Tackling Corruption

Debate between Jim Shannon and Steve Barclay

Tuesday 2nd December 2014 Commons Chamber

[Stephen Barclay (North East Cambridgeshire) (Con)]

Tonight’s debate on the Government’s approach to tackling corruption is timely for a number of reasons. It builds on the progress and leadership given by the Prime Minister at the G8 and G20. It comes as we anticipate the long-awaited Government report into corruption, which has been delayed for a year but is due out, we understand, later this month. It comes as London is hosting a conference of 14 overseas territories discussing their approach to corruption, and it comes just a day after changes applying to extraction companies on disclosing payments came into legal force.

The debate is not just timely; it is relevant to London specifically. London is home to more than 250 foreign banks, the most of any financial centre. It is the largest currency trading centre in the world, processing 18% of cross-border transactions. In 2013, the then regulator, the Financial Services Authority, estimated that the level of money being laundered through London and the UK was between £23 billion and £57 billion. Indeed, the Home Secretary used the £23 billion figure when she gave a speech to the Royal United Services Institute, which suggests that the Government accept the scale of the challenge. To put those figures into global context, the African Union estimates the cost of corruption in Africa to be $148 billion and the World Bank estimates that up to $1 trillion is paid in bribes. We know this is a serious issue, and that is why it is timely that Parliament should address it.

I want to highlight three broad themes. The first is resourcing: how to get investigating corruption right and how we give life to the Government’s plan and address some of the challenges they face on the transfer of key personnel to the National Crime Agency. Secondly, how do we improve the policy in terms of industry, so that we move from a quantity approach, particularly on suspicious activity reports, to one based more on quality and targeted at the more serious multi-million pound cases rather than low-value transactions? Thirdly, I want to highlight a number of loopholes in the legislative framework, given that there will be the Second Reading of the Serious Crime Bill in the next week or two.

On resourcing, will the Minister clarify whether colleagues in the Department for International Development have asked for reassurance on key financial investigators moving to the NCA, particularly from the proceeds of crime unit and the City of London anti-corruption units? Is it the case that, to date, only two of the 35 key investigators have agreed to move across? Such expertise takes time to grow. If we are to have a new plan, there is clearly a risk if the experts are not there to implement it. I understand that, in a letter to the Home Secretary on 20 November, the Bond group of non-governmental organisations also highlighted this issue. Given that police officers do not TUPE across and terms and conditions are less favourable, is the Minister confident that the staff will move across? I understand that in the two years that the NCA has had the intelligence unit, not been a single investigation has resulted from that intelligence. We need to tackle the concerns about resourcing.

Will the Minister update the House on the challenges of buying in resource, if that is seen as a short-term fix? The case of Malawi and “cashgate” is a good example. DFID paid for a British firm, Baker Tilly, to provide expert consultancy advice. The scandal is known as “cashgate”, but we have not recovered any cash. Has there been any enforcement? We gave £106 million—a significant amount—in aid to Malawi last year. How much has been spent on the investigation? Is it true that these consultants had no powers to require banks to disclose financial transactions or request intelligence from foreign Governments? If so, what are the constraints on using external consultants in respect of such investigations in the future?

For policy reasons, the Government have decided not to pay for law enforcement out of money recovered from corruption investigations, but given that we have fewer than 100 investigators—in the Serious Fraud Office, the proceeds of crime unit and the City of London unit—would that not make sense? It would allow us to conduct more investigations, which would be in the interests of the countries being defrauded.

Will the Serious Crime Bill deal with the evidential test? It appears to be set too high and so acts as a cost disincentive to the bringing of cases, which is compounded by the time scales. Where there is a financial institution with a complex, multi-jurisdictional case, perhaps spanning many years, law enforcement agencies have just 38 days to build a case to the satisfaction of the courts to block a payment. That is clearly insufficient. We could learn lessons from Guernsey and its approach in the Indonesian logging case. We need a mechanism of unexplained wealth orders to allow law enforcement agencies to stop the clock and allow time to investigate. Does the Minister accept that 38 days is wholly inadequate when it comes to building a complex legal case on payments?

On the relationship with industry, the suspicious activity report procedure is based on regulatory compliance, rather than investigation. The industry pays out millions of pounds for document checks on one’s granny in respect of low-value transactions, while serious cases receive little scrutiny. Of the 316,527 serious activity reports filed by banks last year, just 110 were looked at by the proceeds of crime unit. The banks do not want to exit profitable clients and see them go to other firms, so we have this defensive filing of suspicious activity reports, 95% of which are not acted on by law enforcement agencies—they just sit on file for intelligence. It is not cost-effective.

Last Thursday, on the BBC’s “Question Time”, the Chief Whip—the Whip might want to sharpen her pencil—said that Facebook had been aware of intelligence relating to a terrorist attack but had not passed it on. Do the Government know whether the 300,000 or so suspicious activity reports filed by banks include any transfers of funds to people complicit in those attacks? We do not have the mechanism for filtering them effectively. Is that an issue of concern to the Government, particularly in the light of the discussion about Facebook?

We need to shift away from this catch-all defensive policy to one based on targeting high-value corruption cases, and we need to work more in partnership with financial institutions, and combine that with a greater fear factor in respect of money laundering. Does the Minister share my concern that the current consultation relating to the Financial Conduct Authority seems to be repeating past errors? We had a Financial Services Authority report in 2011 that showed problems relating to the money laundering of banks, and two weeks ago we had an FCA report showing again that small banks were failing on money laundering. If we go back to the 1990s, 23 banks were complicit in money laundering, yet no action was taken.

It might surprise the House to know that over the last decade, only two fines appear to have been imposed against individuals for money laundering, the highest of which was for £17,500. How confident is the FCA that, particularly given the number of foreign banks in the UK, we have the right approach to money laundering even today?

[Jim Shannon (Strangford) (DUP)]

I appreciate the opportunity to intervene. The hon. Gentleman refers to money laundering. In Northern Ireland, over some 30 years of a terrorist campaign, it was clear that paramilitaries were involved in it. A wealth of experience was built up by police officers both from the Royal Ulster Constabulary and from the present Police Service of Northern Ireland. If the hon. Gentleman wants to enable more prosecutions for money laundering, does he think it might be a good idea for the Government and the Department to take on some of those officers who have now retired and take advantage of their expertise to bring more prosecutions for money laundering?

[Stephen Barclay]

The hon. Gentleman makes an interesting point about how we learn from other jurisdictions in other territories. Italy is another example, with its experience of dealing with the mafia. The hon. Gentleman speaks from experience of the challenges within Northern Ireland where there is a great deal of expertise, from which we can learn.

On the fear factor for individuals, the Parliamentary Commission on Banking Standards put forward very good proposals, allowing a reversal of the burden of proof, but it is still the case that money laundering reporting officers are often not seen enough within the organisation and, not being at executive level, they often do not control the budget. That risks repeating past mistakes. Let us look at HSBC and the problems it got into in Mexico. To what extent does the Minister believe that the current regime would ensure that at a group level executives would be liable individually for fines if similar mistakes were made today?

The High Court recently heard the Nigerian OPL 245 case, which was dealt with by Lady Justice Gloster. It reveals a current impediment that applies to the judiciary, which I would like to draw to the Minister’s attention. In her ruling, Lady Justice Gloster said:

“I find as a fact that, from its incorporation and at all material times, Chief Etete had a sufficient beneficial interest in Malabu”.

She refers to the well-known case of Malabu, a $1 billion oil fraud. One can only look at that judgment, which says that if Etete had the beneficial ownership, he must have had it from the point of origin when he was the oil Minister of Nigeria. That is where the companies in beneficial ownership sat, having been set up in six days by a lawyer convicted in the French courts of money laundering. Yet Lady Justice Gloster could essentially adjudicate only over the spoils of that corruption. She had no power to do otherwise, because neither of the parties to the case claimed that the funds were corrupt. To what extent would the new plan put forward by the Government allow the judiciary greater powers where, in its judgment, a case that is being disputed is corrupt? That applies particularly in the arbitration courts, given the lack of transparency often seen in those proceedings.

Of course, non-governmental organisations could act as a friend of the courts in theory, but cost pressures invariably make that very difficult, while the likes of the Proceeds of Crime Act 2002 cannot be used to intervene unless there is a victim. If in this case the Nigerian Government are not of the view that they have been defrauded, very little can be done. We need to look at the way our courts operate in that regard.

Property is another area. It has been suggested that 45% of London properties valued at over £2 million are currently owned by offshore companies. The Prime Minister has taken some positive measures relating to the register of beneficial ownership, but the Minister must realise that that is null and void when it comes to those properties owned by offshore companies.

It is a well-known fact that beneficial ownership is very opaque, especially in the case of shell companies. Estate agents currently have no duties in relation to buyers, and even their duties in relation to the sellers who are their clients usually extend only to the offshore companies with which they are acting, or their lawyers. Would the Minister consider a requirement for beneficial ownership of property worth over £2 million to be disclosed to the Land Registry? She might even want to consider the imposition of a fine on offshore property-owning companies that did not wish to comply with the disclosure requirement—along the lines of those that were introduced as a result of recent banking regulatory changes—with the proceeds going to good causes. That simple measure could be applied over the next 12 months, and could bring a huge amount of transparency to the top end of the property market, where we know that money is being laundered.

Let me now ask some questions about legislation. First, will the Minister update the House on the position of the British overseas territories and Crown dependencies, given the lack of transparency surrounding their plans? Consultations in the British Virgin Islands closed 300 days ago but nothing has been reported, and the same applies to the Cayman Islands. Secondly, it is feared that industry guidance might fetter the effectiveness of new United Kingdom law relating to the transparency of payments to Governments for the extraction industry. A QC’s opinion recently raised concern in that regard. Will the Home Office be making any representations to the Department for Business, Innovation and Skills on the subject?

Thirdly, will the Government make it a condition that the countries to which we give aid comply with the United Nations convention against corruption? In particular, will they provide global leadership in requiring the publication of asset declarations on politically exposed persons? The UN has pressed for that, and I do not understand why we are giving aid to countries without expecting them to comply with the convention. Fourthly, will the United Kingdom introduce administrative orders, such as those introduced by Switzerland and Canada, so that we can rapidly freeze assets in post-revolutionary circumstances?

Let me end by referring to the troubling case of Sergei Magnitsky, about which concern has been raised with the Government by Members in all parts of the House, and on which there appears to have been a woeful lack of progress so far. The Minister will be well aware that the 25-year-old Russian lawyer was tortured to death in a Russian jail. I know that detailed forensic information has been given to the UK Government about British nationals who were complicit in the money laundering linked to his death, and that information has been provided by Hermitage Capital Management, but the UK authorities appear to have taken no action, despite a Back-Bench debate initiated by my hon. Friend the Member for Esher and Walton (Mr Raab), and supported by the hon. Member for Rhondda (Chris Bryant) and many others.

Other Governments have given leadership, notably the United States Congress, but there has been a serious lack of action from the UK Government in relation to the proceeds of the tax fraud that was linked to Magnitsky’s torture and death. What reassurance can the Minister give that there will be a change of gear, and that amendments will be tabled to the Serious Crime Bill to give effect to it?

Sports Funding (Rural Communities)

Debate between Jim Shannon and Steve Barclay

Wednesday 4th December 2013 Commons Chamber

[Stephen Barclay (North East Cambridgeshire) (Con)]

There is a wide discrepancy in sports funding between cities and rural communities, far in excess of what can be logically explained by population levels or other factors that can produce spikes, such as national centres of excellence in specific sports. I hope that the Minister will clarify her Department’s understanding of that variance, and tell me what action will be taken to address it. Since 2010, North East Cambridgeshire has received on average £120,000 a year from Sport England, from its annual budget of £322.6 million. That represents just 0.03% of Sport England’s budget, and I am keen to hear from the Minister why officials feel that that figure is justified, given the Government’s sizeable contribution to sports funding.

The Library confirms that, since 1995, North East Cambridgeshire has received a total of £2.9 million compared with, for example, Hammersmith, which has received £56 million. That could partly be explained by the fact that the GB rowing team is based in Hammersmith, but does that really explain that massive discrepancy? We should also take into account that some areas are getting double funding. Some are getting Olympic legacy funding as well as awards from Sport England, for example. Hammersmith received awards for tennis and sailing in September.

I wish to draw the House’s attention to three issues that are driving this discrepancy, which has existed for some time. My parliamentary neighbour, my hon. Friend the Member for North West Cambridgeshire (Mr Vara), was highlighting in parliamentary questions in 2009 his concern that communities such as ours were not getting an adequate allocation of taxpayer funds.

Three factors are particularly fuelling the current issue, the first of which is the complexity of the number of bodies that are allocating funds on behalf of the taxpayer. Sport England itself has 11 different grant schemes, and my constituency has never had a grant under nine of them; we have only ever qualified for two of the 11 schemes. There is no yearly breakdown of how much Sport England allocates under the schemes, and there are different time scales for the spending envelopes, so they do not run in a holistic way that fits together. Sport England’s staff costs this year are £13.5 million, which, given that a sizeable proportion of its budget is outsourced to national Government budgets, is not inconsiderable in terms of administrative costs. Indeed, its chief executive earns more than the Prime Minister, although that seems not uncommon in the sports world.

In addition to the 11 grants that Sport England gives, 46 national governing bodies are also given grants, and each of those has myriad schemes. For example, the Lawn Tennis Association makes a split between capital investment and a separate revenue fund, and within those the criteria frequently change. Those who get involved because they love sport, and not because they want to be accountants or to fill out forms, are often confronted with an alphabet soup of grant-making bodies, and that is before they get the match funding of local authorities, charities and the other bodies that they must deal with.

The second issue driving this problem is the confusion in, and frequent changes to, the criteria applied. Some criteria appear actively to discriminate—for logical reasons—against rural communities. Participation is, understandably often a key criterion—bodies want people to play if they are giving a grant—but that tends to drive funding purely to cities, often on the basis of flawed research. For example, all the eight priority areas identified by the LTA were in cities; it did not sample one rural area, so its criteria are distorting the basis on which it makes its granting decisions.

We also encounter a remarkable lack of consistency, which is not just a rural issue. Let us consider boxing in London. It is funded by the Mayor of London, the Department for Culture, Media and Sport, the Department for Education, the Department for Communities and Local Government and local authorities, all of which have different criteria and assess in different ways. I am curious as to what is being done to simplify and standardise the way in which these grants are being allocated.

The third issue is the lack of transparency in awards. Of course we see individual awards—the £5,000 awarded to X or the £10,000 awarded to Y—but who is looking at whether all 46 national governing bodies are allocating in the same concentrated areas? Who is looking holistically to see whether some areas are underlapping and other areas are overlapping? Where is the accountability for those areas that are not directing funds to needs, such as the needs in my constituency? How do we get transparency on that issue?

[Jim Shannon (Strangford) (DUP)]

I spoke to the hon. Gentleman earlier to seek his indulgence in allowing me to intervene. Helpfully, all the sporting projects in the countryside in Northern Ireland are funded by the Department of Culture, Arts and Leisure and by councils. However, because of social isolation and the need to have sporting projects in rural communities, we have also sought help from Europe and through the Department of Agriculture and Rural Development. We have used that money to help rural communities. Does the hon. Gentleman feel it would be helpful if the Minister considered that as an option to help rural communities to seek and access funding?

[Stephen Barclay]

The hon. Gentleman makes an important point, which reflects the complexity of the different bodies and the role of the Department in drawing this matter together and producing data that he and I can use to scrutinise how effective the taxpayer pound is in getting to the front line. He is right to draw attention to the isolation in rural communities where there are not the same options as in the cities. That is why it is important that we do not miss out across the 46 different governing bodies.

I also want highlight the lack of accountability around how awards are allocated. There is a real irony here. If we look at elite sport—at British cycling for example—we see the power and accuracy of real-time data. Those data enable us to understand what is happening across the full activity, and yet for the Department and the national governing bodies, it is unclear how that is being demonstrated to Members of Parliament so that we can accurately see whether the £120,000 we are getting, which is a fifth of what Cambridge gets—and Cambridge is just down the road—is actually the right level. The Minister’s assistance on that point would be appreciated.

I want to bring my argument to life with a few local examples. Let me take the complexity of the various bodies. Wisbech tennis club in my constituency currently has 130 members, which is a 14% increase on last year, and yet it has only grass courts and no lights. The club is very restricted as to when it can play, in terms both of times of year and times of day. If it rains, play must be suspended. The Lawn Tennis Association advised the club in 2012 that its bid for two courts and lights was too modest, and that to win LTA support it had to put in a bid for four courts. Sport England then changed the funding of the LTA, which led the LTA to withdraw its support. It was a classic example of two sporting bodies giving conflicting advice, which meant that the bid failed.

The club then put in a second bid. It still followed the LTA’s advice of four courts, but took out the lights. Sport England turned it down. This was logical to a certain extent, because without lights the club could not get the same numbers of people playing. The club was therefore penalised a second time for following a national governing body’s advice on securing funding from another body, Sport England, which strikes me as a pretty illogical process.

A third bid is now proposed for next week. The club has already spent £8,000 to £9,000 on planning and other things to get to exactly where it was at the very start, which is a bid for two courts with lights. This is a sport in a growing market town with massive levels of immigration from eastern Europe. Tennis helps to bring people together in the way that sport does at its best.

Let us look now at communication. Coates football has teams of all ages and 11 acres of playing fields, but no changing facilities. I welcome the fact that Sport England confirmed funding for the club, which coincidentally came through last week, but unless the funding comes from the other bodies, there will be insufficient money to deliver the facilities. Again, we need the different bodies to work together.

The third issue is the challenge to national governing bodies. On Friday, I will have the privilege of attending March amateur boxing in the Braza club. Some 40 kids train at the club three or more nights a week, yet the club has never had a penny of grant from the Amateur Boxing Association, which is given £4.8 million by Sport England. As taxpayers, we hand over £5.8 million to boxing, yet only £1 million of that goes to the clubs directly. The question is: where is the rest going? The chief executive of the body is on a six-figure salary, yet the volunteers at March boxing have to pay a fee to the ABA. The Government are quite rightly allocating significant funds to the boxing body, but the kids who are training in the club and not causing trouble and the volunteers are not getting the support that they need.

The Rugby Football Union has done many good things. It has been involved in some good schemes with Thomas Clarkson in my constituency, but if we look at the data, we see that 0.74% of its annual funding goes to the eastern counties of Cambridgeshire, Suffolk and Norfolk, yet we form 4.5% of the population. How am I, as a Member of Parliament, supposed to assess whether that is the right level? What is the role of the Department in assisting me in doing so?

I welcome the allocation of funds from the Minister. I know that she is passionate about sport, and indeed the hon. Member for Bradford South (Mr Sutcliffe) was widely respected across the House as a Sports Minister who was passionate about getting money to the community groups, but there is an alphabet soup of bodies and there is complexity. Complexity always drives up costs. We are talking about volunteers in our community groups doing what we all want them to, yet the system is not getting the money to them in communities such as mine. I hope that the Minister will agree to meet me to discuss the bids coming in next week from Wisbech tennis club, Coates and March boxing club so that we can deliver on our shared objective of getting more people playing sport in rural communities such as north-east Cambridgeshire.

Health Professionals: Regulation

Debate between Jim Shannon and Steve Barclay

Monday 4th March 2013 Commons Chamber

[Stephen Barclay]

My hon. Friend is right. A lot of the people at the Care Quality Commission doing the clinical assessments are not clinically trained, and, even when they have a clinical qualification, it often does not relate to what they are looking at—for example, we might have doctors looking at baby units. Her point applies to coding as well: as seen in media reports last week, the people reinterpreting the coding are often not clinically trained.

Whistleblowers have a unique vantage point on what is happening with patient safety, but for too long we have hypocritically lauded their contribution publicly while silencing or gagging them in practice. The Commission for Health Improvement found problems at Mid Staffordshire back in 2002, a peer review of critically ill children by the strategic health authority criticised Mid Staffordshire in 2003 and 2006, and whistleblowers at Mid Staffordshire raised concerns as far back as 2005, yet the warning signs were not acted on. Many members of staff simply chose to close ranks. There appeared to be a bullying culture which discouraged people from coming forward, and those who did were threatened. One nurse at Mid Staffordshire summed up the position by saying:

“The fear factor kept me from speaking out”.

This is not an isolated case. It is almost beyond parody, but the Care Quality Commission, the body to which whistleblowers might turn, itself used gagging clauses. It disgracefully smeared Kay Sheldon, a member of its board. When she had the courage to speak out, it was suggested that she had mental health problems. That is the culture. As my hon. Friend the Member for Bristol North West (Charlotte Leslie) pointed out during Prime Minister’s Question Time last Wednesday, three reports commissioned to mark the 60th anniversary of the NHS in 2008 which identified problems appear to have been buried. One of those reports, to Ara Darzi, referred to a “shame and blame” culture, and said that fear was pervading the NHS and at least certain elements of the Department of Health. Why were those reports buried?

Figures I obtained after a two-year battle in Whitehall showed that £15 million of taxpayers’ money had been spent over three years to gag whistleblowers. Why are we spending £5 million a year to silence those who are brave enough to speak out? We hide behind the guidance which says that the Public Interest Disclosure Act 1998 protects them, but, as we have seen in the Gary Walker case, trust lawyers threaten and intimidate whistleblowers although they know about that protection. I welcome the Secretary of State’s recent letter, but I must point out that gagging clauses have no place in the NHS today.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this important matter to the House’s attention. Does he agree that, at a time when mortality levels in the NHS are the highest they have been for years, the restoration of public confidence in the service is imperative? What steps does he think the Government should take to ensure that it is restored, and people no longer feel that it is dangerous to go to hospitals in our constituencies?

[Stephen Barclay]

The answer is to tell the truth. Constituents come to my surgery—I am sure that that the hon. Gentleman has the same experience—and talk about going to visit a husband of many years and finding him naked from the waist down, or taking soup in to feed patients. They know the issues. Let us be candid. There are many wonderful things about our NHS, but let us not hide the failures and concerns. Let us not have a culture of cover-ups that silences the whistleblowers.

An official NHS circular from 1998 states:

“It is not contrary to the Department of Health’s policy for confidentiality clauses to be contained in severance agreements.”

Will the Minister ensure that that is scrapped? The letter from the Secretary of State does not force trusts to take such action, and I think it is high time that we made the position on gagging clauses clear and beyond doubt.

Regulatory failure across hospitals nationally shows the need for greater data transparency, so that we can see the true patient outcomes and protect staff who speak out. That will secure a higher-quality and safer NHS for patients across the board. We need to move the health service out of its cover-up culture and into the light, and to ensure that individuals are held to account. The Prime Minister has said that sunlight is the best disinfectant, and that applies on our hospital wards. It is best for us to have well-informed patients and staff who are able to voice their concerns. It is clear from what happened at Mid Staffordshire, at the 14 hospitals that are under investigation, and at the 25 that were drawn to the attention of the Secretary of State that concerns about those hospitals—along with the many other concerns that are being expressed around the country—have not been acted on so far. I hope the Minister will be able to reassure us that he will now speed up such action.