John Stonehouse, My Father

by Julia Stonehouse

  * Josef Frolik told a US Senate Committee that Josef Kalina was ‘a below average intelligence officer and is a product of patronage’. (Ref: ‘Communist Bloc Intelligence Activities in the United States,’ 94th Congress, Committee on the Judiciary, United States Senate, 18th November 1975.)

  7

  The Madness of 1974

  On 1st January 1974, under the Conservative government of Edward Heath, Britain was put on a ‘three-day week’ because there was a shortage of electricity to fuel homes and businesses. The miners had gone on strike and there wasn’t enough coal to supply the power stations. Until it ended on the 7th March, the nation was shivering at home and went shopping holding candles in their hands. Industrial action was just one of our problems. During 1973 and 1974 Britain suffered the worst financial crisis to hit the country since 1931. The price of oil had doubled after the Organization of the Petroleum Exporting Countries (OPEC) refused to sell oil to Britain because of its support of Israel during the Yom Kippur War; interest rates of 18 per cent were crippling businesses and private individuals alike; there was a stock market crash; and falling property prices had reduced the value of collateral against business loans. The secondary banks were in dire financial trouble and by the end of 1974 the Labour government became so worried about the domino effect of collapsing banks, they instigated a ‘lifeboat’ bail-out scheme to pump £1,300 million into 30 institutions. Most of the money came from the big four clearing banks, but it included £120 million from taxpayers through the Bank of England.

  On the 25th January 1974, The Times carried an article by Christopher Sweeney: ‘Defector reveals MPs’ part in spy ring’. It read: ‘the three then MPs who were named by him had not been arrested at the time because sufficient evidence could not be found to stand up in court … the three were confronted with the available evidence and “their usefulness was finished … the London people have other means up their sleeves to damage these men and they have already done so”.’1 My father had all the newspapers delivered to the house so he would’ve read the interview in The Times and I expect he choked on his cornflakes when he saw that Frolik was going public with the ‘fact’ that three MPs had been recruited by the Czech StB. Although no names were given, he knew that his name would be among them and that, despite there being no evidence, it would only be a matter of time before those names would be floating around the bars in parliament and into the press gossip machine. It was sinister and ominous to read ‘the London people have other means up their sleeves to damage these men and they have already done so’. This raised questions: had MI5 interfered with his business relations, and had they put an end to his political career?

  The answer came after the 28th February election, when he wasn’t offered a ministerial position in Harold Wilson’s hung parliament, 33 seats short of a majority. Wilson is on record as saying he wasn’t happy that when my father was postmaster general (PMG) he’d undermined the chancellor by offering the Post Office Engineering Union a pay rise higher than the 5 per cent the government wanted to give them, but less than the 10 per cent the union’s conference demanded. Their strike action on 14th July 1969 had closed down most telegraph and international phone services, and 25 per cent of inland calls, and they were resolved to carry on striking. But the fact is that when the position of PMG was dissolved in October 1969 and replaced by minister of posts and communications – to reflect the fact that the two branches of post, and telecommunications, were made into separate organisational entities, my father was appointed as the new minister – so Wilson can’t have been that unhappy with his work. What had happened between the last Labour government of June 1970, and this one in February 1974, was that the spy rumour had gained traction, and Wilson had to be careful it didn’t reflect badly on himself. And, as we were to learn, the very accusation of being a spy allows people to dump other unfounded allegations at your feet. No doubt too, the very fact that the DTI and Scotland Yard had carried out investigations into BBT during the previous year had damaged my father’s reputation. It didn’t matter that no civil or criminal charges had been brought because that had not been reported in the press, to counter the bad publicity of the original accusations. In any event, my father was now acutely aware that he was out in the political cold.

  My father was becoming increasingly paranoid and with each setback, each anxiety attack, each episode of depression, or bout of insomnia, he popped another Mandrax or Mogadon into his mouth and became even more paranoid. He was spiralling out of control. Things were not improving at BBT; they were getting worse. It was a miracle the accounts of 30th June 1973 passed the audit, and to some degree this was the fault of the auditors themselves, Dixon Wilson. The DTI inspectors said it was ‘astounding’ that the auditors failed to ‘identify that the true purpose of the bulk of the loans was to fund the purchase of shares in BBT itself’ and ‘We are driven to the conclusion that the auditors were thoroughly slipshod in dealing with material matters. They told us they thought that the responsibility lay with the lawyers.’ Meanwhile, the solicitor, Mr Levine, said ‘the primary responsibility towards the public must be the auditors’. The auditors review the totality of the files.’ The senior partner at the auditors was Sir Charles Hardie, who did not escape the criticism of the DTI inspectors: ‘Sir Charles, in our view, took a deliberate risk, believing that no great harm would ensue. Mr Levine, on the other hand, seems to us to have lacked the objectivity appropriate to his actual position as the company’s advisor.’ While the professional advisors blamed each other, the inspectors blamed them both: ‘The circumstances of this case do not entitle the solicitors to hide behind the skirts of the auditors nor the auditors behind those of the solicitors.’2

  The essential problem was that the original share issue had not got enough support from outside and my father and his companies had thrown into the big black hole every asset at their disposal and, more dangerously, every loan they could obtain. As well as his trading companies of EPACS, Global Imex and Connoisseurs of Claret, dormant companies were drawn into the crisis as nominees and a complex inter-company system of loans began. When it came to a company’s year-end, another of his companies would lend it money for a short period so its accounts looked OK. This is called ‘window dressing’, and it was known to happen on a larger scale too. In return for the favour of one bank covering the year-end shortfall of another, a reciprocal favour would be offered. The DTI report said: ‘It is clear from other Department of Trade Inspectors’ Reports that this practice was common among secondary banking companies about the time with which we are concerned and in this respect, at least, BBT was typical. It took and placed deposits over its own year-end so as to increase the total of its advances and deposits and helped other concerns in a similar way. The largest such transaction in which BBT engaged was over the night of 31st May–1st June 1973 when no less than £1 million was deposited with Cornhill Consolidated Company Limited (Cornhill) against a deposit from its affiliate, Highcastle Securities Limited. Cornhill’s financial year ended on 31st May.’3*

  My father was sailing very close to the wind, and he knew it. The audit of 30th June 1974 was approaching and he feared the irregularities he’d been engaged in would be revealed. The DTI inspectors said in their report, ‘This is not a case in which the promoters were bent on wrongdoing or seeking to feather their own nests at the expense of the company or its shareholders or creditors. Mr Stonehouse embarked on the course of serious wrongdoing when stung by bad publicity which attended an offer of shares to the public. He was propelled into crime by his pride.’ They also said, ‘We do not suggest that Mr Stonehouse’s object was to gain and retain control of BBT; but by his own conduct he found himself forced into the position of being its actual and effective controller. As time went on, his attempts to free himself failed. He was enmeshed in his own web, which grew more tenacious as he struggled to escape from it.’4 There were only two ways out: persuade another bank to invest in BBT, possibly an American one that needed internationa
l connections; or make a lot of money on exports to plug the financial cracks.

  To this end, my father was flying all over the world trying to finalise trade deals. One day he’d be in New York, another in Sudan, another in Beirut, another in Romania, and another in Yemen. He was involved in negotiations all over the world concerning selling communications equipment to the government of Kenya, police transmitters to Bangladesh, an ICI refinery and a fertiliser plant in Bangladesh, another fertiliser plant and rail equipment to Sudan, a cotton mill in Tanzania, a hotel complex on the Gulf, cement deals involving Iran, the Gulf, Libya and Cyprus, and so it went on. He also tried to arrange bilateral trade deals such as, for example, arranging for Sudan and Bangladesh to exchange jute and cotton. He had a contract with the Government of Mauritius to promote export zones, and took a group of British industrialists there to explore the opportunities. He never stopped trying to link people and make deals and because he was the only person in his companies who could bring in this business, the successes and income were all down to him as, too, was the pressure of failure. A £6.5 million deal to supply Romanian cement to Nigeria couldn’t be finalised because the shipping costs became too expensive, while a contract to supply cement to Iran was broken at the last minute when a cheaper French alternative came along. Given the importance of bringing serious money into his companies, the disappointments were crushing. In April and May, he’d been working hard on a deal to supply electronics from a British company, Racal, to North Yemen, involving negotiations with President Abdul Rahman al-Iryani. But by the first week of June the political situation was looking distinctly shaky and, indeed, on the 13th there’d be a military coup d’état led by Ibrahim al‑Hamdi which would overthrow al-Iryani, and put an end to the Racal deal. The stress of Global Imex losing a potential £40,000 in commission was, I believe, the straw that broke the camel’s back.

  His life was becoming unbearable. Try as he might, nothing was going his way. Perhaps he’d just been fighting too long, and the pressures of a lifetime were no strong ground to stand on while weathering this financial storm. He’d erected a great big house of financial cards and the slightest breeze could bring the whole edifice crashing down around him. He wanted to walk away from it all. Instead, he remembered that in Frederick Forsyth’s book, The Day of the Jackal, another identity could be obtained by presenting a birth certificate to the Passport Office. He imagined himself escaping the world of John Stonehouse and becoming someone else, someone without all these difficulties. It was an enticing fantasy and, drugged into craziness by eighteen months of taking Mandrax and Mogadon, he set about making it a reality.

  When interviewed by police six months after the events, Mrs Markham couldn’t remember the name my father gave, or the exact date he visited her in Brownhills, Walsall – it was likely to have been the second week of June. Without saying what his occupation was, he told her he was carrying out a survey of widows’ pensions and their taxes. Mrs Markham couldn’t remember whether the man asked her if Joseph had had a passport, but as that had been his objective, it seems very likely that he did. In early July, my father phoned Manor Hospital in Walsall, giving them his name and telling them he had monies to distribute to young widows and asking if they could give him names of men who’d recently died. The Deputy Patient Services Officer, Mr Perks, after verifying that he was, in fact, John Stonehouse MP, gave him about five names. When interviewed by the police six months later, Mr Perks said he couldn’t remember if Mr Markham was on the list, but remembered supplying the name of Donald Clive Mildoon – because he knew a doctor with a similar name. A week or so later, on a Saturday morning, my father visited Mrs Mildoon at her newsagent shop in Walsall Road, Wednesbury, introducing himself as John Stonehouse MP and saying he’d read of her husband’s death in the newspapers. Mrs Mildoon had indeed placed a notice in the local paper, the Express and Star. He said he was contacting her because he had a Motion going through the Commons about children of one-parent families. Then he asked if they’d been abroad and Mrs Mildoon told him they’d gone to Austria in 1971 so although he didn’t specifically ask if Clive Mildoon had ever had a passport, he had his answer. He would later acquire copies of birth certificates for Clive Mildoon and Joseph Markham, and falsely obtain one passport in the name of Markham. On Christmas Eve 1974, Mrs Mildoon read on the front page of the Express and Star that John Stonehouse had been found in Australia using the name (Donald) Clive Mildoon. It must have been a terrible shock to Mrs Mildoon, and to Mrs Markham, to find their husbands’ names being used in this way.

  Throughout everything that’s happened with my family, over all the years, this is the one thing we find so terrible. On behalf of my father, I apologise to the Markham and Mildoon families and hope they can accept that this bizarre behaviour was only brought about by terrible stress and the effects of mind-twisting prescribed drugs. It’s unbelievable to us, the family, that my father should do something as cold-hearted as having a conversation with two widows with a view to adopting their husbands’ names. It’s so out of character for the John Stonehouse we knew, we can only attribute it to madness, one symptom of which is that the person does mad things. As a family, we often felt that the press would have been happier if my father had just killed himself and become a statistic, seen perhaps as a victim of the financial crisis which, by the summer of 1974, was in full swing. Instead, he found new lives to inhabit, ones that were totally separate from the man he had come to hate.

  The DTI inspectors wrote that, ‘By mid-July, it was clear to Mr Stonehouse that “the game was up” and his counter-measures bore the mark of desperation. To the auditors’ questions dishonest replies were given. The auditors insisted on disclosure of advances to directors and their companies of £262,961 (used to purchase BBT shares).’5 On the 15th July my father went to the General Register Office in Kingsway, WC2, and applied for a birth certificate in the name of Clive Mildoon, using the name ‘H. Humphries’. He’d collect it a couple of days later. On the 17th or 18th, again at the General Register Office, this time as ‘S.J. Lewis’, he applied for a birth certificate for Joseph Markham, collecting that on the 19th or 22nd July.

  Around this time, he first went to the Astoria Hotel at 39 St George’s Drive, London SW1, telling them he’d be wanting a single room for one night a week in the middle of the week. He’d stay there for the first time a month later. On the 22nd, he opened a deposit account at the Midland Bank on Vauxhall Bridge Road in the name of Markham, giving his address as 39 St George’s Drive, London SW1. Between this day, and the 16th September, he’d deposit £17,520 into this account. On the 27th, he got a Post Office Giro account for Markham. On the 1st August, he went to the Passport Office in Petty France, SW1, with a passport application in his hand in the name of Joseph Arthur Markham, age 42, of 30 Eccleston Square, SW1. He had two photographs of himself countersigned with signatures he had forged of Neil McBride, an MP who was very ill and would pass away on the 9th September. The application form said that he needed the passport by the 7th as he was travelling to France and Spain. One official checked the form, and another issued a receipt for payment. Passport number 785965A was issued the next day, and collected on Monday 5th August by a man who signed the receipt as ‘J.A. Markham’. Now it was real. He was officially another man.

  On the 20th August, Mr Markham registered with Management Business Services, of 243 Regent Street, London W1, a company that received and forwarded mail, took telephone calls, and provided telex and secretarial services. He was given the registration number 726, paid cash in advance for the service commencing 1st September, and said he’d be collecting his mail in person. He’d go here at least once a week and collect two or three letters each time. On the 21st August, Mr Markham stayed at the Astoria Hotel for the first time, and as he left the next morning he said that he’d be getting some mail there and asked if they’d hold it for him, and he’d collect it. He’d stay at the Astoria a further four Wednesdays: 28th August, 18th September, 2nd and 16th October.
He’d arrive about 6 or 7pm, and come downstairs for a cup of tea around 9am, having already been out to buy newspapers. In addition to staying on these nights, he’d frequently phone to see if there was mail and on at least two occasions collected it while a taxi waited outside. In October, the receptionist signed for an item of registered mail and gave it to him later.

  Whereas a year earlier, BBT had managed to pull the wool over the auditor’s eyes, in 1974 they were dealing with Albert Stokes, a partner in Dixon Wilson, and he was altogether more eagle-eyed. The DTI wrote of him, ‘By 28th August he had compiled a formidable catalogue of the wrongdoings of Mr Stonehouse and others associated with the company. Mr Stokes, we think, is the person entitled to the principal credit for his tenacity in penetrating what was, by then, a jungle dense with improprieties.’6