The Brexit Millionaire by Dispatches reopens the matter of Rees-Mogg's failure to declare his interest.

Channel 4 Dispatches broadcast a piece yesterday about Brexiters, especially Jacob Rees-Mogg, who has gained substantially from Brexit. Here is a clip of the programme.


A year ago I wrote to my MP and the Parliamentary Commissioner for Standards. 

Here is my first letter, which sets out the background:

_________________________________________________________________________________

03/03/18

Kathryn Stone OBE

Parliamentary Commissioner for Standards

House of Commons

London SW1A 0AA

cc Mr Jacob Rees-Mogg MP

House of Commons

London SW1A 0AA

Dear Commissioner

Complaint regarding the failure of Mr Jacob Rees-Mogg MP to declare his financial interest

This allegation relates to three occasions on which Mr Jacob Rees-Mogg, MP for North East Somerset, has spoken in Parliamentary debates without declaring his financial interest in the matter under discussion.

His financial interest

In 2007, Mr Rees-Mogg helped to found Somerset Capital Management[1] (SCM), and remains a major shareholder in the firm, which specialises in emerging markets - that is, markets that are not yet fully developed, but are expected to become so in coming years - for example markets in Brazil, Russia, India and China.

Mr Rees-Mogg received more than £178,000 in 2017 from SCM according to the record in the Register of Members' Interests.

In October 2017 SCM had more than $8.9 billion under management, of which $4 billion was in emerging markets[2]. SCM is managed through subsidiaries in the tax havens of the Cayman islands and Singapore.

SCM stands to gain significantly in the event of a hard Brexit (defined here as one in which we leave the Single Market and any Customs Union with the EU) as British traders in that event will find business harder to transact with the EU, and many will choose to go instead into emerging markets[3]. It is frequently claimed by those in favour of leaving the EU that British trade will flourish in the global market, of which emerging markets are an important part at this time.

As a major shareholder in SCM Mr Rees-Mogg therefore stands to gain financially from a hard Brexit.

The Rules

Members of Parliament are elected in order to serve the best interests of the people that they represent.

They must not use the power given to them by the people to benefit themselves or their family.

This principle is set out in the Code of Conduct  for MPs[4].

“Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends". (IV Selflessness)

More

"Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might influence them in the performance of their official duties"  (IV Integrity)

“Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest”. (IV Honesty)

Members “shall always be open and frank in drawing attention to any relevant interest in any proceeding of the House or its Committees, and in any communications with Ministers, Members, public officials or public office holders”. (Rules of conduct 13)

This means an oral declaration of interest at the time of communication, since it is unreasonable to expect all Ministers, Members, public officials or public office holders to be aware of every entry in the Register of Members interests by the MP. (Guide to the Rules, Chapter 2.2 (“Members, the public and others are made aware at the appropriate time, in proceedings of the House and on other occasions, of any interest relevant to those proceedings or to the actions or words of a Member. The requirement to declare an interest complements the registration requirements”).

Three occasions when these rules were broken

The Hansard record shows that Jacob Rees-Mogg, MP for North East Somerset, has failed to declare his financial interest orally at the appropriate time when debating in Parliament on Brexit on three occasions.

First, Jacob Rees-Mogg is recorded in Hansard in a debate on Exiting the European Union (26 Jan 2017) as saying “selling into the single market is far preferable to being a member of it, because it is a highly regulatory, bureaucratic mechanism on which 87% of British businesses—the British economy—are not reliant”[5].

He is arguing that Britain should not be a member of the single market. He does not at the time of speaking declare his financial interest as a major shareholder of SCM, which would benefit as a result of Britain leaving the single market. The test of relevance is satisfied in that his interests might reasonably be thought by others to influence his or her actions or words as a Member . Indeed the news report making the connection between his position as a keen advocate of leaving both the EU single market and the EU Customs Union was written because with this conflict of interest in mind.

Second, Jacob Rees-Mogg said in a debate on the Autumn Statement (23 November 2016) “Might we be able to take a slightly more optimistic tone and, with the freedoms that we have outside the customs union and the single market, be able to solve the productivity problem?”[6].

He argues here for exiting both the customs union and the single market. Again, he is in effect arguing for an outcome that will be to the financial interest of SCM, and therefore of himself. Again the test of relevance is satisfied as laid out above.

Third, he said (23 November 2017) “the real opportunity that comes from Brexit is freely opening up our markets to the rest of the world. We must remember that the customs union... is actually a protectionist union ​that stops people in the United Kingdom from buying the cheapest available goods and that, by and large, it protects industries that the UK does not have. The overwhelming majority of the protections under the customs union are for things such as German coffee processors or Spanish orange growers—the types of things that we are not doing. Our industries receive marginal protection from the customs union, but at a very high cost to British consumers—it is thought that the cost for food is 20%, and that the next highest level of tariffs is on clothing and footwear”[7].

He is arguing that Britain should not be a member of the customs union. He does not at the time of speaking declare his financial interest as a major shareholder of SCM, which would benefit as a result of Britain leaving the single market. The test of relevance is satisfied in that his interests might reasonably be thought by others to influence his or her actions or words as a Member . Indeed the news report making the connection between his position as a keen advocate of leaving both the EU single market and the EU Customs Union was written because with this conflict of interest in mind.

All three of these interventions satisfy the test for relevance, (Guide to the Rules, Chapter 2, 4(c) ), since he is at “the stage where the Member has a reasonable expectation that a financial benefit will accrue”.

Public perception is important: (Guide to the Rules, 5 ) “The test of relevance is whether those interests might reasonably be thought by others to influence his or her actions or words as a Member”.

Conclusion

These three instances show that Mr Rees-Mogg has, in the course of  Parliamentary debate, advocated that the UK should withdraw from both the single market and the customs union, and in doing so did not declare his own particular financial interest in the matter under discussion.

This is a matter of great importance. The MP expenses scandal of 2009 has greatly lowered the esteem of all MPs in the eye of the public, even though only about 10% of MPs were found guilty. There is a widespread cynicism among the public based on the idea of MPs being “only in it for themselves”, that leads to nihilism and withdrawal from the electoral process, which is not good for the health of democracy in our nation.

It may be argued in response to this allegation that if MPs were to adhere religiously to the Rules, Parliamentary debate would be held up by overly frequent declarations of interest. Such an objection misses the point made about the principles at the beginning of this complaint. It is the correct perception of the common person that MPs should be there to represent the interests of their constituents, not to grow their business empires. If MPs find these rules too onerous, they can choose either to drop their business interests or choose not to stand for Parliament. In the view of the common people, strict application of the Rules of Conduct can only serve to improve the way we are governed.

It is not suggested here that Mr Jacob Rees-Mogg is the only, nor even an egregious example of this kind of conduct by MPs, but his case is taken as a clear and concrete example for the Parliamentary Commissioner for Standards  to comment and act upon.

I look forward to your favourable response to this case.

Yours sincerely

Dr Richard Lawson MB BS, MRCPsych

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[1]             Register of Members interests https://www.parliament.uk/mps-lords-and-offices/standards-and-financial-interests/parliamentary-commissioner-for-standards/registers-of-interests/register-of-members-financial-interests/ Open the 2017 link, and search “Mr Jacob Rees-Mogg”

[2]    https://www.ft.com/content/d9f42362-aea0-11e7-beba-5521c713abf4

[3]             https://www.thelondoneconomic.com/news/jacob-rees-mogg-line-huge-personal-windfall-britain-exits-single-market/07/02/

[4]             https://publications.parliament.uk/pa/cm201516/cmcode/1076/107602.htm

[5]             https://hansard.parliament.uk/Commons/2017-01-26/debates/082F22CA-E500-4EF4-B780-20CFFB345477/SingleMarketAccess?highlight=%22single%20market%22#contribution-ADD1F17F-B3DB-46FC-ACC7-8A1C501EAC41

[6]           https://hansard.parliament.uk/Commons/2016-11-23/debates/4F39F2C9-583D-407B-A529-3956F6A927F1/AutumnStatement?highlight=%22single%20market%22#contribution-574FC8F1-BF65-4974-9661-9912B51020C5

[7]             https://hansard.parliament.uk/Commons/2017-11-22/debates/8945A0FD-E24C-4584-B180-0E309B69E555/BudgetResolutions?highlight=%22customs%20union%22#contribution-E423424E-4069-40A8-B3A8-049251EF216D

____________________________________________________________________________

Kathryn Stone replied "In Confidence", so I cannot put up her replies, but I wrote four more times. 
Here is the last letter that I sent:

____________________________________________________________________________ 

08/06/18

Kathryn Stone OBE

Parliamentary Commissioner for Standards

House of Commons

London SW1A 0AA

Your reference PCS 875(4) 2017-18

Thank you for your letter of 4^th June.

I understand that you are asking me to provide evidence relating to something that will happen in the future. I have pointed out that it is impossible to provide conclusive evidence about a matter that lies in the future.

Allow me to set out the evidence in a numbered sequence:

1.      Jacob Rees-Mogg MP (JRM) is a major shareholder in Somerset Capital Management  (SCM)

2.      SCM operates in emerging markets

3.      Emerging markets will become an active focus for British businesses in the event of a hard Brexit

4.      SCM is a well-run company

5.      SCM will therefore benefit financially from a hard Brexit

6.      JRM will therefore benefit financially from a hard Brexit (see 1).

7.      JRM should therefore declare his interest when he speaks in favour of a hard Brexit.

To a reasonable observer, the logic of these seven steps is unassailable. The only weakness that I can see is in (4). If I provided evidence on this point, would this be enough for you to open an inquiry?

Let me ask this question: If, after a hard Brexit, it is clear that SCM (and therefore JRM) has prospered from increased  activity in emerging markets, will this constitute evidence that JRM should have declared his interest? In this case, what sanctions would you apply to JRM?

I apologise for what you may perceive as importunity. Please accept that I genuinely do not understand what evidence you need for an event that lies in the future. I have been a District Councillor, and thought that I understood declaration of interest, but it seems to operate differently in Parliament. Your answers to the three questions I have put in this letter will I hope assist in my understanding.

________________________________________________________

She  dug in, and it was clear that she did not want to investigate JRM, insisting that I had to prove something that lay in the future. However, a year later, now is the future, and I will write to her presenting the Dispatches finding, that he has benefited to the tune of £7,000,000 from a significant improvement in SCM's profits since the Brexit madness began.

It might help if everyone who reads this post and finds Rees-Moggs' failure to declare his financial interest in Brexit unacceptable should write to Ms Stone and ask her to do her duty.