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Archive for the ‘Legal’ Category

After a lengthy investigation started in February 2012, the Office Of The Scottish Charity Regulator (OSCR) has issued a damning report on Rangers Charity Foundation.

Following many complaints about funds originally to be raised for charitable purposes being diverted to a now liquidated football club, OSCR carried out a lengthy examination of the circumstances. The regulator has finally ruled that there was obvious misconduct by the charity with decisions made by one Trustee alone, that the Foundation ignored rules set out in its own Trust Deed and that decisions taken by Trustees breached their legal duties due to a clear conflict of interests.

The complaints related to moneys raised in a fundraising match between former players of Rangers and AC Milan. It was originally envisaged that the Foundation, a Scottish Charity that distributes moneys to good causes, and the AC Milan Foundation would share the proceeds of the match. But, as the now defunct Ibrox club had then just gone into administration, funds were diverted to the football club instead. A total of £191,430 was effectively lost to good causes because it was “donated” to the football club instead. And no legal advice was taken before this decision was made.

It is important to note here that the Foundation is a legal body in its own right. It is not owned by, or a subsidiary of, either the old club or new club, or indeed any of the various bodies with the words Rangers or Sevco in their titles. The Foundation is a Scottish charity, and with that charitable status comes specific legal responsibilities.

The OSCR report does not name the three Trustees responsible for the management of the Foundation at the time, instead anonymising them as Trustees A, B and C. But we know that one of the Trustees was always the Chairman of the Board of the former football club. And we know that in February 2012 this was Craig Whyte. We also know that the other Trustees of the Foundation at the time Whyte took control of the club were the then CEO Martin Bain and Finance Officer Jacqueline Gourlay, who is now Head of Business Management with new club The Rangers (formerly Sevco Scotland Ltd).

Documentation relating to the Foundation indicates that Whyte was removed as a Trustee on 13 May 2012, while Bain resigned from his role on 4 April 2012. The Foundation’s web site indicates that Gourlay is still a Trustee. So we therefore know that at the time of the events referred to in the OSCR report, the Trustees were Craig Whyte, Martin Bain and Jacqueline Gourlay.

The Charities and Trustee Investment (Scotland) Act 2005 sets out the role and responsibility of charity Trustees – those who manage charities, usually through a Board of Directors, a Trust Board or a committee. Section 66 of the Act states that trustees have to put the interests of the charity first and to ensure that the charity acts at all times in a manner consistent with its charitable purpose.

But, in this case, all of the Trustees of the Foundation were either employees or directors of Rangers Football Club plc (now in liquidation). There was a clear conflict of interest here between the Trustees responsibilities to the charity and to the football club. And the OSCR report tells us which should have taken priority:

Should such a conflict arise, the law makes clear the charity trustee’s duty is to act in the interests of the charity. A charity trustee who is unable to put the interests of the charity before those of the person or organisation responsible for appointing them is required to disclose the conflict of interest and refrain from participating in any deliberation or decision with respect to the matter in question.”

An explanation for the moneys being diverted from the Foundation to the then financially stricken club was given to OSCR by the one active Trustee – presumably Ms Gourlay given that Whyte was otherwise occupied and Bain had by then resigned from his CEO position and instigated legal proceedings for constructive dismissal against the club.

The rationale seems to be that diverting funds to the football club was necessary to allow the game to go ahead, and that if this had not happened the administrators appointed by then to run the football club could have stopped it. The Foundation received some funds rather than none if there was no game is the justification. But the report notes that the option of simply paying a fee to the club for the use of Ibrox was never discussed. Surely this was an obvious solution?

The OSCR investigation has also revealed that the Trustees of the Foundation had not met in over a year, and that, as noted above, only one Trustee appeared to be playing an active role. In effect decisions were being made by one person acting alone, in contravention of the Charity’s own rules.

It should be noted that another of the Trustees did not respond at all to any requests for information from OSCR. Clearly this was either Craig Whyte or Martin Bain. Make your own mind up …

OSCR has concluded that there was clear misconduct in the management of the Foundation. But, rather strangely, no action at all will be taken against those involved. It seems that OSCR is content with the explanations offered. The report states:

we have concluded that although the decision was a breach of legal duties the circumstances were such that it would not be a proportionate use of our regulatory powers to take further action. The decision to assign the Charity’s rights in the contract was made in good faith

It seems odd, to say the least, that a decision taken in a manner that clearly disadvantaged the charity, that was taken in a manner incompatible with the charity’s own rules, that put the interests of a football club above that of the charity and that was taken without considering any legal advice first, can be explained away in this fashion. A “breach of legal duties” should have consequences.

As someone who has been involved with Scottish charities for over 25 years as (at various times) funder, employee, manager, Director and Trustee, I can reasonably claim to have a great deal of experience in charity administration. And I can state categorically that I have never seen a large charity operate in such a chaotic manner. No meetings, only one active Trustee and a major financial decision involving such a clear conflict of interests taken without recourse to legal advice? Embarrassing is one way of describing the situation.

But then it seems that controversy, mismanagement and embarrassment are pretty much par for the course in the running of any Scottish organisation that has the word Rangers in its name.

 

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Well, this is a turn up for the books.

After a lengthy delay, the First Tier Tax Tribunal that sat to consider the former football club’s use of Employee Benefit Trusts has issued its verdict. And the club has won on a 2 – 1 majority decision.

The full document issued runs to well over 100 pages and is written in the kind of legal and tax jargon that few of us fully understand. The names of those giving evidence have also been changed, giving a comic look as we read of Mr Magenta and Mr Scarlett. And two very different interpretations of the evidence and the law are contained within the document.

But the bottom line is that the decision has gone the former Rangers’ way.

Now, a few words for the many fans of the football club in liquidate who have visited this blog over the last couple of days. My policy is not to delete comments that disagree with me. I like a bit of debate. But I do delete those with bad language and sectarian epithets, so most of that time Follow Follow readers spent here is for nothing.

(Just to clear up a few matters for you. I’m an atheist not a Roman Catholic. I went to a non denominational school, not an RC one. My parents are married. And I’ve never had intimate relations with a non-human animal. So now you know.)

Back to the matter in hand. What does this decision actually mean?

Well the first thing to say is that Her Majesty’s Revenue and Customs (HMRC) are considering an appeal against the decision. That would mean another hearing and a further lengthy wait for a decision.

It should also be pointed out that the decision announced does not totally clear the former Rangers. It rules that tax was due on some, but not all, of the payments made. So the tax liability will be much reduced, but will not be zero. Unfortunately no figures are included so the exact amount that is due is unknown.

So in effect the former football club now has debts that are much lower than we had thought. But it still owes far more that it will ever be able to pay and so the liquidation process that is being overseen by BDO will continue. There are no degrees of dead – this decision doesn’t make the club slightly less dead.

The other big issue relates to Lord Nimmo Smith’s delayed inquiry on behalf of the Scottish Premier League into the contractual position of players of the former club. In short, that inquiry will look at whether payments were made to players outwith the contracts lodged with the footballing authorities.

Now far from clearing the former club, the FTT ruling issued actually makes a guilty verdict more likely.

It is now confirmed that so called side letters do exist. These are letters from the Trust acting on behalf of the club to individual employees, players and managers included, confirming that they will not need to pay back the loans made to them.

It is important to remember that the tax issue and the footballing issue are separate, Even if they payments made were legal under tax law they could still fall foul of football’s regulations. A successful tax appeal does not make the Nimmo Smoth inquiry go away.

And what about those who received the loans? Well, they could find a letter from liquidators BDO in the post sometime soon asking for repayment. But, they will argue, we have letters stating that we will never have to pay the loan back. And so there may be a few more court cases to come as that legal knot is untangled.

In relation to the former football club we are left with a lot of What Ifs? What if Craig Whyte had paid his bills – would the club have survived? What if the £10.5M payment David Murray tried to negotiate with HMRC had been agreed? Could he have continued to run the club rather than selling it to Whyte for £1?

We will simply never know.

Finally, to all of those who are calling for an apology from me, here it is. I apologise for stating that the former club would lose this appeal. I got that wrong.

But this ruling is not the end of the matter. There may well be a further HMRC appeal. And even if there is not there could still be footballing consequences to come from the use of EBTs.

As always, nothing to do with the affairs of the former Rangers football club is straightforward.

 

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No, that title is not a mistake. The former Sun editor really does think that he has been wronged and is due an apology.

As everyone knows, the comic masquerading as a newspaper that MacKenzie used to edit blamed Liverpool fans for the tragic events that cost 96 people their lives. The despicable front page article titled “The Truth” that MacKenzie ran led to The Sun being boycotted on Merseyside – and rightly so.

 

But now the bold Kelvin claims that it wasn’t his fault. He was duped, he says. The police lied and all he did was to report it. And so he has now instructed his lawyers to write to South Yorkshire Police seeking an apology for giving his journalists misleading information.

MacKenzie states in a magazine article that he has been “deeply affected by the affair”, adding that he is not a victim but has “suffered collateral damage”.

Damage? Almost 100 people died, their families were denied the truth for over 20 years in a massive cover up and a newspaper editor thinks he suffered damage? Don’t make me laugh.

A South Yorkshire Police spokesman stated that, “It is well known that many media outlets ran similar stories at the time based on the same sources but chose to treat them differently.”

“Mr MacKenzie was responsible for the particular headline he chose to run with.”

And there is the rub. MacKenzie ran a story slanted against Liverpool fans. He endorsed an article containing allegations that have proven to have no substance as if they were facts. He must accept the consequences for those decisions.

The Daily Mirror was given the same briefing as The Sun but decided not to believe it as the content could not be verified. Indeed Mirror journalists concluded that the police were simply trying to divert attention from their own failings – a correct analysis as we now know. The different approach taken is clear in its headline: “Fury as police claim victims were robbed.”

Very different, in other words, to “The Truth”.

 

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Leading Roman Catholic churchmen in Scotland have lined up to condemn the Scottish Government’s consultation paper on marriage equality.

Deputy First Minister Nicola Sturgeon launched a paper seeking views on the issue of same-sex marriages and religious ceremonies for civil partnerships. The government has said that its initial view is that same-sex marriage should be introduced, but that faith groups who did not want to solemnise gay marriages should not be made to do so.

In a letter to the Herald newspaper last week, Mario Conti, the Archbishop of Glasgow, claimed that marriage would become meaningless as a concept if it was defined in any other way than as a relationship that has the “capacity to create a natural family”.

He was answered in the Letters page by Tim Hopkins, Director of the Equality Network, who asked whether Conti wished, “to ban marriage between men and women who are unable to conceive a child.” David French from Edinburgh also suggested, tongue firmly in cheek, that the Archbishop back his call for mandatory fertility tests before marriage.

Philip Tartaglia, the Bishop of Paisley, said at the weekend that a Scottish government which backed same-sex marriage did not deserve the support of the Catholic community.

And, writing in an article for the Mail On Sunday, Cardinal Keith O’Brien claimed that a change in the law would mean that the government, “will have forfeited the trust which the nation, including many in the Catholic community, have placed in them and their intolerance will shame Scotland in the eyes of the world.”

Perhaps the strangest claim made by the Church is that allowing gay marriage would breach Article 16 of the Universal Declaration of Human Rights, which states that, “Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.”

Quite how allowing gay couples to marry would breach this provision in not clear. Indeed, it could be argued that the Article can be read in such a way that every man or every woman has the right to marry – and that a ban on gay marriage is what breaches some individuals’ rights.

Clearly this is an issue where feelings are running high. The Catholic Church takes the view that marriage can only take place between a man and a woman. Indeed Cardinal O’Brien argues that no government has the right to legislate on the issue.

But the definition of marriage has, of course, changed many times. Marriages between those of different races were once outlawed in many places, and it is not too long since there could be no such thing as rape within marriage. If a society is to progress then it must continue to change and evolve.

It seems that the proposed opt out for faith groups would not be sufficient for Catholic Church leaders. They are entitled to their views like anyone else, but cannot seek to force those views on a country where the majority would appear to be in favour of change.

If 60% of Scots are in favour of marriage equality then our politicians should reflect that and legislate accordingly.

The consultation period runs until 9 December. And, if the end result is a proposal to change the law then the arguments could go on a great deal longer.

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HMRC v RFC: Only One Winner

There is something ironic about the club that prides itself on being quintessentially British falling foul of Her Majesty’s Revenue and Customs. But events over the last few months have put the two on collision course, and there will be more to come.

The key fact is quite simple: Rangers owe money for tax they failed to pay some years back and HMRC want their money.

The total sum involved is £4.2 million. That’s £1.9 million for the original bill, £0.9 million in interest and an additional £1.4 million in penalties. Rangers do not dispute that they owe the first two sums, totalling £2.8 million, but are challenging the additional statutory penalty.

Discussions between the two parties have been going on for some time without resolution, and HMRC eventually lost patience, taking the matter to court. This first resulted in the much publicised visit to Ibrox by Sherriff Officers. They delivered a statutory notice giving Rangers 21 days to pay the amount due.

Three weeks went by and it appears that no progress was made. It now appears that HMRC went back to court and got an order to arrest a sum from Rangers’ bank account. It is not clear whether the amount is the total sum due of £4.2 million or just the uncontested amount of £2.8 million.

What does this mean to Rangers? Quite simply they cannot use the money arrested. It has to sit in their bank account until the matter is concluded, one way or another. The point of the action is to avoid a debtor simply spending its money and then claiming to be penniless.

So is there a way out of this for Rangers?

Well, the club could simply pay the total sum HMRC and the courts say it owes.

But from piecing together information that is in the public domain it seems that this may not be an option for the cash strapped club. Or, if the money is there to pay the bill, it could be that it would leave the club unable to pay the usual monthly outgoings that it must face.

Did new owner Craig Whyte gamble on European qualification to generate short term income? If he did, defeats to Malmo and Maribor blew that out of the water.

It was revealed on Friday that Rangers had sold off future profits from catering at Ibrox. Now this is the act of a business with cash flow difficulties; one which needs cash right now rather than later. There can be no other purpose to this move than to raise cash in a hurry.

If things really are as bad as they seem, then matters are likely to come to a head very soon. In addition to the money owed to HMRC, the club is being sued by its former legal advisers over an unpaid bill and its recently dismissed CEO is also seeking a large compensation payment. Are there other bills outstanding? You wouldn’t bet against it, would you?

It is looking extremely likely that some form of relief through administration will be sought sooner rather than later for Rangers. There is no other solution that appears likely – unless Craig Whyte has a plan up his sleeve.

Mind you, this is the man who promised a £15 million summer spend on transfers and failed spectacularly to deliver.

And this isn’t just a short term cash flow problem. Later this year the result of a tax tribunal into a much larger tax liability will be announced. And that could mean a bill of anywhere between £40 million and £70 million. The club would, quite simply, have no way to pay such a sum.

Not a good time to be a Rangers supporter, is it?

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The Scottish Government has launched a consultation paper on marriage equality. Views will be sought on the issue of same-sex marriages and religious ceremonies for civil partnerships.

The government has said that its initial is that same-sex marriage should be introduced. This would put Scotland ahead of the rest of the UK, where a separate consultation is expected to take place at a later date.

However, Deputy First Minister Nicola Sturgeon said faith groups who did not want to solemnise gay marriages should not be made to do so.

Ms Sturgeon said that a recent Scottish Social Attitudes survey found that more than 60% of people in Scotland felt that same-sex couples should have the right to marry, compared to 19% who disagreed.

She added: “The Scottish government is committed to equality and diversity for all and that is why we pledged to come forward with a consultation on same-sex marriage and religious ceremonies for civil partnerships.”

Currently, same-sex couples can obtain legal recognition of their relationship through entering into civil partnerships, which were established across the UK by the Civil Partnership Act 2004. Civil partnerships may not currently take place in religious premises and can only be registered by civil registrars.

The response to the consultation launch has, as expected, been mixed.

Tim Hopkins of the Equality Network said, “We welcome the start of the consultation, and we very much welcome the Scottish government’s stated initial position in favour of same sex marriage. It’s an excellent consultation paper covering all the issues.

“Now it will be really important for all supporters of equality and fairness to respond to the consultation, so that our voices are heard, and so that the Scottish government knows how important it is to legislate for equal marriage as soon as practicable.”

But Mike Judge from the Christian Institute was not so enthusiastic, stating that, “This is not about rights, this is about redefining marriage for the whole of society at the behest of a small minority of activists.

“If marriage is redefined for homosexual marriage, that new definition will be the one that the state promotes as the standard. It will have huge implications for what is taught in schools and for wider society.”

My position on marriage is simple: I don’t believe in it and think the whole medieval notion should be abolished. Why should two people who want to commit to each other be required to apply for a license from the state to do so? Why not just commit in a private way? Of course those who believe in such things should be free to seek a blessing from their own particular priest, guru or shaman.

But if there is to be such a legal device as marriage then it should be open to all, whatever their sex. As a society we should practice equality and a same-sex marriage should be equivalent in legal terms to any other kind of partnership.

Interested groups and individuals can make their views known to the Government over the next 14 weeks, with the closing date set at 9 December. If a decision is taken to change the law once the consultation process is over, a bill could be introduced to the Scottish Parliament in 2013.

The consultation paper can be downloaded from the following link: http://www.scotland.gov.uk/Topics/Justice/law/17867/samesex/samesexconsultation

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In 2008 the remains of more than forty bodies were removed from Stonehenge for scientific study. Ministers gave researchers from Sheffield University permission to keep the bones until 2015.

In the High Court yesterday, a 57-year-old former soldier and biker asked the court to give permission for a judicial review of the government’s decision to allow the remains to be taken away. His request was denied.

The petitioner’s name?

King Arthur Pendragon, battle chieftain of the Council of British Druid Orders and “titular head and chosen chief” of the Loyal Arthurian Warband druid order.

Looking fully the part in flowing white robes decorated with a red dragon and his long grey hair tied back, the king was defiant.

He said, “Even though on this occasion my appeal has been dismissed I am still very much hopeful that I can win in the future. I wasn’t asking for the bones to be put back straight away, I simply wanted confirmation that they will be returned to the site as soon as possible.”

Pendragon, who represented himself, said the bones were remains of members of the “royal line” or “priest caste” who could have been the “founding fathers of this great nation”. After the hearing, Pendragon, who signed himself as Arthur Rex on court papers, vowed to continue his fight to have the remains reburied.

It is not recorded whether King Arthur brought his sword to court with him, or if he had a group of knights on hand in case things turned nasty.

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The Scottish Crime and Drug Enforcement Agency (SCDEA) is trying out a new approach to the problem of organised crime. Rather than simply attempting to arrest those responsible, they are also seeking to disrupt the activities of gangs.

The agency has worked with a range of public regulators to frustrate organised crime groups’ attempts to launder their cash through businesses in industries such as the taxi trade and security industry. A total of 59 schemes have been devised to undermine Scotland’s 360 organised crime groups.

SCDEA shares intelligence with other agencies, including trading standards, NHS boards and local authorities. Crucially, some of these links are making it hard for Scotland’s drug importers to travel abroad. Visa restrictions have been imposed on significant Scottish players by both the governments of Canada and the United States in recent months.

SCDEA officers have harried front companies and seized nearly £1.3 million from the working capital of criminals – far more than ever before – and frustrated deals to buy guns and drugs.

The agency also arrested 195 people, including 73 of the “most harmful and dangerous” criminals in the country, securing convictions that ended in a cumulative jail sentence of 275 years, a new record.

Deputy Chief Constable Gordon Meldrum, the SCDEA’s director-general, said “Disruption is the name of the game for us. It is what we focus on. It is what we are measured on and it is what is really, really important to us.”

Meldrum explained that the new approach could involve preventing crime taking place rather than simply arresting those responsible afterwards.

“If you think about it logically, if we know organised crime is involved in a deal to bring drugs back in to Scotland and we know they are leaving Scotland with a big bag of cash, why would we let them do that?” he explained.

“Why would we run the risk of letting them leave the country with the money and let them bring back the drugs just so we could seize the white powder as a measure of our success?”

It is an interesting approach and it seems to be having positive results. And let’s not forget that Al Capone was eventually jailed for tax evasion rather than the many other crimes he and his gang committed.

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Emily Barrass was jailed for two years after using her position as a call centre adviser at Her Majesty’s Revenue and Customs (HMRC) office in Dundee to make fraudulent claims.

Barrass, from Carnoustie in Angus, moved to Arbroath and bought a house from Susan Lindsay, who was emigrating to the USA. At the time she had a live claim for tax credits which were being paid into her bank account.

The enterprising Barrass kept the claim open, then amended Miss Lindsay’s file to qualify her for a higher rate of child tax credit. And then she changed the bank account details associated with the claim so that the money was paid into a different account, which she controlled. It was easy for her to update files to show that Lindsay had actually requested the changes.

And then she got greedy. Over the next three years, she updated the account to claim that Miss Lindsay had informed her of two more children being born, increasing the payment amounts.

And  Barrass also accessed the tax credit account of the former partner of a relative and amended the details to make payments into an account in the name of Susan Lindsay. Two more fictional children were also added to this claim.

An investigation was finally established when suspicions were raised by the fact that Barrass had made so many changes to Lindsay’s file.

Fiscal depute Vicki Bell told Dundee Sherriff Court that the total amount fraudulently claimed by Emily Barrass totalled £92,589.

Barrass pleaded guilty to two charges of repeatedly accessing and amending tax credit claims in the name of the two women between 2005 and 2009. Her defence lawyer, Joseph Myles, told the court that the fraud had started because Barrass was struggling with household bills.

Sheriff Alistair Duff was not impressed. “You obtained a total of more than £90,000 as a result of your participation in these crimes and that puts this case in a situation where only a custodial sentence is appropriate. There are not significant mitigating circumstances in my view,” he told her, issuing a sentence of two years in jail.

What is most alarming about this case is that Barrass was able to receive payments for five years before anyone in HMRC cottoned on to her fraud.

 

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There was a big build up to the appearances of the two Murdochs and Rebekah Brooks before a committee of MPs, but it was ultimately an unsatisfying experience for those seeking the truth about their knowledge of phone hacking.

The Commons’ Culture, Media and Sport Committee first questioned Rupert and James Murdoch together. The day started with the Murdochs asking to make a statement but being told they had to answer questions instead. That was perhaps the high point.

They made some of the right noises about humility and apology. But crucially there was no acceptance of any responsibility at all.

Rupert said clearly that he had been let down by those he trusted. The fact that he appointed them, paid them and relied on their advice seemed to have escaped the senior Murdoch. He also blamed other media outlets for whipping up hysteria – surely the ultimate pot and kettle moment.

He answered many questions slowly, giving the impression of an aging mind having trouble remembering names and dates, but throughout it you got the feeling that there was great calculation behind his responses.

Anyone who has worked for Rupert Murdoch has talked about his grasp of detail, his interest in every part of his global business empire, however small. So the notion of a remote Chief Executive who was happy to delegate and leave his trusted lieutenants to their own devices with little or no scrutiny strained credibility.

James seemed more confident, but just as evasive. He had answers for everything. Not direct answers, of course, not revelations or acceptance of responsibility. But he seemed to be able to deal with the generally feeble and ineffective questioning from the MPs without too much trouble.

Only Tom Watson and Paul Farrelly seemed to have the ability to ask probing questions, while others seemed cowed in the presence of the Murdochs and made stumbling speeches or got side tracked into issues such as the approval of petty cash expenditure. It may have been a question and answer session, but this was no interrogation.

Two hours into the hearing there was a moment of high farce as a man from the audience threw a foam pie at Rupert Murdoch and proceedings were briefly suspended. It was perhaps the only direct hit of the meeting.

Rebekah Brooks followed her former bosses and was keen to concentrate on how swiftly the Murdoch empire had responded when made aware of the various nefarious actions taken in its name, none of which she sanctioned or was even aware of, you understand. Again we had a key executive claiming to be in the dark about the actions of her staff.

Brooks is currently on bail as she was arrested on Sunday after allegations of conspiring to intercept communications and corruption, which she denies. This gave her a get out for several questions, as of course she wouldn’t want to compromise a police inquiry, would she?

So at the end of the sessions we know little new. There is still a great deal about the dark side of the News International newspapers that is not yet in the public domain, and we may need to wait for the public and police inquiries to find out more. And that might take years rather than months.

Attention turns to the floor of the House of Commons today as the Prime Minister will be put under pressure to explain his relationship with Andy Coulson, among other things, in a full scale debate. Ed Miliband has been on top form in recent times and will hope to land a few blows this afternoon.

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