23 SEPTEMBER 1995, Page 28


With cat-like tread, the men from the ministry come back to call on Lord Archer


It is no pleasure to be questioned by the Department of Trade and Industry's inspectors. After a session with them, the Archangel Gabriel would want to pour himself a stiff drink. So if, as I imagine, they are questioning Lord Archer, I do not envy him the experience — but I cannot expect him to say so. If he were to, he would (or so I am advised) be breaking the law. If that sounds like a curious law, it is our old friend the Financial Services Act 1986. Section 177 of this well-meant but ill- considered piece of law-making gives the DTI powers to appoint inspectors, to inquire into possible breaches of the law on insider trading. They are likely to be a QC and an accountant, with a full supporting cast. Their appointment is not announced, their inquiry is carried on in secret and their report is not published. (The Act pro- vides that it cannot be published without the consent of every witness.) The inspec- tors do not prosecute. Their job is to estab- lish whether there is evidence that an offence has been committed. For this they have the extraordinary powers that the law confers on DTI inspectors. They can com- pel witnesses to attend and answer ques- tions upon oath, even if the answers might tend to incriminate them. They can put any question, proper or improper. They are not bound by the rules of the courts or by the laws of evidence, but evidence given to them can be used in court. Such methods would not, of course, be available for an investigation into murder, high treason, or keeping a terrier without a muzzle, and any charge based on them would be thrown out — but suggestions of insider trading are different. Lord Archer does not need to be told that. He has been here before, and there is something odd about the proce- dure that now seems to have brought him here again.

An embarrassing error

EIGHTEEN months ago the DTI appoint- ed inspectors (without, of course, saying so) to inquire into dealings in the shares of Anglia Television. The sequence of events is now familiar. On 18 January 1994, the board of Anglia, including Lady Archer as a non-executive director, agreed to accept a take-over bid for the company, and the shares rose sharply. A few days earlier, Lord Archer had dealt in Anglia shares as a buyer, asking for the purchase to be booked in the name of a Kurdish friend, Broosk Saib, an interior decorator. This deal gen- erated an instant profit. Lord Archer subse- quently called it a grave error and publicly apologised for the 'needless embarrass- ment' caused to Lady Archer. By then news of the inquiry had leaked out and the DTI was forced to acknowledge its existence though not, of course, to publish its find- ings. Three weeks later Michael Heseltine, then the DTI's presiding spirit, announced that he proposed to take no further action against Lord Archer or anybody else who might have been concerned. So much for presidential proposals. It is now evident that the DTI has asked its inspectors to reopen their inquiry.

The party worker

THIS TIME they seem to be taking an interest in some Anglia shares bought by Karen Morgan Thomas. She was a stock- broker with James Capel and at the time had money of her own to invest. She bought her shares through her firm, using its standard procedures and after talking to its analysts. A fortnight later the bid came and she sold at a profit. None of this, in itself, would have mattered a row of beans — but it happened that she knew Lord Archer. She works for the Conserva- tive Party, in December 1993 its deputy chairman sent her one of his books, and she rang him up to thank him. In the New Year he went off on a much-publicised errand of mercy to Kurdistan, and when he came back she rang to ask about it. By then she had bought her shares. Put like that, the connection looks tenuous. Hers was a far simpler transaction than the share purchase booked to Broosk Saib, and, on the face of it, less in need of explanation. However, Lord Archer's name can be brought into it, and so the inspectors are back.

`You are fair game'

A FEW years ago a friend of mine described the experience: 'You have no idea what they'll ask you, no idea what papers they have, no idea what they're lead- ing up to, or what others have said about anything else or about you. It's highly adversarial. It's as though you are criminal, and fair game to be treated as such.' He was a professional: a banker and company direc- tor in good standing and a former City regu- lator. In the event the inspectors' report made no suggestion of misconduct. All the same, the experience shook him. What later shook him were his lawyers' bills. No doubt it all comes as more of a shock to someone without his professional experience or with- out Lord Archer's depth of pocket. In theory, the secrecy that the Act enjoins is meant to cushion the blow. No one's job or reputation is put on the line unless a decision is finally taken to prosecute. In practice, as we see, the word gets out. The City is a sounding-board, and it sometimes happens that passing the word on can serve a purpose. I would not like to think that somebody is gunning for Lord Archer. Apart from anything else, other peo- ple might get hurt.

Time to inquire

I HAVE long argued that we need an inquiry into these inquiries. Theirs are the procedures of the Star Chamber, and it is hard to say why they should apply to allega- tions of insider trading but not to the gravest offences against public order or humanity. The DTI has been known to answer that insider trading is a difficult offence to prove. I would blame that on the Act and on subsequent misconceived attempts at definition — but it is not, in any case, an answer that would cut much ice in the United States, whose constitution guar- antees to every citizen the right not to incriminate himself. It may not cut much ice here when the European Court has ruled on an appeal put forward after the first Guinness trial. The Court seems mind- ed to impute the same rights to citizens here. If that happens, the whole apparatus of the DTI inquiry will have to be disman- tled and something less arbitrary put in its place. I should even be willing to help the inspectors who are set to inquire into inquiries, but not without a stiff drink nearby.