Travis knew Kenny must be breaking the law somehow, but he had neither the staff nor the resources to follow it up. And Kenny might have continued to milk this particular cow indefinitely had a complaint from a leading company on the stock exchange not landed on the Chief Inspector’s desk.
A Mr Cox, the company’s financial director, reported that he had received an invoice for £500 for an advertisement his firm had never placed.
The Chief Inspector visited Mr Cox in his City office. After a long discussion, Cox agreed to assist the police by pressing charges.
The Crown took the best part of six months to prepare its case before sending it to the CPS for consideration. They took almost as long before deciding to prosecute, but once they had, the Chief Inspector drove straight to Chester Square and personally arrested Kenny on a charge of fraud.
Mr Duveen appeared in court the following morning, insisting that his client was a model citizen. The judge granted Kenny bail, but demanded that he lodge his passport with the court.
‘That’s fine by me,’ Kenny told his solicitor. ‘I won’t be needing it for a couple of months.’
The trial opened at the Old Bailey six weeks later, and once again Kenny was represented by Mr Duveen. While Kenny stood to attention in the dock, the clerk of the court read out seven charges of fraud. On each charge he pleaded not guilty. Prosecuting counsel made his opening statement, but the jury, as in so many financial trials, didn’t look as if they were following his detailed submissions.
Kenny accepted that twelve good men and women true would decide whether they believed him or Mr Cox, as there wasn’t much hope that they would understand the niceties of the 1992 Data Protection Act.
When Mr Cox read out the oath on the third day, Kenny felt he was the sort of man you could trust with your last penny. In fact, he thought he might even invest a few thousand in his company.
Mr Matthew Jarvis, QC, counsel for the Crown, took Mr Cox through a series of gentle questions designed to show him to be a man of such probity that he felt it was nothing less than his public duty to ensure that the evil fraud perpetrated by the defendant was stamped out once and for all.
Mr Duveen rose to cross-examine him.
‘Let me begin, Mr Cox, by asking you if you ever saw the advertisement in question.’
Mr Cox stared down at him in righteous indignation.
‘Yes, of course I did,’ he replied.
‘Was it of a quality that in normal circumstances would have been acceptable to your company?’
‘Yes, but . . .’
‘No “buts”, Mr Cox. It either was, or it was not, of a quality acceptable to your company.’
‘It was,’ replied Mr Cox, through pursed lips.
‘Did your company end up paying for the advertisement?’
‘Certainly not,’ said Mr Cox. ‘A member of my staff queried the invoice, and immediately brought it to my attention.’
‘How commendable,’ said Duveen. ‘And did that same member of staff spot the wording concerning payment of the invoice?’
‘No, it was I who spotted that,’ said Mr Cox, looking towards the jury with a smile of satisfaction.
‘Most impressive, Mr Cox. And can you still recall the exact wording on the invoice?’
‘Yes, I think so,’ said Mr Cox. He hesitated, but only for a moment. ‘“If you are dissatisfied with the product, there is no obligation to pay this invoice.” ’
‘“No obligation to pay this invoice,” ’ repeated Duveen.
‘Yes,’ Mr Cox replied. ‘That’s what it stated.’
‘So you didn’t pay the bill?’
‘No, I did not.’
‘Allow me to sum up your position, Mr Cox. You received a free advertisement in my client’s magazine, of a quality that would have been acceptable to your company had it been in any other periodical. Is that correct?’
‘Yes, but . . .’ began Mr Cox.
‘No more questions, m’lud.’
Duveen had avoided mentioning those clients who had paid for their advertisements, as none of them was willing to appear in court for fear of the adverse publicity that would follow. Kenny felt his QC had destroyed the prosecution’s star witness, but Duveen warned him that Jarvis would try to do the same to him the moment he stepped into the witness box.
The judge suggested a break for lunch. Kenny didn’t eat – he just perused the Data Protection Act once again.
When the court resumed after lunch, Mr Duveen informed the judge that he would be calling only the defendant.
Kenny entered the witness box dressed in a dark-blue suit, white shirt and Guards tie.
Mr Duveen spent some considerable time allowing Kenny to take him through his army career and the service he had given to his country in the Gulf, without touching on the service he had more recently given at Her Majesty’s pleasure. He then proceeded to guide Kenny through the evidence in brief. By the time Duveen had resumed his place, the jury were in no doubt that they were dealing with a businessman of unimpeachable rectitude.
Mr Matthew Jarvis QC rose slowly from his place, and made great play of rearranging his papers before asking his first question.
‘Mr Merchant, allow me to begin by asking you about the periodical in question, Business Enterprise UK. Why did you select that particular name for your magazine?’
‘It represents everything I believe in.’
‘Yes, I’m sure it does, Mr Merchant, but isn’t the truth that you were trying to mislead potential advertisers into confusing your publication with Business Enterprise, a magazine of many years’ standing and an impeccable reputation. Isn’t that what you were really up to?’
‘No more than Woman does with Woman’s Own, or House and Garden with Homes and Gardens,’ Kenny retorted.
‘But all the magazines you have just mentioned sell many thousands of copies. How many copies of Business Enterprise UK did you publish?’
‘Ninety-nine,’ replied Kenny.
‘Only ninety-nine? Then it was hardly likely to top the bestsellers’ list, was it? Please enlighten the court as to why you settled on that particular figure.’
‘Because it is fewer than a hundred, and the Data Protection Act 1992 defines a publication as consisting of at least one hundred copies. Clause 2, subsection 11.’
‘That may well be the case, Mr Merchant, which is all the more reason,’ suggested Mr Jarvis, ‘that to expect clients to pay £500 for an unsolicited advertisement in your magazine was outrageous.’
‘Outrageous, perhaps, but not a crime,’ said Kenny, with a disarming smile.
‘Allow me to move on, Mr Merchant. Perhaps you could explain to the court on what you based your decision, when it came to charging each company.’
‘I found out how much their accounts departments were authorised to spend without having to refer to higher authority.’
‘And what deception did you perpetrate to discover that piece of information?’
‘I called the accounts department and asked to speak to the billing clerk.’
A ripple of laughter ran through the courtroom. The judge cleared his throat theatrically and demanded the court come to order.
‘And on that alone you based your decision on how much to charge?’
‘Not entirely. You see, I did have a rate card. Prices varied between £2,000 for a full-colour page and £200 for a quarter-page, black and white. I think you’ll find we’re fairly competitive – if anything, slightly below the national average.’
‘Certainly you were below the national average for the number of copies produced,’ snapped Mr Jarvis.
‘I’ve known worse.’
‘Perhaps you can give the court an example,’ said Mr Jarvis, confident that he had trapped the defendant.
‘The Conservative Party.’
‘I’m not following you, Mr Merchant.’
‘They hold a dinner once a year at Grosvenor House. They sell around five hundred programmes and charge £5,000 for a full-page
advertisement in colour.’
‘But at least they allow potential advertisers every opportunity to refuse to pay such a rate.’
‘So do I,’ retorted Kenny.
‘So, you do not accept that it is against the law to send invoices to companies who were never shown the product in the first place?’
‘That may well be the law in the United Kingdom,’ said Kenny, ‘even in Europe. But it does not apply if the magazine is produced in Hong Kong, a British colony, and the invoices are despatched from that country.’
Mr Jarvis began sifting through his papers.
‘I think you’ll find it’s amendment 9, clause 4, as amended in the Lords at report stage,’ said Kenny.
‘But that is not what their Lordships intended when they drafted that particular amendment,’ said Jarvis, moments after he had located the relevant clause.
‘I am not a mind-reader, Mr Jarvis,’ said Kenny, ‘so I cannot be sure what their Lordships intended. I am only interested in keeping to the letter of the law.’
‘But you broke the law by receiving money in England and not declaring it to the Inland Revenue.’
‘That is not the case, Mr Jarvis. Business Enterprise UK is a subsidiary of the main company, which is registered in Hong Kong. In the case of a British colony, the Act allows subsidiaries to receive the income in the country of distribution.’
‘But you made no attempt to distribute the magazine, Mr Merchant.’
‘A copy of Business Enterprise UK was placed in the British Library and several other leading institutions, as stipulated in clause 19 of the Act.’
‘That may be true, but there is no escaping the fact, Mr Merchant, that you were demanding money under false pretences.’
‘Not if you state clearly on the invoice that if the client is dissatisfied with the product, they are not required to make any payment.’
‘But the wording on the invoice is so small that you would need a magnifying glass to see it.’
‘Consult the Act, Mr Jarvis, as I did. I could not find anything to indicate what size the lettering should be.’
‘And the colour?’
‘The colour?’ asked Kenny, feigning surprise.
‘Yes, Mr Merchant, the colour. Your invoices were printed on dark-grey paper, while the lettering was light grey.’
‘Those are the company colours, Mr Jarvis, as anyone would know who had looked at the cover of the magazine. And there is nothing in the Act to suggest what colour should be used when sending out invoices.’
‘Ah,’ said prosecuting counsel, ‘but there is a clause in the Act stating in unambiguous terms that the wording should be placed in a prominent position. Clause 3, paragraph 14.’
‘That is correct, Mr Jarvis.’
‘And do you feel that the back of the paper could be described as a prominent position?’
‘I certainly do,’ said Kenny. ‘After all, there wasn’t anything else on the back of the page. I do also try to keep to the spirit of the law.’
‘Then so will I,’ snapped Jarvis. ‘Because once a company has paid for an advertisement in Business Enterprise UK, is it not also correct that that company must be supplied with a copy of the magazine?’
‘Only if requested – clause 42, paragraph 9.’
‘And how many companies requested a copy of Business Enterprise UK?’
‘Last year it was 107. This year it dropped to ninety-one.’
‘And did they all receive copies?’
‘No. Unfortunately, in some cases they didn’t last year, but this year I was able to fulfil every order.’
‘So you broke the law on that occasion?’
‘Yes, but only because I was unable to print a hundred copies of the magazine, as I explained earlier.’
Mr Jarvis paused to allow the judge to complete a note. ‘I think you’ll find it’s clause 84, paragraph 6, m’lud.’
The judge nodded.
‘Finally, Mr Merchant, let me turn to something you lamentably failed to tell your defence counsel when he was questioning you.’
Kenny gripped the side of the witness box.
‘Last year you sent out 2,400 invoices. How many companies sent back payments?’
‘Around 45 per cent.’
‘How many, Mr Merchant?’
‘1,130,’ admitted Kenny.
‘And this year, you sent out only 1,900 invoices. May I ask why five hundred companies were reprieved?’
‘I decided not to invoice those firms that had declared poor annual results and had failed to offer their shareholders a dividend.’
‘Most commendable, I’m sure. But how many still paid the full amount?’
‘1,090,’ said Kenny.
Mr Jarvis stared at the jury for some time before asking, ‘And how much profit did you make during your first year?’
The courtroom was as silent as it had been at any point during the eight-day trial as Kenny considered his reply. ‘£1,412,000,’ he eventually replied.
‘And this year?’ asked Mr Jarvis quietly.
‘It fell a little, which I blame on the recession.’
‘How much?’ demanded Mr Jarvis.
‘A little over £1,200,000.’
‘No more questions, m’lud.’
Both leading counsels made robust final statements, but Kenny sensed that the jury would wait to hear the judge’s summing-up on the following day before they came to their verdict.
Mr Justice Thornton took a considerable time to sum the case up. He pointed out to the jury that it was his responsibility to explain to them the law as it applied in this particular case.
‘And we are certainly dealing with a man who has studied the letter of the law. And that is his privilege, because it is parliamentarians who make the law, and it is not for the courts to try and work out what was in their minds at the time.
‘To that end I must tell you that Mr Merchant is charged on seven counts, and on six of them I must advise you to return a verdict of “not guilty”, because I direct you that Mr Merchant has not broken the law.
‘On the seventh charge – that of failing to supply copies of his magazine, Business Enterprise UK, to those customers who had paid for an advertisement and then requested a copy – he admitted that, in a few cases, he failed so to do. Members of the jury, you may feel that he certainly broke the law on that occasion, even though he rectified the position a year later – and then I suspect only because the number of requests had fallen below one hundred copies. Members of the jury will possibly recall that particular clause of the Data Protection Act, and its significance.’ Twelve blank expressions didn’t suggest that they had much idea what he was talking about.
The judge ended with the words, ‘I hope you will not take your final decision lightly, as there are several parties beyond this courtroom who will be awaiting your verdict.’
The defendant had to agree with that sentiment as he watched the jury file out of the courtroom, accompanied by the ushers. He was taken back down to his cell, where he declined lunch, and spent over an hour lying on a bunk before he was asked to return to the dock and learn his fate.
Once Kenny had climbed the stairs and was back in the dock, he only had to wait a few minutes before the jury filed back into their places.
The judge took his seat, looked down towards the clerk of the court and nodded. The clerk then turned his attention to the foreman of the jury and read out each of the seven charges.
On the first six counts of fraud and deception, the foreman followed the instructions of the judge and delivered verdicts of ‘not guilty’.
The clerk then read out the seventh charge: failure to supply a copy of the magazine to those companies who, having paid for an advertisement in the said magazine and requested a copy of the said magazine, failed to receive one. ‘How do you find the defendant on this charge – guilty or not guilty?’ asked the clerk.
‘Guilty,’ said the foreman, and resumed his seat.
The judge turned hi
s attention to Kenny, who was standing to attention in the dock.
‘Like you, Mr Merchant,’ he began, ‘I have spent a considerable time studying the Data Protection Act 1992, and in particular the penalties for failing to adhere to clause 84, paragraph 1. I have decided that I am left with no choice but to inflict on you the maximum penalty the law allows in this particular case.’ He stared down at Kenny, looking as if he was about to pronounce the death sentence.
‘You will be fined £1,000.’
Mr Duveen did not rise to seek leave for appeal or time to pay, because it was exactly the verdict Kenny had predicted before the trial opened. He had made only one error during the past two years, and he was happy to pay for it. Kenny left the dock, wrote out a cheque for the amount demanded and passed it across to the clerk of the court.
Having thanked his legal team, he checked his watch and quickly left the courtroom. The Chief Inspector was waiting for him in the corridor.
‘So that should finally put paid to your little business enterprise,’ said Travis, running alongside him.
‘I can’t imagine why,’ said Kenny, as he continued jogging down the corridor.
‘Because Parliament will now have to change the law,’ said the Chief Inspector, ‘and this time it will undoubtedly tie up all your little loopholes.’
‘Not in the near future would be my bet, Chief Inspector,’ Kenny said as he left the building and began jogging down the courtroom steps. ‘As Parliament is about to rise for the summer recess, I can’t see them finding time for new amendments to the Data Protection Act much before February or March of next year.’
‘But if you try to repeat the exercise, I’ll arrest you the moment you get off the plane,’ Travis said as Kenny came to a halt on the pavement.
‘I don’t think so, Chief Inspector.’
‘Why not?’
‘I can’t imagine the CPS will be willing to go through another expensive trial, if all they’re likely to end up with is a fine of £1,000. Think about it, Chief Inspector.’
‘Well, I’ll get you the following year,’ said Travis.
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