Register of Arms Brokers Bill [HL]

Debate between Baroness Jolly and Lord Judd

Committee: 1st sitting (Hansard): House of Lords
Friday 18th November 2016 Lords Chamber

[Lord Judd (Lab)]

My Lords, I must also apologise for not having been able to participate at Second Reading. However, I am glad to say that I cannot think of a Bill that is more pressing or important in the highly dangerous world in which we live.

Weapons are lethal. I have always held the view that the export of arms is so dangerous that it should be only to recognised allies, in the context of alliances to which we belong, or in the case of very specific arrangements that further defence interests as we see them and which can be monitored. The ethos has to be changed from one of exporting arms unless there is a reason not to, to seeing arms as very dangerous, hazardous and unwise things to export unless there is a very good reason for doing so. I believe that that underlying ethos is crucial. In the context of what I have just said, the amendment speaks for itself. As far as I am concerned, I warmly applaud it, as I do the Bill, and hope that it succeeds.

[Baroness Jolly]

Perhaps I can better help the noble Lord, Lord Swinfen, by explaining that the issue he raised comes under the second group of amendments. The amendments in the first group are merely technical to determine how such legislation could take effect.

--- Later in debate ---

[Baroness Jolly]

This amendment is really the nub of what we are trying to achieve. It calls for a fit and proper test for arms brokers. The majority of British arms brokers are decent, upright citizens who have chosen this particular profession and would most certainly pass any fit and proper person test as defined by the Secretary of State. However, as the Minister indicated earlier, some are brass-plate operators and work in offshore tax havens such as the British Virgin Islands, Cyprus, Hong Kong, Liechtenstein or Gibraltar. They pay no tax on considerable earnings.

The events of earlier this year highlighted the key role that offshore shell companies have played in large-scale tax avoidance, prompting a series of reforms and proposed new legislation in the Criminal Finances Bill, which will come before this House some time early next year. There is widespread political support to crack down on these activities and make it harder for individuals to use such offshore vehicles for tax avoidance, including greater powers of disclosure over such overseas assets.

Crucially, these offshore company vehicles have not just been used by those seeking to avoid paying tax. There is a direct link to arms brokering in that they are also the vehicle of choice for arms brokers wishing to conceal their activities. Here, I am clearly not referring to perfectly bona fide arms manufacturers, Ministers, members of the Cabinet or whatever who, if they are caught within the remit of the Bill, are caught totally unintentionally.

A registration system of arms brokers, including mandatory disclosure of all overseas company assets, would serve as a major enforcement tool for Her Majesty’s Government to tackle illicit brokering. It would also be fully consistent with complementary to parallel initiatives being pursued to clamp down on tax avoidance using the same overseas company vehicles and structures. As such, it would be wholly inconsistent with emerging government policy in this area and a huge missed opportunity to exclude arms brokering activities from the process of establishing greater oversight and regulation over offshore companies.

The UK has one of the most active and lucrative arms industries in the world and, at a time of global instability, it is critical that we play our part to ensure that it is transparent. Over 30 industries in the UK require registration, from bouncers to beauticians, yet people who make millions trading weapons, bombs and military equipment have no such scrutiny. The amendment would require all UK arms brokers to pass a fit and proper person test, bringing us into line with most western countries, including the USA and Australia. I beg to move.

[Lord Judd]

My Lords, the amendment is critically needed. It relates to my previous point. Ideally, we should export arms only when they are furthering our defence policies or our strategic alliances for specific purposes. If they are exported outside that context, it should be in a very carefully considered way that contributes towards world peace and stability. Of course all the huge issues of end use and the rest are critically important for context. From that point of view, I can imagine that only the most responsible citizens are qualified to be involved in this trade. The amendment is very important if we are to take the whole purpose of the Bill as seriously as we should.