Cash-for-questions Affair - Overview

Overview

The Guardian's story alleged that Al-Fayed had approached the paper and accused Ian Greer of paying Neil Hamilton and Tim Smith to table parliamentary questions on his behalf at £2000 per question. Smith resigned immediately after admitting to accepting payments from Al-Fayed himself, but not from Ian Greer as The Guardian alleged.

Hamilton and Greer immediately issued libel writs in the High Court against The Guardian to clear their names.

The furore prompted Prime Minister John Major to instigate the Nolan Committee, to review the issue of standards in public life.

Six weeks later in December 1994, in a private letter to the chairman of the Parliamentary watchdog the Members' Interests Committee, Mohamed Al-Fayed alleged that he had paid Hamilton, in addition to the original allegations that Ian Greer was the paymaster. Hamilton denied this new allegation.

The Defamation Bill 1996 was designed to alter the Bill of Rights 1689 and allows an MP to waive his Parliamentary privilege. This would allow Mr Hamilton to give evidence in court on statements he made in Commons.

Two years later, in the last days of September 1996, three days before Hamilton's and Greer's libel actions were due to start, three of Mohamed Al-Fayed's employees claimed that they had processed cash payments to the two men. Hamilton and Greer denied these new allegations.

Hamilton and Greer withdrew their libel action on 30 September 1996.

Hamilton's and Greer's withdrawal of their libel actions provoked an avalanche of condemnation of the two men in the British Press, led by The Guardian. Parliament initiated an official inquiry into the affair to be led by Sir Gordon Downey.

In December The Times reported the collapse of Ian Greer's lobbying company.

In early 1997 Downey began his inquiry, but before he published his report Prime Minister John Major prorogued Parliament for a general election to be held on 1 May 1997.

Smith resigned from Parliament on 25 March and said he would not contest the next general election.

In the election former BBC reporter Martin Bell stood in Hamilton's Cheshire constituency of Tatton as an independent candidate on an "anti-corruption" platform. Bell easily defeated Hamilton with the assistance of the Labour Party and the Liberal Democrats who both withdrew their candidates and supplied party workers to help Bell's campaign.

In early July 1997 Sir Gordon Downey published his 900 page report, clearing Ian Greer, Neil Hamilton, and Tim Smith of The Guardian's original allegations that Ian Greer had paid the two MPs to table questions. However, Downey decreed that the three Fayed employees' testimony that they had processed cash payments to Hamilton amounted to "compelling evidence", though he did not accept their claims to have processed cash payments to the lobbyist Greer.

At the same time Standards and Privileges Committee published its conclusions in relation to complaints made by The Guardian and Mr Mohamed Al Fayed which concluded:

• Michael Brown

"Mr Brown failed to register an introduction payment from Mr Greer in relation to US Tobacco."

"Mr Brown persistently and deliberately failed to declare his interests in dealing with Ministers and officials over the Skoal Bandits issue."

"Mr Brown has expressed regret for these omissions."

• Sir Peter Hordern

He had no obligation to disclose to Ministers the interests of his colleagues

Although the extent to which he declared his own interests on House of Fraser matters fell well short of the terms of the 1974 Resolution, there is no evidence that Ministers and officials were misled by this

The spirit of the rules would have been better observed had Sir Peter made a separate Register entry in respect of Mr Al Fayed's hospitality, but this omission was not improper by the standards accepted at the time

The allegation that Sir Peter tabled questions for cash is without substance and has been withdrawn

• Sir Andrew Bowden:

There is insufficient evidence to substantiate the allegation that Sir Andrew received, or demanded, cash payments from Mr Al Fayed in return for lobbying services.

The election donation of £5,319 from Mr Greer was intended as a reward for lobbying and Sir Andrew probably knew it came originally from Mr Al Fayed.

Sir Andrew failed to register, as he should have done, this election campaign donation.

Sir Andrew failed to declare his interests in dealings with Ministers and officials over House of Fraser, and, in one case, gave a positively misleading explanation for his representations.

• Sir Michael Grylls

Sir Michael received payments from Mr Greer (though not in cash) which were neither introduction commissions nor fees associated with the Unitary Tax Campaign.

It is not possible to conclude that these payments originated from Mr Al Fayed, although Sir Michael actively participated in the Greer lobbying operation.

Sir Michael deliberately misled the Select Committee on Members' Interests in 1990 by seriously understating the number of commission payments he had received; and by omitting to inform them of other fees received from Mr Greer.

Sir Michael persistently failed to declare his interests in dealings with Ministers and officials over the House of Fraser.

Sir Michael's action in taking a commission payment for introducing a constituent to Mr Greer was unacceptable.

There is insufficient evidence to show that Sir Michael solicited business for Mr Greer in expectation of commission payments.

• Mr Tim Smith

Mr Smith accepted cash payments directly from Mr Al Fayed of between £18,000 and £25,000 in return for lobbying services. There is no evidence to indicate that he received cash from Mr Al Fayed indirectly through Mr Greer.

The way in which these payments were received and concealed fell well below the standards expected of Members of Parliament.

The allegation that Mr Smith was paid to initiate an Adjournment debate in 1986 is not substantiated.

Mr Smith's financial interest in relation to House of Fraser was only registered in January 1989 when it had been publicly exposed by Mr Rowland; and then only hesitantly for a period of two and a half weeks. This has to be seen as a disingenuous attempt at concealment. On any view, this was a totally unacceptable form of registration by Mr Smith.

Mr Smith persistently and deliberately failed to declare his interests in dealings with Ministers and officials over House of Fraser issues.

To his credit, Mr Smith eventually admitted receiving payments, although not until he was asked in 1994; and he expressed his regrets for the non-registration and non-declaration of interests."Smith accepted cash payments directly from Mr Al Fayed of between £18,000 and £25,000 in return for lobbying services...persistently and deliberately failed to declare his interests in dealings with Ministers and officials over House of Fraser issues... Mr Smith's conduct fell seriously below the standards which the House is entitled to expect ... had he still been a Member we would recommend a substantial period of suspension from the service of the House"