The Conduct of Lord Moonie, Lord Snape, Lord Truscott and Lord Taylor of Blackburn - Privileges Committee Contents

APPENDIX 2: REPORT OF THE SUB-COMMITTEE ON LORDS' INTERESTS

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CHAPTER 1: THE ALLEGATIONS AND THE CODE OF CONDUCT

Background

1. On 25 January 2009 the Sunday Times published grave allegations that four Members of the House of Lords were "prepared to accept fees of up to £120,000 a year to amend legislation in the House of Lords on behalf of business clients".[2]

2. The Members concerned were Lords Moonie, Snape, Taylor of Blackburn and Truscott.

3. According to the newspaper, the four Members were willing to help undercover reporters posing as lobbyists to obtain an amendment to the Business Rate Supplements Bill in return for payment.

4. The newspaper had secretly recorded its conversations in person and on the telephone with the four Lords, some nine hours in total. The newspaper alleged that it had recorded two of these Lords (Lords Taylor and Truscott) telling the reporters that they had previously secured changes to Bills going through Parliament to help their clients. In the case of Lord Truscott a secret video recording 53 minutes long had also been made of one of their meetings with him.

The sequence of events leading to our investigation

5. On the Sunday the story was published the Leader of the House of Lords, Baroness Royall of Blaisdon, wrote to the Chairman of the Sub-Committee on Lords' Interests requesting the Sub-Committee to begin an immediate investigation as a matter of urgency.

6. The next day (26 January) the Registrar of Lords' Interests advised[3] the Chairman of the Sub-Committee that the allegations appeared to fall within the scope of the House of Lords Code of Conduct. The Chairman of the Sub-Committee concluded on the basis of the allegations in the newspaper stories that there was a prima facie case for the four Lords to answer and that an investigation by the Sub-Committee was justified.

7. The same day Mr Norman Baker MP wrote also asking that the Sub-Committee begin an investigation. We also received correspondence from Mr Ben Wallace MP and from two members of the public, Mr Keith Pudney and Mr Ian Dixon, to similar effect.

8. At a meeting later that day the Sub-Committee took the Leader's letter to be a complaint for the purposes of commencing an inquiry into the allegations, and agreed to conduct an investigation. We treated the Leader as the complainant because her letter was the first we received.

9. Accordingly, on 26 January the Chairman of the Sub-Committee wrote to the four Lords concerned, inviting them to respond to the allegations; and we asked the Sunday Times to supply us with copies of the recordings that they had made.

10. The Sub-Committee has no remit to investigate matters involving allegations of criminal misconduct.[4] So initially there was uncertainty whether the Sub-Committee's inquiry could proceed, because of the possibility of a criminal investigation by the police at the request of Mr Chris Huhne MP. This uncertainty was removed when the police announced on 11 February that they would not be examining the matter further. The Leader of the House then wrote again to the Sub-Committee, making it clear that she was the complainant for the purposes of our investigation.

Our investigation

11. This report contains our findings on the allegations against all four Lords. We have, however, considered the allegations as four separate complaints, and we have treated each case separately, on its own merits, independently of the other complaints.

12. We have held 18 meetings in total. Eleven of these were by way of preparation for the oral hearings, and each took place over the course of a whole day or half a day. Preparation included listening to the recordings made by the Sunday Times, and also viewing the videotape they had made of a conversation with Lord Truscott. At two meetings we took oral evidence separately from three of the four Lords concerned; Lord Taylor declined our invitation to attend. Deliberation and preparation of this report has taken a further five meetings.

13. After careful consideration we decided that the allegations had to be the starting point of our investigation and that we had no remit to examine the behaviour of the Sunday Times. So we decided that oral evidence from the Sunday Times reporters directly involved was not required. We considered the written material and recordings they supplied. We received the bulk of the material from the Sunday Times on 30 January 2009, further recordings and a video on 10 February, and the final material on 17 March. The Sunday Times assured us that they had then given us all the material relating to the various recordings that they made. They gave us transcripts which reproduced what they considered to be the most relevant extracts from the recordings. We took the view that we needed a complete transcript of the recordings if we were to be able to conduct a fair and thorough investigation. So we asked the House of Lords Hansard Department to produce for us an independent transcript of all the recorded material supplied to us. We sent each Lord the sections of the Hansard transcript relating to him. We are grateful to Lords Hansard for their assistance.

14. The quality of the recordings is variable, given that they were made undercover and in places where there was a lot of background noise. In parts of the recordings it is not possible to hear clearly and to understand every word recorded, and this difficulty is reflected in the transcripts of both the Sunday Times and Lords Hansard. However, after listening to the recordings we were in no doubt that the recordings and transcripts based on them were sufficiently comprehensible to permit us to conduct a thorough and even-handed investigation. None of the four Lords questioned the general accuracy of the transcripts but some did draw attention to differences between the Sunday Times version and the Hansard version.

15. We also received a submission from Lord Harris of Haringey, who was also approached by the journalists but was not the subject of any allegations.

16. The oral evidence and all the relevant written evidence is published with this report.

Our procedures

17. The procedures that we have followed are those set out in the Fourth Report of the Committee for Privileges of 25 November 2008.[5] A step-by-step summary of the procedures is set out in Appendix 3. This investigation is the first time that these new procedures have been used.

18. The Sub-Committee is a parliamentary body. It is appointed to determine complaints that a Member of the House has broken the House of Lords Code of Conduct. It is not a court of law to hear cases. Rules of court do not apply. Our procedures are not adversarial. In common with all select committees, there is no provision for examination of witnesses by anyone except members of the House.

19. Proceedings in the Sub-Committee are not criminal proceedings. The standard of proof stated in the Fourth Report is "at least … the balance of probabilities" (paragraph 26). The language makes it plain that this is a guaranteed floor, but not necessarily a ceiling, to the appropriate standard of proof. The Sub-Committee was conscious that its investigation in each of the four cases involved the possibility of findings of serious breaches of the Code, and accordingly decided to apply a very high standard of proof, falling just short of the criminal standard. The Sub-Committee decided that, in making its findings, it would have to be satisfied, against this high standard, that any breaches had been established to its complete satisfaction. A key question for us was: did the evidence show that the Lord in question expressed a clear willingness to breach the Code of Conduct?

20. Standing Order 67 of the House of Lords (power to hear counsel) forbids the Sub-Committee to hear parties by counsel unless so authorised by Order of the House. Such Order could only be made on a motion in the House to dispense with Standing Order 67. The solicitors for Lord Taylor asked us to arrange for such a motion to be moved. The Committee for Privileges report referred to above stresses that "every effort is made to keep proceedings informal" and that "the Sub-Committee's proceedings should not acquire the formality of a court of law".[6] Dispensing with the Standing Order would not have been consistent with that approach. At the same time we were well aware of the need to proceed with the utmost fairness, as reflected by the provision in the Code that "in the investigation and adjudication of complaints against them, Members of the House have the right to safeguards as rigorous as those applied in the courts and professional disciplinary bodies" (paragraph 19(d)).

21. In implementing our mandate to investigate the complaints, we were determined always to act fairly in accordance with the rules of natural justice. On that basis, we ensured that the Members whose conduct was being investigated were told the rules under which their conduct was being assessed, were given full particulars of the matters that the Sub-Committee would have to assess in determining whether they had breached the Code, were shown all the evidence relating to them, and were given appropriate opportunities to respond. We were at pains to make clear to the four Lords the nature of the findings that might be made against them.

22. All four Lords in their initial responses to us had stressed that they wished the inquiry to progress swiftly so that they could vindicate themselves. Lord Snape and Lord Taylor had also said in the House on 26 January that they wished to be able to refute the allegations in person before the Sub-Committee.[7] Lord Taylor, on the advice of his solicitors, subsequently resiled from that position.

23. The allegations against the four Lords were so grave that we decided at the outset that there was no question but that we would have to interview them in person and on the record. While we did not dismiss the possibility that their written evidence might persuade us to terminate the investigation without such interviews, we believed it was right that they should know at an early stage in our inquiry that we would almost certainly invite them to attend the Sub-Committee to give their explanations.

24. All four Lords denied the allegations and continue to deny them. This meant that the remedial action procedure (under which a Member can make an oral or written apology) could not have been applied, since it only arises in cases where the Member acknowledges that the complaint is justified. However, all four Lords apologised either to the House or to us for any part they may have played in damaging the House's reputation.

25. The solicitors instructed by Lord Truscott objected that we rushed into deciding to hear oral evidence and had invited him to attend the Sub-Committee before we had received his written response to the allegations. They said that in doing this we had denied him the rigorous procedural safeguards to which he was entitled. They contended that Lord Truscott had no prima facie case to answer. Their correspondence with us, and our replies, are printed with the evidence to this report.

26. Lord Taylor's solicitors raised procedural and legal objections based on a fundamental misconception of our role as explained above, namely, that we are a parliamentary body and not a court of law. The objections included the suggestion that the Sub-Committee had acted as a prosecutor by formulating the "charges", that the Sub-Committee was improperly relying on evidence obtained by agents provocateurs, that it was unjust for the Sub-Committee not to examine the behaviour of the Sunday Times, that the Sub-Committee was denying the Lords their rights by not allowing representation by counsel or cross-examination of the Sunday Times, and that the Sub-Committee had unfairly refused to set the standard of proof at the criminal level of "beyond reasonable doubt". Their correspondence with us, and our replies, are printed with the evidence to this report.

27. We took time to consider and reply to these objections and delayed our original scheduled interviews with all the Lords concerned. In the case of Lord Taylor of Blackburn, we postponed his interview a number of times, and when he then, on his solicitor's advice, gave us his final refusal to attend the Sub-Committee, we proceeded to consider his case without the benefit of hearing him.

The position of the Sunday Times

28. We must make it clear that we were not enquiring into the circumstances under which the Sunday Times came to report the allegations against the four Lords. We took its allegations as our starting point. It was not within our remit to examine the conduct of the journalists or issues of entrapment or the undercover use of recording equipment on parliamentary premises. These matters may be considered separately by others, such as the Press Complaints Commission. It was not, however, our role to question the behaviour of the Sunday Times, and we were not sitting to adjudicate on a conflict between the Sunday Times and the Lords concerned.

The allegations in more detail

29. The Sunday Times articles were based on a "sting" operation similar to that which the newspaper carried out in 1994 against some Members of the House of Commons.[8] The allegations at that time were that Members of the House of Commons had been offered, and had accepted, payment for the tabling of parliamentary questions.

30. We understand that the Sunday Times journalists approached ten Members of the House, and that five Members actually met them. These were Lords Moonie, Snape, Taylor of Blackburn and Truscott, who were then the subject of the newspaper allegations, and Lord Harris of Haringey, who was not.

31. The journalists claimed to be working for a company called Michael Johnson Associates (MJA). They claimed that MJA were a communications and public affairs company dealing mostly with the European institutions in Brussels, but with a new London office in Waterloo Place, St James's, SW1. MJA did not in fact exist, but a website had been set up in that name together with an accommodation address and telephone number, and visiting cards were printed with the false names being used by the journalists ("Claire Taylor" and "David Thompson").

32. In explaining why they had chosen to approach the Lord in question, MJA gave various reasons. In the case of Lord Taylor, MJA said that they were seeking a financial relationship with a Member of the House of Lords who would be someone "to speak in the Chamber on our behalf […] ask parliamentary questions […] perhaps amend certain bits of the legislation and also [arrange for us] to meet Ministers".[9] They told Lord Truscott that they "wanted somebody to help us with connecting with the two Houses of Parliament", particularly on certain legislation. Lord Snape was told that they "were looking for someone to help them do parliamentary work in relation to any problems, any issues that they identify […]". They told Lord Moonie that they "were looking for certain amendments" to legislation and "somebody who might be able to act as a consultant for us in relation to particular clients"(p TaH5, p TrH4, p SH5, p MH4).

33. Common to all four approaches however was the offer or strong suggestion of a future on-going financial relationship under which the Lord in question would provide parliamentary consultancy services to MJA in return for a fee of between £24,000 and £120,000 a year.

34. One particular issue was raised with all four Lords. This related to one of MJA's clients who was supposedly a businessman based in Hong Kong. He was said to be a well-established clothes manufacturer and retailer, seeking to establish a chain of 30-40 new retail outlets in the United Kingdom.

35. MJA's business client was said to be worried about a provision in the Business Rate Supplements Bill then going through the House of Commons. The provision in question would allow certain local authorities in England and Wales to levy a local supplement of up to 2 per cent of rateable value on business properties with a rateable value of more than £50,000, and to spend the proceeds for local economic development.

36. MJA's client was said to wish to have the Bill amended so that new-start retailers such as himself would be exempted from the supplement, or so that businesses in an area could vote on whether the supplement should be levied on them.

37. The details given to each of the four Lords varied slightly, but reduced to essentials the question put to them was whether they could exercise their parliamentary influence to facilitate the enactment of such an amendment. The meaning of the term "parliamentary influence" is explained below.

38. It is relevant to note that in the event, and unlike the case of the MPs in 1994, no money changed hands. No contracts were signed for the provision of parliamentary services. No services were provided.

The "no-paid-advocacy" rule

39. We undertook a detailed analysis of the Code of Conduct before we began to consider the evidence in these four cases. The results of our analysis are set out in the following paragraphs.

40. The crucial paragraph in the Code regarding the conduct of Members of the House of Lords in relation to their interests is paragraph 4, which states:

"Personal conduct

4.  Members of the House:

a)  must comply with the Code of Conduct;

b)  should act always on their personal honour;

c)  must never accept any financial inducement as an incentive or reward for exercising parliamentary influence;

d)  must not vote on any bill or motion, or ask any question in the House or a committee, or promote any matter, in return for payment or any other material benefit (the "no paid advocacy" rule)."

41. We consider that paragraph 4 is dominant in the Code, and that the paragraphs relating to the registration and declaration of interests (paragraphs 7-17) are secondary to it.

42. Paragraph 4 must be read in the light of paragraphs 1 and 9-10. Paragraph 1 places great importance on the role of the Code in reinforcing public confidence in the House of Lords by setting out the standards of behaviour expected of Members. Paragraphs 9-10 give a significant place to public perception. A literal and technical compliance with the requirements of the Code is therefore not enough: Members are also bound to act on their personal honour in the context of the public's expectations of how a Member of the House of Lords ought to behave.

43. The Code in its present form derives mostly from the report and recommendations of the Committee on Standards in Public Life in 2000.[10] Both that report and the Code use terms and language taken from earlier Codes and resolutions of the House of Lords governing the conduct of its Members. Some of the terms such as "personal honour" have been used for centuries. Other terms such as "exercising parliamentary influence" have more recent origins.[11] It has never been thought necessary to define these terms.

44. We state here our view of the meaning of paragraphs 4(c) and 4(d) and the terms used therein.

45. Members of the House of Lords have long accepted that they should not promote in Parliament the interests of an outside body in return for a financial inducement.[12] To do so would be to engage in paid advocacy. Paragraph 4(c) prohibits paid advocacy by prohibiting the acceptance of any financial incentive or reward in return for exercising parliamentary influence. Paragraph 4(d) gives examples of the kind of activities falling under the no-paid-advocacy rule, which is more generally described by paragraph 4(c).

46. Paragraph 4(c) means that Members of the House of Lords may not use their position as members of Parliament to influence Parliament by any means direct or indirect, including through other Members, MPs, Ministers, officials or civil servants, in return for payment by an outside body. The prohibition includes influencing Parliament in return for payment by engineering or promoting amendments to Bills or through persuading Ministers or civil servants to make such amendments or by inducing another Member or Members of either House to table amendments.

47. It is also incompatible with the no-paid-advocacy rule that a Member of the House should in return for a financial inducement urge colleagues or Ministers to exercise their parliamentary influence with a view to securing such amendments.

48. The purpose of the no-paid-advocacy rule is to prevent a Member from entering into any financial arrangement that would limit his complete independence to act in the public interest in Parliament or bind him to a particular point of view on behalf of a body outside Parliament.

49. We understand "exercising parliamentary influence" to mean exercising influence in and over Parliament by virtue of membership of Parliament. It is not necessary for the purposes of determining these complaints to decide whether the expression has any wider meaning. Parliamentary influence should only be exercised in the public interest, which paragraph 6 of the Code insists must come first. Members of the House of Lords should never accept financial inducements, incentives or rewards from any individual or body to exercise parliamentary influence in the interests of that individual or body alone (for example, a particular retailer in the retail industry), or in the interests of a wider group which includes that individual or body (for example, the retail industry generally), even if they believe such action to be in the public interest. A Member who did so would breach the no-paid-advocacy rule.

50. The distinction between receiving a financial inducement to influence the parliamentary process and having a financial interest as a result of employment or otherwise in a particular area is essential to understanding the no-paid-advocacy rule.

Application of the "no-paid-advocacy rule"

51. It is a characteristic of the current House of Lords that its Members speak and act on the basis of their considerable expert knowledge of matters outside Parliament. It is in the public interest that they should be able to do so. At the same time, it is a fact that Members of the House are not paid a salary and many Members have financial interests, including professional careers, outside the House. Parliament should be able to benefit from the broad expertise of its Members: for example, the expert knowledge of education of Members with academic posts, and of industry of Members with business directorships. The problem is how to ensure that when such Members use their expertise in Parliament for the public benefit, they do not breach or appear to breach the no-paid-advocacy rule.

52. The answer to this problem is that Members who are experts in matters in which they also have financial interests, and who wish to use their expert knowledge in their parliamentary work, must ensure that their conduct in relation to Parliament cannot reasonably be thought to be driven or directed by those financial interests. Members must be in a position where a reasonable observer would conclude that their financial interests outside Parliament do not dictate their actions in Parliament by limiting their freedom to act in the public interest in Parliament or binding them to a particular point of view.

53. In other words, it must be clear that a Member who has expert knowledge is choosing of his own accord, without financial inducement, to speak, vote, lobby or otherwise use his expert knowledge in Parliament, and that his parliamentary influence is not being bought by an outside body.

Interests falling within paragraphs 12(a)-(c) of the Code

54. The requirement in paragraph 53 has important implications for what Members of the House of Lords can and cannot do in Parliament in relation to interests falling within paragraphs 12(a)-12(c) of the Code.

55. These paragraphs provide for the compulsory registration of:

(a)  parliamentary consultancies (agreements registered under paragraph 12(a) of the Code); or

(b)  interests in businesses involved in parliamentary lobbying (paragraph 12(b)); or

(c)  any remunerated services which Members provide by virtue of their position as Parliamentarians (paragraph 12(c)).

56. Where a Member of the House of Lords has a financial interest that arises from his membership of the House, as is the case with interests under paragraphs 12(a) and 12(c), it is impossible to prove that he is not being paid specifically to exercise his parliamentary influence for the benefit of those paying him, thereby breaching the no-paid-advocacy rule. Members who hold an arrangement under paragraph 12(a) or 12(c) are therefore restricted in their parliamentary activities to providing advice and never advocacy.

57. Where a Member has an interest in a firm that offers commercial lobbying, paragraph 12(b) of the Code prevents him from participating in parliamentary business relating to his personal clients. This is for the reason set out in paragraph 56, namely, that it would be impossible to prove that he was not exercising his parliamentary influence on behalf of those clients. But a Member involved with such a firm is not disqualified from taking part in parliamentary business relating to the firm's other clients, with whom he has no direct connection, because there can be no suggestion of paid advocacy.

58. It follows that the Code does not allow a Member of the House of Lords to assist a paying client directly or indirectly to influence Parliament, other than by giving advice.

Advice and advocacy

59. The key distinction is between advocacy and advice. Advocacy in return for payment is prohibited. Giving advice in return for payment is permitted.

60. Examples of what is permitted and what is prohibited were given to the Committee on Standards in Public Life by a previous Clerk of the Parliaments. Although the Clerk was speaking in the context of the House's rules of November 1995, what he said remains in our view applicable to the present Code. He said:[13]

"A parliamentary consultancy is an arrangement reflecting a two-way relationship. On the one hand the client/firm receives information from the employee/peer (A below); and on the other hand, the peer is given instructions to undertake certain activities in Parliament in the interests of the client (B below).

(A) The information which the client might expect to receive would include:

·  information about the progress of legislation

·  information about debates and opinions expressed in the House which might be of interest to the client

·  information as to which members of the House might be sympathetic to the interests of the client

·  indications as to which are the appropriate Ministers to approach for purposes of furthering the interests of the client and how such approaches might be made.

(B) The services which the peer might be expected to perform on behalf of the clients might include:

·  speaking in debates

·  tabling, supporting and moving amendments

·  asking Parliamentary Questions

·  lobbying Ministers and other members of the House

·  acting as host at functions in the Palace of Westminster."

61. The Clerk of the Parliaments said that a Member of the House was entitled to give advice as set out at (A); but was debarred from carrying out the services set out at (B).

62. A helpful rule of thumb was given by Lord Griffiths to the Committee on Standards in Public Life in the same inquiry:[14]

"There is no reason why you should not have a consultancy. However, if you have taken a position as a consultant, you cannot speak for your clients; you cannot lobby on behalf of your clients, nor can you act politically for your clients ... You can say, 'Well, I think we might get that amendment through'. But, what you cannot do is take any part in helping to get the amendment through."

63. We have concluded that it is consistent with the Code for Members of the House, in return for payment, to approach other Members, MPs, Ministers, officials and civil servants to gain information. But it is not consistent with the Code for Members to seek to influence such people themselves in return for payment, including to 'soften up' such individuals for a later approach by a client or his representatives, or to make introductions.

64. The distinction between advocacy and advice is crucial. Inevitably, however, there are borderline issues. These may place too great a burden on the judgment of the individual Member and may lead him to cross the boundary between what is legitimate and what is not. Members willing to take money in return for parliamentary services place themselves in great danger of crossing the boundary, knowingly or inadvertently. Even when a Member's intention is limited to obtaining information, the very fact of approaching, on behalf of paying clients, MPs, other Lords, Ministers and civil servants, may give rise to a perception of advocacy and lobbying. The impression can easily be given that not only advice but also advocacy has been bought by the client.[15] Whether or not a Member has indeed crossed the boundary from the permissible depends on the facts of each case.

The cases of the four Lords

65. We must now assess the conduct of the four Lords against the criteria set out in the previous paragraphs. Shortly stated, the question that the Sub-Committee had to investigate was whether any of the four Members breached the House's Code of Conduct by apparently negotiating with the lobbying company MJA for a fee to exercise parliamentary influence to secure an amendment to the Business Rate Supplements Bill. Any agreement to promote an amendment in return for a fee would in our view constitute a breach of the prohibition on exercising parliamentary influence for financial inducement in paragraph 4(c) of the Code of Conduct (the "no paid advocacy" rule); and in negotiating or attempting to negotiate such an agreement the Lord in question would in our view also have failed to act on his personal honour in breach of paragraph 4(b) of the Code.

66. In the case of all four Lords one of the key questions is: what were his intentions and motives?

CHAPTER 2: THE ALLEGATIONS AGAINST LORD MOONIE

Background

67. Lord Moonie was contacted by a Sunday Times undercover reporter ("Claire Taylor") on Friday 9 January 2009, and arranged to meet her on the morning of Tuesday 13 January. They met for morning coffee in the House of Lords guest room. The woman reporter was accompanied by a male colleague ("David Thompson"). The conversation lasted just over an hour. On Tuesday 20 January the male journalist rang Lord Moonie but the recording equipment failed and there is no independent record of the conversation. Claire Taylor had a telephone conversation with Lord Moonie on Friday 23 January, and later that day Michael Gillard of the Sunday Times rang Lord Moonie, revealed the sting operation, and asked him to explain why he had offered to amend legislation for a paying client. Lord Moonie denied the allegation.

68. Lord Moonie was interviewed by the Sub-Committee on Tuesday 10 March. He was unaccompanied.

The conversations with the undercover journalists

69. The journalists told Lord Moonie that their client was "looking for certain amendments" to the Business Rate Supplements Bill, and that they were looking for "a relationship with somebody whereby we could call upon them for advice on these issues and that, you know, when things like this come up that they might be able to act on our behalf for them" (pp MH4, 5). Lord Moonie's response was to say that there were "rules about what you can do and say" in return for payment (p MH5). He told the journalists: "You've got to make your case", and when they asked him what he would "be able to do", his answer was: "I'm going to have to check up on that". He explained: "what I do in consultancy is I tell people who to talk to. I'll tell them how to write their letters if they don't know how to write the letters, you know, what points to put where" (pp MH5, 6). He thought that he was able to "speak on issues" but continued: "It may be that you shouldn't put down—I would need to look up the rules. Maybe you can't actually put down amendments" and added "I've plenty of people I can consult here" (p MH6).

70. When the journalists asked Lord Moonie about what he had done for other companies he had worked for, Lord Moonie explained: "if the company wanted to talk to anybody I'd ??say?? write to Nigel or get in touch with Nigel and speak to him. What I don't do is go to Nigel and say I've got this great idea and these people have paid me lots of money to tell you about it, because that's against the law. But advising the company, this is the guy you've got to speak to, or this woman here or this guy here, go and speak to him, you know, that's what they're paying for" (p MH7). He continued: "What you can't do is give them introductions to Ministers, and things like that" (p MH7). He warned the journalists/MJA off approaching the Government: "it's a very bad idea to approach them […] it's better not to. It's better just to assume that you go through the proper channels" (p MH7).

71. We note that when the journalists asked Lord Moonie "It [the approach] would be better coming from you, I suppose, than from us" he moved the conversation on to the subject of coffee, before returning to the matter in question by saying "I'm not trying to talk myself out of a job, but I think it's best to be completely upfront with people and be honest with the people you're trying to deal with. I believe there are still people in here who will cut corners, but it's daft, frankly. One, it'll ruin their reputation, so they shouldn't be doing it. Two, as far as the company's concerned, if you're found out to have done anything like that, you're dead. Nobody will work with you" (p MH8).

72. He told the journalists that he wouldn't "want you to do anything that, er […] involved doing something even slightly improper" (p MH8). Lord Moonie stressed again that he would need to consult "to make sure I know exactly what's legit and what isn't." (p MH8) They discussed consultancy fees, and Lord Moonie said: "I'm quite sure work can be done. What I'm not certain of is exactly how we do it to ensure that we stay within the letter of what's there, the regulations. From your point of view, you want to be sure that that's done" (p MH12). The business discussion effectively ended with Lord Moonie telling the journalists: "If you think at the end of the day that you'd be better off with somebody else on the retail scene then, you know, I'll wish you good luck […] Give you a few names of people you can approach." He also mentioned: "I've got plenty of [other] work to do" (p MH12).

73. The conversation with Lord Moonie ended with an agreement to get in touch again:

Man: So how shall we proceed? Shall we just take it that you will go away and just check what it is that, erm...

LM: On the retail thing, I'll want to just find out exactly how much work. I'm quite sure work can be done.

[…]

LM: You've got my contact details.

Man: I've got your email address.

[…]

Man: Well, we'll be in touch.

LM: I'll grab a Hansard for you on the way out if you like so that you can see what's going on.

[…]

LM: I'll drop you a note? When we find out exactly what the, what things are (pp MH12-14).

The allegations against Lord Moonie

74. We questioned Lord Moonie on the material in the transcript of his conversations with the undercover journalists that might suggest a clear willingness on his part to breach the Code.

75. It is clear from the transcript of his conversation with the journalists/MJA that Lord Moonie had next-to-no knowledge of the Business Rate Supplements Bill. He informed the journalists/MJA that the retail sector was not an area that he took an interest in (p MH5). He had no expert knowledge of it (Q 73). It follows that Lord Moonie must have realised that he had been approached because of his knowledge of Parliament and government, for the purpose of helping to achieve the desired amendment. Given that he expressed doubts about what he himself could do in that regard (p MH6), it must be asked whether he was wise to continue a conversation in which it was being suggested from time to time that he might do things that were forbidden by the Code. Lord Moonie's explanation was that he rebuffed those suggestions (p MH12) but was attracted to working for MJA because he believed they had a range of clients whose activities were of interest to him. Because he had little knowledge of the retail sector, he was not interested in working for the particular Hong Kong client (QQ 67-74).

76. There are three pieces of evidence that could be regarded as telling against Lord Moonie. The first is his apparent suggestion that it is a common practice for Members of the House to act as paid agents for a lobbying organisation but to keep their involvement hidden by getting other Members to take the desired action in the House. Our examination of Lord Moonie was as follows:

Q37  Lord Irvine of Lairg: What I am a bit puzzled by is the passage in the Hansard transcript on page 10. I am just going to read it to you, I am not going to suggest anything, because I am genuinely puzzled and would like your help. The under-cover reporter says, "So in our example, what you'd be looking to do would be to identify maybe other people." Then Lord Moonie, "Other people who could do it. Exactly. And the other thing is, and this is what a lot of us do now, one person acts as agent and the one who is not will actually put down the Question and then they can speak on it. As long as you declare your interests you can speak on a matter in general terms, without saying, 'I have this excellent bunch from the Far East and much as they would like to do it, the thought of this extra two per cent is really breaking their hearts'. You can't say that, but you can speak in general terms and you can advance the arguments." Then the man goes on, and I will read all this to you because you are going to tell us what it means, "So, sorry, I don't quite understand. What you mean is that you can find somebody else who would speak on it for you. LM: If you needed that, yes. On broad issues like this, you're not going to have any shortage of people to speak. What you need to do is find out who spoke at Second Reading and see what they say. If they show any expertise or any particular insights or particular interest then these are obviously your primary contacts for any further lobbying on behalf of the …." And then it tails off. Could you tell me what all this is about? What were you saying could be done?

Lord Moonie: Basically what I was trying to say, which I did not say very clearly I have to admit looking at the transcript again, was in continuation of the type of work I would do. I would find out who had spoken, who had insight, who had obviously showed expertise in this area and who they could approach. I did not make that clear in the first statement. I did say, "… these are obviously your primary contacts for any future lobbying …" and in the "your" there I did mean them and not me.

Q38  Lord Irvine of Lairg: If you have a paid parliamentary consultancy, you cannot table, support or move amendments or lobby other members of the House.

Lord Moonie: No, that is right.

Q39  Lord Irvine of Lairg: So what exactly is it that you had in mind in this passage I have read to you that you would be able to do?

Lord Moonie: What I had in mind was that I would be able to advise them, having looked at those who would participate in the debate, who would be the most appropriate people for them to contact in order to get their amendments put down.

Q40  Chairman: Could I just press you on the first paragraph, "Other people who could do it. Exactly. And the other thing is, and this is what a lot of us do now, one person acts as agent and the one who is not will actually put down the Question …."?

Lord Moonie: (After a pause) I think I was trying to describe what generally happened, that there were people who were acting as agent and people who were not, and it was the people who were not who would be the ones who would actually have to put down the amendments on their behalf.

Q41  Lord Irvine of Lairg: Who is the agent? Are you the agent?

Lord Moonie: In this sort of situation, I would be the agent and I would be identifying the people who they would be able to contact, so I would be the agent of the company.

Q42  Lord Irvine of Lairg: You would be the employee of the company and would be informing them, the company, whom they could approach?

Lord Moonie: Yes, that is certainly what I meant to say. The other thing is, I have served on—I would not say "countless Bills" because that is obviously nonsense—many, many Bills, both in Opposition and in Government, and one is well used to the volume, particularly on a controversial Bill, of amendments which are suggested and the number of people who approach us and the number of people who put down amendments. So it is quite commonplace for a great deal of outside interest in a Bill to be present, and for a great deal of people to be trying to get amendments put down. I would generally expect, certainly when in Opposition, to be approached either by an outside agent or possibly by colleagues who had a particular interest in it, but you would expect that. You would find there is a huge amount of interest in certain Bills. What is important is to separate your own behaviour from the behaviour of anyone else without paying any attention to it.

Q43  Lord Irvine of Lairg: I think what you are trying to say to us is that you, if you became a paid consultant of this supposed outfit, would have given them information as to whom to approach and not done the approaching yourself?

Lord Moonie: That is not what I intended, no. Sorry, that is what I intended. I would not have attempted to approach them myself, no.

77. The best interpretation that can be put on these exchanges is that Lord Moonie used language that was muddled and misleading. It is not surprising that the journalists understood him to mean that as a paid agent for MJA he would find a front-man to table Questions and amendments on the client's behalf. However, there is an alternative interpretation of these exchanges, one which exonerates Lord Moonie, but not one that Lord Moonie was setting out clearly—namely, that the "agent's" role is to identify the Member to the client, so that the client can approach the Member to table the Question completely without financial incentive. Because the meaning of his words is uncertain, we cannot on the standard of proof we have set interpret Lord Moonie's description of "what a lot of us do now" as expressing a clear willingness to breach the Code.

78. Another troubling piece of evidence against Lord Moonie was when he seemed to say to the undercover reporters that either MJA or he himself could approach Members of the Lords to get amendments tabled, but that it was probably better if the approach came from MJA (Q 64). The word "either" is damaging because it suggests that Lord Moonie was willing personally to lobby other Members of the House in favour of the amendment. The following extract sets out the exchanges:

LM: On the retail thing, I'll want to just find out exactly how much work. I'm quite sure work can be done. What I'm not certain of is exactly how we do it to ensure that we stay within the letter of what's there, the regulations. From your point of view, you want to be sure that that's done.

Man: We're obviously middle people in this, but we obviously get pressure from above, because they say, "Oh, can't you have a look at that and see if you can find someone to amend it?" And it would be quite useful to know how feasible that was.

Woman: I think it's knowing how the system works, really. We're not ...

LM: The easiest way to get something done is to approach the Opposition spokespeople and see if they are interested—the Liberals of the Conservatives, see if they're interested in putting something forward. By and large, they are under a lot of pressure and I'm sure that the more they can get somebody else to provide them with amendments if they agree with the basic principle of what's being done, the happier they'll be, because it makes life easier for them.

Man: Is that something that you would suggest that we should do, or that you would be able to do?

LM: Either, but it's probably better if it comes from you.

Man: From us?

LM: Yes.

Man: Oh [disappointed]

LM: But that's the sort of thing on which we can make introductions easily. Particularly the Opposition, you're not influencing Government.

Man: No, exactly.

Woman: It's always something that's quite tricky for us to pick up the phone and try to speak to them, particularly someone we haven't met.

LM: You've got to make the first contact. If you think at the end of the day that you'd be better off with somebody else on the retail scene then, you know, I'll wish you good luck (p MH12).

79. In oral evidence Lord Moonie explained that:

"The language was not good there, no. It reflected the fact I had not looked at the code for some time and therefore, quite frankly, I did not know what exactly the code said. I knew about it in the most general way but it was something I was obviously going to have to check up. So the "either" I think reflected my uncertainty as to what exactly it said. That is why I stressed all along I would have to check back, I would have to look to ensure we behaved within the rules (Q 64).

80. We do not consider that we can find Lord Moonie to have been in clear breach of the Code on the basis of the word "either", given his repeated insistence during his conversations with the journalists that he would not act without consulting on what was legitimate.

81. The most damaging piece of evidence against Lord Moonie may be when he later apparently confirmed to another Sunday Times journalist, Michael Gillard, that he had agreed that he could write on behalf of MJA to Rt Hon John Healey MP, the minister in charge of the Bill, but "obviously not using House […] of Lords [note]paper" (p MH18; QQ 93-97). When we put this allegation to him, Lord Moonie replied:

"It is really not clear to me what I was trying to say either. I have to explain that this conversation was taking place on one of the nastiest days of weather ever. I was standing outside a restaurant in Glasgow without a coat on, in the sleet, trying to make sense of what he was saying as the Argyll Street traffic went past. Quite frankly, I could not recall exactly at that stage what had gone on. Somebody had mentioned at some stage John Healey to me. It was a vague notion in my mind that anybody can write to a Minister; you cannot use your position in the House to write to them, and if you are going to write to them on any issue it has to be made clear you are writing as a private individual and not a member of the House. I thought that might be something which could possibly be done". (Q 93)

[…]

Q94 Baroness Manningham-Buller: But you would be writing actually as a paid individual who was a member of the House?

Lord Moonie: I suspect I would be, yes. I think that is why I wanted it cleared up. I certainly wanted to clear that up. That was one of the areas I wanted cleared up very definitely.

[...]

Q97 Baroness Manningham-Buller: You recollect, it would appear from this transcript, that you had offered to write to John Healey on their behalf apparently.

Lord Moonie: That is not really what I recollect at all. I was trying to explain the circumstances in which I was making this phone call. It was a stressful situation. […] However, having spoken to him and having been led down the path, I was not thinking clearly at the time. For all I knew, I might have said that to him but I could not recall it."

82. Lord Moonie denied to us that he had offered to approach any Members of the House or John Healey MP on behalf of the amendment (QQ 107-108, 114-117). The suggestion that he had agreed to do so was included in the journalists' summary of a telephone conversation with Lord Moonie which was not recorded, but later the same week (before the sting was revealed by Gillard) Lord Moonie denied to the journalists that he had said he would speak to Healey (pp MST8, W8-9, MH15). This confusion in Lord Moonie's mind (during his conversation with Gillard) over whether or not he might have said he would approach the Minister in charge of the bill (Mr Healey) could be construed as an indication of conscious misconduct. We must bear in mind however what Lord Moonie said about the stress and confusion of the conversation and his earlier denial before the sting was revealed. We are also conscious that the overwhelming majority of his replies to our questions were frank and helpful.

83. Given the high standard of proof we have decided is appropriate, we do not find that Lord Moonie expressed a clear willingness to breach the Code by writing on behalf of MJA to the Minister in charge of the Bill.

The case for Lord Moonie

84. We have set out above the three pieces of evidence that are most damaging to Lord Moonie because they are the only real evidence against him. The weight of the evidence either exonerates him or is not enough to establish a clear willingness by him to breach the Code.

85. Lord Moonie stressed in his evidence that throughout his conversation with MJA he repeated the need to keep within the rules (for example QQ 44-47). In later evidence Lord Moonie uses robust language to reject suggestions by the journalists/MJA that he would table amendments in return for payment:

Q86 Lord Irvine of Lairg: Then what Gillard did was he returned to his theme on page 21 of 29, and he said at the top of the page, "Putting down an amendment yourself for a pay client …"—that should probably be a "paying client"—"… wouldn't be something you could do." Then you replied firmly in the vernacular, "Och, shit, no, I don't think I would ever consider that."

Lord Moonie: Yes.

Q87 Lord Irvine of Lairg: Could you amplify that, not necessarily in the vernacular?

Lord Moonie: I was basically agreeing with him, yes, putting down an amendment yourself would not be something you would do, yes. I would never consider that.

[…]

Q133 Baroness Manningham-Buller: […] What did you think you were going to be doing for your £2,500 a month?

Lord Moonie: I thought that I was going to be advising them on how to get amendments to legislation put down in one or other of the Houses.

86. Lord Moonie demonstrated in his oral evidence that he well understood the distinction between advice and advocacy, and therefore what was permitted and what was prohibited by the Code. He believed that he could "draw that fine line" between what he could and could not do (Q 33). He could give "information, advice, as to whom to approach" (Q 20). He could "tell people who to talk to" (Q 10), and point them in the right direction (Q 34), including special advisers (Q30). He could tell MJA who were the appropriate Ministers for them to approach but he could not give introductions to Ministers (Q 21-22). He had said in his conversations with MJA that to do so would be "sailing very close to the wind" (p MH7). He agreed that "For the purposes of furthering the interests of the client […] you are permitted to tell them under the Code how such approaches might be made." He knew that he "could not speak to the Minister on their [i.e. the client's] behalf in advance of their approaching the Minister" (QQ 23-24). But he could identify the key decision makers (p MH7).

87. He also stressed to us that in so far as he may have had any doubts about what was permitted by the Code, he would have consulted the Registrar of Lords' Interests (QQ 51, 54).

Our conclusion on Lord Moonie

88. We have concluded on the basis of the transcripts, and on our evaluation of Lord Moonie's oral evidence and his interview with us, that there is insufficient evidence to establish to the standard of proof that we have adopted that Lord Moonie expressed a clear willingness to breach the Code. The transcript of the conversations between Lord Moonie and the journalists must be read as a whole, not selectively. His motives in agreeing to talk with the journalists were avowedly financial—but this in itself was legitimate. He was unwise to continue his conversation with MJA once they raised the possibility of actions that he knew, or reasonably suspected, constituted paid advocacy prohibited by the Code.

89. One of his defences was that his knowledge of the Code was imperfect, and that he would have submitted for the Registrar's advice any draft contract with MJA. Members of the House, however, have a responsibility to understand the essentials of the Code, just as they have a duty to master legislative procedure, the rules of debate and so on. The Registrar gives advice, and Members are wise to accept his advice. But ultimately they must exercise their own judgment. However, we are persuaded that Lord Moonie, though unwise to be so unversed in the Code, was very clear during the conversations with the journalists that, having taken advice, he would not do anything illegitimate.

90. We conclude that in the case of Lord Moonie, with some exceptions that we have already quoted and which he tried to explain, he said nothing that suggested a clear willingness to go beyond what was permitted by the Code. Some of the things Lord Moonie said to the journalists were unwise. For example, Lord Moonie told the journalists that "the rules are being made as they go along" and that "there's virtually nothing they can do to you [if you break the rules]" (p MH9). We do not find that this is, in itself, evidence that he was willing to breach the rules. It constituted a wholly inappropriate attitude to the rules but not a breach of duty. Therefore on the standard of proof that we have set, we do not find that Lord Moonie expressed a clear willingness to breach the Code by promoting amendments on behalf of lobbyists in return for payment.

CHAPTER 3: THE ALLEGATIONS AGAINST LORD SNAPE

Background

91. Lord Snape was contacted by a Sunday Times undercover reporter ("Claire Taylor") on Friday 16 January 2009, when a message was left, and again on Tuesday 20 January, when a meeting was arranged. They met in the morning of Thursday 22 January in Lord Snape's office in Parliament. The woman reporter was accompanied by a male colleague ("David Thompson"). The conversation lasted just under an hour. On Friday 23 January Michael Gillard of the Sunday Times rang Lord Snape, revealed the sting operation, and asked him in two mobile phone conversations to explain what he was prepared to do for MJA to get the Business Rate Supplements Bill amended. Lord Snape denied that he had indicated a willingness to do anything in breach of the rules of the House.

92. Lord Snape was interviewed by the Sub-Committee on Tuesday 10 March. Although he had retained a solicitor, Lord Snape came unaccompanied to the meeting with us.

The conversations with the undercover journalists

93. In his conversations with the journalists Lord Snape said that although he could not initiate legislation specifically for a company that paid him, such as his transport industry client First Group, he could accept payment to amend legislation for the bus industry generally or to "exempt the whole of the railway industry from some particular clause […] on the grounds that, you know, this is for the public good or the benefit of the industry rather than one specific client" (p SH7). He said that he "could well argue, I'm sure, under the rules, that there should be an exemption for new businesses from the extra business rate" (p SH7). He said that "depending on who was on the Commons Committee [on the Bill] I'd have a chat and see whether I could get them to table an amendment in Committee" (p SH8). Asked whether he would do it personally, he replied "Yes, I mean, I'd get somebody to do it, yeah" (p SH9).

94. Lord Snape went on to say "So, you know, you pick people incred…—reasonably carefully" (p SH9). He gave the impression that he already had an MP in mind: "She's anxious to be seen on the side of business" (p SH11). He also said that he was willing to approach the junior Minister in charge of the Bill "sort of behind the scenes to say, you know, 'This is the purpose behind this amendment—look at it'" (p SH8). He said that he would also approach civil servants ("they're not normally averse to [having] lunch somewhere") and say "look, you know, this is what I want to do. It's for a client I'm working for" (p SH12). He continued "if you can persuade [civil servants] then you know you are half way there" (p SH12). While he had never before amended legislation on behalf of clients, he saw no difficulty except that the Government might not agree to the desired amendment. However, once the amendment had been drafted "then obviously I'll circulate it to those people I think might be sympathetic, people on the committee initially, but I'll talk to first the Minister's PPS, I'll find out who it is …" (pp SH16-17).

Lord Snape's defence

95. We questioned Lord Snape on the material in the transcript of his conversation with the undercover journalists/MJA that might appear to show a clear willingness to breach the Code. Throughout his evidence, Lord Snape's explanation of his conduct was that he believed, and still believes, that the proposed amendment was a good idea (Q 203); that what he was talking about was a blanket amendment that would benefit new-start businesses generally, and possibly the wider economy, not one specifically for the future client's benefit (QQ 177-178, 182-183, 184, 209, 284); that he continued negotiating with MJA for that reason (Q 177); that he had ruled out an amendment for the specific benefit of the proposed client (QQ 173, 178); but by analogy with his relationship with First Group he could speak and vote on matters affecting the general sector (QQ 194-200); and that everything he said to MJA was conditional on consulting the Registrar and getting his approval (QQ 172, 175, 177, 178, 182, 184, 196, 200, 207, 210, 212, 215-218, 222-235, 240, 243-244, 264, 273-274, 321). These points lie at the heart of Lord Snape's explanation of his conduct.

96. It is clear from the transcript that Lord Snape had no special knowledge of the retail sector or the Business Rate Supplements Bill, but was an expert on the transport industry, particularly buses (p SH6). He was being approached because he was known to engage in parliamentary consultancy work. In their conversation with Lord Snape, MJA came quickly to the point:

Man: […] Now, the question is, I mean, you know, what we would do is pay you on a retainer as a consultant to, in effect, help us amend this Bill. Now, is that something a) you would do, or b) you would be able to do?

PS: I don't think I would. The problem about having a direct financial interest is that one is not supposed to initiate legislation which would benefit the person who gives you or pays you this financial interest. So, you know, if I specifically worked for your company, for example, then I'd need to take advice, as these people are your clients, as to whether or not I could amend it. I certainly couldn't do it if I was working directly for the client themselves.

Man: Right.

PS: But I'd need to take advice.

Man: Oh, I see. So if you were working for Michael Johnson Associates you might be able to do it but not if—

PS: Not if I were working directly for the person or industry concerned. That's off the top of my head and I would have thought that's the way the rules would be interpreted. For example, I played quite a prominent role in local government transport Bill that's just gone through, but I could do so because I was talking about exemptions for the specific bus industry, although I worked for First Group which is declared in the Register of Members' Interests.

Man: Yes.

PS: So provided I made that declaration, then I could amend, let us say, what I liked and I would have thought, although I will take advice from the Registrar of Members' Interests in the Lords, that I feel that would also appertain if I worked for your company rather than specifically…

Man: Yes.

PS: I might well have to declare that you have certain clients involved in this particular field.

Woman: That's before—well, speaking in the House you'd have to declare that.

PS: Yes, and put it in the Register (pp SH5-6).

97. It is apparent from the above exchanges that Lord Snape understood the rules well enough to know that he was required to disclose in the register any employment with MJA and also the names of his personal clients. The exchanges suggest that he believed that, subject to taking advice, he might be able to move the amendment if he was employed by MJA, but not if "working directly for the person or industry concerned" (p SH6). He accepted that a direct financial relationship with the client ruled out moving amendments for their benefit, but appears to have believed that an indirect financial relationship might allow this to be done. It is important to note that the question of payment was raised by the journalists/MJA early in the conversation and that Lord Snape was aware of it.

98. Lord Snape set out in the above extracts the two central pillars or justifications on which he based his later explanation of his conduct. The first pillar is the notion that he can act in Parliament for the benefit of his employer/client provided it is not for their exclusive benefit but also benefits the wider industry or public interest. The second pillar is that he would have checked everything with the Registrar of Lords' Interests and done nothing without his authorisation (QQ 184, 234). These pillars must now be examined in detail.

The first pillar

99. The first pillar is composed of a number of themes:

1)  That promoting the interests of the client benefits a wider or public interest;

2)  That it is legitimate to exercise parliamentary influence for that purpose;

3)  That it is not improper to approach Ministers behind-the-scenes for that purpose;

4)  That it is legitimate to accept payment for that purpose.

The following paragraphs deal with these themes in turn.

The first pillar: what's good for the client is good for the wider interest

100. The first pillar is so fundamental to Lord Snape's position that it needs to be set out in full in his own words. The following extracts are taken from the Hansard transcript of the exchanges between Lord Snape and the undercover journalists, and relate to his justification that it is legitimate to take payment to use parliamentary influence on behalf of a client provided some wider interest is also served:

Man: You are paid a fee by them [First Group].

PS: Yeah.

Man: And would you be able to amend legislation for First Group?

PS: Not specifically, but I can amend legislation which applies to the bus industry, provided I declare an interest first.

Woman: Yeah.

PS: I mean, I couldn't say, for example, let's say First Group—First Great Western—I couldn't get some exemption or do something specifically on rail fares, for example, on First Great Western.

Man: Right.

PS: Because I would be initiating legislation for a company from which I am paid, which would be improper under the rules of the House.

Man: I see.

PS: But if I was wanting to exempt the whole of the railway industry from some particular clause I could do so on the grounds that, you know, this is for the public good or the benefit of the industry rather than one specific client.

Man: I see. I see. I see. So, in our instance, you could, for example, argue that the exemption was for the general business—

PS: A newly set-up business anywhere in the country ought to be exempt from this supplementary rate because of the high cost of starting up and the need for Government to encourage small businesses—small and large—in the current economic situation.

Man: Well, in that case, so would you therefore—I mean, it matters not to us whether you are representing us or whether you are representing our client. It would be whatever's more convenient for you, really.

PS: Well, the obvious question that the Registrar would ask me would be, "Who's paying you?" So it would have to be either yourself—again, it doesn't particularly matter to me provided I can do it on a blanket basis, but I could not, sort of, as I said earlier, represent your client in this and say, "There should be an exemption for this particular company because of" [inaudible] or whatever.

Woman: Yeah.

PS: I could well argue, I'm sure, under the rules, that there should be an exemption for new businesses from the extra business rate.

Man: Right, I see. And, because actually in terms of who pays, it's a question of whether they pay you directly or whether we pay you. It could go either way.

PS: Yeah (p SH7).

The first pillar: exercising parliamentary influence

101. We now set out Lord Snape's exchanges with us at some length. We believe it is important in the interests of fairness that Lord Snape's own words of explanation should be used and not just a summary prepared by us. The following extracts deal with exercising parliamentary influence:

Q172 Chairman: Did you take the view that it is legitimate to move the amendment to the benefit of the public good or the whole industry, even if those amendments are also for the benefit of the client?

Lord Snape: Only if I had first spoken […] to the Registrar of Members' Interests. […] I have said earlier on […] that I could only approach the minister or anybody else once I have cleared the matter with the Registrar of Members' Interests who might well, I say earlier on, ask me for a full list of those clients and I would only approach the minister or anybody else if I was given the go ahead by the Registrar.

Q173 Lord Dholakia: Would you say you were using parliamentary influence at that particular stage?

Lord Snape: No, I would have thought, and still do, my Lord, it makes eminent sense to alleviate the rates burden for new businesses at the present time. I think it is incumbent and a duty on Members of Parliament in either House if they see an opportunity to alleviate the rates burden, bearing in mind […] there had been no discussion of money or fees or whatever at this stage. I was merely expressing an opinion, one I held then and one I still do, that I do not think it is exerting any improper influence to suggest to ministers, given the state of the British economy, that this might be a way of helping to set up new businesses. I emphasise, my Lord Chairman, if I may, I had ruled out the question of the specific amendment for this person's client in almost my first business-like comment.

102. This explanation—that all he was doing was offering to have a good idea taken forward for consideration by MPs or government Ministers—was developed in later oral evidence:

Q210 Lord Irvine of Lairg: […] [Lord Dholakia] is pointing out to you from the transcript that there were various things that you said that you would do personally in order to promote the amendment. If you look at page 11, you see about a third of the way in, "I would need to look at the Committee. I mean, it wouldn't be any problem. I can see who's on the Committee, anybody I could sort of approach and say … To do that, I'd need something from you outlining these proposals ..." which means a short briefing on proposals. Then you go on, and say, "You know, I think we'd have to do it a bit more professionally than that. But, I mean, depending on who was on the Commons Committee I'd have a chat and see whether I could get them to table an amendment in Committee…." You would ascertain who was on the Committee, have a chat and see whether you could persuade somebody who was on the Committee to table the amendment in Committee. Then you say that the best way to go about it is that it would be better if you could get a Government person to do it but you could possibly, also, get a member of the Opposition. Pausing there, Lord Dholakia's question to you was, "Well is that not you offering to use your influence as a former Member of the House of Commons and Minister and now as a peer?"

Lord Snape: To use my influence only to have this idea debated and explored. If it was never debated or explored no-one would ever know about it. I do not think there is anything improper in me saying to a Member of the House of Commons, provided I have (a) got the permission of the Registrar of Members' Interests and (b) provided I make sure, which I would do, that I tell any Member of the House of Commons if I had any sort of consultancy with these people, "Look, this is a good idea, why don't we give it a run in the Commons and see what the Government's view is?" Actually, my advice probably would have been, and I hope Lord Dholakia does not take this amiss, "Don't you think it would be better having a word with the minister rather than tabling an amendment for the reasons I have outlined?"

103. We understand Lord Snape to be saying here that he would have been willing to approach an MP with the desired amendment and say "Look, this is a good idea, why don't we give it a run in the Commons…". To have the "good idea" behind the amendment "debated and explored" by "giving it a run in the Commons" in return for payment would be a breach of the no-paid-advocacy rule. It is apparent from this extract that Lord Snape was prepared to approach not just MPs but government Ministers too, in the mistaken belief (according to Lord Snape) that the blanket nature of his proposed amendment made this legitimate. We note that when the journalists asked Lord Snape "would you be able to get an amendment tabled on the Committee, do you think?" he answered: "Yes, I mean, I'd get somebody to do it, yeah, I mean." He added: "you know, you pick people incred…—reasonably carefully" (p SH9). He was also willing to take a draft amendment from MJA and give it to "Whoever", making the connection between the blanket amendment and MJA's benefit very clear (p SH17). He continued: "let me have a copy of it, then obviously I'll circulate it to those people I think might be sympathetic, people on the committee initially" (p SH17).

The first pillar: approaching Ministers behind the scenes

104. We now turn to the allegation that Lord Snape offered to approach Ministers behind the scenes in order to promote the amendment:

Q211 Baroness Manningham-Buller: Lord Snape, you just said it might be better to go to the Minister, which brings us back to your statement which Lord Irvine touched on at the very beginning: "I could approach him sort of behind the scenes". That is concerning because it is behind the scenes. This is doing something for a small group who made it clear that they would be paying you.

Lord Snape: Well, I am sorry, Lady Manningham-Buller, what I meant by "behind the scenes" was rather than a formal stage in the committee for the reasons I have just outlined, once you do something formally and it is defeated that is the end of it.

Q212 Baroness Manningham-Buller: It is an issue on which you are asking for briefing on which you are not fully informed and your interest—I hope I am not putting words into your mouth—has been sparked by these two, as you say, attractive young people who you believe you are helping. "I'd need something from you outlining these proposals." This is not a subject on which you had a lot of previous thought, but you are now apparently, according to the transcript, offering to do various things on the basis of this possibility for the reason you explained that you think it would be worth doing it anyway, and still do, and then you proceeded to say what you might do, including a Commons committee, a minister and so on. Our concern is whether you think this is anything to do with paid advocacy and the paid advocacy rule?

Lord Snape: I think provided I got the go-ahead from the Registrar, whether I was paid or not, if I may say so, was immaterial. A good idea being put to Members of the House of Commons is a sensible way to go about it.

105. Lord Snape developed his explanation in later evidence:

Q218 Lord Irvine of Lairg: [Quoting from the Hansard transcript of the undercover recordings] "The overall Minister is Hazel Blears, but it's actually being done by John Healey, a junior Minister. PS: Yeah. Yeah. Yeah. Well, again, I could approach him, you know, sort of behind the scenes to say, you know, 'This is the purpose behind this amendment—look at it'." Your position is that because it was an amendment for the benefit of new business generally you thought that was entirely proper?

Lord Snape: The phrase "behind the scenes", my Lord, is not one I hope you read too much significance into. It is not that I am going to whisper behind a curtain to him. The reason I used the phrase "behind the scenes" was if I got the go-ahead from the Registrar to do this I might well have said to a minister, PPS or anybody else, "Don't you think it would be a good idea to exempt new business? Would you consider an amendment on those grounds?" I would also go on to say, of course, I would have to declare an interest to that person I spoke to. I would say, "I have been approached on behalf of a consultancy for which I work to look at this method of alleviating the rates burden on new start-up businesses". The phrase "behind the scenes" is an alternative to tabling a formal amendment. Again, I go on to say why I do not think that is a particularly good idea for the reasons I have already outlined to the Committee.

[…]

Q297 Lord Irvine of Lairg: You [see] that you were asked, half way down, "Woman: Is it worth speaking to the Bill team at all, do you think? PS: What, the civil servants? Woman: Yeah. PS: Yes, it is if you know anybody. I mean— Woman: Well, no, unfortunately I don't. PS: I'm not sure whether I do. I mean, I'd have to use some of my contacts to find out who they are." Then you go on to say, "I mean, they are…more important than the politicians in my experience" and then you say, "If you can persuade them, then you know you are halfway there". Again, it is obvious that you do not think there will be anything inappropriate in seeking to persuade the Bill team or particular members of it of the merit of this amendment because then you would be halfway there.

Lord Snape: I did not think there was anything inappropriate in bouncing an idea, the thought of which attracted me, off civil servants, no.

Q298 Lord Irvine of Lairg: But you would make it plain to the civil servants that the idea appealed to you and has merit which they should consider with a view to bringing to their Minister?

Lord Snape: Indeed.

106. We understand the phrase "behind the scenes" to mean influence he could exercise privately, for example, upon civil servants. The telephone call to Mrs Lynda Waltho MP (pp SH10-11) also seems designed to impress potential clients with the kind of person over whom Lord Snape could exercise private influence. Moreover, his statement that he would approach a Minister or other person and say to that person "I have been approached on behalf of a consultancy for which I work to look at this method of alleviating the rates burden on new start-up businesses" is in our view a clear admission that he envisaged engaging in paid advocacy (Q 218). We conclude that Lord Snape was using the language he did to convey to his potential clients, from whom he would be receiving payment, his influence in places to which others would not have access.

The first pillar: the question of payment

107. We turn now to the question of payment because an essential part of Lord Snape's explanation of his actions was that he was not motivated by money.

108. Payment was raised by MJA at the outset of their conversation with Lord Snape (QQ 178, 253). It formed the background to much of the subsequent conversation, although Lord Snape did not accept that payment related to the amendment in question (QQ 178, 203). But he did accept that payment would have formed a necessary part of any consultancy agreement (Q 206). The relevant extracts from the oral evidence are as follows:

Q178 Chairman: […] In your submission of 29 January you say that in the initial discussion with the journalists regarding amendments, there was no mention or suggestion of payment or retainer and [you] would not have raised such.[16] The journalist said "What we will do is pay you a retainer as a consultant to in effect help us amend the bill" before you express any interest in the merits of the amendment. Was it not clear from the start that what you were discussing with MJA would be they could pay you?

Lord Snape: No, it was not, with respect, my Lord Chairman. I had ruled out accepting any payment for the specific amendment very early on in the conversation. […] I was attracted, as I repeat, by the question of an overall amendment for all new start up businesses but again, I repeat, I was not negotiating anyway during the course of this, this was a general conversation, as I thought.

[…]

Q189 Lord Irvine of Lairg: Then if we go over to page 7, what they tell you, almost a half way down, is that they want to pay you a retainer as a consultant to secure the desired amendment to the Bill.

Lord Snape: Yes.

[…]

Q191 Lord Irvine of Lairg: So you were under, obviously, no illusions that the sums of money subsequently discussed, £25,000 in total, were to induce you to take steps to procure the desired amendment?

Lord Snape: No, I am sorry that is not the case, my Lord.

Q192 Lord Irvine of Lairg: Forgive me.

Lord Snape: Later on in the transcript you will see they brought up the question of money. I dispensed all this advice, whether valuable or not, without even talking about money. I am aware that they said they wanted to come and see me about a possible consultancy but they could have walked away with the advice I had given them without, obviously, any financial discussion whatsoever. They mentioned the question of money and they said something, again it is in the transcript, about now we come to the hard part and I merely said to them the £25,000, which actually, my Lord, I think is £24,000 which appeared in the Sunday Times actual story, comes from the fact that I said that the normal fee that I charged my clients was £1,000 a month retainer and £500 a day.

[…]

Q200 Lord Irvine of Lairg: […] If you go over to page 10, you say, "PS: Well, the obvious question that the Registrar would ask me would be, 'Who's paying you?' So it would have to be either yourself—again, it doesn't particularly matter to me provided I can do it on a blanket basis, but I could not, sort of, as I said earlier, represent your client in this and say, 'There should be an exemption for this particular company…'" Then you go and say, "I could well argue, I'm sure, under the rules, that there should be an exemption for new businesses from the extra business rate." If I may say so, this is your leitmotiv, this is the general position subject to what you say about approaching the Registrar?

Lord Snape: Yes, indeed.

Q201 Baroness Manningham-Buller: By this stage, Lord Snape, you are very much talking in terms of being paid and the issue when you talk to the Registrar he will be asking who pays you?

Lord Snape: I do not think I am. I never mentioned money at this stage, I was freely dispensing advice to two attractive young people, about the same age as my own children, who were anxious to start up a business in London having recently arrived, as they said, from Brussels. I was not talking specifically about money. I never at any time said, "That will cost you so and so" or "I wish to be taken on". There was a general understanding, they had asked to see me about a possible consultancy but had they said, "Well, thank you and goodbye" at that stage I would not have said, "Well I will send you a bill for the advice I have given". I was giving it quite freely because, to be honest, I quite liked the two of them and they seemed to be honest and straight forward.

Q202 Lord Irvine of Lairg: I think what Baroness Manningham-Buller has pointed out here is that money was in your mind because if you look at the top of page 10 of the transcript you are saying, "Well, the obvious question that the Registrar would ask me would be, 'Who's paying you?' So it would have to be either yourself—again it doesn't particularly matter to me provided I can do it on a blanket basis …" that is provided it is permissible on a blanket basis "… but I could not, sort of, as I said earlier, represent your client in this and say, 'There should be an exemption for this particular company …'" So on reflection was Baroness Manningham-Buller not right in suggesting that at this stage you did have reward in your mind?

Lord Snape: No, my Lord, for I was replying to the question above, "Man: Well, in that case, so would you therefore—I mean, it matters not to us whether you are representing us or whether you are representing our client. It would be whatever's more convenient for you, really". Now if I am representing anybody, it is presumably as a paid consultancy but it is he who is saying that to me not me who is saying that to him. I am responding to his question about a consultancy in the way that I did.

Q203 Lord Irvine of Lairg: You are assuming you would be paid?

Lord Snape: I am assuming that having come to see me, my Lord, about a possible consultancy for the company, if they wish to accept my advice they would make some specific offer at the end of the meeting but I was not assuming I would be paid at that moment for this general amendment. Indeed, may I just say, my Lord Chairman, had they gone away and I never heard from them again, I might well have been tempted to say to colleagues in both Houses, do you think it would be sensible to exempt small businesses […] from this additional rates burden in the current economic climate. I think it is a very attractive proposition and without any payment I would pursue that matter.

[…]

Q206 Lord Irvine of Lairg: Before we leave the passage which I think Baroness Manningham-Buller was calling attention to at the top of page 10, that the Registrar would ask you "Who's paying you?" and you say "… it would have to be either yourself—again it doesn't particularly matter to me provided I can do it on a blanket basis …" Do you want to leave your evidence to the Committee on the basis that you did not have any expectation of payment at that point for consultancy if an agreement was made?

Lord Snape: No, my Lord, I think if an agreement was made for me to act as a consultant on behalf of MJA that is a perfectly logical conclusion to draw. What I was saying in reply to Baroness Manningham-Buller was that was not the thought that was uppermost in my mind at the time although I can readily see that it is a natural conclusion to draw.

109. We conclude on the basis of these extracts that the question of payment had been raised before Lord Snape expressed any view on the merits of the amendment and, although Lord Snape did not accept our view, it seems to us that a fair reading of these extracts as a whole reveals that his conversation with MJA was based on the assumption from the outset that he would be acting in return for payment, if not for the specific amendment originally sought, then for a blanket amendment that would also have benefited the client (QQ 175-177). As we have stated above, a blanket amendment in return for payment would have been a breach of the no-paid-advocacy rule, contrary to Lord Snape's expressed belief.

110. We note also the following exchange, in the context of the discussion of Lord Snape's fee:

Man: In this case it is basically just to get this amendment.

PS: Right, right.

Man: Favourably for our client.

PS: Yes, sure. I couldn't give any guarantees for obvious reasons (p SH12).

111. We have concluded that money was an important part of the picture for Lord Snape, and that he knew that so far as MJA were concerned he would be promoting the amendment for their Hong Kong client in return for payment.

The second pillar: consulting the Registrar of Lords' Interests

112. Lord Snape's justification of his conduct was based on a second pillar, namely, that he would not have gone forward without consulting the Registrar of Lords' Interests. Lord Snape said twice, early in his conversation with the journalists, that he would "need to take advice" about what he could do in working with MJA, and added: "I will take advice from the Registrar of Members' Interests in the Lords"(p SH6). This was a recurring theme in his oral evidence. However, this justification is undermined if Lord Snape had during his conversation with MJA already concluded an agreement to act for them. It is important therefore to assess this justification against the evidence relating to any agreement Lord Snape may have reached with MJA.

113. The evidence relating to this point is set out in the following paragraphs. Lord Snape's explanation was:

Q244 […] I was not negotiating. This was a casual conversation, I am walking around the office chatting to these people largely thinking aloud because I am not negotiating any contract with them at that particular time, I am thinking aloud of what could or could not be done.

114. The Chairman tested him on this:

Q248 […] if you look at page 27, as we have reached the question of money, you see there in the middle of the page: "I mean what I want from you as far as we're concerned is if you would summarise this conversation and our agreement in a letter to me, formally requesting me to act as a consultant on the lines financially that we have just agreed".

Lord Snape: "Agreement" was not a sensible word to use, although I readily concede that I used it, my Lord Chairman. I meant arising from the fairly long discussions about all sorts of things that we had had. The financial lines that we discussed were my basic fees which were a monthly retainer and a daily rate. That was to what I referred. I stress, we never formally negotiated that. I wanted to see something in writing from them before I agreed to anything or before I agreed to go ahead.

115. When we pressed Lord Snape on this point, he suggested that there was no binding agreement:

Q250 Lord Irvine of Lairg: […] why is the Lord Chairman's point not absolutely correct? What you have said [to the undercover journalists] is, "I mean what I want from you as far as we're concerned is if you would summarise this conversation and our agreement in a letter to me", so you feel that there is a concluded agreement "formally requesting me to act as a consultant on the lines financially that we have just agreed". Surely you think that all the essentials have been agreed and it now must just be set out formally in writing.

Lord Snape: Not necessarily.

Q251 Lord Irvine of Lairg: What did you mean? These are your words?

Lord Snape: Yes, indeed. What I meant was, "You've been here an hour or so, I've got a lunch appointment, would you kindly formalise, if you are going to, any proposals. I will look at them and on the basis of those formal written proposals I may or may not sign them".

Q252 Lord Irvine of Lairg: You do not use the language of proposals, you use the language of agreement and to record in writing "to summarise this conversation and our agreement in a letter to me", and it includes the financial terms "that we have just agreed". It is as if all essentials had been agreed. What do you say?

Lord Snape: Yes, that was what I said, my Lord.

[…]

Q255 Lord Irvine of Lairg: However, the real point is on page 27, is it not, that you thought you had made a concluded agreement.

Lord Snape: Well, I did not actually think I had concluded an agreement, although I readily accept that that was probably what I said and that is why it appears in the transcript. I thought we had a general discussion about me working for the company.[17]

Q256 Lord Irvine of Lairg: If that is right, why on earth did you use the language of agreement? You know what an agreement is.

Lord Snape: Yes, I do indeed. I am not a lawyer. I am not trying to evade that point, nor cast any aspersions on your profession, Lord Irvine, but I repeat it was a casual conversation at the end of an hour or so's discussion which I was anxious to conclude. What I really wanted was a letter from them in writing setting out what they wanted me to do so I could go off to lunch.

116. We believe that the point is not whether Lord Snape had concluded a legally binding agreement with MJA but what he said he could do for them and his intentions in his conversations with them. Although he made the point about consulting the Registrar early in the conversation with MJA, the rest of his conversation revealed few misgivings about what he could do for MJA, and Lord Snape felt sufficiently comfortable about what he was saying that he rang Mrs Lynda Waltho MP during the meeting with the journalists to raise the subject of the Business Rate Supplements Bill. His professed belief in the importance of the Registrar seems to us to be undermined by his eagerness to impress MJA and win the contract.

Amending legislation for clients

117. We should mention one more passage that troubles us. Towards the end of Lord Snape's meeting with the journalists, they asked him: "So, have you amended any legislation before on behalf of clients, or?" Lord Snape's response was not to tell the journalists clearly that such a thing would be prohibited by the Code of Conduct, but to reply "Ah. I think we are back to the bus business there. I don't think I've got any specific amendments I could think of. I mean, I've certainly amended legislation as an Opposition spokesman but not on behalf of clients, so, I mean" (p SH16). It was wrong for Lord Snape to leave the impression that he could amend legislation in return for payment. Moreover, he went on to say that he did not foresee any difficulties in amending legislation in this case, except that the Government might not agree to the desired amendment. When we asked Lord Snape about this passage he told us: "I denied—accurately—amending legislation on behalf of clients. I said earlier that I could not amend legislation on behalf of his client. […] I did not particularly want to be rude to the people concerned but I had made my position quite plain. Saying "not on behalf of clients" is fairly specific having said I would not do it for them right from the start and I pointed out I never had, although it might have been better if I added the words "and I never will". I think it is apparent from my own conduct that I never have and I never will" (Q 318).

118. Taking into account everything Lord Snape said to the journalists and to us in oral evidence, we do not find this explanation convincing.

Our conclusion on Lord Snape

119. Everything that Lord Snape said and offered to do, or apparently said and offered to do—approaching ministers behind the scenes (QQ 163, 166, 168-170, 211, 218), having "a chat" with members of the Commons committee on the Bill (QQ 209-210), the size of his fee (Q 192) etc—must be judged against his central belief that, subject to the advice of the Registrar, he was permitted to exercise influence in Parliament on behalf of a client or employer provided the action was not for the exclusive benefit of that client or employer. It follows from what we have said in paragraphs 40-50 above that Lord Snape was mistaken in this belief.

120. Two questions must be asked about Lord Snape's motives in his conversation with MJA.

121. First, if Lord Snape was convinced that the amendment sought by MJA was in the public interest, it is reasonable to ask why he wanted to be paid to promote it. In his evidence, he said:

" had they gone away and I never heard from them again, I might well have been tempted to say to colleagues in both Houses, do you think it would be sensible to exempt small businesses" (Q 203). (our italics)

122. These words do not seem to us to demonstrate the belief in the merits of the amendment that Lord Snape has made a central point of his defence. He did go on to say that "I think it is a very attractive proposition and without any payment I would pursue that matter" (Q 203). We do not find this persuasive and therefore conclude that his enthusiasm for the amendment was inspired by the prospect of payment by MJA, in breach of the Code.

123. There is a second question to ask about Lord Snape's motives. In November 2008 Lord Snape tabled but did not move two amendments to the Local Transport Bill. He told us that he did not move the amendments, although they were "eminently sensible", because he feared a perception that the amendments were being moved for the benefit of his client First Group, even though the amendments would have benefited the bus industry as a whole (Q 278). This admission seems to us to devalue much of what he was arguing in his oral evidence. We asked ourselves why, having taken the view he did in November 2008 in relation to First Group, he continued to believe that it was wise to discuss even a blanket amendment, never mind the particular amendment sought by MJA. We conclude that he was deceiving himself if he believed that amendments to benefit an individual client of MJA would be acceptable or seen to be acceptable, provided a wider interest was also served, because only a few months before he had rejected such a possibility in the case of First Group (QQ 277-284). We conclude that Lord Snape was so keen to win a contract with MJA that in conversation with them he was led to a point beyond what he had previously considered to be prudent and in doing so he showed a willingness to breach the Code.

124. One of Lord Snape's key defences was that he would have submitted any draft contract with MJA for the Registrar's advice. That would have been advisable, but it should not be used as an excuse to exempt a Member from his duty to exercise his own judgment of what is proper. Members of the House cannot evade their personal responsibilities. Lord Snape did exercise his own judgment earlier in the parliamentary year when he did not move two amendments he had tabled because he feared a perception that the amendments were being moved for the benefit on his client First Group (Q 278). There is no evidence that he sought the advice of the Registrar on that occasion: he acted on his own good sense. He ought to have done so with regard to MJA too.

125. We find that Lord Snape expressed a clear willingness to breach the Code of Conduct. The fact that he may have believed that moving a blanket amendment was legitimate does not excuse him because, as we have explained above, moving such an amendment in return for payment would breach the no-paid-advocacy rule. The mitigation that might result from this belief is diminished in our view by the fact that he had abstained from a blanket amendment in relation to First Group because he feared that such an amendment might be perceived to be intended for the benefit of First Group. Thus, in the case of MJA he failed to ask himself how others might perceive his words and actions. He should not have given the impression that he could manipulate Members of the House of Commons. He was unwise to talk about the influence he could exercise behind the scenes. The language he used was misleading, even if not intended to mislead. We believe that he himself came to realise this, and so it may be appropriate to leave the last word to Lord Snape himself:

Q276 Baroness Manningham-Buller: […] on your reading of paragraph 4 of the Code of Conduct, and in particular the last two points of it, do you think with hindsight and on reflection that offering to get someone to table an amendment and picking them is within the Code of Conduct?

Lord Snape: On reflection and with hindsight, no, I do not.

CHAPTER 4: THE ALLEGATIONS AGAINST LORD TRUSCOTT

Background

126. Lord Truscott was contacted by a Sunday Times undercover reporter ("Claire Taylor") on Friday 9 January 2009, and arranged to meet her in the afternoon of Wednesday 14 January. They met for tea in the House of Lords Dining Room. The woman reporter was accompanied by a male colleague ("David Thompson"). The conversation lasted just over an hour. Over the following days e-mails were exchanged and Lord Truscott submitted his c.v..

127. A second meeting then took place on the morning of Wednesday 21 January, at the St James's Hotel and Club, Park Place, London SW1. This meeting was recorded on video and lasted just over 53 minutes. On Friday 23 January Michael Gillard of the Sunday Times rang Lord Truscott, revealed the sting operation, and asked him to explain what he had offered to do for MJA's Hong Kong client. Lord Truscott denied that he had offered to facilitate the desired amendments in return for payment.

128. Lord Truscott was interviewed by the Sub-Committee on Friday 13 March. He was accompanied by his solicitor, Mr Neil O'May, a partner in Messrs Bindmans LLP. As explained above, the Sub-Committee has no power to hear parties by counsel, but Lord Truscott was entitled to be accompanied by Mr O'May.

The evidence

129. The evidence relating to Lord Truscott's case is lengthy. For the purposes of analysis we have grouped it under the following broad headings:

a)  What was his understanding of the Code and of paid advocacy?

b)  Did he offer to cross the boundary between advice and advocacy?

c)  Did the "smart metering" episode show that he had breached the Code in the past or indicate a clear willingness to do so in the future?

Lord Truscott's understanding of the Code

Advice, advocacy and lobbying

130. Lord Truscott was clear about the critical distinction between providing advice to clients and engaging in advocacy for them. He gave an impeccable description of his proper role when challenged on the telephone by Michael Gillard two days before publication of the newspaper stories. He said: "I was not agreeing to amend the legislation myself or to bring that about. All that I was going to do was assist them to make their lobbying case so they could lobby to make amendments and to put their case to parliamentarians who would then amend the legislation. […] I was not personally going to amend the legislation or […] convince any MP or peer or minister to amend the legalisation. I was merely going to advise them how they could go about planning their campaign to amend legislation. […] I was giving advice, nothing more" (p TrH40).

131. He drew a clear line between advising and lobbying: "I advise the lobbyists rather than doing the pitch myself. I am happy to find out information, but that's a slightly different thing" (p TrH9). Lord Truscott stated his position on lobbying many times: "I think it is inappropriate for me to lobby anyone. It is something I have clearly said that I would not do, I have never done before and I would not do it now or in the future. […] I do not lobby Members. I do not think it is appropriate to lobby Members. […] I thought by saying that I would not lobby, and by not lobbying, which I have never done, that I was ensuring not only was I abiding by the rules but I was more than abiding by the rules" (QQ 364, 440, 445). He understood that "it is within the rules to ascertain the predominance of view on a particular issue or piece of legislation and to identify people that the lobbyists themselves could approach to lobby, and that is what I thought I was offering to do" (Q 343). The lobbyists would have to lobby "and they, together with my advice, would identify sympathetic parties that might be willing to put forward an amendment" (p TrH39).

132. Lord Truscott insisted that he saw his role as "merely offering advice" (Q 365). At the beginning of his discussions with MJA, he described his consultancy work by saying "Some of it's sort of strategic advice", on the "passage of legislation, the development of legislation and how the Government work, and what's happening in internal departments and the way to go about influencing Government and legislation", and on the "interface" between Parliament and business (p TrH4). He asked what MJA wanted from him in terms of advice: "It depends what sort of advice your clients are looking… Are they looking at the sort of legislative stuff that they can give, you know, contracts with Government or were they thinking of just how the political system works?" (p TrH4). In his second meeting, discussing how many days' work he would be doing, Lord Truscott said "even doing background work takes almost a day, so to monitor it going through all its stages—", which suggests that he was envisaging advice and monitoring work only (p TrH26).

133. The evidence shows that the Code of Conduct and the prohibition on paid advocacy were in Lord Truscott's mind from the outset. He told the journalists: "if I am paid as a, as a consultant, then I can't be paid for parliamentary advocacy, as it were" and "you just have to be a bit careful about paid advocacy" (p TrH6). He considered "paid advocacy would be lobbying, it would be promoting an issue, seeking to influence anybody as a result of being paid", whereas he had been talking about "finding out information. That is really what I was offering to do, and offering advice" (Q 383). He explained:

"To my view, the layman's view, the Code of Conduct is saying that you should not exert parliamentary influence as a result of being in the employ of any company, i.e. you should not ask questions, you should not move amendments, you should not try to influence legislation as a result of being a paid consultant or whatever" (Q 385).

134. Lord Truscott told us that he had been at pains to explain to the two journalists "how the process worked, what their role should be and what my role should be" (Q 378). His role, he said, would be very different to that of the lobbyists: "I was talking about a division of labour, but my division of labour was that I would be identifying people and they would be doing the lobbying. […] My side of the partnership would be giving advice, identifying people to whom the lobbyists could make their case. Their role would be to act as lobbyists, to actually do the pitch, to Members, to do presentations, to talk to people, and try to convince people. All I would be doing is point them in the right direction and say, 'This member has an interest in this subject, it is worth you talking to them'" (QQ 398, 404). He told us: "I was trying to make it clear that I differentiated talking to people, finding out information; and lobbying and paid advocacy" (Q 537).

Moving amendments

135. Lord Truscott considered that he had been "absolutely clear" with the journalists about the ground rules for a consultancy. "No lobbying, no paid advocacy and no moving amendments. I made that absolutely clear in the first meeting, the ground rules on which I would engage with any company, even hypothetically" (QQ 338, 340).

136. Lord Truscott had told the journalists:

"I would not be comfortable myself being paid by the company to put amendments directly myself. What I could do is advise on the process. You know, identify all the people who would be willing to … who could be approached to put the amendments forward and all that sort of stuff. So I draw a line between sort of advice, consultancy, and actually … er …er …er … direct advocacy of, you know, particular causes … like if I was sort of paid by a company or whatever" (p TrH6).

137. Lord Truscott said that in his discussions with MJA, he was definite that he would not table any amendments to benefit their clients. He told them: "We can work on who puts the amendments, but I wouldn't put amendments directly myself", which he reiterated to Michael Gillard (pp TrH5, TrH37). Lord Irvine put it to Lord Truscott: "What you are saying is that the amendments that were wanted would have to be put forward by persons other than you?" and Lord Truscott's reply was "That is right" (Q 366).

138. We asked Lord Truscott why he had not strongly and clearly rebutted some of the journalists' improper suggestions, and he answered: "Because I had done that extensively all during the meeting and I thought I had made myself absolutely clear" by laying down the ground rules (Q 391). He told us: "In my own mind I was clear where the boundaries were and the rest of the text in large measure was me trying to describe what I would do and what they would do and what was appropriate under the rules" (Q 457).

139. We are satisfied in the light of the evidence set out above that Lord Truscott had a good knowledge of the rules governing paid advocacy. The question now is: to what extent if any did he show a clear willingness to breach those rules?

Did Lord Truscott offer to cross the boundary between advice and advocacy?

140. There are to be found in the evidence many occasions on which Lord Truscott seemed to us to move beyond discussing legitimate advice, and into expressing a willingness to engage in paid advocacy. The following paragraphs describe these occasions, necessarily at length because what matters for assessing Lord Truscott's conduct is the picture that is built up from the examples taken as a whole.

Smoothing the way for lobbying

141. We find that the evidence shows that Lord Truscott was willing to let lobbyists use his name to smooth the way for lobbying. For example, having explained to the journalists his role in identifying potential targets for lobbying, Lord Truscott added that he might advise the lobbyists: "such and such a person is following this and you really need to chat to them and stick out all their notes, put a briefing note, have a cup of tea with them and say would you move these amendments, Lord Truscott mentioned it [inaudible] you know" (p TrH7). He was happy for the lobbyists to quote his name to Members (Q 409).

142. Lord Truscott rejected Baroness Manningham-Buller's suggestion that this was making an introduction: "I would not make an introduction to Members. […] Mentioning my name is not actually fixing the meeting. I would not fix the meeting. I would not go away and physically arrange the meeting, they would have to arrange the meeting themselves" (QQ 407-408). He said that what he was proposing was: "that I would chat to Members perhaps who had an interest in the subject, see whether they were interested in the subject, then I would suggest to the fictional public affairs company, "You should talk to this Member". They might be able to mention my name and say, "Lord Truscott suggested you". It is as simple as that" (Q 407). Lord Truscott insisted that this would be an "above board and transparent" way to proceed (Q 409). He was not implying that he could soften up Peers to make them favourably disposed to an approach by the lobbyists (Q 410).

143. In the opinion of the Sub-Committee, inviting the lobbying group to use his name to facilitate a meeting with other Members of the House could only give rise to the impression that he was willing to use his parliamentary influence on behalf of the paying client. When the female journalist suggested to Lord Truscott: "you could smooth the way for us", Lord Truscott replied "Yeah", and when she continued: "For instance, you could say this person you need to speak to, I've spoken to them already. You know, they're expecting your call" Lord Truscott replied "Yes" (p TrH7). We asked Lord Truscott what he had meant by his affirmative responses. He said: "Again I was talking about identifying people, and I was talking here about facilitating again, identifying people and facilitating the process of lobbying. Their process of lobbying. […] I would be identifying people that they could approach" (QQ 418, 420). However, this did not allay our concern that Lord Truscott was willing to make an introductory call to the Member whom he had identified for an approach from the lobbyists. We consider that "they're expecting your call" means that he would have mentioned the lobbyists to the Member as his client. Such an introductory call seems to us to cross the boundary from the permissible to the prohibited.

144. When the journalist asked Lord Truscott "is it possible for us to just leave it with you to identify the right people and coach them?", Lord Truscott's reply was "Well, I think it would—I mean, it should normally be a sort of partnership, as it were, you know" (p TrH7). He did not take the opportunity to tell the supposed lobbyists that what they were suggesting ("coach") was contrary to the Code. We find this damaging to Lord Truscott. Lord Truscott's explanation was that he was too diplomatic and did not want to offend potential clients (Q 388). This eagerness to please the potential clients, even at the cost of indicating a willingness to breach the Code, is one of the recurrent themes to emerge throughout his evidence: Lord Truscott was torn between his desire to win a lucrative contract, and his need to insist on observing the Code of Conduct.

Influencing Members of Parliament

145. During the first meeting, Lord Truscott said to the journalists: "I can advise on procedure and who to deal with in the Commons but obviously when it comes to the Lords it is far more within my ambit to influence it than in the Commons." The journalist prompted Lord Truscott to explain, and Lord Truscott continued: "I can contact the officials as it goes through the Commons stages, but in terms of, I can contact some of the MPs as well, but in terms of influencing Members and knowing the people, obviously I know the people better up here than in the Commons" (p TrH14). We spent some time exploring the meaning of these words. We believe that their natural meaning is that Lord Truscott personally, by virtue of his membership of the House of Lords, was in a better position to influence Members of the House of Lords than Members of the House of Commons.

146. Lord Truscott told us, however: "I was not talking about directly influencing members or their views but I was talking about influencing the process of their lobbying. What I was really talking about was my ability in the Lords is greater to ascertain the predominance of view with the head of the Bill team, with Members of the House of Lords, than it is in the Commons because of the very fact that I am in the House of Lords, so I have a greater ability in the House of Lords to sound out Members and officials on their views" (Q 438). He said: "I would be in a stronger position to make suggestions in the House of Lords and that was what I was talking about" (Q 447). Lord Truscott stressed: "I was talking about the process of lobbying, I was not talking about influencing legislation. I never said that. I did not mean that" (Q 455). He told us that he regretted the use of the word "influence". However, he continued, "We have to recognise by our very nature Members of the House of Lords do have influence. […] The point is whether that influence is used appropriately and whether it is used to promote commercial interests". "I would not use influence to influence parliamentary business or legislation or lobbying" (QQ 441-443).

147. Lord Truscott explained that when he spoke of "influencing Members", "I was talking about them influencing Members, not me influencing Members. I do not say I will personally influence Members or their opinions. […] when I talk about "influencing Members", I am talking about them influencing Members and then I go on to say, "… and knowing people, obviously I know the people better up here than in the Commons". That is just a fact. […] obviously I did not know it was being tape-recorded and all that. I did not say at any stage, "It's not a problem for me to influence Members in the Lords because I know them all, I can swing that", I never said that because I did not mean it" (Q 456).

148. Lord Truscott concluded:

"I did not see that as my role, influencing peers. I did not think it would be appropriate. I have never tried to do it before. […] When I talk about "influence" I simply mean the influence that we all have as peers, Members of this House. Yes, I have a certain degree of influence. If I pick up the phone an official will talk to me. If I contact a colleague and say, "Have you thought about this? What is your view on this piece of legislation?" in many cases they will talk to me. That was the sort of influence I was talking about. Okay, it was not expressed very well and clearly if I had known I was on the record I would not have used that phrase because it can be misinterpreted" (Q 458).

149. The problem with these replies is that they reinforce the impression of misconduct: Lord Truscott in his own words of explanation was proposing to "sound out" Members and officials to "make suggestions" to them (QQ 438, 447). To ask other Members "Have you thought about this?" suggests advocacy (Q 458). We do not accept Lord Truscott's explanations that he would be "sounding out" Members only with a view to determining whether they would be suitable candidates for lobbying by MJA. The words he used were "it is far more within my ambit to influence it" (p TrH14). We conclude that what he was signalling to the journalists was that he would himself seek to influence other Members of the House of Lords to support the desired amendment.

150. When the journalist asked Lord Truscott, in their second meeting, "How far are you able to help us in all of this?", Lord Truscott replied: "I can work with you over it, and it is, it, you know, identifying people and, obviously, following it and identifying people to talk to talking with people to facilitate the amendments and make sure that the thing is drafted. I mean, I think it's got to be a sort of partnership" (p TrH26). We find the word "partnership" significant, with the clear implication of a division of labour in which the lobbyists and Lord Truscott would take an equal part in attempting to persuade Ministers, MPs and others in favour of the desired amendments. Lord Truscott told us in evidence that as an adviser he would "assist them in the lobbying process and so to facilitate their work. […] what I was talking about was facilitating the lobbying process. I was not talking about directly lobbying people" (QQ 334, 337). The first half of his reply, up to "identifying people to talk to" referred to Lord Truscott's own role, but the second half was the lobbyists' role, "because earlier they talked about drafting an amendment and having counsel to do that." The partnership reflected "a division of roles" (Q 473). Lord Truscott would talk to Members only to identify their sympathies (QQ 476-478). We find this implausible and we regard this admission that he would be talking to people to facilitate the amendments to mean that he would persuade them in favour of the amendments.

151. Lord Truscott described his contacts to the journalists: "I know, you know, some of the MPs and I know all the Tories in the Lords, so I've got no problems with approaching them" (p TrH26). He told us that his purpose in approaching them would only be "To identify their views on this issue" (QQ 479-483). It would have been ludicrous for him, as a former Labour minister, to try to influence Conservative policy (QQ 480-482). When Lord Irvine put it to him that "this is a sort of formulaic reply […] that you would only approach them to identify what their existing views were and not to seek to influence them at all", Lord Truscott responded:

"Well, it is not just a formulaic reply; it is the view I had and the boundary that I thought was appropriate, because I have always operated within the rules of this House, I have never lobbied, I have never moved an amendment, I have never got involved in paid advocacy, so I thought that would be the appropriate reply for me. It is not only a standard reply for you, Lord Irvine, and the Committee, but it is the standard reply that I was giving to them" (Q 485).

152. We find it difficult to accept this reply. We do not find it plausible that a Labour ex-Minister could have approached Conservative Members of the House merely to seek their views on the desired amendments. The Conservative Members would almost certainly have had the impression that they were being asked to give their support. The very act of approaching other Members of the House in these circumstances inevitably gives rise at least to a perception of lobbying, if not to actual paid advocacy. We therefore do not accept Lord Truscott's explanation on this and conclude that, when talking to the journalists, he did intend to suggest that his purpose in approaching Members would have included seeking to influence them in favour of the proposed amendment.

Facilitating meetings with Members

153. In discussing with the journalists the "number of things that need to be done", Lord Truscott said: "I have got to keep an eye on the progress of the Bill. Then I think the other thing is identify who could be approached to put forward amendments at various stages and maybe other bodies to contact. Then that comes down to, I think it will be a bit of a mix—you talking to some people, me talking to some people, sometimes both of us talking to people. […] To people together to put something through" (p TrH27). Lord Truscott explained that this did not mean what it appeared to mean: he was not talking about a joint lobbying operation between him and the lobbyists but about the lobbyists alone persuading the persons he had targeted (QQ 486, 490). We examined him on this passage in detail:

Q491 Baroness Manningham-Buller: So you are both going to be talking to people together […] Are you saying that you would never have considered meeting with the lobbying company with a third party?

Lord Truscott: I think I was suggesting there that there may be occasions where they met someone and that they did the lobbying and I would be present. […]

Q492 Lord Irvine of Lairg: So that is clear then, when you say to people together, the lady is asking you whether you can be present with them whilst they lobby peers; is that right?

Lord Truscott: I was—

Q493 Lord Irvine of Lairg: Is that right?

Lord Truscott: I was suggesting that it was a possibility that there would be an occasion where they would meet peers to chat to them.

Q494 Lord Irvine of Lairg: With you?

Lord Truscott: That is what the text says but—

Q495 Lord Irvine of Lairg: And that is also what you say because at the top of the page it says, "To people together to put something through," and that means that it will be a joint meeting and the object of it would be to get an amendment through?

Lord Truscott: I was not saying that I would be suggesting any amendments or putting any amendments forward.

Q496 Lord Irvine of Lairg: What do you mean?

Lord Truscott: It was their aim obviously to influence legislation.

Q497 Lord Irvine of Lairg: What do you mean by, "To people together to put something through"? These are your words; what did you mean by them?

Lord Truscott: I meant that I would identify people—

Q498 Lord Irvine of Lairg: You are having a cup of tea in the Tea Room with the lobbyist and you are there and there is another peer there. What did you mean by, "To people together to put something through"?

Lord Truscott: I suggested here that there might be an occasion where the public affairs company and I sat down with someone over a cup of tea and they would do the pitch to someone, but I would not be involved in lobbying or suggesting or putting amendments or suggesting amendments or anything of that nature.

Q499 Lord Irvine of Lairg: So you would be there observing their lobbying techniques and that is the only purpose that you would be there for?

Lord Truscott: I would not be there to lobby or to suggest amendments.

Q500 Lord Irvine of Lairg: Why would you be there?

Lord Truscott: I was suggesting that once I had identified someone there might be an occasion where they set up a meeting with someone over a cup of tea, they put forward their case and I would be present, but I would not myself do any lobbying or make any proposals to amend legislation. […] My own feeling was that it would be within the rules to be present at a meeting with a public affairs company, providing I did not lobby or get involved in paid advocacy, or suggest any amendments, so my presence at any possible meeting with a public affairs company and a Member would not breach the rules […]

Q501 Lord Irvine of Lairg: Would it not suggest to the other peer that you favoured the pitch that the lobbying company was making because you are not going to repudiate them, you are going to sit there silently consenting?

Lord Truscott: Not silently consenting. I would be there as an observer obviously to hear the discussions, but I would not be there to make the pitch, which I said I would not do, I would not be there to lobby. I understand that it is possible for Members to have meetings with public affairs companies, with colleagues, and that is perfectly in order. What obviously would not be in order would be to lobby a colleague, to suggest particular amendments or anything of that nature. However, if the public affairs company were to do that in your presence and they were pushing a particular line, that would be up to them, and it would be up to the Member how they responded to that.

154. We do not find the scenario envisaged by Lord Truscott to be credible, and so we do not accept his explanation. We have concluded that the purpose of both the lobbyists and of Lord Truscott in speaking to Members in the Guest Room and elsewhere would have been to seek to influence such Members in favour of the proposed amendment.

155. Lord Truscott's conversation with the journalists continued with Lord Truscott saying "Really you have to feel your way a little bit because some people like to do it over a cup of tea in the Tea Room and some people prefer to have a proper sort of, you know, chat and presentation" (p TrH27). He told us that this did not mean he would necessarily be entertaining the lobbyists in the Guest Room himself—the Member identified by him to be approached might do the inviting (QQ 488-489). We note here that Lord Truscott did not rule out the possibility that he himself might be the host at such a meeting. We also note that he should have been aware that his presence at such a meeting would be viewed by the other Members present as tacit support for the lobbyists' position. In any case we do not believe that if Lord Truscott had been present at such a meeting in the House of Lords Guest Room, acting as host or merely in attendance with the lobbyists, he would have abstained from adding his own voice to that of the lobbyists in favour of the amendment.

156. Following this exchange, the journalist suggested that "some people will find it much better to deal with you as a fellow Peer and a former Minister" than they would with lobbyists going in cold. Lord Truscott responded: "in the Commons, it might be better, I'll identify the MP, but it might be better for you to talk to the MP. That's why, if you know an MP, have a word with them. And then I see the Lords people on my own, because, you know, I know everyone in the Lords so I'm quite happy to see them on their own" (p TrH27). He told us: "I do not see a problem about that because it is also about identifying a Member's views on legislation or on issues. It would be perfectly in order for me to see them on their own to ascertain their views" (Q 504).

157. We conclude that just as the lobbyists' purpose in seeing the MPs would be to persuade them of the merits of the desired amendment, so too would Lord Truscott's purpose be in seeing Peers himself. In our opinion, Lord Truscott was indicating that he was willing to cross the boundary between what is permitted and what is prohibited.

Finding someone to move amendments

158. During this conversation with the journalists, Lord Truscott again stressed: "I don't think I'd be comfortable moving amendments myself". The journalist came back: "No, but the question is that you would be able to find someone who could", and Lord Truscott replied: "That's right" (pp TrH27-28). Lord Truscott argued that he did not mean that he would himself seek to persuade somebody to move the amendment (Q510). Our discussion with him continued:

Q512 […] Lord Truscott: The position here is that they were trying to get me to admit to moving amendments or suggesting someone else do so. If you actually look at the video, when they ask this question.

Lord Irvine of Lairg: We have done.

Q513 […] Lord Truscott: You can see that I was taken aback by the question, I was quite shocked, and I thought, "What is this about? Where is this leading me?" I sort of rolled my eyes a bit, stroked my chin and thought, "Well, what am I going to say to this?" Again, do not forget this meeting was operating at two levels. On the one hand they were saying they wanted to work with me in a consultancy but they were also trying to entrap me. I was trying to think hypothetically about working with these people. What I gave was a sort of politician-type answer, I said "Yeah, yeah," and then moved on to another subject. I did not say, "Yes, yes." I said, "Yeah, yeah," and then I go on to talk about something else. I completely ignore that and then I move on to another issue. […]

[…]

Q518 […] Lord Truscott: When I said, "Yeah, yeah, that's right," what I was talking about was their question was, "So you would be able to find someone who could?" This is about moving amendments. I was talking about working together to develop a process to see at the end of the day if it would be possible to move these amendments. So I was thinking that together in partnership we would be able to identify someone who could move this amendment. Bearing in mind, if you think about it, all throughout I was talking about identifying someone, identifying a Member who had an interest in this subject. I also talked about working with them in partnership. So I was talking about working with them to identify a Member who had an interest in this who could possibly be persuaded by them, on my advice, to move the sort of amendment—

Q519 Lord Irvine of Lairg: What do you mean by on your advice?

Lord Truscott: Because I would be identifying someone they should approach. Then this person would move an amendment. It would be in the context of a campaign because, as I said, just identifying an individual who could move an amendment would not be enough. You would have to get political support from the different groups.

159. We do not find these answers convincing. We conclude that when Lord Truscott said that he would find someone to move the desired amendments, he meant that he would not only identify someone but would himself seek to persuade that person to do so.

160. The journalists and Lord Truscott discussed the amendment's chances of success. Lord Truscott said: "I'm not quite sure that the Liberals yet are 100 per cent signed up for the ballot idea, but, er … I feel that they go along with it, that's the feeling I get so far. But then that's what we need to talk to them about, really…" (p TrH33). He told us that the final phrase was "just an expression obviously. I made clear earlier they would have to do the lobbying part" (Q 557). Lord Truscott told the journalists "I think they can be persuaded on that, I would have thought." The female journalist responded: "Yeah, you'll soon find out when you get talking to them", and Lord Truscott replied: "That's right." (p TrH33) Lord Irvine asked Lord Truscott: "So you are going to find out whether […] they are persuadable on this but not engage in seeking to persuade them yourself, is that right?" Lord Truscott agreed: "Yes, that is right" (Q 558). In this case the "you" in "when you get talking to them" is unambiguously Lord Truscott, who again signally failed to rebut the journalists' improper suggestion.

161. We have concluded that dismissing evidence that tells against him as "just an expression" calls Lord Truscott's credibility into question. This is one of a number of instances when Lord Truscott attempted in his explanations to us to make words mean what they do not mean. We repeat our conclusion that Lord Truscott did mean that he would seek to persuade someone to move the desired amendment.

162. We discussed with Lord Truscott whether his comment "I can contact some of the MPs as well" suggested that he was willing to lobby MPs (p TrH14). He told us: "As for the contacting Members of the House of Commons, it would be to undertake the same role that I was hypothetically proposing in the Lords, ie to identify those Members who may be sympathetic to the proposals of this hypothetical public affairs company that they could contact" (Q447). For the reasons set out above, we do not accept Lord Truscott's evidence that his purpose in contacting MPs would be limited in this way.

Lobbying Ministers

163. We discussed with Lord Truscott whether he had expressed a willingness to lobby the relevant Minister. During their first meeting, he told the journalists: "You can get the Government to amend its own Bill, provided you […] can convince a Minister or his officials" (QQ 449-450). Lord Truscott explained to us "'You', again, I am not talking about me, I am talking about the lobbyists. I am not saying I can get Government to amend its own legislation" (Q 450).

164. In Lord Truscott's second meeting with the journalists, one of the journalists asked whether the relevant Minister would be John Healey MP, and enquired whether Lord Truscott knew Mr Healey; Lord Truscott said he did. The journalist asked "is it worth talking to him?" and Lord Truscott replied "Erm, yes, yeah. Certainly I can, er … yeah. Certainly I can, er … There's no problem with me approaching the Minister either at the Commons stage or the Lords stage and saying … because it's usually a common thing that's done that the Ministers and the Bill team—that's the other people you need to contact, the Bill team—that they will brief MPs and Peers, so there's plenty of opportunity for exchange between MPs and Peers, and so …" (p TrH28). Lord Truscott explained to us: "I was talking about talking to the Minister about Government thinking on the Bill" (Q 522). He went on: "In this hypothetical case I would be approaching the Minister about what the Government's position was on the Supplementary Rate Bill, and there would be two issues that I would be particularly interested in knowing their position on: (i) their position on the ballot; and (ii) their position on the exemption for new businesses. During the course of that conversation I would find out what Government thinking was on that, and then I could advise the public affairs company on those issues" (Q 524).

165. We questioned Lord Truscott further:

Q526 Lord Irvine of Lairg: Could I just say so that we have it for the record, you are saying that you were not agreeing to approach the Minister with a view to persuading the Minister of the merit of the particular proposed amendment? Is that what you are saying?

Lord Truscott: That is what I am saying, and I do not think that that would work anyway in the way that legislation works, but I am not proposing that.

Q527 Lord Irvine of Lairg: With respect, the issue is over what you intended.

Lord Truscott: I agree and the main thing is that I would not do that anyway in terms of trying to influence the Minister or influence policy formation or the legislation.

166. We do not accept this evidence. We regard it as unrealistic to suppose that Lord Truscott could have asked the Minister about the Government's reaction to the proposed amendment without in substance promoting the amendment, and it should have occurred to Lord Truscott that by offering to use his parliamentary influence to secure a meeting with the Minister on the subject of the amendment he would inevitably cross the boundary between what the Code permits and what it prohibits.

167. Lord Truscott and the journalists continued to discuss John Healey's role. Lord Truscott volunteered: "I came across John… well, I remember I helped him in his by-election when he was elected, I think, and then I came across him again quite a bit when I was a Minister, because he was the Treasury's man at the time." The journalist asked: "So he might listen to the arguments, in that case?" and Lord Truscott replied: "Yeah" (p TrH35). Lord Truscott assured us that he was not suggesting that Mr Healey might listen to the arguments from Lord Truscott because Lord Truscott knew him and had assisted in his by-election (Q 561). He expanded on this: "What I was saying here was I had come across John Healey in the past, so therefore my assessment of him would be that he is the sort of person who would listen to arguments put to him. I cannot say that I know him very well but I have come across him and my assessment of his character would be that he is someone you can make an argument to, that sort of thing" (Q 563).

168. Being able to say that he knew the Minister and had done him past favours and so could approach him about the amendment would undoubtedly have been an attractive prospect for a potential client. We consider that the purpose of such a meeting would not have been fact-finding alone: the discussion with the Minister in charge of the Bill would also have been for the purpose of persuasion and lobbying, and that is our conclusion.

Lobbying government officials

169. At many points, Lord Truscott discussed approaching Government officials. He told the journalists: "I can sort of identify people and talk to them and sort of talk with officials and all this sort of thing but normally I would work with the organisation" (p TrH7). He said: "I can contact the officials as it goes through the Commons stages" (p TrH14). Lord Truscott replied "No, no" when Michael Gillard accused him of being ready to work behind the scenes to identify officials whom he could speak to in order to further the aims of MJA. He denied that he would, "because I had always made clear in my meetings with them that my only purpose of contacting officials would be to find out information, not to lobby" (p TrH39, QQ 354-355). He also told us that his intention in approaching officials "would be to ascertain the state of play of a piece of legislation and what their reaction might be to the progress of legislation but not to propose any specific amendments" (Q 358). Lord Truscott told us that it was in order (and necessary) to talk to Members and officials to "discover the predominance of view in the House or monitor the progress of legislation" (Q 402). He said that in discussing approaching officials, "I was only talking about contacting officials for information, particularly on timetabling and other matters, where we are at with a particular piece of legislation, which you cannot always gather from Hansard or committee minutes" (Q 447).

170. Lord Truscott told the journalists that, despite his intention to recruit an assistant, "in reality a lot" of the work would come down to him. This was "Because I know the people we are talking about" and "The head of the Bill team is not going to talk to a researcher" (p TrH15). Lord Truscott expanded on this for us: "It is easier for me to pick up the phone, ask the head of the Bill team, 'What is the information on this Bill? Where are we at with this Bill?' If a parliamentary researcher does that he probably will not talk to him, will he?" (Q 460). He had been "only talking about finding out information. You do not ring up the head of the Bill team or talk to the Bill team and suggest an amendment, that is not the way that amendments are made in this place or the Commons. […] It would not be appropriate and it would not work" (Q 463). He was "not talking about any private approach to have a chat with an official to try to get them to change Government policy" (Q 465).

171. Lord Truscott told the journalists that "there are ways to do these things but you have to be—there's a degree of subtlety required and you have to work behind the scenes, to a certain extent" (p TrH6). He was "quite happy to talk to MPs, Peers, officials, and to do behind the scenes stuff", though he wouldn't move amendments himself (p TrH27). Lord Truscott argued that this did not mean he would be happy to persuade behind the scenes. He explained: "My understanding is that the appropriate role for consultancy in the House is to work behind the scenes" (Q 509). Subtlety came in because the journalists were asking for inappropriate action and "I was trying to say to them delicately there are rules, and then I go and outline the rules in the first meeting. Putting it delicately, you have to be subtle about these things. In other words, in my diplomatic language they were being too crude about the whole thing, and the behind-the-scenes business is that is my understanding how consultancy works in the House of Lords and in the Commons because it should not be in the forefront because that would mean getting involved in parliamentary business" (Q 565).

172. This explanation invites us to accept an interpretation of Lord Truscott's plain words that they cannot sustain. We believe that Lord Truscott was indicating to the lobbyists a clear willingness to approach the Bill team and other civil servants on their behalf. We believe that his motive was to impress the lobbyists that he had access to persons whom others (mere "researchers") could not approach. The point is that he was willing to use, or willing to suggest that he would use, his parliamentary influence to contact such persons on behalf of clients. He was willing to do this in order to win a lucrative contract with the lobbyists.

The issue of "smart metering"

173. One of the allegations against Lord Truscott is that, in presenting his credentials to MJA to win a contract with them, he deliberately gave the impression that he had influenced the Energy Bill of 2008, which included clauses on smart metering, in favour of a paying client which was a smart metering company.

174. A part of Lord Truscott's discussions with the journalists concentrated on what he had achieved as a consultant for his smart metering client. These discussions throw light on Lord Truscott's past behaviour, on how he operated, and also on what he might have been willing to do for MJA. The discussions, and Lord Truscott's replies to our questions on them, highlight again the way he needed to exaggerate what he could achieve for MJA, in order to win a contract with them, and how this led him by a series of nods and winks to indicate a willingness to breach the Code.

175. It was Lord Truscott who first brought up the question of smart metering, and he did so in order to illustrate what he might achieve for the potential Hong Kong client:

"I spoke on the Energy Bill and declared an interest and mentioned smart meters, I can declare an interest. But I would not be comfortable myself being paid by the company to put amendments directly myself. […] the smart metering case is a case in point. I spoke on the Second Reading of the Energy Bill and I did mention smart meters amongst other things, but I declared an interest. I monitored the Bill going through about smart meters and the amendments that were going through … and that the amendments that industry wanted to see put forward were put forward, but they weren't put forward by me" (p TrH6).

176. The journalist wondered whether the Bill had become law. Lord Truscott responded: "The Energy Bill? Yeah, yeah, absolutely. Smart metering is involved and there are going to be further Government announcements about how they are going to implement" (p TrH6). The journalist asked Lord Truscott: "And did it in the end work out the way that your company wanted?" Lord Truscott's reply was: "Yeah, they were very happy because they got a Government commitment to do the thing, to roll out these things" (p TrH6).

177. In discussing with the journalists whether it would be possible for Lord Truscott to "identify the right people and coach them" regarding MJA's desired amendment, and the difficulty of lobbyists "going in cold", Lord Truscott again brought up smart metering: "there was an occasion again with the Energy Bill when the Energy Retail Association approached me and said, you know, will you move these amendments? I said no I won't, but I know who will. I know the person that's interested in [inaudible] and it was one of my colleagues that did move the amendment" (p TrH7). He continued: "He said, you know, will you move these amendments? I said, well, you know, I'm monitoring the Bill but I did not want to be seen to be moving amendments myself" (p TrH7). Lord Truscott added: "again […] the sort of client said, well what's happening about this government decision? We've heard, you know, that it's going to be delayed. You know, what are the things that's sort of holding up, the problems. So I can just ring up someone and chat to them" (p TrH7).

178. Lord Truscott spoke again about his work on smart metering during his second meeting with the journalists. The discussion was substantial:

PT: Again, thinking back to the Energy Bill, I had meetings with the Bill team, the relevant Minister and head of policy, actually, at, er, BERR.

[…]

Man: What was your objective? Was that again, was that to amend the Energy Bill?

PT: Well, I was keeping an eye on smart metering …

Woman: Ah, yes.

PT: … but also I was interested in, you know, the general principles of the Bill, energy security and all that sort of [stuff]. But the specific thing was energy, er, smart metering.

Woman: Yes, of course, you were working for the smart metering client.

Man: And did you manage to get it amended in that instance?

PT: They got the result they wanted, yeah, in terms of the … because they wanted a commitment that smart metering would be in the Bill and that it would be rolled out, and both commitments were given.

Man: Were they not in originally, or…?

PT: There was some debate about whether they would be in, and there was certainly no government commitment to when the rollout would happen…

Woman: When it would be rolled out.

PT: … over what period.

Woman: Yeah.

Man: So you managed to get that changed so it would be in there?

PT: Yeah.

Man: I see.

PT: Again, it was sort of pushing at an open door because I know from my time as a Minister that the Government was keen on the principle of smart meters and willing to try it out, but essentially get it moving from a position where they in general support something to actually getting them to do it" (p TrH29).

179. After comments on the Business Rate Supplements Bill, the journalist returned to the theme of smart meter amendments:

"Man: It's quite interesting, your experience with the Energy Bill. It's quite instructive. How do you manage … how do you actually … presumably, there has to be at some point a piece of paper which is an amendment. How do you actually manage to find the right person to do that in that particular instance?

PT: Well, it has to be a Member that has to move an amendment, even if … it can be … it can be one of the Front Benchers or it can be an individual Member.

Woman: A Member of the Commons or the Lords, depending on where you move it.

Man: So with the smart energy, you found a person who was willing to….

PT: Yeah, it was very … amendments were moved both in the Commons and in the Lords.

Man: Right, okay. And that effectively gave … those amendments gave … changed the legislation in so far as it took account of your client's view, your client's needs?

PT: Um … yeah, well, I mean … yeah, I mean, they were … they were happy with the result. I mean, as I say, I was pushing at an open door in a way because government policy was going that way. It was simply a question of getting the Government to firm up its position" (p TrH29-30).

180. When Michael Gillard put it to Lord Truscott that "You talked about an energy Bill that had been changed favourably for a smart metering client", Lord Truscott answered: "No, no no, that was not changing, that was not changing legislation. […] Yes I have mentioned other work but not in terms of, er, I did not amend any legislation myself. I merely said that, that, er, that, um, you know, that a bill had gone through that I was involved with, the energy bill" (p TrH41).

181. In evidence to us Lord Truscott denied that he had moved any amendments on smart meters, and the record supports this denial, but this does not rule out his exercising influence behind the scenes. When we asked him about this, he said "I have never spoken on any amendments on legislation, and I have never suggested anyone else do so" (Q 368). He also stressed that his energy interests had been properly registered and declared in his second reading debate speech (Q 568). He insisted he had not lobbied other parliamentarians in favour of smart metering (Q 369).

182. With regard to the implication that Lord Truscott had arranged for a Member to move amendments on behalf of the Energy Retail Association ("I won't, but I know who will"), Lord Truscott explained: "I knew the Members, after the event, who moved the amendments. I did not approach anyone in advance of any amendments being put. I did not actually suggest a name to them either; I did not give them any—" (QQ 411-412).

183. We probed Lord Truscott about whether he had advocated the case for smart meters:

Q536 Lord Irvine of Lairg: Could you go over to page 13 where you say, "Again, thinking back to the Energy Bill, I had meetings with the Bill team, the relevant Minister and head of policy, actually, at, er, BERR." […] "So all that's possible and that's fine, you know, I don't mind doing that." So that again you would say was not for the purpose of advocating a case for smart meters?

Lord Truscott: No.

Q537 Lord Irvine of Lairg: Is that right? It was not for the purpose of advocating the case for smart meters?

Lord Truscott: That is right, Lord Irvine, and if I may reply, I said that is possible, that is fine, I do not mind doing that, and again I was trying to make it clear that I differentiated talking to people, finding out information; and lobbying and paid advocacy, which I felt was acceptable—finding out information, monitoring it—because the man says, "What was your objective? Was that again, was that to amend the Energy Bill?" I say, "Well, I was keeping an eye on smart metering ..." "… But also I was interested in, you know, the general principles of the Bill, energy security, and all that sort of stuff. But the specific thing was energy, er, smart metering." I was making it clear that I saw my role as monitoring, finding out information. I was not in the business of amending or trying to influence policy. I had not done it before and I was not proposing to do it on this occasion.

Q538 Baroness Manningham-Buller: And you did not do it on smart meters?

Lord Truscott: No, I did not do it on smart metering.

Q539 Lord Irvine of Lairg: Then the woman said to you, this is at the foot of page 13, "Yes, of course, you were working for the smart metering client," and the man adds, "And did you manage to get it amended in that instance?" "They got the result they wanted, yeah […]" So you abstained from saying that you got it amended but your clients got what they wanted; is that fair?

Lord Truscott: It was fair. If I could just, Lord Irvine, explain very briefly the background to that. The whole roll-out of the smart meters was not a legislative proposal. It was merely an indicative timetable. What the smart metering company was happy about was that the Minister stood up in the course of the Energy Bill, which I did not take part in the later stages of, and said the Government would have an indicative timetable of roll-out of ten years plus two for implementation. That is what they were happy with […]

Q540 Lord Irvine of Lairg: Then at the foot of page 13 you say, "There was some debate about whether they would be in, and there was certainly no government commitment as to when the roll-out would happen," but then at the top of the next page the man puts to you, "So you managed to get that changed so it would be in there?" And you said, "Yeah"; does that mean yes?

Lord Truscott: No, again it is an unfortunate sort of mannerism, "Yeah," and then I go on to say something else. I go on, "... it was pushing an open door because I know from my time as a Minister that the Government was keen on the principle of smart meters and willing to try it out." I was not suggesting that I changed anything. As I said before, the Hansard record shows that I took no part.

Q541 Lord Irvine of Lairg: Nobody is suggesting that you moved an amendment.

Lord Truscott: Or influenced policy. Both the company involved and the department said I did not play any role in influencing policy. But what I was saying was again—

Q542 Lord Irvine of Lairg: Surely what you said was if you just look at the top of page 14, you say essentially you got it moving from a position where the Government in general supported something to actually getting them to do it. Is that not an assertion that your persuasion was successful?

Lord Truscott: Lord Irvine, where did I actually say that?

Q543 Lord Irvine of Lairg: Forgive me, at the top of page 14 and it is the first complete paragraph and you say, "Again it was sort of pushing at an open door because I know from my time as a Minister that the Government was keen on the principle of smart meters and willing to try it out, but essentially get it moving from a position where they in general support something to actually getting them to do it." [Lord Irvine actually said "got it moving".] So that sounds to me as if you were claiming that you had achieved the desired result on smart metering, not by moving an amendment yourself but by other means.

Lord Truscott: Well, again, if you look at the video you can see that I was taken aback by this line of questioning which was clearly a form of entrapment.

Q544 Lord Irvine of Lairg: We know you said this and you do not dispute that you said it. Would you tell us what you meant when you said that "you essentially get it moving from a position where they in general support something to actually getting them to do it." [Lord Irvine actually said "got it moving".] All we want to know is what you meant?

Lord Truscott: Right, okay, I can answer that specifically. When I say "Yeah," again it is the style I use because I do not in any of this say, "No, you are wrong." That is an unfortunate style that if you read these transcripts; unfortunately there are one or two places where I do not say, "No, you are wrong, you are talking nonsense."

Q545 Lord Irvine of Lairg: I am not asking—

Lord Truscott: Can I just finish, Lord Irvine.

Q546 Lord Irvine of Lairg: But I am not asking about the "Yeah", I am asking about the complete paragraph.

Lord Truscott: I will come on to that. On occasions I do have this mannerism where I say, "Yeah, yeah" or sometimes "yeah, yeah" and then go on to something else. This is an occasion where I say, "Yeah, yeah," and then I say, "…it was pushing at an open door…" I did not say that I was pushing at an open door. It was pushing at an open door, i.e., the company got what they wanted because the Government was moving in that direction anyway. I do not claim credit for that. I do not say I did it or that I was pushing at an open door. I said "it was pushing at an open door". Then there is an inaudible section and then "getting them from a general position to actually getting them to do it." That was the evolution of the process of—

Q547 Lord Irvine of Lairg: Who was doing the getting?

Lord Truscott: It was the evolution of the policy process where the Government had decided in principle to have the smart meters, to the Bill going through Parliament, which I did not have any part in. Members in the Commons were particularly active in the Commons actually in moving smart metering amendments, and in the Lords, so when I say getting them, the Government moved its general position to actually getting on to do it and making a commitment on the timetable. But it was not me, it was Members in the Commons and the Lords that were moving amendments on smart meters, putting pressure on the Government to come out with an indicative timetable, which they did do, so the pressure of Members of the Commons and the Lords got the Government to come out with an indicative timetable to the roll-out the smart meters. I was not actually part of that process. If you look at the transcripts I never actually claimed to be.

Q548 Lord Irvine of Lairg: So that is your answer; you were not claiming any credit for yourself?

Lord Truscott: No, they were putting in a question saying so you moved this amendment, so you changed the law so you managed to get it changed.

184. It seems to us to be clear from the transcripts that, despite many opportunities, Lord Truscott did not choose to make plain to MJA what he had or had not personally achieved for the benefit of his smart metering client, and he did not dispel the strong impression he gave that he had advocated that client's case for payment. The impression he created, in our opinion deliberately, was that if his client wanted to get legislation amended he could achieve that result. He told the journalists that "the amendments that industry wanted to see put forward were put forward", the bill had become law and "Smart metering is involved", and his clients "were very happy because they got a Government commitment" (p TrH6). He told them that "it was one of my colleagues that did move the amendment" wanted by the Energy Retail Association (p TrH7). His clients "got the result they wanted [because] both commitments were given" and "amendments were moved both in the Commons and in the Lords" so "they were happy with the result" (pp TrH29-30).

185. In the light of Lord Truscott's good understanding of the Code, and also considering the many disturbing passages in the transcripts, we pointed out to Lord Truscott the possible interpretation that he had paid lip service to the rules, setting them out with great clarity, but had then indicated that he was able to do much more in practice, behind the scenes (Q 444). Lord Truscott replied: "I would have to be pretty schizophrenic to lay out in such detail that I would not do lobbying and all the rest and then a bit later on in the same meeting say, "Oh, by the way, you can forget all that, I'm quite happy to do it". That was not my intention at all" (Q 451). He added that he did not think our suggested interpretation was "supported by the text" (Q 452). We do not accept his explanation and repeat our finding set out above that Lord Truscott was using the example of smart metering to indicate his willingness to breach the Code of Conduct by securing amendments to legislation for his paying clients.

Did Lord Truscott make an agreement with MJA?

186. Lord Truscott told us that he thought he was "just considering" becoming a consultant for MJA. He said: "I was thinking about it. I was not sure that I wanted to do it. It would have been a new area for me. […] I was thinking whether this is something that I would be happy with" (QQ 571-573). However, Lord Truscott was much more positive and committed in his dealings with the journalists. When it was put it to him, "It sounds as if broadly you would be able to do it", Lord Truscott said "Yeah, in principle, yes I would, yes" (p TrH15). His first email to MJA, sent between the first and second meetings, stated: "In principle, I think working together could be of great mutual interest and benefit." It discussed the number of days' work per month, and added: "Do get in touch when you've had time to think about if [sic] further, and we could then have a follow-up meeting to finalise the details, if you are happy to proceed." (p TrH17) The journalist's reply also described the second meeting as one "to finalise details". (p TrH19) Lord Truscott told the journalists in another email that he had "found out more about the Business Rate Supplements Bill" and said at the second meeting that he had already done "a bit of preliminary work" by going through the second reading debate (pp TrH20-21, p TrH22). When, during the second meeting, the journalist asked "is there anything else we need to discuss for this point?" Lord Truscott replied: "Well, I suppose you just need to give me, er, draw up a draft contract and then take it from there" (p TrH32). Following that meeting, he sent an email saying "I can give MJA three days per calendar month for the duration of the contract (with a 12 month review)" (pp TrH36-37).

187. We asked Lord Truscott why, if he had felt uncomfortable with the way the discussions were going, he continued with them, and: "why towards the end when the man said, "Is there anything you want to raise?" you said, "What about a contract"?" (Q 550). Lord Truscott answered that it was a draft contract. He continued: "It was two exploratory meetings with what I thought was a public affairs company, to see whether we could agree to work together and to establish the boundaries. […] some of the questions towards the end I thought were pretty bad really and made me uncomfortable because they did seem to be saying, "So you changed the legislation". It is right that I did not say, "No", I tried to give a politician's non-answer and move the thing on" (Q 552). After the meetings, he decided that he was "not comfortable" with the suggested arrangement; Lord Truscott pointed out that on previous occasions he had changed or even rejected draft contracts (Q 552).

188. We conclude that Lord Truscott's intentions were plain and that Lord Truscott came to an oral agreement with MJA that would require him to undertake on their behalf lobbying that he knew was prohibited by the Code of Conduct. We emphasise that the heart of the matter is not whether he concluded a legally binding agreement, but what he said he could do for MJA and his intentions in his discussions with them.

Wrong words and loose language

189. Parliamentary consultancy was new to Lord Truscott: "I have never actually done any parliamentary consultancy work" (Q 404). He explained: "I was inexperienced, I probably was feeling my way, and I probably did express myself using the wrong words on occasions, but I thought this was just a casual, informal couple of exploratory meetings to decide whether I would work with this public affairs company or not" (Q 573).

190. Lord Truscott's "wrong words" often stemmed, he told us, from his diplomatic nature. When we asked him why he had not strongly rebutted the journalists' improper suggestions, he told us: "I was trying to be helpful and co-operative, and we were exploring the possibility of developing a business relationship. I was not going to say to these people, "You are really talking rubbish, you know, you really do not understand what you are about"" (Q 389). He felt he made his ground rules perfectly clear, "but if someone is discussing with you about possibly working together on a consultancy basis, you do not say, "Go away and boil your head, you are talking absolute nonsense…"" (Q 394). That was not his approach: "I am a very diplomatic person. Sometimes I do give politicians' answers. It is not in my genetic code to basically turn round to someone and say, 'No', especially in this sort of scenario where you are talking about possibly working together, "No, you are talking absolute nonsense", because the meeting will come to a very swift end if you do that" (QQ 393-396). It was an "unfortunate style" that "I do not in any of this say, 'No, you are wrong'" (Q 544).

191. Lord Truscott wanted us to take account of the fact that he did not know his conversations with MJA were being secretly recorded: "on occasions my language was loose and naïve, and obviously if I had known I was on the record and I was being recorded, I would have been a lot more careful the way I constructed what I said", though he thought he had been clear about the ground rules (Q 396). If he had been on the record he would have been more careful in using the word "influence", which was open to misinterpretation (Q 442). In retrospect, there were words used that he would rather had not been used: "I should have been more careful with my language" (Q 572).

192. In particular, Lord Truscott had, he said, an unfortunate mannerism: "Sometimes I have a mannerism and say "Yeah" and then I go on to say something contrary to that, or I give more facts; it is just a mannerism I have" (Q 420, also Q 540, Q 544). This caused confusion, in his view, because "Yeah" could mean "No" (Q 540). Misunderstanding was also caused by muddling of the words "you", "one", and "I" (Q 435).

193. Although the behaviour of the Sunday Times is beyond our remit, Lord Truscott stressed that their conduct was important to the understanding of the text of their conversations with him. He told us: "in the second meeting they started asking leading questions, and trying to get me into a corner, and trying to get me to agree things that I did not, and trying to get me to compromise myself. I am an expert on Russia and this is a classic KGB entrapment-type operation where you say, "I am only willing to do this; I am not going to get involved in corruption; I am not going to do these dodgy things," and then they work on you, there is a second meeting, they put leading questions to you, they frame it in a certain way, they try to back you into a corner. […] On one or two occasions I was backed into a corner and I said, "Yeah, yeah," and moved it on and said something else. Obviously in retrospect it would have been better if I said no, no, I am not going to go along with any of this nonsense" (QQ 548-549, 573). Since no-one could disagree with that, we are forced again to question Lord Truscott's motives for not making the position crystal-clear. We find that here again is evidence of Lord Truscott's dilemma: in order to win a lucrative contract, he was agreeing to do things, or seeking to give the impression that he was willing to do things, that he knew would involve crossing the boundary of what was permitted by the Code of Conduct.

Our conclusion on Lord Truscott

194. Lord Truscott, in the written evidence and in his oral evidence to us, showed a clear awareness of what was permissible and impermissible under the Code, and expressly disavowed any willingness to act as a lobbyist; he would confine himself to advising lobbying companies on how they should lobby. The question for us is whether, despite his impeccable statements of principle, he in fact expressed a clear willingness to breach the Code by agreeing to take action to promote the desired amendment, in breach of paragraph 4.

195. We have asked ourselves whether he was in effect saying "this is the formal position, but what I can and will do for you is different". Our finding is that this was indeed his intention. He was led into crossing the boundary from what was permitted to what was prohibited by his eagerness to secure the contract. Lord Truscott had many opportunities to tell the journalists that he was not willing to do what they were suggesting, but he did not do so. Instead, he used language about "subtlety" and working "behind the scenes" which conveyed a clear willingness to exercise his parliamentary influence improperly (p TrH6).

196. We do not accept that, in general, his explanations for the language that he used are convincing, especially given the deeply damaging nature of the phrases he used, such as: "when it comes to the Lords it is far more within my ambit to influence it"; "I can contact some of the MPs"; "There's no problem with me approaching the Minister"; "I can sort of identify people and talk to them and sort of talk with officials"; "I can contact the officials as it goes through the Commons stages"; "I am quite happy to talk to MPs, Peers, officials, and to do behind the scenes stuff"; "I know, you know, some of the MPs and I know all the Tories in the Lords, so I've got no problems with approaching them"; and "I think it will be a bit of a mix—you talking to some people, me talking to some people, sometimes both of us talking to people […] together to put something through" (pp TrH14, 28, 7, 27, 26).

197. The evidence against Lord Truscott is so clear and so plentiful that we have little doubt that Lord Truscott was advertising his power and willingness to influence Parliament in return for a substantial financial inducement. We conclude that Lord Truscott expressed willingness to breach the Code of Conduct's prohibition on paid advocacy, and failed to act on his personal honour, as required by paragraphs 4(c) and 4(b) of the Code.

CHAPTER 5: THE ALLEGATIONS AGAINST LORD TAYLOR OF BLACKBURN

Background

198. Lord Taylor was contacted by a Sunday Times undercover reporter ("David Thompson") on Wednesday 17 December 2008. They arranged to meet at 10 am the following morning in the House of Lords Guest Room. The conversation lasted just under an hour. On 12 January 2009 MJA provided a background brief for Lord Taylor on the Business Rate Supplements Bill. A second meeting then took place over lunch in the House of Lords Dining Room on Thursday 15 January. This meeting was attended by David Thompson and Claire Taylor (another undercover reporter). This meeting lasted two hours and twenty-two minutes.

199. There followed a series of telephone calls, most of which were recorded by the Sunday Times, except when the recording equipment failed to work. In an e-mail on 20 January MJA sent Lord Taylor a long and detailed brief on the Bill. There followed a further series of telephone conversations. On Friday 23 January Michael Gillard of the Sunday Times rang Lord Taylor, revealed the sting operation, and asked him to explain what he had offered to do for MJA's Hong Kong client. Lord Taylor denied that he had offered to facilitate the desired amendment in return for payment.

Lord Taylor's evidence

200. We did not have the benefit of a question and answer session with Lord Taylor. We had indicated to him the areas we wished to cover in oral questions and a number of specific points arising from the transcripts of his conversations with the undercover journalists. Lord Taylor's solicitors interpreted this as our compiling the "charge sheet" against Lord Taylor. We took the view on the other hand that we should do so in order to ensure compliance with the rules of natural justice, and that it was helpful to give these indications, in accordance with the usual practice of House of Lords committees in dealing with witnesses. There followed a lengthy exchange of letters with Lord Taylor's solicitors in which they objected to the procedures we were following in our inquiry.

201. The outcome was that they advised Lord Taylor not to attend the Sub-Committee to give his explanation in person, but to submit a "statutory declaration". It is this statutory declaration that we have had to use as Lord Taylor's explanation of his actions and we have had no opportunity to question him on it.[18] It is regrettable that Lord Taylor and his solicitors have failed to assist us, by denying to us the evidence we would have drawn from our detailed questioning of him had he attended the Sub-Committee. We have, as we informed Lord Taylor we would do, proceeded on the basis of his statutory declaration and the evidence provided by the Hansard transcripts of his conversations with the undercover journalists.

202. In his statutory declaration Lord Taylor explained that he was "a loquacious old man with an advanced degree of self satisfaction but one who is easily confused and who rambles on, not always to the point" (p TaD1). We have borne this explanation in mind in assessing the evidence relating to his case. His conversations with the journalists were so exaggerated and his conduct so irrational that it may well be thought that no genuine lobbyist would have taken much time with Lord Taylor. But as an active Member of the House of Lords he must be judged on his behaviour and on the meaning of his words and on his intentions.

What was Lord Taylor being asked to do?

203. Early in their conversation with Lord Taylor, MJA made clear what they wanted from him. The journalist told Lord Taylor: "I would imagine that if we were to have some sort of financial relationship with you, what we would be looking at for you to do is perhaps—and tell me if this is how it normally works—erm, we would be looking for you to speak in the Chamber on our behalf, erm, ask parliamentary questions, erm, perhaps amend certain bits of the legislation and also, I mean, and if possible, I mean, we'd quite like to, if it might be possible, to meet Ministers." Lord Taylor's first response is inaudible, but he then says: "I've got an idea [of what you want]. Tell me, how did you get my name?" (pp TaH5-6). If, as he claimed later, Lord Taylor was immediately suspicious of MJA, and if he would never have contemplated doing what they were proposing, then he should not have spent the next part of the conversation setting out his credentials and his record of achievement, including apparently getting legislation amended for Experian (see below) (p TaH9). He should at that point simply have walked away. Instead, Lord Taylor felt able to continue discussions for the better part of an hour, to meet the client again over a two-hour lunch, and seemingly to enter into an agreement with them.

204. Lord Taylor's explanation is: "[My] response is "inaudible" but I believe I spluttered in my coffee at these outrageous suggestions. I was immediately put on my guard—this nice, educated and decent man was either very ignorant or very bent. My immediate response was to ask him "how did you get my name?" It was the inappropriateness of the suggestions put to me that made me begin to question his bona fides. He calmed me down with a flattering answer and I went off on a long disquisition about my previous experience […] emphasising—and this was the point of my lengthy expostulation—that I would not be party and had never been party to doing anything inappropriate" (p TaD3).

205. In our opinion he should have made it unmistakably plain during such a "lengthy expostulation" that he could not do what was being asked of him. Instead, in his lengthy conversations Lord Taylor, having said frequently what he could not do, went on to give a clear impression that it was only the methods suggested by MJA that troubled him, and that the ends could be achieved, but only by the more subtle methods and behind-the-scenes influence that he could provide.

Did Lord Taylor understand the rules?

206. Before we turn to means and ends, we must establish whether Lord Taylor understood the no-paid-advocacy rule. With one exception (see paragraph 208) the evidence suggests that he did. For example, during his call with Michael Gillard he appeared to be familiar with the rules: Man: "the issue is: is it improper or not for a Lord to take money or agree to take money from a third party to have legislation amended?". Lord Taylor replied: "Absolutely it is. Absolutely" (p TaH66). He went on to say: "I've not taken a penny and would never take a penny for it" (p TaH66). He stated:

"I have not seen any Minister or done anything in any unproper way at all, and would never dream of doing it. Never dream of doing it. I've been in the House for 30-odd years and I've been in Government for 50-odd years. I would never dream of doing that" (p TaH67).

207. Lord Taylor's understanding of the rules was also well shown in the statutory declaration that he submitted to us, for example in the following passages:

"I have never put down an amendment to a bill on behalf of a client, or arranged for a client to have favourable treatment from any minister or civil servant as will be verified by Hansard and by civil servant records. I have certainly advised clients from time to time about which minister they should try to see or how they should lobby or how to structure a campaign in a way that appeals to parliamentarians, but I have never acted, in relation to a company that has paid me, without disclosing any financial interest that existed" (p TaD2).

"As consultant I may advise them on how to make their pitch and whom to go to see—but it is the company's pitch and not mine. I do not play any part in the amendments process. I was telling them "what you do is you meet the minister, you meet the various people." I was not suggesting that I would do this for any company. I would help identify decision makers; certainly that is the role of a consultant" (p TaD4).

"While I might share elements of my knowledge and experience with a client, or anyone else who might ask me and listen to my answer, I would never put any decision maker in a compromising position or act against the public interest" (p TaD10).

208. We note, though, that his understanding was not perfect. He told us: "I have to say that I do not consider that approaching ministers, having explained that I am working with a certain company, having declared my interest and suggesting that the company has some reasonable points to make and would like to meet the minister could be other than proper" (p TaD10). We strongly disagree that it would be proper for a Member of the House, while accepting payment as a parliamentary consultant, to seek at his client's request to persuade a Minister of the merits of amendments desired by the client.

209. For present purposes, however, it is enough to note that Lord Taylor understood the rules well enough, and accordingly made it clear to the journalists that he could not do certain things. In response to the journalists' suggestion that he might "ask parliamentary questions" on their behalf, he told them: "Now, […] asking questions in the Chamber. Never in your life will I—" (p TaH7). He reiterated in the second meeting: "I would not put any questions down. That's the last thing that I would do. […] I am not going to put myself in an embarrassing situation or do anything that I think is illegal or using my position as a way for monetary [inaudible]" (p TaH26). He was clear with them that: "My credibility means a great deal to me […] so I will not do anything that I think is dodgy or crossing that line" (p TaH8). He said this meant that he would not put down amendments himself (p TaH9).

210. Lord Taylor was clear that he could and would advise lobbyists, in accordance with a consultant's proper role. He explained to the journalists that "what you do is you meet the Minister, you meet the various people and it's not always Ministers or the Secretary of State or even the Permanent Secretaries that do this, but it's some little chappie who is half way down the grade […] These are the people. It's identifying the decision-makers; it's identifying the people that make the recommendations. […] I know the people that are the decision-makers. I know the teams in various government departments and I will identify them" (p TaH9, see also p TaH25).

211. Lord Taylor said that he would be able to advise the lobbyists on their chances of success. He gave as an example the guidance he could get on certain matters from a civil servant called Gary, "a little chappie […] who works in Victoria Street […] who does all the recommendations to the various Ministers and civil servants", who would be able to advise him on whether the clients had "a cat in hell's chance" of success in their campaign (p TaH10). He would "do all the research and tell you what chances you've got of being successful […] [Then] I will say to you, "This is my reckoning: you stand a 50-50 chance. […] If you do so-and-so, you stand a better chance of doing it [inaudible]" and I will tell you who are your likely competitors" (p TaH12). He said: "I will give you the general advice. […] I can use my experience and give you some idea of the way things will go" (p TaH13). Lord Taylor explained that he could help with judging what would work, how it could work, when to cut losses, and "where you stand and what you're likely to get", and added: "I have occasionally advised clients on the appropriate people they should approach themselves directly and sometimes advised on when and whether it would be appropriate to make such an approach" (pp TaH19, 25; p TaD9).

212. None of this contravenes the Code of Conduct.

Lord Taylor's methods

213. We are troubled that the reason Lord Taylor gave for his refusal to take action openly in the Chamber was that it would not achieve the desired result rather than because it was prohibited by the rules. When he informed the journalist that he would never ask questions in the Chamber for a client, he added: "You don't do things like that if you want results" (pp TaH7-8). Further, when the journalist asked: "Do you actually put in amendment[s] yourself?", Lord Taylor replied: "No, no, no, no, no, no, no, no, no. We don't do things like that. That's stupid—that's the way that you don't get things done" because it was too late by the time the Bill was in Parliament, so "if you can get it done to them when it's in the draft form, it is far better" (p TaH9). When in the second meeting the journalist suggested that "we'd need somebody to table an amendment for us", Lord Taylor's response was "Ooh, don't start doing things like that" because "They don't like amendments" (pp TaH48-49). Finally, when the journalists asked about whether it was possible for their client to meet the Minister, Lord Taylor answered: "Oh yes, yes, on certain occasions" but "Sometimes it's not always good for the client to meet the Minister; it's far better for the client to meet the civil servant down below because the civil servant down below gets annoyed if he feels is the Minister going to tell him to do something, and it could be vital" (p TaH30).

214. Lord Taylor's explanation for these extracts is that he "thought this guy would be more persuaded by an argument based on practicality rather than morality, the ineffectiveness of having people speak for you in the chamber." (p TaD3). It was also his "honest opinion" that "you will get a better hearing from a minister if you get your message across to him in an informal situation", and he was "trying to make the obvious point that in relation to individual corporate matters, it was pointless to expect speeches in the chamber to have any effect" (p TaD3). According to Lord Taylor, when he told the journalist "in no uncertain terms that he was entirely wrong in certain things", he "meant "wrong" in a moral sense", not just in the sense of ignorance (p TaD4, p TaH10). He considered that he had "made it clear that I would not dream of doing anything wrong and again tried to explain why it was necessary for their client to approach civil servants and ministers directly rather than hire spokespeople to make speeches in the House" (p TaD6).

215. However, there are many points in the evidence where Lord Taylor seemed to say that he was able and willing to do more than the Code allows. Lord Taylor told the journalists that, on the Business Rate Supplements Bill, "I should watch what's going on in committee, and then when it comes in here I will do more with it" (p TaH21). The following two examples show what he meant by "doing more".

216. First, the evidence shows that in certain circumstances Lord Taylor was willing to speak in the Chamber for his client's benefit. He told the journalists, "because I do it in the way that I do, it would only be if I wanted some publicity for the client that I would speak in the Chamber. […] So if you we had a client that wanted some publicity, it would be done this way. Then I would speak and declare the interests and mention it and so on. But you only do it when it's necessary" (p TaH50). He was aware that when speaking in the Chamber he would have to declare the interest: when the journalist asked "Do you have to notify anyone of our agreement?" Lord Taylor replied "Yeah, I do. I do. […] Janet [his assistant] will put it in the Declaration of Interests so that it's open and above board. […] And, for example, if I were speaking about something that you were concerned with in the Chamber, I would have to declare it when I spoke, you know, as well as it being declared in the Members' register of interests" (p TaH50). We note however that the point here is that he should not have been willing to speak at all on behalf of a paying client.

217. Secondly, the evidence shows that Lord Taylor was willing to lobby Ministers and civil servants for the client's benefit. Thus, he said that he could talk to people informally. He explained to the journalists: "The best way, you see, because of my position and because I'm accepted […] if I want to get a point over to a Minister or a civil servant or someone like this, this is the place [the Lords' Guest Room] where I would do it, over this [tea]table […] asking a question in the Chamber you'll get the written answer—but that's not what you want; you want to make your point known to them." (p TaH8) He emphasised to them that "you're far better in doing it the way that I do it, where you can talk straight to someone, than what you can just in putting questions down and things like that" (p TaH8).

218. Lord Taylor was keen to demonstrate his contacts at the senior levels of Government and his readiness to lobby Ministers. He told the journalists that he was happy to discuss "what the client wants" with Ministers "over a pie and a pint" (p TaH25). He stressed that, "being in the position that I'm in, it's easier for me to pick up a telephone and say to Peter Mendelson [sic], "Peter, I want to come and talk to you next week about A, B and C" Right, I'll do it. Or, in science and technology, Dyson [sic] has just taken over; I'm having a meeting with him about a particular concern in gas storage next week. Now, these are the sort of things that I do" (p TaH8).

219. Lord Taylor went further, and implied that his influence might even extend to getting financial legislation amended. Lord Taylor said that this wasn't easy but: "I have got a lot of contacts within the Treasury, as well with the Treasury teams, from … erm, Yvette Cooper and people like that, I've worked with for many years. […]People like Jack Straw and so on have all worked with me for many, many years." The male journalist picked him up on the implication: "so, they'll pick up the phone to you and they'll come to meetings with you", and Lord Taylor responded: "Oh, yeah yeah yeah yeah" (p TaH12). When the journalists mentioned their company's work in Brussels, Lord Taylor boasted about his contacts there too: "Well, this is good, you see, because I've got a very good relationship with Neil Kinnock and I've got a very good relationship with Peter Mandelson, and […] Baroness Ashton […] who's a very good friend of mine" (pp TaH47-48).

220. Lord Taylor went further than boasting of his connections. On 16 January 2009 he told the journalists, in a phone call subsequent to their two meetings: "I have got a meeting next week with Yvette Cooper, who, as you are probably aware, is the first secretary in the Treasury […] And we are going to discuss the problem that we have in hand." He confirmed that he meant the Business Rate Supplements Bill (p TaH56). When the male journalist told Lord Taylor that he thought the client would "be very impressed at how quickly you were able to get hold of … get in front of the Minister", Lord Taylor answered: "I'm not doing this to impress you. I'm doing it for action" (p TaH58). In an answer-phone message left for MJA on 21 January, he went further still: "I have met Peter Mandelson and I have discussed it with him and Baroness Andrews, and I've discussed it with her and I'm meeting Yvette Cooper later on today and I'm also meeting two of the local authority teams tomorrow morning, so everything is in hand and thank you very much for your suggestions" (p TaH63). While we are satisfied that Lord Taylor actually held no such meetings, his claim to be doing so was astonishing, and indicates a clear willingness to breach the Code.

221. Lord Taylor also claimed that he could arrange meetings for the clients with Ministers and officials. When the journalists asked if it was possible for their client to meet anyone they wanted to meet, Lord Taylor told them: "I would advise him as to, you know, whether it was a bit dodgy or what, but the answer is, on most cases, yes […] You know, I would say to them 'You, the person that your client wants to meet is A, B and C. Right, well, what we'll do is we'll invite them here [to the House of Lords] for lunch'. And you'd come and have lunch with them we'd do it that way. And it's surprising what you can do either on this table before you go for lunch or what you can do over lunch" (p TaH12). When the journalist asked if this applied to senior civil servants as well, the response came: "Exactly. Yep yep yep" (p TaH12). The client could be brought in to meet the Minister, "on certain occasions", but Lord Taylor added: "You've got to be very careful that you're not seen to go over the mark" (p TaH30). He was clear: "You can get the client in in certain cases and get them together, so that it gets in the technical side—I don't want to get involved in the technical side of things" (p TaH26).

222. Lord Taylor also clearly indicated his willingness to lobby civil servants. He explained to the journalists that, "Being in the position that I'm in, very often I will talk to civil servants […] I will go and discuss that with them and say to civil servants, 'Look, let's talk about what a, b and c are. Have you realised the consequences of this on to them?'" (p TaH21). He told them that while he wouldn't put down amendments himself, "What you do is you talk to the parliamentary team, the draftsmen, and so on, that are going through, and you point out to them the difficulties that the retailer will be having on this and how things are working, and so on, and you get them to amend it that way" (p TaH9).

223. According to Lord Taylor, his relations with Gary in Victoria Street were not limited to gathering information. He said he could take Gary to a pub at lunchtime, and buy him a few beers, and bend his ear (p TaH31). He confirmed to the male journalist, at his prompting, "if you can persuade Gary then you are in and you can do what you want and you point out the logic of doing it that way." When the journalist asked: "Have you ever done that with him?" Lord Taylor replied, "yes", and when the journalist asked whether this worked, Lord Taylor responded "Oh yes"(p TaH10). He also explained that "it's easier for me to pick the phone up and say to someone, 'Come and have a talk to me' or 'Look, we're having a bit of trouble in your department. Tell me, who is the person who I can go and talk to?' […] I will identify the person. Then I'll come here and then I'll explain to them, and if I can't get it, I get somebody to come in with me to explain the situation. So that's how I operate" (p TaH26).

224. Lord Taylor was clearly confirming how he intended to act for the client's benefit: "what I am hoping to do is I am going to talk to the team that are going to deal with it in the Commons [inaudible] in Committee. […] I'm going to talk to them about it and then I'm going to talk to people here and see what we can do" (p TaH48). None of these passages suggest that Lord Taylor was proposing to limit, or had in the past limited, his conversations with the civil servants to mere information-gathering.

225. One further piece of evidence may be noted here. Lord Taylor believed that his contract with MJA related not just to the Hong Kong client, who would be paying the bill initially, but to other future clients, and he was keen to establish that MJA would allow him to entertain useful contacts on behalf of those clients:

LT: We've said ten [thousand pounds a month in payment]. [inaudible] Yeah, that's what we said. Are you happy about that?

Woman: That sounds fine. To be honest, the client we're particularly thinking of doesn't seem particularly worried about how much it costs, as long as the job's done.

Man: Right, I think I'd better just—

LT: Yeah, but it's not just this client.

Man: No, no, no.

LT: One client.

Woman: No, but they'll be paying, basically they're largely going to be paying the bill.

LT: I see, right.

Woman: For this particular piece of work, anyway.

Man: And the rest of it will roll out of that.

LT: Yes, because you don't want me to ring up and say, "I'm meeting so and so today"? Do you mind if I gave them lunch or anything like that. You will accept [the bill]?

Woman: Yes. No, you don't need to do that. That's fine. Of course it would be nice for us to know after you've had lunch, "Oh, I had a great lunch, this is what I found out".

LT: Oh, yeah, oh yeah, you'd get all that, you'd get all that.

Man: I mean, I would be quite interested to know how your lunch with Peter Mandelson goes next week, for instance. I don't know whether—that's something you're doing for someone else, then, isn't it?

LT: Pardon?

Man: That's something you're doing for someone else" (pp TaH49-50).

Lord Taylor's explanation

226. Lord Taylor explained his comments as follows. He considered that he had been clear about what he would and would not do: "Because some of his requests seemed to me unethical, I laid down very clearly my own standards—that I was 'a straight, honest operator' because 'I believe in telling the truth… my credibility means a great deal to me because at my age I am not going to lose my credibility just for a few pounds… so I will not do anything that I think is dodgy or crossing that line' […] I wanted to make it plain at the outset, crystal clear in fact, that I would not do anything unethical" (pp TaD3-4). He had told the journalists that he would "work within the rules" because he was "getting across to people whom I do not really trust that there is no way in which I will accept money to do anything illegal or unethical" (p TaD6). Moreover, he knew he could not exercise parliamentary influence on their behalf, because his assistant Janet had picked up a brief for him from MJA and "said to me that there was something odd about it and that obviously although I could act as a consultant and give them advice, I could not intervene in Parliament for them" (p TaD5).

227. Lord Taylor argued that in his discussions about arranging for clients to meet Ministers and civil servants he meant only that this was possible to organize if it was done through the proper channels. When Michael Gillard, revealing the sting, asked Lord Taylor about these passages the conversation ran as follows:

LT: Yeah, well it is possible to meet them if you go through the appropriate channels.

Man: You, in other words.

LT: Well, yes, me, and other people through the appropriate channels. If you've got a suggestion to make you apply to see the Minister or you apply to see the appropriate civil servants through the usual channels. This is open government (p TaH68).

He added to us: "I made it clear that my comments about meeting ministers and senior civil servants were in the context of going through the appropriate channels and the usual channels" (p TaD8). When we asked about his comment "Exactly. Yep yep yep" when the journalist asked about meetings with Ministers and senior civil servants, Lord Taylor gave this explanation: "As we are winding up, the journalist tries to snare me with questions about arranging meetings with ministers and I humour him but essentially the meeting had finished on an utterly inconclusive note […] I am humouring him ('yep, yep, yep') but essentially telling him that as a consultant I might do research and tell them what their chances were of being successful with their proposal" (p TaD4).

228. According to Lord Taylor, he had no intentions of lobbying. He stated in his statutory declaration: "My descriptions of what should be done at the top of page 11 refer to 'you' i.e. the company that employs me as a consultant, and not something that I would do personally. When I say 'what you do is you talk to the parliamentary team… you point to them the difficulties that the retailer will be having… you get them to amend it that way,' I was referring to the perfectly proper procedure that companies adopt if they want changes in legislation: i.e. they go to the people responsible and make their submissions" (p TaD4). He, Lord Taylor, would only be giving advice. He considered that Ministers were indeed more open-minded in discussions over a pie and a pint, but "I was not of course suggesting that I was open to receiving payment for influencing ministers over a pie and pint in the dining room. This was never my intention. There is nothing sinister about my advising them to meet ministers informally rather than formally" (p TaD6).

229. Lord Taylor denied that he had ever lobbied at any time: "I have never invited any minister to the peer's [sic] dining room for a meal or to talk to me in the peer's [sic] guest room, when acting on behalf of any client or in any context where I may expect a financial reward from such invitation or meeting" (p TaD9). While he did not consider that it would be inappropriate to approach Ministers to suggest that a company had some reasonable points, having declared his interest with the company, he stated: "I have myself never approached a junior or senior minister or a civil servant and asked them to meet with a client" (p TaD10).

230. As far as lobbying civil servants was concerned, Lord Taylor stated: "I have never secured any amendments by persuading 'the parliamentary team, the draftsmen and so on' to amend a draft bill on behalf of my clients. I have never approached legislat[ors] directly. […] My words have clearly been misunderstood" (p TaD9). He reiterated: "I would never have contemplated talking to the policy team myself or seeking to amend legislation 'behind the scenes'—this is something that I have never done and certainly not something that I would begin to do at the age of 80" (p TaD11). Regarding his references to discussions with Gary of Victoria Street, Lord Taylor said that he was "trying to get across to this foolish and naïve man [the journalist] that experts in the public service are the persons to talk to about the commercial implications of particular legislation, and this was not a matter that would normally take up the time of the House" (p TaD4).

Is Lord Taylor's explanation believable?

231. Lord Taylor's explanation for his claims about meeting and lobbying Yvette Cooper MP, Lord Mandelson and Baroness Andrews is essentially that he was being duplicitous because he was suspicious about the journalists and trying to push them into revealing their game.

232. The weight of evidence against Lord Taylor is such that we are not convinced by his explanations, especially given three important factors. First, Lord Taylor's emphasis on surreptitious techniques indicates that he knew what he was suggesting to do in relation to MJA was improper. He told them early on: "I do it in a very quiet way, and so on, without any publicity, I wouldn't want that really, because you don't get what you want to by … you only use the Chamber if you're fighting the cause of society [inaudible] but not on a commercial dealing would you [inaudible]. Do it quietly"(p TaH8). He thought it best to "do it quietly behind the scenes" (p TaH9). The Guest Room was his preferred venue, because discussions weren't officially recorded: "if I want to get a point over to a Minister or a civil servant or someone like this, this is the place where I would do it, over this [tea]table. I can speak better and they will speak more freer over a cup of coffee, or a pie and pint, as I say, rather than over a boardroom table or over a ministerial desk where everything is being written down, and so on" (p TaH8). He emphasised: "It's easier for me to talk over a pie and a pint in this room here and explain what the client wants and what we're trying to achieve and so on, and what the story is behind it, rather than over a ministerial desk, where everything is being taken down and the Ministers are reluctant to say more than yes or no and so on or 'I'll consider that' and so on. […] it's not recorded, it's not official and so on, it's just a nice family conversation" (pp TaH25-26).

233. Secondly, comments made by Lord Taylor during his meetings with the journalists about his own lack of discretion in what he was saying to them suggest that he knew that his methods were compromising. In discussing his chats with Gary of Victoria Street, he said to the journalists: "Do you know, I'm telling you two too much" (p TaH31). In describing his contacts in Brussels, he added: "So these are the sort of people that I work with. I'm telling you too much, you know. You see, I'm showing you all my ?? cards ??. You're going to be as clever as me by the time you [inaudible]" (p TaH48). In the second meeting he even expressed concern about his indiscretion during the first: "I thought at the last meeting [inaudible] 'Have I opened my mouth too much? Have I told them too much?' You might even be a reporter from one of the newspapers in disguise, you know, that has come on to see me, and I'm telling you the way that I operate, because I was quite honest with you […] And I wondered whether I'd overstepped the mark. I didn't know much about you at that time, and because of that I wondered whether…" (p TaH41).

234. Thirdly, Lord Taylor's remarks about bending the rules undermine his other explanations. He told the journalists: "I'm completely unorthodox. I do things to get results and I do them my way and not always the accepted way" (p TaH19). We accept Lord Taylor's point that unorthodox "is not the same as unethical" (p TaD6). More troubling however was Lord Taylor's statement: "I will work within the rules, but also rules are meant to be bent sometimes and the way that I will use it, I am telling you the way that I work is completely different from a lot of lobbyists [inaudible]. I am a doer and a sorter out of problems more than anything else" (p TaH26). When Gillard asked him what he had meant, Lord Taylor replied: "Oh, to explain things to people, that's all", which we do not find plausible (pp TaH65-66).

235. Lord Taylor explained his statement further in his statutory declaration: "The saying that 'rules are meant to be bent sometimes' is an old Northern saying and is probably common in many other geographical areas. In fact, I am told that the hero of the book 'To Kill a Mockingbird', Atticus Finch, who is fiction's most ethical and admired lawyer, instructs his daughter with exactly this phrase 'rules are meant to be bent sometimes' to cater for justice in special situations. That is precisely the way I used the phrase. In context and not in isolation. This is all part of a passage in which I insist that I will never be party to breaking the rules" (p TaD7). We find this explanation to be convoluted and unconvincing.

236. Lord Taylor insisted to us: "I have not broken the rules or, to my knowledge, bent them" (p TaD10). He also commented: "I have always worked within the rules, although I am a great believer in interpreting them with commonsense rather than legalistically" (p TaD10). We find however that his clear statement that "rules are meant to be bent sometimes" was a signal that he was ready in certain circumstances to break the letter and the spirit of the Code.

Lord Taylor's other clients

237. Lord Taylor mentioned work he had done for other clients, we infer to impress the journalists with what he had to offer. When the journalist started talking about amending legislation, Lord Taylor's response was: "Well, these are the things where I can come in quite well." He brought up his work with a company called Experian, with whom he had a non-parliamentary consultancy, and said: "For example, I have been working with them on amending a statute that's coming out, or was coming out—I've got it delayed now—whereby it was going to be difficult for them to get certain information, and so on. So I've got that amendment and you do it quietly behind the scenes" (p TaH9).

238. When Michael Gillard challenged Lord Taylor about this claim, Lord Taylor denied that he had behaved improperly:

Man: […] you referred to having done work to amend legislation on behalf of Experian. Is that also not the case?

LT: Oh, no. I've worked for Experian for a long time. But it's not amend regulations.

Man: No, not amend regulation. Amend legislation.

LT: No, not amend, it is pointing out the difficulties about legislation (p TaH67).

239. Lord Taylor added to Gillard: "I've not got it amended. I'm using that term. It is the agents that have got it amended" (p TaH68).

240. In his statutory declaration, Lord Taylor reiterated: "I certainly had not 'got it delayed' in terms of any statute or statutory amendment" (p TaD4). He put his position on Experian on the record: "I have worked with Experian since 1999, keeping it informed of any developments that may be of interest to their business and advising on the appropriate people to speak to in government and civil service. However, most of the work for Experian is entirely unconnected with parliament and I do not see this as a parliamentary consultancy. Any success they have had over the years in amending draft legislation has been a result of direct interaction between the company executives and the legislatures I have never myself secured or attempted to secure any amendment to any bill 'quietly behind the scenes' or otherwise. […] my relation as a consultant to this company has always been declared in the Register of Lords Interests. I have never spoken in the House on any matter concerning Experian Ltd" (p TaD9).

241. Our conclusion is that whether or not this is true, Lord Taylor's clear intention was to make the journalists believe that he had worked on legislation in the interests of Experian, in order that he might win a lucrative contract with the lobbying company. Lord Taylor's eagerness to impress by showing what influence he could bring to bear behind the scenes can also be found in, for example, his claim that he rang up the committee for appointing magistrates in Kent and "Lo and behold, they decided that Janet [his secretary] was the right sort of person to be a magistrate" (p TaH32). Lobbyists would probably have found more enticing his strong hint that he could bring their problems to the attention of government ministers: "in science and technology, Dyson [sic: Lord Drayson] has just taken over; I'm having a meeting with him about a particular concern in gas storage next week" (p TaH8). Given that Lord Taylor held a consultancy with Canatxx, an energy company with significant interests in gas storage in the United Kingdom, this seems to be another example of his boasting about what he could do for those who employed him.

Lord Taylor's motives

242. Lord Taylor mentioned a number of times his motivation for working: he enjoyed a challenge (p TaH20, p TaH1), he liked solving problems (p TaH27), he enjoyed helping young people whom he liked (pp TaH4, 13; p TaD4), and fundamentally he did it for his own satisfaction (pp TaH1, 22, 48). So far as we can ascertain however it is only in his statutory declaration that he claims for the first time that his appetite was whetted by the prospect of jobs for the North West.

243. Lord Taylor stated: "When the Sunday Times spiders spun their web of deceit, their first inducement to me was to help bring several hundred jobs to the North West. I am sure that the journalist initially said this in a telephone call […] it was the message I took away from his description of his client's intentions. He knew exactly how to get me interested—and I make no apology for being interested" (p TaD1). He emphasised: "when he first contacted me he attracted my interest by stating that they wanted my help in generating 500 new jobs, many of them in the North West. It had nothing to do with money, as I made perfectly clear" (p TaD4). He did not let his suspicions about the journalist deter him because "he was purporting to represent a client with important job prospects for the UK […] He had hooked me, in the sense of getting me interested in a legitimate and worthwhile project" (p TaD4). Lord Taylor even stressed that "I would give them initial help free of charge, if I thought them legitimate and their proposal in the public interest" (p TaD4).

244. We would have questioned Lord Taylor closely on this claim, had he been willing to meet us. There is no mention of jobs for the North West in any of the recordings of his conversations with the journalists, and we can find no mention of jobs for the North West in the transcript of the initial phone call from the undercover journalists to Lord Taylor. Since that call was "out of the blue", there can have been no earlier telephone conversation with Lord Taylor in which jobs for the North West were mentioned (pp TaH1-3). We can find no mention of jobs for the North West in any later phone calls between the journalists and Lord Taylor. We therefore find it impossible on the available evidence to believe Lord Taylor's submission, and we do not believe it.

245. We are convinced that money was an important motive for Lord Taylor. Lord Taylor's phrase that he was seeing the journalist because "you just whetted my appetite a little bit to see what it was all about", has received much publicity (p TaH9). Lord Taylor argues that "in context all it meant was that when he first contacted me he attracted my interest by stating that they wanted my help in generating 500 new jobs, many of them in the North West. It had nothing to do with money, as I made perfectly clear" (p TaD4). According to Lord Taylor, when the journalist started to talk about money in the first meeting, "in an attempt to turn away from this premature discussion I pointed out that money was not the question: 'it's just whether I want to do it or not, that's the thing. And you've got to whet my appetite to get me to come on board.'" The whetting comment "was related to offering others employment in the North West—that was my appetite—not offering me money" (p TaD4).

246. However, Lord Taylor told the journalist that some companies would pay him £100,000 a year, and we would have liked to ask Lord Taylor why he said "That's cheap for what I do for them" (p TaH10). When Lord Taylor was being offered a monthly retainer by MJA, the sum mentioned was between £5,000 and £10,000 a month, and Lord Taylor reminded them "We've said ten. [inaudible] Yeah, that's what we said. Are you happy about that?" (p TaH49). Lord Taylor had earlier commented: "You'll find that I will earn this money for you in no time at all" (p TaH44). Janet, who looked after all of Lord Taylor's financial arrangements, would "every month send you the accounts" (p TaH30, see also p TaH49). Lord Taylor later claimed that "I've not taken a penny and would never take a penny for it" (p TaH66) and that "nothing has been done and no money has been asked for in any way at all" (p TaH67). But we are convinced that money was a motive for Lord Taylor, as the following exchange shows:

LT: […] what did you say the remuneration was?

Man: Well, initially I said between 5 and 10 thousand and then you said 10 thousand, so we left it at 10 thousand.

LT: Yeah, but what are you on, 10 thousand a year?

Man: A month.

LT: Oh, that's better, yeah, because you worried me there. Leave it at 10 thousand for the time being, because as I say I'll get this back for you" (pp TaH57-58).

Lord Taylor's interest in the retail sector

247. While it is common for members of Parliament to advise companies about parliamentary procedures as experts on Parliament rather than experts in a particular field, Lord Taylor showed an extraordinary lack of interest in what MJA actually wanted to achieve. This adds to the impression that his motivation was monetary. He asked the journalists for two briefs, the first described as "one sheet from you of where you feel that you need help", and the second a much fuller brief for discussion with Yvette Cooper MP (p TaH11, p TaH56). Lord Taylor claims as a defence his ignorance of the details of the amendment MJA were seeking, but his enthusiasm for the contract, notwithstanding his lack of knowledge of the subject matter of the amendment, tells against him (pp TaD8-9).

Did Lord Taylor make an agreement with the lobbyists?

248. We have set out the evidence of what Lord Taylor stated he was willing to do for his clients. We now consider whether the evidence shows that Lord Taylor believed that a firm agreement had been made.

249. Lord Taylor told MJA: "Now, we've agreed that we're doing the deal. […] So we've agreed on that, then. When do we officially start?" (p TaH49). He confirmed to the journalists: "I want you to know that I think that you're both good people and I would be delighted to work with both of you. […] You've got to use me" (p TaH53). Lord Taylor was clearly confident enough about the arrangement to give the impression that he had sprung into action: as recorded above, his answer-phone message of 21 January 2009 made the claim to the journalists that he had met Lord Mandelson and Baroness Andrews on MJA's behalf and was going on to meetings with Yvette Cooper MP and two local authority teams (p TaH63). As we have said in paragraph 220, we believe that he had not in fact met any of them.

250. On the other hand, Lord Taylor denied to Michael Gillard that they had made any agreement. He told Gillard "I haven't done anything. We've just kept on chatting, that's all" (p TaH64). He explained to Gillard:

LT: Oh, they just asked me about what was happening and so on, and I've given them my advice but I'm not contracting with them in any way.

Man: Oh, I understood that you'd agreed to a consultancy fee of £10,000 a month.

LT: Oh no.

Man: No? And that you've already started doing work for them?

LT: Oh no.

Man: You haven't met anyone or pressed any buttons?

LT: No, not yet. No, no, no. I was only in the early stages of talking to them (p TaH65).

251. Lord Taylor stressed to Gillard: "I wasn't contracting. I've signed nothing, I've agreed to nothing at all. Nothing at all" (p TaH66). He emphasised again: "I have signed nothing. I have agreed nothing. I have met no one. You can get in touch with any government department. I have approached no one at all about this" (p TaH66). When Gillard challenged him about the financial agreement, the conversation ran as follows:

Man: Well, money was … there was a discussion about money and there was an agreement to pay you £120,000 a year.

LT: Well, if there was it was just a verbal agreement. I never suspected that it would get anywhere near that at all.

Man: Why would you make a verbal agreement?

LT: I didn't make a verbal agreement. I didn't make a … I was just completely seeing how far they would go (p TaH67).

252. Lord Taylor argued firmly in his statutory declaration that he had not come to any agreement with MJA. He declared: "I have done nothing wrong—indeed I have done nothing, other than airily banter with agents provocateur[s] and I would have done nothing had their conspiracy to destroy me proceeded any further" (p TaD1). He quoted his comment "this is only an introductory kind of meeting today", to show that "I was being careful and making it clear that we were not negotiating seriously or at all: we were merely introducing ourselves" (p TaD4). He added: "I go on to make it very clear that I have not begun to negotiate anything" (p TaD4). He felt that the first meeting "finished on an utterly inconclusive note, i.e. that I would check them out and consider whether I could do anything worthwhile for them" (p TaD4). He was "disturbed" that our Sub-Committee has "focused on parts of this transcript which have been taken out of context and do not convey the reality of this meeting, which I never conceived would be treated as a negotiation. I really think that the emphasis at page 13 ('more details about you—how legitimate you are'), which was the initial end of the coffee taking phase, gives the lie to this allegation" (p TaD5).

253. Lord Taylor stressed that he had told the journalist: "'I promise you nothing […] I'm a great believer in honesty because if I have got decisions to make I can only make them if I have the true picture.' In other words, I would need much more information to decide whether a) this fellow and his firm were legitimate, b) this fellow's client was legitimate, and c) whether the client was even worth helping, and if I decided to do so I would, free gratis and for nothing, tell him the truth about his project" (p TaD5). Lord Taylor quoted the journalist's line, "it's up to us to convince you, obviously", as "reflecting what was my understanding and intention, and what he had clearly picked up from my demeanour and body language (not possible to discern from a transcript), and the general tone of the meeting, namely that it was obvious that I was not at this point prepared even to consider a negotiation until I knew a lot more about him, his company and his client" (p TaD5).

254. According to Lord Taylor, by the end of the first meeting "I had not been attracted by their offers of money, I had not been persuaded that the exercise was worth my while or was in the public interest" (p TaD5). Janet saw MJA's first brief between the two meetings, and "She said we should make no decisions" (p TaD5). Lord Taylor stressed that no agreement would have been concluded without consulting Janet: "I would never conclude any agreement without her involvement from the outset. I rely upon her for negotiating my interests and advising me in every business thing I do, particularly in making and concluding consultancy agreements. It is perhaps the most absurd thing in the charge the Sub-Committee levels against me that I am accused of negotiating an agreement—I can barely negotiate a corridor and I invariably arrange for Janet to do any real negotiating or contracting. […] she negotiates the terms of the contract, which I later sign in reliance upon her advice. […] I would not make any agreement or even contemplate making an agreement before Janet has been brought in. This was never, in my mind, a serious negotiation" (p TaD2).

255. In Lord Taylor's mind, then, "Neither meeting was, on my part, a serious discussion about any agreement, much less an 'acceptance'" (p TaD6). According to Lord Taylor, in the second meeting: "I make it clear that everything is hypothetical and we are not negotiating any agreement: "I promise you nothing and will make no promises … if I decide to work for you of course" (p TaD7). Lord Taylor felt he had been non-committal in the second meeting: "I really was not interested in dotting any "i"s or crossing any "t"s about any deal or any relationship. We did not have one, and I know that had they continued their conspiracy, we never would. […] I really did not want to see them again" (p TaD7).

256. Lord Taylor was emphatic in his statutory declaration that "I never did accept a financial inducement […] I did not 'negotiate' for this financial deal" (p TaD8). The conversations

"were entirely preliminary: they were not, as far as I was concerned, serious negotiations, let alone an agreement or acceptance for the purposes of Code 4(c). They were merely an exploration on my part of an unusual, possibly wrong but also possibly valuable approach by people purporting to be from a large Brussels PR company with a client who was proposing to launch a job creation business. I had absolutely no intention, at any time of the Hansard transcript or later to enter into an agreement or to create legal relations with people whom I had not yet checked out" (p TaD9).

257. He firmly denied "that any deal had been finalised with MJA. No money exchanged hands and nothing was ever done by me on MJA's behalf. They mentioned £10,000 and at one point I pretended that the deal was done and said more or less let's get on with it: they backtracked; it was part of my test of whether they were genuine. […] The Hansard transcript records no more than preliminary discussions at which there was never on my part any attempt to enter into legal relations" (p TaD11).

258. While we accept that there was no written agreement, this does not prove that no agreement was reached, because Lord Taylor's way of working was to put nothing on paper. He told the journalists:

LT: Right, now, you've got to give me more details about it, now. Now, we've agreed that we're doing the deal.

Woman: Mmm

Man: Right.

LT: So we've agreed on that, then. When do we officially start? When do you want to start?

Man: I don't know. I suppose … do we have to have a contract?

LT: Nothing you have to sign, no. You just name the figure and Janet will send you an account every month. And she'll add on [inaudible] entertainment" (p TaH49).

259. We conclude that Lord Taylor believed he had reached an agreement with MJA. Nevertheless, we should also emphasise that the heart of the matter is not whether he concluded a legally binding agreement, but what he said he could do for MJA and his intentions in his discussions with them.

Lord Taylor's other explanations

260. Lord Taylor denied the allegations entirely, first to Michael Gillard:

Man: […] what I understand from the transcripts of those conversations, Lord Taylor, is that you did agree to work for them, that the fee structure was at £10,000 a month and that what you agreed to do was to help amend the legislation on the business and financial rates and that in that regard you had already approached Peter Mandelson and Yvette Cooper.

LT: Oh no, no I'm sorry.

Man: You're recorded as…

LT: No, I'm sorry I have not met, you want the wrong Taylor. I have not met anyone at all.

Man: I'm sorry, but you're on record to these two undercover reporters.

LT: Yeah, well I have not met anyone.

Man: You did not meet Yvette Cooper yet.

LT: No, I have not met Yvette Cooper, I've not met Peter Mandelson or anyone.

Man: But why would you tell them that you had done it, then?

LT: Oh, I didn't tell them that.

Man: It's on record, Lord Taylor.

LT: No, I'm sorry, I have not met anyone. I have not met any Government officer at all (p TaH65).

261. Lord Taylor's denials to Michael Gillard included: that Gillard had "the wrong Taylor", that Lord Taylor had not had any meetings with anybody, that he had been playing the reporters along, that he had agreed nothing, that he had taken no money and never would, that he hadn't done anything at all by way of follow-up, that he had asked for no money, that there was only a verbal agreement, and also that there was no verbal agreement (pp TaH63-69). Part of the conversation ran as follows:

Man: Right. So the position is that you didn't contact or have a meeting with Yvette Cooper.

LT: Not at all.

Man: That you didn't have a meeting with Peter Mandelson.

LT: Not at all.

Man: You didn't speak to the head of the Bill team.

LT: Not at all.

Man: Right. And you have made no approaches to anyone on behalf of—

LT: None whatsoever (p TaH67).

262. In his statutory declaration Lord Taylor also denied the allegations. He stated: "I make this declaration in order to refute, on my personal honour and my oath, any allegation that I have deliberately and knowingly breached the code of conduct" (p TaD1). He was "determined to refute the allegations that I have ever been corrupt or let down my fellow members or deliberately disgraced the House" (p TaD1). Lord Taylor declared: "I have never acted with the intention of breaching the code of conduct or doing anything unethical." (p TaD1), and, moreover, "I abhor corruption and will have no part in it" (p TaD1). He said, on oath: "At no stage in these introductory discussions did I accept any financial inducement, as a reward, or incentive for exercising parliament[ary] influence or for anything else." (p TaD6), and "It is very plain from these transcripts that I never did accept a financial inducement and I never did exercise parliamentary influence on behalf of this supposed company" (p TaD8). While he had misled the journalists, "In the context of my scepticism about MJA, and in this private conversation before any relationship had been entered into, let alone money changing hands, my false statement was in no way a breach of the Code of Conduct" (p TaD10). Finally, Lord Taylor declared: "I can only repeat on my oath that I have never accepted, and would certainly not in this case have accepted, a financial inducement for attempting to alter or affect parliamentary legislation" (p TaD11).

Loose language

263. Lord Taylor has also contended that he was guilty only of using loose language. He admitted in his statutory declaration: "I am a loquacious old man with an advanced degree of self satisfaction but one who is easily confused, and who rambles on, not always to the point" (p TaD1). He said that he exaggerated and conceded that "I fantasised about chairing 'various cabinet meetings' which of course is nonsense"—but "I was not on oath or under any duty to speak precisely: I was in private conversation with a man of exasperating naivety, and trying to bring home to him how his conception of parliament was mistaken" (p TaD4, p TaD3). Lord Taylor added that "I have to accept that I am a somewhat lonely old man without regular companionship, and that I may well have used this occasion as an opportunity to discourse to company, and simply to talk very loosely, perhaps envisioning myself as the powerful politician I might once have liked to be. In this sense I allowed an element of fantasy to enter into what I assumed was an entirely private conversation […] I boasted about myself extensively and somewhat exaggerated my abilities and political powers and my closeness to ministers and senior civil servants" (p TaD6). Lord Taylor observed, in regard to his tendency to speak boastfully on occasions and with some exaggeration from time to time: "I imagine most people do in private conversations" (p TaD9).

264. While we note Lord Taylor's comments, we consider that the words he used about what he could do for MJA were perfectly clear. We cannot dismiss what he said as the ramblings of a muddled old man, as Lord Taylor says we should. He is an active Member of the Parliament of the United Kingdom. His exaggerations were designed to win a lucrative contract with lobbyists. He claimed that he had abused his parliamentary influence in the past on behalf of paying clients and he indicated a clear willingness to abuse it in the future on behalf of MJA.

Was Lord Taylor engaged in a counter-sting?

265. A central part of Lord Taylor's explanation of his conduct is that he was suspicious about the journalists from the outset, so that he was not negotiating any deal but was deliberately saying things that crossed the boundary of permissible behaviour in order to call their bluff and push the journalists into giving up their game. This explanation first emerged during his phone call with Michael Gillard, who had just revealed the sting:

Man: So what were you doing? Conning the company?

LT: No, I was conning two reporters.

Man: So you thought they were reporters?

LT: Oh, yes. Right at the beginning (p TaH66).

266. This explanation depends on the contention that he had suspicions about the true identity of MJA. There are a number of points in the transcripts of his meetings with the journalists which could be read as suggesting wariness on Lord Taylor's part. He told the male journalist, during their first meeting: "you're coming to me this morning with fixed views that are entirely wrong in the way that you use words" (p TaH10). He wanted: "some more details about you. You know, how legitimate you are, and so on" (p TaH11). During the second meeting, he even unwittingly hit on the truth: "I thought at the last meeting [inaudible] 'Have I opened my mouth too much? Have I told them too much?' You might even be a reporter from one of the newspapers in disguise, you know, that has come on to see me, and I'm telling you the way that I operate, because I was quite honest with you […] And I wondered whether I'd overstepped the mark. I didn't know much about you at that time, and because of that I wondered whether …" (p TaH41) He told Gillard: "they were so naïve, were the people. You don't do things like that" (p TaH66).

267. Lord Taylor emphasised his suspicions in his statutory declaration. According to Lord Taylor, with the male journalist's first substantial question ("we would be looking for you to speak in the Chamber on our behalf, erm, ask parliamentary questions, erm, perhaps amend certain bits of the legislation and also […] to meet Ministers"), Lord Taylor was "immediately put on my guard—this nice, educated and decent man was either very ignorant or very bent. […] It was the inappropriateness of the suggestions put to me that made me begin to question his bona fides" (p TaD3). He was left "really uncertain about this man, he seemed at one level so decent, but on another level so ignorant" (p TaD4). Janet confirmed that he "should be suspicious of them and what they might really want" (p TaD5).

268. Lord Taylor said that before the second meeting with the journalists, he had "given some thought in the preceding weeks to this [their] approach" and during the second meeting he was "not reassured by their unconvincing explanation as to why they did not promote themselves" (p TaD6). He "remained sceptical about these two" but was reassured by a reference to Trevor Hemmings, a close acquaintance, which "took me in to the extent that I was prepared to suspend my judgement a little longer" (p TaD6). However, at this stage "I am still bothered about what they are really up to and who they really are. Their persistent questions about my contacts and their desire to meet various people are starting to make me more suspicious" (p TaD7). According to Lord Taylor, "by this point they struck me as poseurs" (p TaD7). Lord Taylor "didn't believe that these people had a company operational in London", and "was not prepared to act for a company that they could not persuade me was going to be worthwhile and they were certainly ignorant and hinting at having me do things that would have put me in breach of the Code" (p TaD7).

269. However, this evidence is contradicted by Lord Taylor's apparent willingness, as displayed in the transcripts of his meetings, to agree to MJA's proposals. He told the journalists: "I want you to know that I think that you're both good people and I would be delighted to work with both of you" (p TaH53). Furthermore, in his statutory declaration Lord Taylor also seems to admit that he didn't have any suspicions: "I really do get some satisfaction about using the experience I have acquired, and I feel good about helping 'young people like you'. If only I had known the truth!" (p TaD4).

270. Lord Taylor's explanation of why he had seemingly promised to cross the boundary of the permissible in various ways, and in particular why he claimed to be already taking action by having held meetings with Ministers, is that he knew that MJA were crooked and he was pushing them to see whether they would come clean. He told Gillard he had led them along "Because I was interested to see the way that undercover reporters work" (p TaH66). The conversation continued:

Man: So your position is that all the claims that you made on the tape recordings, all the things you agreed to do for money, you were doing on the basis that you knew you were speaking to undercover reporters.

LT: Yeah, because I've not done a damn thing (p TaH66).

271. Lord Taylor reiterated this line to Gillard many times. He said "We were just playing, just playing, that's all. It was absolutely farcical to do what they thought" (p TaH66). He had gone along with the sting operation because "I wanted to see what they were doing" (p TaH66). Lord Taylor argued: "It was fascinating to see how undercover reporters work. And I'm not so naïve. It was interesting to see how far they would go, what they were trying to get at" (p TaH67). He was "just completely seeing how far they would go" (p TaH67). When Gillard asked, "Isn't this just a defence that you're putting up now that you've been caught in a sting?", Lord Taylor responded: "Not at all. I've not been caught in anything at all. I'm absolutely honest" (p TaH67).

272. According to Lord Taylor, this also explains why he offered to arrange dinners and hold meetings in the House to impress clients: "To be quite honest, I played them along because I thought they were undercover reporters and I just led them along" (p TaH65).

273. Finally, an answer-phone message Lord Taylor left presumably after Gillard called him and revealed the sting may be viewed as an extension of Lord Taylor's game, but this evidence, though worth citing, is inconclusive on the question of whether Lord Taylor had suspected the journalists' game before it was revealed to him:

LT: Hello David [of MJA]. I shall be seeing Gordon Brown some time over the weekend and then I shall be seeing the Queen on Monday. Anybody else you'd like me to see? You certainly were a little man, weren't you? Anyway, all the very best to you David. You'd make a very, very good actor some time, but luckily I knew what you were up to. Thank you. Bye" (p TaH69).

274. Lord Taylor expanded on his story in his statutory declaration. He stated that his "concerns [led] me to try to push them into giving me information upon which I can make up my mind whether to have anything further to do with them" (p TaD7). He "decided to push them—I had in my mind that the only way to bring this business to a conclusion was to pretend that we had done a deal and then see what they said" (p TaD7). Lord Taylor told us, "I called their bluff by telling them that the agreement would be notarised by Janet who would put it in the Declaration of Interests" (p TaD7). After the second meeting, according to Lord Taylor: "I was not prepared to enter into any relationship with these people, but I did feel the need to know what they were about—and why they had come to me in particular" (p TaD7). He wanted to know, "Was I really going to be of assistance in progressing this enterprise, or were they playing me for a sucker who might lend his name to a money laundering front for drugs"? (p TaD7-8).

275. Lord Taylor decided to call the journalists to say that he would be meeting Yvette Cooper MP (p TaD8). He told us that it was "not the best decision" that he had ever made. We agree. Lord Taylor said: "When making the call to Calvert [i.e. "David Thompson"] I thought that if I gave him the impression that I was taking his proposal seriously and carrying it through, he would be forced to either come clean with his deception or produce his client and finally establish his legitimacy. […] I also tested him by asking him for further information […] I also tried to put a little pressure on by reminding him on page 7 about the money he had agreed to pay […] I attempted to flush out the client by asking to meet him" (p TaD8).

276. After this, Lord Taylor "decided that I would 'up the ante' further to finally bring this matter to a head and see whether they took fright or flight. I therefore left a message claiming to have discussed their case with Peter Mandelson and Baroness Andrews and that I would be meeting Yvette Cooper and local authority teams. I did this so that they would think (wrongly, of course) that I really had moved and that they would have to either abandon their efforts or produce their client and establish his legitimacy." He wanted "to pretend that their names and their client's name was being fed into a political and bureaucratic process" (p TaD8). It is Lord Taylor's argument that his "trick worked to the extent that" it forced Gillard to call him and give up the game (p TaD8). He stated to us: "I never met Mandelson or Andrews and I was pleased to tell the Sunday Times that I had not done so and was playing their reporters along" (p TaD8).

277. Lord Taylor declared: "It is certainly the case, and I fully accept, that the language I used in this private conversation recorded by the Sunday Times suggests that I might be able to arrange meetings with Yvette Cooper and Jack Straw, but that was not my intention—I said this in order to flush out the real reason why they were approaching me and to bring them to the point. The meetings with the ministers were a fabrication on my part in order 'to up the ante' and either scare them off if they were tricksters or draw them out if they were not" (p TaD10). He admits that "with hindsight I realise I should have handled my suspicions about these people in a completely different way" (p TaD11). We agree.

Our conclusion on Lord Taylor

278. We are not persuaded by Lord Taylor's argument that he was stringing the journalists along. Lord Taylor asserted that although he claimed to the journalists that there were various actions that he was undertaking on behalf of the lobbyists, in fact he was not doing so and was simply misleading the lobbyists because he suspected they were bogus and he wanted to flush them out. We do not consider that this story is supported by the evidence. We do not believe that, if he was truly suspicious about the journalists' identity or intentions, he would have been so reckless as to tell them how he would behave as a consultant and to reveal the extent to which he had both broken the Code in the past and was willing to do so in the future. We have concluded that this story is an attempt after the event to justify his actions, and we do not accept it.

279. Lord Taylor clearly expressed a willingness to breach the Code of Conduct in explaining how he would go about influencing Parliament for the benefit of his client, including speaking in the Chamber if need be, lobbying Ministers and lobbying civil servants. His arguments against acting in the Chamber on their behalf (such as tabling amendments) were based more on effectiveness than ethics. We are disturbed by Lord Taylor's disdain for the rules. We deplore his clear intention to give the journalists the impression that he had breached the Code on behalf of his clients Canatxx and Experian. We can find no basis in any of the transcripts for Lord Taylor's assertion that he was primarily concerned to win new jobs for the North West.

280. There can be no good reason for Lord Taylor deceiving the journalists about his behaviour in Parliament: we find that either it must have been a true picture he was painting, in which case he had breached the Code in the past and was agreeing to breach it again; or it was a story spun in order to secure a lucrative contract, in which case he was falsely suggesting that he would breach the Code in the future. We prefer the latter finding but in either case he was also failing to act on his personal honour.

281. We conclude that Lord Taylor's conversations with the journalists display his clear willingness to breach the Code of Conduct by engaging in paid advocacy, and by failing to act on his personal honour, as required by paragraphs 4(c) and 4(b) of the Code.

CHAPTER 6: GENERAL CONCLUSION

General conclusion

282. We make this report to the Committee for Privileges. It is their responsibility to consider our conclusions and take a view on the appropriate penalties. The final decisions rest with the House as a whole.

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2   Sunday Times, 25 January 2009, p1. Back

3   Under paragraph 10 of the procedure for considering complaints against Members of the House. The procedure is set out in the Report from the Committee for Privileges, 4th Report (2007-08): The Code of Conduct: procedure for considering complaints against Members (HL 205). It may be found on the parliamentary website at: http://pubs1.tso.parliament.uk/pa/ld200708/ldselect/ldprivi/205/20502.htm Back

4   Paragraph 11 of the Report referred to in footnote 2. Back

5   Committee for Privileges, 4th Report (2007-08): The Code of Conduct: procedure for considering complaints against Members (HL 205). Back

6   Paragraph 25, and Appendix to that report, paragraph 23. Back

7   HL Deb 26 January 2009 col 12. Back

8   See House of Commons Committee of Privileges, 1st Report (1994-95): Complaint concerning an article in the "Sunday Times" of 10 July 1994 relating to the conduct of Members (HC 351). Back

9   In the Hansard transcripts, ellipses (i.e.: "…") indicate an inaudible trailing off of speech. In the Sunday Times transcripts, ellipses (i.e.: "…") were used to show when a word or passage was missing from the transcript, because a word was inaudible or because a passage was excluded as irrelevant (see appendix 6). To differentiate, when in this report a word or passage in the evidence is excluded from a quote, we use ellipses in square brackets (i.e.: "[…]"). Back

10   Seventh Report of the Committee on Standards in Public Life, Chairman Lord Neill of Bladen QC, Standards of Conduct in the House of Lords, CM 4903 (November 2000). Back

11   The term "exercising parliamentary influence" dates from 1995 and is found in the resolutions of that year which constituted the previous code of conduct. Back

12   See Neill Report cited in footnote 10 above, Volume 2, paragraph 6.6:

"6.6 The House of Lords has long endorsed the principle that financial reward should not influence the activity of peers in the House. The Sub-Committee on Registration of Interests, for instance, reporting in 1974, found it

... inconsistent with the traditions or proper function of the House that any Peer

should act in the House as a paid agent of someone or that he should continue to act

in the House in any cause for which he has recently been a paid agent, whether or

not his interest is declared.

They therefore endorse the entry in the Companion: "It is, however, considered

undesirable for a Lord to advocate, promote or oppose in the House any Bill or

subordinate legislation, in or for which he is or has been acting or concerned for any

pecuniary fee or reward." " Back

13   See Neill report cited in footnote 10 above, Volume 2, paragraph 6.10, p 52.  Back

14   Neill Report cited in footnote 10, Volume 2, paragraph 6.15, p 53. Lord Griffiths was Chairman of the Sub-Committee which produced the 1995 Code of Conduct. Back

15   See First Report of the Committee on Standards in Public Life, p 29, paragraph 49. Back

16   Comment by the witness: this submission was provided prior to Lord Snape's receipt of the transcript of his conversations. Back

17   Comment by the witness: in the Sunday Times transcript, their introductory summery concludes: "He asks for the lobbying company's business proposal to be put in writing" (my emphasis). Back

18   The paragraph references cited in the chapter are to the paragraph numbers of this statutory declaration. Back