Philip Augar and Keely Winstone investigate the mysterious disappearance of a senior government minister.
On 20 November 1974, the Rt Hon John Stonehouse MP, on a business trip to Miami, told a colleague he was going for a swim. But he didn’t go swimming. Instead, he left his clothes at a beach club, doubled back and collected another set of clothes. Crossing the world using false credit cards and passport, he ended up in Melbourne Australia where he hoped to settle. He was soon spotted and was arrested by Melbourne police on Christmas Eve ending five weeks of frenzied media speculation about his whereabouts.
Stonehouse’s arrest, extradition and trial alongside his lover and former secretary Sheila Buckley made more headlines, especially when Czech defectors alleged that he had been spying for them when he was serving in Harold Wilson’s Labour governments. These allegations were confirmed when British and Czech government papers were opened up after his death and he remains the only minister known to have spied for a Communist state while still in office.
What has never been known, however, is why Stonehouse embarked on his bizarre plan to disappear. Love alone is an insufficient motive although he certainly planned a future with his girlfriend. Neither is fear of espionage charges since he had already seen off one UK Security Services inquiry and would have been confident in facing down another. But while neither love nor fear of MI5 solve the mystery, the University of Bath archive does.
Ian Hay Davison FCA was one of the inspectors appointed by the Department of Trade to look into the Stonehouse companies in 1975. Amongst the papers he gave to the archive is the report he authored with Michael Sherrard QC. It is a forensic analysis of Stonehouse’s fraud and we believe it reveals the real reason that he disappeared.
Rather than admit that investors were unwilling to back a bank he had set up, Stonehouse covered up the failure by illegally recycling inter-bank loans. But the bank’s auditors were onto it and Stonehouse needed cash before he was rumbled. He took one last stock market gamble to make back the money but markets fell and he was ruined. His brokers demanded the equivalent of a million pounds in today’s money, money he didn’t have and rather than face the music, Stonehouse simply disappeared.
We have used the Sherrard-Davison report in Agent Twister, the first published account of what really went on at the Stonehouse companies. Lizzie Richmond and her colleagues at the archive facilitated our work at a time when visits were impossible because of Covid restrictions. The report provides an extraordinary insight into business practices in the pre-internet age and was invaluable to us in researching our book. We hope both help all students of white collar crime.