TUESDAY 21 MARCH 2000

MR TONY BALDRY, MP

  1. Good morning, Tony. I understand you want to make a personal statement at the start. There will probably be some questions to follow. When it comes to the questions, take your time and answer them after you have had time to think about them.

  (Mr Baldry) Of course. Mr Williams, firstly, I am very grateful to the Committee to let me have the opportunity of seeing the Commissioner's Report and I am also grateful for the opportunity of being able to address the Committee this morning. Having read the Parliamentary Commissioner's Report, I agree that it was an error of judgment on my part to have provided a reference or, having provided a reference, not to have written to the Lord Chancellor's Department to inform him of the loan. For this I apologise unreservedly to the Committee and to the House, and of course I would be willing to reiterate such an apology on the floor of the House. When the question of the loan first arose, I wrote to Mrs Filkin and I said, "It is of course a matter for you and the appropriate authorities of the House to decide whether I got this matter wrong. If I did, I am fully willing to accept any criticism or chastisement that is made." That is still the case. However, I would simply ask that I be criticised and punished for what I did do and not for what I did not do. I did not ask for, or receive, a loan in consideration of my giving a reference. It is frustrating not to have, or to have had, total recall of every detail of events at this time—but this was a particularly hectic time in my parliamentary and ministerial life and a lot has happened since. But there were two separate and distinct events and I hope the Committee will understand that; the loan and the giving of the reference. All of the discussions in relation to the loan took place on 5 December 1996. At no time during these discussions was there ever any mention, either direct or indirect, of a reference, and indeed if there had been any such mention, I would have simply refused to have accepted a loan on any such terms. At the end of the meeting, I signed the loan agreement agreeing to repay the loan, together with the agreed interest, on 6 June 1997, I gave Sarosh Zaiwalla a post-dated cheque for that date and for that amount. In turn, I was given a cheque. I cannot now recall whether I then sent that cheque to my bank to be credited to my account at the beginning of January, or whether I physically paid in the cheque to my bank. What I am certain of is that at the time I left Sarosh Zaiwalla's office on 5 December, all the discussions relating to the loan had been completed and at no time had there been any mention of a reference for an honour. Clearly, at some time in the early part of January, I must have been approached to provide a reference. I fully accept that in all the circumstances I should not have provided a reference, or if I did provide a reference that I should have told the Lord Chancellor's Department of the existence of the loan, and for this I apologise. Clearly, I did not address my mind properly to the issues, again for which I apologise. For both these failings, I fully accept that my behaviour deserves to be criticised. Certainly it was not my intention to deceive. There was nothing that was said in that short, two paragraph reference that I do not believe was true. I simply apologise to the Committee and to the House.

  Mr Williams: Thank you, Tony. Would any of my colleagues like to ask any questions?

  2. I have said to the Committee that Mr Zaiwalla has a home in my constituency; just so that is on the record. When you sent the reference, that was to Lord Feldman?
  (Mr Baldry) Yes.

  3. Was that because Lord Feldman had put something round suggesting it, or Mr Zaiwalla had, or someone else had?
  (Mr Baldry) First of all, it is very frustrating but I do not have an independent recollection. My understanding from the Parliamentary Commissioner who has spoken to Lord Feldman, and it is in the papers, is that Lord Feldman says he telephoned me as someone whom he knew knew Mr Zaiwalla asking for a reference, and I simply acceded to that request. Those who were in the House at the time will recall this was a particularly hectic time. The last meeting of the Council of Ministers in Europe was the Fisheries Council just before Christmas of that year, for which I had responsibility. The last set piece debate in the House was the Fisheries Debate, for which again I had responsibility. It was a debate we had lost the year before and I was determined that we should not lose it that year because presentationally it was the last debate before Christmas before the general election. That involved a lot of negotiations with the Treasury, it also involved a lot of individual negotiations with parliamentary colleagues to keep them on-side, and the Government won the debate by a small margin of nine. The actual negotiations in Brussels, which I think were on 21 and 22 December, went through the night, they lasted 21 hours, I came home, had a brief Christmas break and was thrust immediately after Christmas back into the logistics of BSE, when at that stage we were slaughtering huge numbers of cattle, the logistics of simply what we were to do with the rendered remains, all of that. I think, what I suspect happened, was that one day Basil Feldman telephoned me, he knew I knew Sarosh Zaiwalla, and he asked me for a reference and I acceded to that request. I fully accept, with the benefit of hindsight and having seen the Commissioner's Report, that of course it would have been right for me to have either said, "I am terribly sorry, Basil, I cannot do that" or I ought to have written to the Lord Chancellor's Department, but actually at that stage life was going at a hell of a gallop and we were working 18 hours a day. I accept fully the criticism that was made of me but I simply did not properly put my mind to the issues.

  4. So the simple answer to the question is, it was not your initiative, it was not Mr Zaiwalla's initiative, it was Basil Feldman's initiative?
  (Mr Baldry) Yes. I responded to Basil Feldman.

  5. Going to another matter, in paragraph 20 of the Commissioner's Report, she says that you should have registered Zaiwalla & Co as clients for the purpose of booking Committee (sic) rooms. Do you accept that?
  (Mr Baldry) Yes. Can I just say that as soon as—and I hope the Parliamentary Commissioner would confirm this—any question arose about this, I immediately went and sought the Commissioner's advice. She very kindly gave me her advice and I immediately took her advice. I have a full entry in the Register of Members' Interests, there is absolutely no intention not to have a full entry. It was something I never derived any direct benefit from, the Asian Business Breakfast was something which I thought and think is for the public good, but of course as soon as the issue arose I went and sought advice and it appeared in the Register almost immediately.

  6. Just one question. Can you confirm—because £5,000 is a fairly decent slice of money for most of us and you put it in your bank account and then you dashed off, under whatever pressure of time, this reference for the honour—whether any kind of alarm bells rang in your brain at all?
  (Mr Baldry) Mr Bell, I do not think it could have done because I think if it had I would have remembered the incident. Thinking today, Basil Feldman was someone whom I knew, he knew that I knew Sarosh Zaiwalla, I assume that he would have told me he was putting Sarosh Zaiwalla forward for an honour, as I understand it from the Parliamentary Commissioner he also approached and was given references by a significant number of other people. Clearly it did not ring alarm bells and I clearly just did not put my mind to it.

  7. How long had you known Mr Zaiwalla?
  (Mr Baldry) The relationship with Sarosh Zaiwalla is very simple. Some time before I had become a minister I had been working in publishing and we had set up a trust to give parents information about their choice of schooling, and Sarosh Zaiwalla had joined that foundation as a trustee. That was the first time I met him.

  8. That was in or around when?
  (Mr Baldry) That must have been about 1988, 1989. I then became a minister in 1990, I did not see very much of Sarosh after that—he might have invited me to his office party once a year or something of that kind. I really did not meet him again until it must have been 1995, and what happened in 1995 was that he read the details of my divorce in the national press, he had recently gone through a not dissimilar experience, so he got in touch with me again and we met up from time to time basically to give each other mutual support. I suppose we became better friends as a consequence of that. I got to know something of the work he was doing and, as I explained and I think it is in the papers, the only reason I approached him for a loan was simply he was a friend whom I was not embarrassed to ask for a loan, at the same time I would not have been embarrassed if he had said no, if you can understand that.

  9. How much did you ask for originally?
  (Mr Baldry) I asked for £5,000.

  10. Was there any expectation of further loans?
  (Mr Baldry) No, not at all. I am very happy for the Committee to see, because the Parliamentary Commissioner has seen, my bank statements which I produced to her. Looking back on it, and looking at the bank statements, my finances were not in a particularly bad shape, this was not in any degree of desperation, and I think probably, thinking back on it, this was the beginning of December, I knew I was going to have a very hectic month, and I think I probably just did not think that I had time in my life to go and sort out those sort of things with the bank. There was no need, and it is quite clear from the bank statements, for me to borrow or want to borrow any more than £5,000. We agreed what the rate of interest would be, there was a loan agreement signed on 5 December, I was given a cheque, I gave him a post-dated cheque, as far as I was concerned that was the end of the matter. Whilst I take Mr Bell's point that £5,000 is a not insignificant sum of money, it is not a huge sum of money and I knew it was well within my competence to repay, and we agreed when it would be repaid and exactly how it would be repaid, and I think how it came to be repaid was exactly in accord with what we all agreed.

  Mr Foster: Thank you.

  11. Can I just ask you a couple of questions about the arrangements with the Catering Department? You rang up for advice; did you ring up for advice?
  (Mr Baldry) No.

  12. So that is not true?
  (Mr Baldry) Let me just explain. Some time after the last general election, I was at a lunch with the Chinese Ambassador, Mr Habib, who is a banker, and Sarosh Zaiwalla, and it was shortly after the present Chinese Ambassador had arrived. The question arose that a lot of the Asian business community felt that they were—

  13. I can understand that, I am trying to actually be helpful. Basically, were you told by the Catering Department that it could not be booked in the name of Zaiwalla & Company?
  (Mr Baldry) No, no.

  14. That never happened?
  (Mr Baldry) No, that never happened. What actually happened was that I booked the rooms for the Breakfast Club but that question never arose. The first time anything arose in relation to the Asian Business Breakfast was when the Sunday Telegraph expressed concerns, and that was on a Sunday, and on the Monday I immediately went to the Parliamentary Commissioner and I said, "Look, I am concerned about these suggestions", in fact I think I said I might make a complaint against myself, and the Parliamentary Commissioner said, "You do not have to make a complaint, you can see my advice." I explained the whole background to the Asian Business Breakfast, the Parliamentary Commissioner gave me her advice, I immediately took her advice and registered what the Parliamentary Commissioner advised me to actually register in the Register of Members' Interests.

  15. I understand that, but what you are saying is that it is not true that you realised it could not be booked in the name of Zaiwalla & Company?
  (Mr Baldry) No. As we all know, it is perfectly possible. There would have been no problem of booking the dining room in the name of Zaiwalla & Co and nor would there have been any embarrassment or anything untoward.

  16. Mr Milne made some very grave allegations about Mr Zaiwalla in correspondence. Mrs Filkin, would Mr Baldry have seen any of that?
  (Mr Baldry) Yes, I have seen all the papers.

  17. I mean about unpaid taxes, about people boycotting "the Indian businessman". Is all that totally untrue?
  (Mr Baldry) As I have repeatedly said and I say it again today, I know nothing to the detriment of Sarosh Zaiwalla, then or now. May I just make this point, or a number of points? The first time Mr Milne got in touch with me was a letter he wrote to me shortly after he and Mr Zaiwalla had separated. As I explained to the Commissioner, and it is in the papers, I also accept that what I should have done at that stage was to have taken that letter to some authorities but I could not think at the time to whom one should take such a letter. But if Mr Milne really thought I had done anything untoward in relation to this reference, one would have expected him to have put it in that letter, or one would have expected him to have raised it a lot earlier. I think the Committee will know, and I think these are matters on which you have to take independent advice, that as I understand it Mr Milne was dismissed, he had been an employee-partner of Zaiwalla & Co, he was dismissed for misconduct, it was alleged he had misappropriated £500,000 from Zaiwalla & Co. There was a dispute, there was an arbitration agreement under the partnership with an arbitration clause, it went to arbitration, Mr Zaiwalla won. In due course, the arbitration award got turned into an award of the High Court, and one can draw one's own conclusions from the fact the High Court award was made about a week before the Sunday Telegraph article appeared. I understand, although I have not seen proof of this, that Mr Milne was declared bankrupt last week by the Registrar of Bankruptcy, owing some £800,000 to creditors.

  18. So all these references to Indian moneylenders, they are all in his mind, are they? They are essentially unreasonable allegations he is making?
  (Mr Baldry) I have explained to Mr Foster that at the time I saw Sarosh Zaiwalla and asked him for a loan and as of today, I know of no other person to whom he has lent money. I repeat, the only reason I went to him was that he was a friend. There are lots of people whom I could have gone to and we all know there are quite a lot of people in this House who are fairly wealthy. It would, I think, have been embarrassing—I personally would have found it embarrassing—to have gone to them and said, "Can I borrow £5,000." My relationship with Sarosh was not so close that I found it embarrassing to do that. More importantly, if you go to a friend and say, "Please may I borrow £5,000" and they say no for whatever reason, it kind of disrupts things. I imagine the friendship is never going to be the same thereafter. If Sarosh had said to me, "I am terribly sorry, I cannot do that", I do not think it would have disrupted our friendship, it would not have been of that nature.

  19. You have read all the documentation which we will not go into in great detail, could you hold your hand on your heart and say, "I believe Mr Zaiwalla is someone I would wish to nominate for an award now"?
  (Mr Baldry) Yes.