scrutiny in Parliament and ensure that the Welsh Government could introduce their own measures under the process within their clearly devolved responsibilities and so on—was good. Yes, it caused delays, but there was a good spirit. We managed to pass LCOs into legislation, even after good scrutiny in Parliament by the Welsh Affairs Committee and others. There was never any intention to hold things up unduly.

The purpose was the growing relationship under the LCO system between the right scrutiny of this place at that time and the right role of the Welsh people, through their elected officials in the Welsh Assembly and the Welsh Government, to introduce appropriate measures from Wales. As my hon. Friend pointed out, that was not without its difficulties. It could sometimes be tortuous—even the now legendary red meat LCO took a little time to get on to the books, and that was one of the more straightforward orders—but we got there eventually. On all occasions, the intention of my right hon. Friends the Members for Neath (Mr Hain) and for Torfaen (Paul Murphy) was for their officials to work with officials in the Welsh Government and the Welsh Assembly to try to progress the measures through the LCO mechanism, which was imperfect but was what we had at the time.

What has followed, with the will of the Welsh people, is ostensibly an attempt to streamline the process to give clarity on where devolved responsibilities lie, and to allow the Welsh Government, the Welsh people and Welsh civic society to get on with passing their own laws—whether we, on both sides of the House, might agree or disagree with them ideologically—to define their own democratic path. As we have heard, it has not quite gone that way. For those on the Opposition Benches it feels like there has been by the current Secretary of State for Wales—I do not blame the Solicitor-General for looking quizzical—a maybe inadvertent but deliberate attempt to hold up, to challenge, to rebuke the Welsh people for being so impertinent as to actually bring forward their own legislation.

[The Solicitor-General]

I am surprised to hear the hon. Gentleman suggest that LCOs are better than the current system, whereby the National Assembly for Wales has primary powers in 20 areas. What is more, most of the Bills are going through without any difficulty. There have been difficulties with two, but the idea that we should go back to LCOs is wrong.

[Huw Irranca-Davies]

I could not agree with the hon. and learned Gentleman more. Perhaps I should clarify what I was saying: LCOs were clearly imperfect, but the new system is meant to be better. Even with the LCO paraphernalia—it was difficult and cumbersome—attempts were made within the constitutional arrangement, as my right hon. Friend the Member for Torfaen has made clear, to work through those difficulties. If necessary, and as a last resort, they would be escalated up the constitutional food chain for resolution at a higher level, but there was certainly not the seemingly macho political posturing of taking it outside of this place without recourse to internal mechanisms and straight to the Supreme Court. I can see only one possible justification for that: to prove some sort of point and say to the people of Wales and the democratically elected representatives in Wales, “Know your place.”

[Stephen Doughty]

Does my hon. Friend accept that there is also an opportunity cost here? What is the Secretary of State for Wales doing with his and his officials’ time, attempting to stymie and frustrate the will of the Welsh people and the National Assembly instead of focusing on standing up for Wales around the Cabinet table? He was evasive when we questioned him on this point in the Welsh Affairs Committee. He would not give us an estimate of the amount of time that he and his office had spent on this. I suspect it was far more than it should have been.

[Huw Irranca-Davies]

I agree entirely with my hon. Friend. There is a clear case for a cost-benefit analysis of the tasks the Secretary of State is spending his time on, and for asking why he is not finding more useful things to do. There is also the question of the cost of challenging this through the Supreme Court. In an era of what we are told is great austerity, cutbacks and stringent demands on Departments, I am amazed that the Wales Office thinks it fit to throw on to Government—albeit another Department—the cost associated with a Supreme Court challenge.

I turn to the Agricultural Wages Board, about which I know some small amount, given that I was the shadow Minister who stood here frequently in opposition to its abolition. Just as frequently, I put the case that the Westminster Government merely needed to allow Wales to continue as it was by putting a clause in the Bill, as requested by the Welsh Government, saying, “Ignore Wales for these purposes.” We only asked that they let us carry on and find a way to do it ourselves, rather than abolishing the whole mechanism and saying, “Now do what you want.”

I pay tribute to the work of Unite, in Wales and throughout the UK, which stood up for the lowest of the low-paid agricultural workers, for skills and training and for the development of earnings and capacity among agricultural workers. I also pay tribute to colleagues in the Welsh Assembly, including Mick Antoniw and others, who fought the good fight in Wales and to the Farmers Union of Wales—for goodness’ sake!—which said, “The reason we want to keep it in Wales is that we are slightly different from England. We have a higher proportion of small and medium-sized farms, which do not only employ individuals. That is why we want the clarity provided by the Agricultural Wages Board. We also rent ourselves out.” They would say to me, “I as a small farmer, rent out, and I know the terms of the contract.” I am talking of the young farmers of Wales too. These are not organisations that would automatically side with Labour on every issue in defence of something such as the Agricultural Wages Board, but my goodness they did on this occasion.

All that the Welsh Government and Alun Davies, the Welsh Minister, were asking was, “Give us time and space to define our own future”, but that did not happen. We debated it long and hard, we fought the good fight, speaking up for the Agricultural Wages Board not only in England, but in Wales, all the while conscious that the voice of representatives in the Welsh Government and the National Assembly was not being heard anywhere except in the media. We had to speak for them.

Wales lost without having had a direct say, and all that was required was for a Westminster Minister to say, “We concede that agriculture is a devolved responsibility. We won’t challenge you. We will put a clause in the Bill that will allow you to proceed.” That, I say to the Solicitor-General, would have shown respect for Wales and the devolution settlement. Rather than that, and symptomatic of the case put forward by my hon. Friend the Member for Newport West, we had a firm no. The door was shut in our faces. In effect, it wiped Wales off the democratic map. That is a regret.

The Solicitor-General is a reasonable and fair-minded fellow. The cacophony of pleas from the Opposition might remind him of the old poem about Welsh people worrying the carcase of a dead song and being a bit too melancholy, but we are not melancholy; we want to be joyous and we want to celebrate devolution and respect the fact that the people of Wales supported greater devolution. We just ask the UK Government, whatever political perspectives make it up, also to show that respect.