The findings

No evidence of improper dealings

In the muddle, statements were made on the basis of evidence which turned out to be incomplete

Special report: Mandelson

guardian.co.uk, Saturday 10 March 2001 18.11 GMT

Edited extracts from the Hammond report

The reputations of individuals depend, to some extent, on the conclusions which I have been called upon to reach, although not to the extent of involving questions of criminal conduct, as did the Profumo affair.

I have ... had regard to the fact that, in the case of events which occurred in 1998, ie more than two and a half years ago, recollections are hazy and it would not be surprising if accounts of different individuals are not wholly consistent with each other.

I have not interviewed any of the Hinduja brothers. Their position is well known from their public statements.

There are four brothers named Hinduja; these include Gopichand (known as GP), Srichand (SP) and Prakash (PP). They are international businessmen with extensive interests in India and in other countries including the United Kingdom.

My main conclusions are as follows:

The applications for naturalisation of GP Hinduja and SP Hinduja were handled properly. No improper pressure was brought to bear by any minister.

The inquiries made on behalf of Prakash Hinduja were handled properly by all concerned.

Keith Vaz made representations on behalf of both SP and GP, but these were in the context of many other immigration and nationality cases in which he made representations.

Mr Mandelson or his officials made or passed on inquiries on behalf of SP and Prakash. It is likely that Mr Mandelson spoke directly to [Mike] O'Brien [in relation to SP]. Mr Mandelson's belief that he had not had a telephone conversation with Mr O'Brien was honestly held.

Mr Mandelson did not make representations on behalf of either SP or Prakash.

There is no evidence of any improper relationship between him and the Hindujas or of any connection between his contacts between them over the sponsorship of the Millennium Dome and their efforts to obtain naturalisation.

There was intelligence material about the Hinduja brothers, but this was not drawn to the attention of the Home Office and it probably would not have affected the outcome of the naturalisation applications if it had been.

In some respects, the processing of the naturalisation applications by the Home Office could have been improved, but systems are now in place which address these issues.

Record keeping in the private offices involved ... was, in some respects, unsatisfactory, and there is a need to address this issue and that of the monitoring of telephone calls.

GP Hinduja

An initial application [for naturalisation as a British citizen] was received from GP Hinduja on February 21 1990. This was apparently sent to the then home secretary, Kenneth Baker, and forwarded to the nationality department.

He had entered the UK in 1982 and had obtained indefinite leave to remain here on July 18 1985.

The normal checks were made with the police and security service, which were negative. In view of the fact that investigations were being carried out in India into alleged corruption relating to the award of an army contract to the Swedish firm Bofors, inquiries were made of the Foreign Office (FCO) and the security service was contacted again. The security service response was again negative.

The FCO suggested that his application should be treated in the same way as any other application; as long as he remained under suspicion and investigation in India, it would cause considerable difficulty with the Indian government if his application was given special treatment.

In 1991 a submission was put forward ... recommending refusal of his application on the grounds, first, that he appeared not to meet the unwaivable requirements of being "in" the UK on the date on which the five-year application period began; and secondly, on the basis that, because of the Bofors allegations it would be difficult to satisfy the requirement of being of "good character".

There was also some doubt about whether he had genuinely "thrown in his lot" with the UK.

Mr Hinduja was told only that his application was refused on the grounds of his failure to comply with the residence requirements.

Between 1993 and 1996 inquiries ... were made on behalf of the Hindujas by a number of people including Edward Heath, Sir Jay Gohel, Keith Vaz, Dame Angela Rumbold [MP] and Lord Feldman.

On March 3 1997 a second application was received from GP. It seems that Andrew Walmsley [director of the Home Office nationality division] decided that in view of the high profile of the Hinduja brothers and of the political sensitivities, it would be better to wait until after the election before going to ministers about making a decision.

On July 3 1997, Mr Walmsley put forward a submission to Mr O'Brien recommending that the application be granted. If Mr Walmsley had checked again with the FCO before submitting this minute he would have discovered that there had been a major and (in India) well-publicised development in the Bofors investigation in January 1997 when the Indian authorities had received important information from the Swiss authorities which they had been seeking since 1990.

Naturalisation was granted to Mr Hinduja in November 1997. The application was, in my view, handled properly by officials and ministers.

SP Hinduja

SP Hinduja, the eldest brother, first applied for naturalisation on February 21 1990. In April 1991, SP was informed that his application had been refused. The letter only mentioned SP's excess absences and made no mention of any doubts about Mr Hinduja meeting the "good character" requirement. I am satisfied the case was dealt with properly.

Because of the events which led to the resignation of Mr Mandelson, much attention has been focused on the issue of whether a personal telephone conversation took place between Mr Mandelson and Mr O'Brien in June or July 1998. In view of this, I have decided that I must deal with this issue in some detail, although I have concluded that in itself the issue is relatively insignificant.

When I interviewed Mr O'Brien he told me he was certain he had had a personal telephone conversation with Mr Mandelson about a naturalisation matter concerning SP at the end of June or beginning of July. Mr Mandelson said firmly that he did not remember the call.

Mr O'Brien said that his assistant private secretary in 1998, Matthew Laxton, had sent an email about SP's interest in naturalisation to Mr Walmsley on July 2 1998. This email had clearly been written as a result of some form of contact from Mr Mandelson or his office.

Mr O'Brien told me that Mr Mandelson had explained that Mr Hinduja was a prominent man in the Asian business community who had applied for citizenship and been refused. Mr Mandelson had told Mr O'Brien that Mr Hinduja would not want to make a further application if there was little chance of success.

Mr O'Brien was clear that Mr Mandelson had not made any representations on behalf of SP but had tried to establish the government's policy in this area so he could relay the details back to SP. Mr Mandelson had specifically said that he was not asking Mr O'Brien to grant naturalisation.

Although Mr O'Brien had known Mr Mandelson for some time, he did not often get telephone calls from him. This was one of the reasons why he remembered the call.

Mr Mandelson told me that he did not remember how the issue had been raised with him by either SP or GP. He did not remember any correspondence on this subject at that time and said he thought that the issue might have been raised informally at a meeting he had had with the Hindujas about some other matters.

Mr Mandelson categorically denies that there was ever any link made by the Hindujas between the funding of the dome and the question of naturalisation.

According to Mr Mandelson, one or both of the Hindujas had asked about a relaxation of government policy in relation to citizenship and whether it would have any bearing on SP's wish to become a UK citizen. Mr Mandelson told the Hindujas that he did not know the answer but would find out.

The alleged telephone call resurfaced in 2000-2001 as the result of a written parliamentary question by Norman Baker MP which was due for answer on December 18 2000. [It asked what representations had been made on behalf of GP and SP's citizenship applications by Mr Mandelson and Mr Vaz]

Mr Mandelson told me that he had been keen to deal with the question and get it answered as soon as possible. The reason why Mr Mandelson queried why it was necessary to mention him at all in the answer was first, because the Norman Baker question had asked about representations and Mr Mandelson had not made any representations. He had not expressed support or endorsement. Second, at this stage of his limited involvement in this matter, no application had been made by SP Hinduja.

Mr Straw's recollection is that Mr Mandelson approached him in the lobby and initiated a conversation about the Norman Baker question. Mr Straw explained that he remembered this discussion because Mr Mandelson had said, more than once, that he did not see why he should be mentioned in the answer. Mr Straw told Mr Mandelson that Mr O'Brien had a clear recollection of having had a conversation with Mr Mandelson about SP Hinduja in 1998. Mr Straw recalled that Mr Mandelson's reaction was along the lines of "Did I?"

There is a difference of view between the Home Office and Northern Ireland Office about whether, in December 2000 or January 2001, Mr Mandelson had acknowledged a telephone call with Mr O'Brien and told his private office that this had been "private". If such a claim were true it would, of course, seriously undermine Mr Mandelson's contention that his dealings with Mr O'Brien's office were done entirely through his private office.

Mr Straw's assistant private secretary Jane Fowler said that during the course of a discussion with Mr Mandelson's private secretary Sarah Todd, Ms Todd said she had spoken to Mr Mandelson and he had acknowledged that his conversation with Mr O'Brien had been "private" and so he did not want this conversation mentioned in the reply to the parliamentary question.

Ms Todd told me that she did not remember using the words private or confidential.

Mr Mandelson told me that as, at that point, he had not acknowledged that a telephone conversation with Mr O'Brien had actually taken place, he was not likely to suggest that such a call would have been private. I am unable to come to a clear view as to whether the words "private or confidential" were ever used in this context.

The question from Norman Baker was answered on Thursday January 18 2001. The following Sunday, the Observer carried a story with the headline "Mandelson helped dome backer's passport bid". The Observer reported Mr Mandelson's statement: "To the limited extent I was involved in this matter I was always sensitive to the proprieties. The matter was dealt with by my private secretary. At no time did I support or endorse this application for citizenship."

This statement was to play a significant part in the rest of the week's events, particularly when later in the week, when Mr Mandelson thought that there was some documentary evidence to support the existence of the telephone call, he had acquiesced in the view that a call had taken place.

Despite the paucity of written records, the hazy and inconclusive recollections of many of those involved and the inconsistencies in the various accounts, although I cannot reach a view with any certainty, the best conclusion which I feel able to reach is that a personal telephone conversation involving Mr O'Brien and Mr Mandelson took place.

I have also concluded that there were a number of contacts between the then ministers' private offices and that it is likely that Mr Mandelson spoke personally to [Matthew] Laxton [O'Brien's then assistant private secretary].

All this was clearly a muddle. Events moved very quickly and definitive statements about what had happened in 1998 were made on the basis of evidence which turned out to be incomplete.

Hammond report
The Hammond Inquiry: full text
Summary of the main points

Related special report
New Labour in power