I am writing in response to your letter of 9 December 1997 concerning whether or not the Orion Trust should have been registered under the code of the Registration of Members' Interests in my name.

  Before coming to the specific questions you raise concerning The Orion Trust, I would like to deal with the central issue, namely whether a discretionary beneficiary of a discretionary trust should disclose his interest therein.

  In these matters, I have acted on professional advice of Wilder Coe who advised that no specific disclosure in respect of The Orion Trust was required. This view has been supported by Counsel, The Hon Michael Beloff QC, whom I have recently instructed, in view of the recent publicity concerning this matter. I attach a copy of Counsel's Opinion, for your information.

  The key factors determining my advisors' view that no further disclosure was required, were as follows:

1.  As a discretionary beneficiary I have no interest only a "spes" (or hope). There can be no certainty of me ever receiving any benefit from the trust.

2.  I had no right to have information of the trust's assets or to see trust accounts because the Trust Deed intentionally excluded Section 22 of the Trusts (Guernsey) Law 1989, from applying.

3.  I have never requested such information from the trustees (other than in relation to the TransTec shares, which I will deal with further below), and the trustees have never volunteered this information to me.

4.  In addition to the Trust Deed disapplying Section 22 of the Trusts (Guernsey) Law 1989, it also excludes Section 25, which is the duty of trustees to act impartially between beneficiaries. This underlines the lack of any certainty of my ever receiving any benefit from the trust.

5.  With effect from the beginning of May 1997, when I was appointed Minister, the trustees made a decision, at my request, to exclude me from being a discretionary beneficiary of the trust for my term of office as a Minister. (This was discussed with them in January of this year, in view of the likelihood of a Labour Government being formed following the general Election, and the possibility that I would be asked to become a Minister.) You may wish to confirm this point with them in person.

6.  The trustees act independently of myself and are not controlled or influenced by me. The trust deed was, I have been informed, specifically drafted to ensure that this is the case, by insisting that all investment decisions must be made by independent investment managers whom, I understand to be a reputable international bank.

  With regard to the TransTec shares, prior to May 1997 when I was still chairman of that company, I, and my accountants (Wilder Coe), asked the trustees to keep us informed of any dealings in the TransTec shares so that appropriate disclosure could be made for Companies Act purposes in the Directors' Report of TransTec plc. The trustees agreed to give us this information and this is in fact how considerable information has come into the public domain (via the disclosure in the TransTec accounts). As I ceased to be a company director, following the General Election, the trustees will no longer provide us with this information.

  Clearly, I knew that the trustees acquired TransTec and Coventry City Football Club shares. However, I had no control of the trustees' decisions in this matter, nor indeed - post May 1997 - of any subsequent dealings following the acquisition of these shares. Moreover, I would not be entitled to any such information.

  As you know, I have arranged an appointment with you on Thursday 18 December at 4 pm and it would be my intention, to ask my professional advisors, including Michael Beloff QC, to attend that meeting, so that you can have the benefit of their views directly on this matter. If you feel that the Members Code should be changed so as to embrace Discretionary Trusts in consequence of your enquiries I would naturally comply with any revised code.

  Turning now to the specific questions raised in your letter of 9 December:

1.  The trust was created subsequent to Madame Bourgeois' death which was on 9 October 1994.

2.  The discretionary beneficiaries were initially myself, my wife, and my children, as well as my widowed sister and her children (apart from such charities as nominated by the trustees, from time to time.) As indicated above as from May 1997, I was excluded as a beneficiary for the term of my Ministerial office.

3.  Neither my wife nor I have any influence or control over the decisions or actions of the trustees. Again as indicated above, the trustees do (as they must) act entirely independently from me and with regard to investment decisions must follow the advice of an independent investment advisor.

4.  I have received distributions from the trust prior to my Ministerial appointment, but neither I nor my family have received distributions thereafter.

5.  The trustees do not inform beneficiaries of the income or assets of the trust. Please also see my earlier comments above.

6.  The trust fund can be wound up, by the trustees distributing all the assets of the trust. It is entirely at their discretion as to which beneficiaries would receive the assets and in what proportions.

7.  I have never transferred assets into the trust.

8.  The answer to this question is as follows: I did not have the financial ability to take up my (£10m) rights issue entitlement, and was advised that it was very important to the success of the issue that it should be taken up. After my suggestion to them, The Orion Trust decided it would be prepared to purchase the shares following the rights issue (and to provide bridging finance for this purchase). It seemed to me sensible that Stenbell should subscribe for the shares to enable the envisaged profit on the transaction to be made by that company to enable it to help fund the New Statesman. Stenbell had been previously formed as a service company to the New Statesman.

    In the event, the envisaged profit did not materialise in Stenbell, and, after selling the shares to Orion at market price, it was left with a loss. My own profit on the sale of the rights nil paid to Stenbell, is being taxed in the normal way.

9.  The 2.95 million TransTec shares were transferred by way of a Deed of Addition to Orion by the non resident settlors.

10.  The only shareholdings of which I am aware in the above category, are the TransTec and Coventry City shares.

17 December 1997

1.  GENERALLY

1.1  I am asked to advise Geoffrey Robinson MP ("the client") as to whether he has been in breach of an obligation to disclose in the MP's Register of Interests any interest (if any) that he had in The Orion Trust ("OT") (which I shall use as a convenient shorthand for the Robinson Family No. 1 Trust and the Robinson Family No. 2 Trust) a trust governed by the law of the Island of Guernsey (Clause 22). I shall do so on the basis that the obligations under the Code of Conduct together with the Guide to the Rules relating to the Conduct of Members ("the Guide") fall to be construed as if it were a legal instrument. I note, however, that it is for the House of Commons ("the House") to interpret and police the Guide (The Guide: para. 6. Erskine May: Parliamentary Practice 21st ed., pp. 384-390).

1.2  In my clear view, based on the answers supplied by the client in a letter dated 17th December 1997 to the Parliamentary Commissioner for Standards in response to questions posed in his letter of 9th December 1997, the client had no obligation to register under Category 9: or under Category 10.

2.  THE GUIDE

2.1  The Guide provides, so far as material, as follows:

    "CATEGORY 9

    [Shareholdings: Interests in shareholdings held by the Member, either personally, or with or on behalf of the Member's spouse or dependent children, in any public or private company or other body which are:

    (a) greater than 1 per cent of the issued share capital of the company or body; or

    (b) less than 1 per cent of the issued share capital but more than £25,000 in nominal value;

    The nature of the company's business in each case should be registered.]

    31.  When determining whether or not shareholdings are registrable under the criteria set out above, Members should include not only holdings in which they themselves have a beneficial interest but also those in which the interest is held by, or on behalf of, their spouse or dependent children. For each registrable shareholding, the entry should state the name of the company or body, briefly indicate the nature of its business, and make clear which of the criteria for registration is applicable.

    32.  In considering whether to register any shareholdings falling outside (a) and (b) Members should have regard to the definition of the main purpose of the Register: "to provide information of any pecuniary interest or other material benefit which a Member receives which might reasonably be thought by others to influence his or her actions, speeches or votes in Parliament, or actions taken in his or her capacity as a Member of Parliament". If a Member considers that any shareholding which he or she holds falls within this definition, the Member should register the shareholding either in this Category or under Category 10.

    CATEGORY 10

    [Miscellaneous: Any relevant interest, not falling within one of the above categories, which nevertheless falls within the definition of the main purpose of the Register which is "to provide information of any pecuniary interest or other material benefit which a Member receives which might reasonably be thought by others to influence his or her actions, speeches, or votes in Parliament, or actions taken in his or her capacity as a Member of Parliament," or which the Member considers might be thought by others to influence his or her actions in a similar manner, even though the Member receives no financial benefit.]

    33.  The main purpose of this Category is to enable Members to enter in the Register any interests which they consider to be relevant to the Register's purpose, but which do not obviously fall within any of the other categories. As the Select Committee on Members' Interests pointed out in its First Report of Session 1991-92: "it is a cardinal principle that Members are responsible for making a full disclosure of their own interests in the Register; and if they have relevant interests which do not fall clearly into one or other of the specified Categories, they will nonetheless be expected to register them". Op. cit. paragraph 29.

    34.  The general principle of the Register is that the requirement to register is limited to interests entailing remuneration or other material benefit. Ibid paragraph 31."

  (my underlining)

3.  CATEGORY 9

3.1  In my view, the client had no obligation to register any interest which he (or his wife or dependent children) had under the OT. "It is the essence of a discretionary trust that the beneficiary has no right in the trust fund or any part thereof." (Snell: Equity: 27th ed., pp. 135-6) see to like effect Pettit: Equity and the Law of Trusts 8th ed., p.71 ("Perhaps the true view is that the beneficial interest is in suspense until the trustees exercise their discretion"): Hanbury and Martin: Modern Equity 15th ed., p.60 Matthews and Sowden: The Jersey Law of Trusts 2nd para. 3.14. The beneficiary has, in essence, a spes or hope that the discretion will be exercised in his favour: Munrow's Settlement Trust 1963 1 WLR 145 at p.149 per Wilberforce J.

3.2  I am advised by Guernsey lawyers that (as one would expect) the basic nature of a Guernsey discretionary trust is no different to that of an English or Jersey Trust (see Ashton: An Analysis of the Guernsey Law of Trust: passim). A hope is not an interest: no registration of it can be required under Category 9. [I note that the Parliamentary Commissioner at para.9 of his introduction to the 31st October 1997 register refers in the context of Category 9 to "beneficial interests"] [sic]: see also the Guide, para. 31].

3.3  If, in fact, contrary to their legal obligations as fiduciaries, the Trustees were to abdicate their powers or discretion to the beneficiaries, so that e.g. the client controlled the exercise of their powers of investment, management, or disposition etc under Clauses 10 and 11A of the OT, matters might stand on a different footing.

3.4  However, there is no evidence before me to that effect. There is no reason why a beneficiary (even of a discretionary trust) should not make suggestions to Trustees as to acquisition or investments that they may wish to consider: as long as the Trustees themselves consider (making use of the services of their investment manager whom, I note is a reputable international bank) to the merits of such acquisition or investment (see e.g. Finn: Fiduciary Obligations p.23-25).

3.5  The proposal emanating from the client to the Trustees that OT might acquire (i) the rights issue in Transtec seem to me to be entirely proper: and provides no evidence that the OT was other than a truly discretionary trust, or that, in performance of their functions as trustees, the Trustees were acting other than as independent trustees. The same would apply to any such proposal in respect of the Coventry shares.

3.6  In any event, from the prospective of registration the important feature is that once the OT had acquired the Transtec/Coventry shares referred to in 3.5 above, neither the client nor his family had any interest in them unless and until the trustees exercised discretion in their favour (see para. 3.1 and 3.2 above).

4.  ANALYSIS: CATEGORY 10

4.1  Category 10 is a residual category of imperfect definition. [If I correctly construe the Parliamentary Commissioner's letter, he is in any event concentrating on Category 9]

4.2  Category 10 has two limbs divided by the word "or". The key word which governs both is "interest" (see also paragraph 33 and 34 which again specifically refers to "interests").

4.3  For reasons set out in para.3 above neither the client nor his family has any interest in the trust fund, or any part thereof, (including the Transtec and Coventry shares): nor (I add for completeness) any shareholding as described in paragraph 32.

4.4  Reflecting the main purpose of the Register, such interest has further to constitute a "material benefit" (including, but not excluding) a "pecuniary interest". (Even in the second limb, the benefit has to be material, if not financial, see again in confirmation the first sentence of paragraph 34.)

4.5  For the self-same reasons set out in para. 3 neither the client nor his family has any material benefit or pecuniary interest arising out of the assets of the Orion Trust (including any shares).

4.6  Both limbs of Category 10 also require that the reasonable person would perceive the interests or benefits to have potential for influence in the Members actions in his capacity as a Member of Parliament or as speaker or voter in Parliament ("MP's actions"). The second limb (which requires the Member to consider what might be thought by others) implicitly require consideration of the reasonable person as well: it would be absurd if the Member had to consider the reactions of an irrational person under the second limb, while the first limb focuses (objectively) on the reactions of a rational person!

4.7  This test laid down by Category 10 instructively reflects the modern common law test for apparent (as distinct from actual) bias by a decision maker Reg. v. Gough 1993 AC at p. 670D-E) ("the Court in cases such as these personifies the reasonable man").

4.8  Assuming, for the sake of argument only, that Category 10 did not require either an interest or an interest which was a material benefit, but only that the Member should register a relationship which could give rise to the reasonable possibility of influence in MP's actions etc. I find it hard to discern the source of the possibility on the facts of this case.

4.9  While the general law may require that even the beneficiary of a discretionary trust is entitled to information about the trust assets and state of the account (Chaine Nickson -v- Bank of Ireland Ltd Irish Reports 1976 at p. 395) and Guernsey law expressly provides for it (The Trust (Guernsey) Law 1989), in the case of the OT (consistent with Guernsey practice: Ashton op.cit. at p.54), the Trustees are expressly relieved of any such obligation (Clause 22). While as a Director of Transtec, the client continued to receive such information about the Transtec shares in his capacity as Director, since 2nd May 1997 he has ceased to be entitled to receive it in that capacity and has never had right to receive it as a beneficiary. (Indeed, I note he has expressly said that he does not even wish to see information about any OT assets.)

4.10  In those circumstances the most that can be said is that the client would know that at one time the OT had, as assets, inter alia, the Transtec shares, and the Coventry shares. Neither he nor his family could prevent the Trustees disposing of the same, if they saw fit: neither he nor his family would have the right to know if they had done so: neither he nor his family would have the right to the fruits of any such sale (or, for that matter, of their retention), unless and until the Trustees so determined; neither he nor any member for his family could complain if he or she was by-passed by the Trustees in the exercise of their discretion.

4.11  I doubt that in those circumstances it could sensibly be said that the obligation under Category 10 could be engaged (even if, contrary to my view) no form of interest or material benefit was required.

4.12  No reasonable person could consider that the clients actions would be influenced by that degree of knowledge identified in the first sentence of 4.10 above.

5.  CLIENTS REGISTRATION

5.1  The OT was established in January 1996

5.2  At 31st March 1996 the client declared Registrable shareholdings in Transtec and Coventry (19(a)).

POSTSCRIPT

6.  For the avoidance of doubt my advice is solely and exclusively devoted to the compatibility of the clients registration with the Guide: and to no other issue.

17 December 1997