Select Committee on Standards and Privileges Third Report

Annex 2

Letter to the Parliamentary Commissioner for Standards from Mr Andrew J Milne

  I write further to my letter dated 4 February 2000.


  I believe that the payment of £2,000 referred to in my letter dated 4 February 2000 was made in the months of April or May 1994. You can identify the exact date by an examination of the Office Account cash book of Zaiwalla & Co. The payment would be recorded in the "SZ drawings" column as £2,000 "cash". Mr Zaiwalla never drew such a sum of cash for his own use. Mr Zaiwalla told me that Mr Vaz demanded the money because he was "in trouble with his bank manager". If this is true you would be able to link the payment of £2,000 from Zaiwalla & Co to a deposit in Mr Vaz's bank account at the same time if you were to examine Mr Vaz's bank statements.

  I have a vivid recollection of a young man standing in the reception of our offices who had come from Mr Vaz's office to collect the money. I believe that his name was "Mark". I was told that Mr Vaz had insisted on cash. I subsequently tried to get Mr Zaiwalla to agree not to pay any more money to Mr Vaz. It was well known that Mr Vaz preyed on middle ranking Asian businessmen for money on one pretext or another and I felt that we should not be treated in this way. There is a tradition in India of making payments to politicians—it is simply expected. I felt that as professional people we were above this sort of thing. I also found it insulting that he demanded cash as he did not want his name associated publicly with payments from Mr Zaiwalla. Subsequently Mr Zaiwalla told me that Mr Vaz had asked him for money again and he had refused at my insistence. Mr Zaiwalla told me on several occasions that Mr Vaz had remonstrated with him telling him that he should not have told me about the payment of £2,000.

  I have a vivid recollection of all these matters and am disgusted that Mr Vaz has denied the truth of the payment of £2,000 in the press. I repeat the suggestion in my letter dated 8 February 2000 that I should take a polygraph test on the statements above and would be grateful if you will make the necessary arrangements. I have told the truth in these matters in every detail and I believe that polygraph tests have now reached the level of accuracy that it can be scientifically proved that I am telling the truth. I would also challenge Mr Vaz to take a polygraph test arranged by you and we will quickly find out who is telling the truth.

  It has caused me particular distress that Mr Vaz claimed to The Law Society's Gazette that I had made the complaint against him "maliciously". They published an article containing this claim and have subsequently been forced to publish a correction and an apology and The Law Society has paid me damages for libel in respect of the article.


  Mr Zaiwalla had invested US$15 million, which he had received as his share of the commission paid by the Bofors company of Sweden for a substantial armaments contract with the Government of India in the 1980s, in a company which he had set up called Delta Shipping. Three bulk carriers were purchased in order to launder the money called Nile Delta, Ganges Delta and Avon Delta. Mr Zaiwalla subsequently got into a bitter dispute with the manager of the vessels and they were sold and Mr Zaiwalla acquired a country estate with the proceeds at Kingston Paddocks, Little Preston, Sussex, which he nicknamed "Bofors House". None of this income had been declared by Mr Zaiwalla to the Inland Revenue and they became suspicious and began an investigation. The investigation continues today and has been transferred to Special Compliance Office who deal with the worse cases of taxpayer fraud. Mr Zaiwalla told me that he estimated that he owed millions of pounds in income tax which greatly exceeded his net worth.

  The money which Mr Zaiwalla received as his share of the Bofors gun commission was the start of his dealings with politicians and is the real root of why politicians should be making their way to the office of an obscure Asian solicitor for some cash. Previously he had been a fairly ordinary solicitor with a small office over a bank in Chancery Lane employing two other solicitors. After he got his share of the Bofors gun commission he suddenly had more money that he had ever imagined possible and developed very grandiose ideas about himself. He was desperate for recognition which basically involved trying to meet politicians at fund raising events and trying to buy a peerage. He began spending over £100,000 a year in attending fund raising events, often taking a large table and placing an advert in the programme, and giving money to politicians. He would often buy useless items at Conservative Party fund raising events in the charity auction just to try to get noticed. He once bought a cricket bat for £5,000 because a politician had signed it and also a small piece of embroidery by a Cabinet Minister's wife and many other useless items.

  It became well known by politicians that Mr Zaiwalla did manage to meet that he would like to give them some money and those that did not want to take money themselves would often arrange for him to contribute to their constituency parties.

  The tax investigation was a matter of very great anxiety and concern to Mr Zaiwalla as it became clear that he had systematically defrauded the Inland Revenue out of millions of pounds of income tax in relation to the affairs of his shipping company and the benefits he had received from it. He had also taken other commissions and not declared them on his tax return and had evaded tax on them. In early 1997, Mr Zaiwalla told me that he was going to ask Mr Vaz for help to try to put pressure on the Inland Revenue to accept a token settlement. He told me that he had spoken to Mr Vaz at length about this and Mr Vaz had agreed to help. At that time the tax investigation was being conducted by the district inspector though it is currently being conducted by Special Compliance Office who deal with the worse cases of taxpayer fraud.

  At about the same time he asked Mr Vaz to give him a reference for a peerage. He told me that Mr Vaz had also agreed to do this and I believe that I saw a copy of a letter which Mr Vaz had written to John Major asking that Mr Zaiwalla should be honoured. Mr Vaz also told me that he had sent such a reference though was almost hysterical with laughter at the suggestion of Mr Zaiwalla getting an honour of any description saying that people like Mr Zaiwalla did not get honours and he must be "mad" to be persisting in asking virtually everyone he met to give him a reference for a peerage. Mr Vaz made it very clear to me that there was no question of Mr Zaiwalla getting any honour of any description. I do not believe that Mr Vaz should have given a glowing reference for Mr Zaiwalla in response to his request for a peerage when he honestly believed that Mr Zaiwalla was completely unsuitable for any honour whatsoever.

4 April 2000

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