Norman Lamont

Norman Stewart Hughson Lamont, Lord Lamont of Lerwick (born May 8, 1942), is a British Conservative Party politician who sat as Member of Parliament for Kingston upon Thames from 1972 to 1997 and was Chancellor of the Exchequer from November 28, 1990, to May 27, 1993. As Chancellor he answered in the House of Commons for the government after the Bank of England closed the Bank of Credit and Commerce International (BCCI) in July 1991, and with the Governor of the Bank, Robin Leigh-Pemberton, he commissioned the inquiry of Lord Justice Thomas Bingham into the supervision of the bank.¹²³

Early Life and Banking

Lamont was born in Lerwick, in the Shetland Islands, where his father, Daniel Lamont, a surgeon, was stationed during the Second World War; his mother was Helen Irene Lamont. He attended Fitzwilliam College, Cambridge, where he belonged to a group of young Conservatives known as the "Cambridge Mafia," among them Michael Howard and John Gummer. He was president of the Cambridge University Conservative Association and, in 1964, of the Cambridge Union.⁴

He was principal assistant to the Conservative member Duncan Sandys in 1965 and worked on the staff of the Conservative Research Department from 1966 to 1968. From 1968 to 1979 he was a merchant banker at N. M. Rothschild & Sons. He married Alice Rosemary White in 1971; they had two children, Hilaire and Sophie.⁴ He contested Kingston upon Hull East without success at the general election of June 18, 1970, and entered the Commons for Kingston upon Thames at a by-election in May 1972.¹⁴

Parliamentary and Ministerial Career

In the Commons Lamont was parliamentary private secretary to Norman St John-Stevas in 1974, an opposition spokesman on prices and consumer affairs from 1975 to 1976 and on industry from 1976 to 1979.⁴ He sat on the Procedure Committee from November 1978 to June 1983 and on the Public Accounts Committee from June 1986 to July 1989.¹

His government posts, as recorded by Parliament, were:¹

• Parliamentary Under-Secretary, Department of Energy, May 7, 1979, to September 5, 1981
• Minister of State, Department of Industry, September 14, 1981, to June 12, 1983
• Minister of State, Department of Trade and Industry, June 13, 1983, to September 2, 1985
• Minister of State for Defence Procurement, Ministry of Defence, September 2, 1985, to May 20, 1986
• Financial Secretary, HM Treasury, May 21, 1986, to July 23, 1989
• Chief Secretary to the Treasury, July 24, 1989, to November 28, 1990
• Chancellor of the Exchequer, November 28, 1990, to May 27, 1993

He contested Harrogate and Knaresborough at the general election of May 1, 1997, and left the Commons that day. He entered the House of Lords as Lord Lamont of Lerwick on July 24, 1998, and has served there on the European Union Committee, the Economic Affairs Committee and, from January 2026, the International Relations and Defence Committee.¹

After leaving the Treasury he was a non-executive director of N. M. Rothschild & Sons from 1993 to 1995, and a director of RAB Capital, Balli PLC and several investment trusts; he was vice president of the Bruges Group from 1997, an adviser to the Romanian government in 1997 and 1998, and chairman of Conservatives Against a Federal Europe from 1998 to 1999. He wrote Electoral Reform, No Reform (1975), Sovereign Britain (1995) and In Office (1999), a memoir.⁴

Closure of BCCI, July 1991

On July 19, 1991, two weeks after the Bank of England closed BCCI, Lamont made a statement to the Commons. He told the House that "under the 1987 Banking Act the supervision of banks is unambiguously the duty of the Bank of England and not of the Government," that the Deposit Protection Board would write to depositors at once, and that "Our latest estimate is that the United Kingdom branches at the bank had some 50,000 sterling accounts, although some customers may have had more than one account." He had met Keith Vaz and a group of other members the day before.²

He then announced the inquiry: "in the light of widespread public concern, the Governor and I have agreed that there should be an independent inquiry into the supervision, under the Banking Acts, of the Bank of Credit and Commerce International, to establish the facts and to make such recommendations as arise from them. The report will be made public subject to such restrictions as may be needed to avoid prejudicing any criminal proceedings and subject to the provisions of the Banking Act." He added that the inquiry was "not to be taken as a criticism of the Bank of England. I have no reason to doubt that the Bank acted properly and promptly in the best interests of the depositors."²

Replying to Gordon Brown, Lamont said Brown's remarks "might have been more complete if he had referred to the massive, unprecedented fraud on a worldwide scale which is the real source of the problem facing us." Asked whether the Sheikh of Abu Dhabi should have been asked to put more money into the bank before its closure, he said the auditors' report "contained evidence ... of massive and widespread fraud," and that "it was the Bank's view that the bank should be closed down." On the timing he told the House: "I was informed in general terms that fraud had been uncovered on 26 June. I was given some details of the section 41 report on 28 June, and the Treasury sent a report to No. 10 on 28 June. The final decision was taken on 4 July."²

In the debate of July 22, 1991, Vaz read a written ministerial answer given to him, that "the Chancellor had discussed a number of supervisory cases, including BCCI, with the Governors of the Bank of England on a number of occasions since becoming Chancellor, but was not aware until 26 June that fraud had been uncovered." Vaz set out a timeline: the final Price Waterhouse report "arrived on 25 June. By 26 June, the gist of the report had been given to a Treasury official, John Geeve. On 28 June, a special meeting was held at Downing street, which was attended by both the Prime Minister and the Chancellor." Michael Knowles, member for Nottingham East, said of the auditors' 800-page report of June 26 that "It revealed not inefficiency or poor management but fraud on a massive scale. The phrase used was 'a bank within a bank.'"⁵ The Price Waterhouse report is described at Sandstorm Report.

The Bingham Report

Bingham's report was published on October 22, 1992, when Lamont presented it to the Commons; his statement is described at Bingham Report. In the full debate of November 6, 1992, the Economic Secretary to the Treasury, Anthony Nelson, spoke for the government. He called the report "the conclusion of an inquiry into the largest and most wide-ranging fraud in the history of banking" and said "The bank's guiding principle was divide and deceive." He gave the figures: BCCI had 25 branches in the United Kingdom with deposits of 1.85 billion pounds and "more than 53,000 sterling accounts"; the Deposit Protection Board had sent claim forms to some 42,000 depositors and had paid out more than 54 million pounds. He announced that the Bank had set up a special investigations unit under Ian Watt and a legal unit under Peter Peddie, "a former partner in Freshfields," and closed with five rules for depositors, the last that "one should never confuse authorisation with a guarantee."³

The Labour member Calum Macdonald quoted a letter Lamont had sent him: "my statements in July last year were about my willingness to reconsider the issue of compensation if evidence of negligence on the part of the supervisory authorities were to emerge. Lord Justice Bingham has found no such evidence." Macdonald wrote to Bingham, enclosing the letter, that "Mr. Lamont makes the bald statement that you found no evidence of negligence on the part of the Bank of England," and asked whether he agreed. He read Bingham's reply to the House: "Having been appointed to inquire and report by the Chancellor of the Exchequer and the Governor of the Bank of England, and having delivered my report, I do not feel that it would be right for me to comment on the interpretation which either of them put on it ... I am afraid that the answer to your question must be found in the report."³

Alistair Darling, for Labour, said that "Alarm bells should also have rung in respect of the Tampa indictment," the 1988 charges brought in Tampa after Operation C-Chase, and quoted Bingham's paragraph 2.162: "The likelihood of involvement in handling the proceeds of drug-trafficking could scarcely have eluded a competent and diligent banker contemplating such an investment, particularly if he had branches in Panama and agencies in Florida." Terence Higgins, chairman of the Treasury and Civil Service Committee, recalled that the committee had written "We simply do not understand why BCCI should have been the only bank in the world to be given such preferential treatment," and that the Bank of England had replied that "The BCCI was a unique problem and the college a unique response to it."³