PRESS REPORTS on police investigations into “loans for lordships” have focused on two possible offences that could be charged: the acquisition of peerages or the obtaining of government contracts. In crude terms, where a person buys a peerage, or bribes someone to obtain a commercial advantage such as a government contract, the parties on both sides of such illicit bargains commit criminal offences.

But there may be technical difficulties prosecuting under the Honours (Prevention of Abuses) Act 1925 because it is limited to acts involving “any gift, money or valuable consideration”. No doubt it will be argued that commercial loans fall outside the statute as they are neither gifts nor money, and the consideration is the reciprocal agreement to pay interest and repay the capital.

There is a third way, however, which has escaped notice: the offence of conspiracy to defraud. This usually involves an agreement between two or more people dishonestly to prejudice the economic rights of another. But the offence is not limited to such cases. It can cover a criminal agreement to deceive a public body or a person holding public office. For example, dishonest agreements to make a false application to obtain admission as a barrister or to obtain work permits or export licences or passports are all conspiracies to defraud.

Nor is it necessary to prove deceit; a fraud can be perpetrated by secrecy and without deception. The Law Commission in its Report on Conspiracy to Defraud (1994) acknowledged the scope of the offence as embracing both “obtaining by giving a false general impression” and “corruption not involving consideration”. More interestingly, the offence can comprise an agreement to do something that would not be a crime if committed by a single individual.

Bringing together those principles, it seems that conspiracy to defraud includes a dishonest agreement by two or more people deliberately to deprive those who have a public duty to process applications of the information they need to do their job. A conspiracy investigation would not focus exclusively on the lender or borrower, but on whether there was a dishonest agreement to mislead the House of Lords Appointments Commission, and, if so, who was party to such agreement. The further advantage of going down this route is that it focuses on what many regard as an equally serious crime: the dishonest suppression of information from appropriate scrutiny.

A prosecutor would have to establish that:

(a) the Appointments Commission was a public body carrying out public duties;

(b) material information was not supplied to the Commission;

(c) the omission flowed from an agreement by two or more people not to supply the information, knowing or believing that the commission would or might regard it as relevant, and that the parties acted dishonestly.

Dishonesty is very much a jury issue. It is for them to decide whether what was done was dishonest judged by the ordinary standards of reasonable and honest people. If so they must decide whether the defendants realised that what they were doing was dishonest judged by those standards. It is dishonest for a person to act in a way that he knows ordinary people would consider to be dishonest, even if he genuinely believes that he is morally justified in acting as he did.

By the terms of its own code, the commission is a non-departmental public body “charged with vetting recommendations for life peerages to ensure nominees have upheld the highest standards of propriety”. Although a significant donation to a political party is no bar to appointment, the commission must satisfy itself that any donor is “a credible nominee irrespective of any party political payment”. So the party leader is required to provide the commission with a citation giving the reason for the nomination, and the party chairman must certify either that no significant donation had been made or give an assurance that any donation was not related to the proposed nomination. Therefore, the commission has publicly declared an interest in evaluating any significant financial relationship that a nominee might have with a party. The fact that this issue involves not donations but loans surely makes it more important that the commission be informed. Donations, once made, are monies spent, but loans can sustain an ongoing relationship of dependence between lender and borrower, peerage nominee and political party.

David Ormerod is Professor of Criminal Law at Leeds University and the current author of Smith and Hogan Criminal Law (2005). Tony Shaw, QC, is one of the practitioner editors of Archbold Criminal Pleadings and Practice (2006).

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