Wednesday, March 01, 2006

If nothing's right, what's wrong?

David Mills is a liar. At least, he is if he's telling the truth.

David Mills, under police interrogation, July 2004:
Silvio Berlusconi had decided to give me a sum of money in recognition of the way I had managed to protect him in the course of the judicial investigation
Mills volunteered this explanation when asked to explain the following letter, which he'd sent to his accountant in February 2004 (emphases added):
The brief relevant facts are these.

In 1996 I ended up with a dividend from Mr B's companies of around £1.5m after all the tax and fees had been paid. This was all done on a personal basis: I took the risk, and kept my partners right out of it. Wisely or otherwise, I informed my partners what I had done and, since it was a substantial windfall, offered to pay them (I think) around £50,000 or £100,000 each as what I though was a pretty generous gesture. Which shows you how you can be, as they insisted the transaction should be treated as a partnership profit. To avoid litigation (we had just merged with Withers) I agreed to put the money on deposit in my bank until they were satisfied that there would be no third part claim. By 2000 it was clear there would be no claim (I knew that all along) and the money was taken off deposit and paid out; I kept just under £500,000 out of what was then getting on for £2m.

So all that risk and cost for not very much. The greatest cost was leaving Withers. I was not asked to leave it, but felt so uncomfortable there, not least because my Mackenzie Mills partners had taken most of the benefit for none of the risk, that I really couldn't stay. I spent 1998, 1999 and 2000 as a sole practitioner, and it was evident that the trials were going on, there would be lawyers to pay and there was always the risk of being charged with something - which is actually about to happen now as a result of the latest investigation, which you know about.

I kept in close touch with the B people, and they knew my circumstances. They knew, in particular, how my partners had taken most of the dividend; they also knew quite how much the way in which I had been able to give my evidence (I told no lies, but I turned some very tricky corners, to put it mildly) had kept Mr B out of a great deal of trouble that I would have landed him in if I had said all I knew.

At around the end of 1999, I was told I would receive money, which I could treat as a long term loan or a gift. $600,000 was put in a hedge fund and I was told it would be there if I needed it. (It was put in the fund because the person connected to the B organisations was someone I had discussed this fund with on many occasions, and it was a round about way of making the money available.) For obvious reasons of their own (I was at that stage still a prosecution witness, but my evidence had been given) it needed to be done discreetly. And this was a roundabout way.

At the end of 2000 I wanted to invest in another fund, and my bank made a loan of the amount, secured on my house etc., of around 650,000 euros. I paid it off by liquidating the $600,000. I attach a copy of the dollar account. I regarded the payment as a gift. What else could it be? I wasn't employed, I wasn't acting for them, I wasn't doing anything for them, I had already given my evidence, but there was certainly the risk of future legal costs (as there have been) and a great deal of anxiety (as there certainly have been).
So Mills told his accountant that 'the B organisation' had put a large sum of money his way; when the Italian authorities asked him to clarify this, he explained that Silvio Berlusconi had given him a bung in recognition of service rendered. This all seems eminently consistent with the facts of the case, not least Mills' long association with the 'B organisation' in question. But Mills now says that the February 2004 letter set out a hypothetical scenario (which he presumably intended his accountant to take as factual) and that the July 2004 statement was extracted under pressure. (His Italian lawyer, wary of annoying the investigating magistrates unnecessarily, now denies that Mills actually said this. But denial is very much the order of the day in this case. Diego Attanasio, who Mills now claims gave him the money in question, denies it; Berlusconi himself has denied ever meeting Mills and spoken darkly of someone "tak[ing] advantage of my name to protect himself from the tax authorities in his own country".)

In any case, the best-case scenario for Mills and Jowell - the scenario that Mills is actually proposing - is that Mills lied to his own accountant, then lied to Italian magistrates who were investigating a serious financial crime. This is extraordinary. You've got to wonder, if the Berlusconi story was a lie, what on earth was Mills hiding?

The case has a couple of other interesting angles. One was pointed out yesterday by the estimable Craig Murray:
Tessa Jowell tells us she did nothing wrong. She merely signed documents to remortgage her home. She strongly asserted today that this was “a very normal thing to do, and certainly not illegal.”

It is indeed not unusual to remortgage, though it was unusual that she remortgaged with an offshore bank. It is also unusual to remortgage for as much as £400,000. But it is very unusual indeed to remortgage for £400,000, then pay off the full loan, within a month, with spare cash.

What sort of people do such a thing? Well, money launderers. If you have £400,000 of cash not easily explained, you now have remortgage papers available to show where you got it.
Mills, as we've seen, has another explanation for this money-shuffling operation - he needed some money in a hurry (I wanted to invest in another fund, presumably one which wouldn't accept new investors for much longer) and the loan provided it. This makes a certain amount of sense, although it's not clear why he couldn't have drawn on the hedge fund directly ($600,000 was put in a hedge fund and I was told it would be there if I needed it). But you do wonder how often this kind of contingency could be expected to arise. If you're David Mills, apparently, quite often. Tessa Jowell and David Mills bought their house in 1979. There was no mortgage at this stage - they bought the house outright, then borrowed money on it. Repeatedly. They took out a mortgage in 1987 and paid it off in 1996. In 2000 they took out the mortgage which is now under scrutiny, which they paid off (to the tune of £400,000) two months later. In 2002 they took out yet another mortgage, which is still outstanding. Mills has also raised a series of mortgages (in 1986, 2000 and 2002) on the couple's second home, which he bought outright in 1984. This is speculation at best - hocking your property, investing the loan and hoping to come out ahead when it's time to pay it back. The 2000 mortgage doesn't even have this justification; it's hard to see any rationale for it other than moving money from account A to account B. If Tessa Jowell thinks this is a very normal thing to do, her standards of normality aren't those I'd expect of a Labour MP.

Then there's the Ministerial Code of Conduct. As Craig notes, the question of whether Jowell's conduct complies with the Code isn't all that complex:
the Code precludes acceptance of gifts. That is what Mills claims this money was. As this "Gift" (note the use of a capital 'G') went to pay off a mortgage which was 50% in Jowell's name and which she had signed, she also accepted it.
To be precise, the Code (which you can download from here, if you really want to) says:
It is a well established and recognised rule that no Minister or public servant should accept gifts, hospitality or services from anyone which would, or might appear to, place him or her under an obligation. The same principle applies if gifts etc are offered to a member of their family.
The operative words here are would, or might appear to.

But there's yet another wrinkle, which Brian has pointed out. Gus O'Donnell, who is currently investigating the case against Jowell, has no authority to do so under the Ministerial Code:
The Code is not a rulebook, and it is not the role of the Secretary of the Cabinet or other officials to enforce it or to investigate Ministers.
As it stands, the Code is there primarily to be complied with voluntarily. If this fails, the only recourse is to the Prime Minister himself.
Ministers only remain in office for so long as they retain the confidence of the Prime Minister. He is the ultimate judge of the standards of behaviour expected of a Minister and the appropriate consequences of a breach of those standards.
The ethical buck stops not with O'Donnell but with Blair, in other words - Blair, whose personal relations with Berlusconi are good enough for them to have had a holiday together.

If Mills' past relations with Berlusconi kicked this story off, it may be Blair's which finish it. We should be clear at this point just how political the underlying story is - or rather, how political it isn't. It's true, but not entirely relevant, that there's an election coming up in Italy; the investigations into Berlusconi's business practices have been going on since before Berlusconi returned to power in 2001. It's true that the independence of Italian investigating magistrates allows them - or rather, obliges them - to investigate any possible criminal offence which comes to their notice: it is this feature of the Italian judicial system which led to Tangentopoli, the landslide of corruption cases which swept away Italy's old political class. And it's true that, while magistrates are barred from any party affiliation, in practice many are committed opponents of Berlusconi and believe that bringing him down will be a service to the country. What's not true - and in many cases grossly defamatory - is that the investigations are a political operation, a strategy to advance Communist interests by judicial means. (Grotesquely, Berlusconi has even characterised Tangentopoli in these terms.) Italian politics is even more complicated than it looks (and this post is long enough already), but I will say that, while Berlusconi is certainly on the Right, the split between those who want justice done at whatever cost and those who want to let sleeping dogs lie is not in any sense a Left/Right split. Dave (in the excellent post which gave me most of these links) has it about right:
"Italy’s independent magistrates have targeted Mr. Berlusconi for many years, in what he regards as a politically motivated vendetta." My emphases. That’s good writing.
This has the potential to be a highly explosive story, with implications for Blair's position as well as Jowell's - which almost certainly means that all concerned will handle it like an unexploded bomb, and nothing at all will happen. There was a straw in the wind two Decembers ago:
prosecutors made a tentative request to extradite Mr Mills in December 2004. But the Home Office responded by going to the Ministry of Justice in Rome - via the Italian embassy in London - rather than dealing with the prosecuting authorities. It is claimed that that meant they involved the government of Mr Berlusconi, which had a direct interest in the case.

The Home Office denied any wrongdoing. In a statement it said: "In late 2004, the Serious Fraud Office received a request from the Milan Prosecutor for legal advice about the circumstances in which David Mills could be extradited under UK law, based upon possible charges against him. The request was passed to the Crown Prosecution Service, who took legal advice which was passed by the Home Office to the Italian Embassy in May 2005, since extradition requests are normally handled on diplomatic channels. During this process, which was handled at Home Office official level in the routine way, there was no contact between the Home Office and Department of Culture Media and Sport (DCMS) at any level, or indeed with David Mills."
Whether Jowell was told is hardly the point. The SFO by this stage knew the name of David Mackenzie Mills well; specifically, they knew he had for several years been in deep with a dubious Italian businessman called Silvio Berlusconi. And yet the Home Office, fielding a question about Mills sent to the SFO from the independent Milan Prosecutor, sent the answer to the Italian government. If this wasn't a deliberate tip-off it was quite staggeringly incompetent.

But perhaps incompetence was all that it was. And perhaps David Mills is telling the truth when he says he's a liar. We may know soon.
earlier this month the Home Office authorised the obtaining of two warrants by the police to search David Mills' property on behalf of the Milan Prosecutor, in accordance with UK law and the UK's international obligations. Neither David Mills nor Tessa Jowell nor DCMS were informed of this before the warrants were executed. Once the warrants had been executed, senior Home Office officials informed the DCMS of the factual position in relation to the warrant.
Tobias Jones:
Mr Berlusconi's lawyer, Mr Ghedini, was asked this week whether he thought that Mr Mills was foolish or dishonest. "Neither one nor the other," he replied. "I would simply define him as a person who was very frightened."

4 Comments:

Blogger Earl Jackson said...

A long article, but fair. By way of contrast, have you had chance to read any of Earl Jackson's very brief pieces? His blog is called 'Sand in the Vaseline' and you might see it at: sandvaseline.blogspot.com

3/3/06 10:08  
Blogger Neil Williams said...

Excellent article with a lots of info - funny how the blogs are digging into this story much more than the national newspapers.

I have placed a link to your article on the Rspect Blog at:
http://respectuk.blogspot.com/

Neil Williams

3/3/06 13:18  
Anonymous Brian said...

I'm afraid almost all of this is irrelevant to the question whether Tessa Jowell, as a cabinet minister and MP, has behaved improperly in either capacity. Despite the feverish diggings in the cess-pits and sievings of the gutters, no-one has so far come up with a solitary nugget of mud to stick on her. It could well turn out that Mills has crossed the fuzzy borderline between propriety and impropriety, but no-one has so far succeeded in pinning anything on him or even formally accused him of anything. If and when someone does, it will remain entirely irrelevant to Ms Jowell's position unless she can be shown not just to have known about the impropriety but actually to have been involved in it. To say that a gift to Mills was also in some weird extra-planetary sense a gift to Jowell just because it was used to pay off a mortgage on a house which she happened to co-own is, frankly, stretching the meaning of words beyond breaking-point. The particular mortgage involved was one of (I think) eleven which Mills had taken out and repaid over a period of several years on the two houses, and not in any way comparable with the kind of once-in-a-lifetime burdensome debt that the rest of us associate with a mortgage which we take out to enable us to buy a house (pace the good Craig). No-one has suggested that the mortgage was improper or that Ms Jowell had an obligation to mount a forensic investigation of Mills's reasons for needing it before she signed. Tessa Jowell has enough to keep her occupied for around 23 hours a day as a cabinet minister without wanting, or even needing, to spend her remaining hours trying to follow the minutiae of her husband's byzantine financial dealings, themselves probably little different from those of any other financial consultant, lawyer or fund manager.

One other point. Just supposing that Ms Jowell had discovered, by asking questions or by chance, that Mills's activities had involved some impropriety. What do the witchhunters suggest she should have done about it? Shop her own husband of 27 years to her permanent secretary, or the parliamentary commissioner, or the register of MPs' interests? To whom did she owe her primary loyalty? How would you feel if your own wife or husband took action against you that could land you in prison? But the question is academic, for we have not a jot of evidence of Mills's impropriety (not yet, anyway): and even less evidence that his wife knew about it even if there was any.

I suppose that trying to unravel the tangled knitting of the Mills finances is a tolerably harmless hobby for those who have time for such things; but please don't let's pretend that it's of the slightest importance or indeed interest to anyone except Mills and his clients.

I find this widespread vindictive animus against Tessa Jowell hard to explain except as a way of trying to get at Blair and perhaps Berlusconi, those hate-figure bugbears of the sententious left. Doesn't the effort to discredit them by using Tessa Jowell as surrogate fox strike anyone else as even slightly distasteful?

I stand by the views I expressed last night in my blog. The Culture Secretary is a victim of a certain kind of malicious envy on the part of an old-fashioned form of distorted leftism which can't accept that anyone else on the left should have a different kind of life-style from one's own. She is entitled to the presumption of innocence until some kind of guilt (not guilt by association or matrimony) has been proven against her. So, come to that, is Mills, although his guilt or innocence, and the fine detail of his financial dealings, are of no more than passing interest, and a fixation with them verges on the prurient. End of story.

Brian
http://www.barder.com/ephems/

7/3/06 17:00  
Blogger Republic of Palau said...

Brian - bollocks. Envy? No, disgust - disgust that a party that likes to portray itself as the saviour of the poor should be so mired in corruption.
Technically, nothing may stick to her, but she's been lying with a dog, no wonder she's suspected of having fleas.

The ministerial code also states that ministers should avoid even the mere appearance of impropriety, and this appears as about improper as could be.

All New Labour's sophistry and spin cannot change that fact, no matter how many loyal apparatchiks they send out to troll the blogs.

(Prurience is to do with sexual matters, btw. Those have yet to raise their head in this case, but give it time.)

14/3/06 17:51  

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