Sanctions and Anti-Money Laundering Bill [HL]

Lord Bates Excerpts

Committee: 3rd sitting (Hansard - continued): House of Lords
Wednesday 6th December 2017 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, there are two issues here. The first is to make sure that money laundering checks are carried out somewhere in the chain. There could be various mechanisms to do so, some of which are suggested in the amendments. Then there is the issue of how Companies House itself will get the money to conduct the checks. That is the point of the provision in Amendment 69L for a mechanism to levy a fee. Obviously, there could be other mechanisms. As to Amendment 69J, if there is no bank account, the fee could be levied at that point. Ways in which to tighten up and get the money are the objectives of this family of amendments.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I thank the noble Baroness, Lady Kramer, for leading a short but interesting debate on these matters. I shall put some remarks on the record to see whether they satisfy her and my noble friend.

Amendments 69H and 69J would prohibit trust or company service providers, known as TCSPs, that do not carry on business in the UK from incorporating UK companies, unless overseen by a UK anti-money laundering supervisor. The amendments would also require UK companies to establish a UK bank account and evidence this to Companies House. The money laundering regulations 2017 require TCSPs carrying on business in the UK to be fit and proper. We will also shortly formally establish the office for professional body anti-money laundering supervision, or OPBAS, which will work to ensure consistently high standards of anti-money laundering supervision by professional bodies, including TCSPs.

If there are factors that make it unclear whether a trust or company service provider could be regarded as acting by way of business in the UK—in which case it would fall within the jurisdiction of a UK anti-money laundering supervisor—HMRC considers on a case-by-case basis whether registration for supervision is necessary in order to combat attempted evasion of supervisory requirements. I therefore agree with the intention behind the amendment. However, given the pending establishment of the office for professional body anti-money laundering supervision, it is right that we establish this body first and then take proper account of its conclusions around TCSP supervision before taking further action in this space.

Additionally, the problem that the noble Baroness, Lady Kramer, and my noble friend Lord Naseby correctly identified ultimately results from trust or company service providers exploiting the comparative weakness of anti-money laundering supervision in certain overseas jurisdictions. In order to comprehensively address this, our emphasis should not be solely on expanding the scope of our anti-money laundering regime, particularly given the practical difficulties that would arise from UK supervisors seeking to exercise effective oversight over trust or company service providers established outside the UK and with no physical presence within the UK.

Such circumstances would present significant challenges for effective supervision, which typically includes measures such as on-site visits to firms that present higher risks of money laundering. The most effective way of addressing the problem which the proposers of the amendment have highlighted is through effective international co-ordination to drive up standards of supervision in jurisdictions with weaker anti-money laundering regimes than we have here in the UK. This is the agenda which we promote with international partners through the Financial Action Task Force, and it is this agenda which will offer a durable, long-term solution to the problem of weak overseas supervision of trust or company service providers.

Amendment 69J would amend the Companies Act 2006 to require UK companies to establish a UK bank account and evidence this to Companies House on an annual basis, or otherwise pay a fee or financial penalty. The wider purpose behind this part of the Companies Act is to provide a simple mechanism for companies to confirm that corporate information registered with Companies House as required under other obligations is accurate and up to date. The amendment would significantly change the purpose of the annual confirmation statement. As drafted, it would additionally require all UK companies to demonstrate annually that they hold a UK bank account; otherwise, they would have to pay a financial penalty. This would mark a significant increase in the reporting burden on the 3.9 million entities registered with Companies House, the majority of which are small, local businesses which would have to provide evidence of a UK bank account every year.

Amendment 69K would require company formation agents—defined for these purposes as including the UK registrar of companies at Companies House—to conduct customer due diligence. I appreciate my noble friend’s remarks about the consultation which has taken place, led by my noble friend Lord Ahmad, with colleagues and officials. I understand and sympathise with my noble friend’s intention; it is quite correct that we should take steps to avoid corporate vehicles being used for money laundering. However, I hope I can convince him that his amendment is not the best way to do that—although he prefaced his remarks by saying that it was a probing amendment. He will probably want to reflect on my remarks in response to it.

The amendment would represent a fundamental change in the principles under which the UK’s company law system has long operated. The UK registrar of companies has a statutory duty to incorporate and dissolve limited companies. This is carried out by Companies House, which registers company information and makes it available to the public. Companies House is not—unlike trust or company service providers, which are already supervised for anti-money laundering purposes under the money laundering regulations—a private-sector profit-making business. The registrar has no discretion in law to refuse or decline a request to incorporate a company. Companies House therefore cannot decline to establish a business relationship in the way that firms regulated for anti-money laundering purposes must when they cannot discharge their customer due diligence obligations. Because of the registrar’s statutory obligations, Companies House is not considered to be a company formation agent. If approved, the amendment would require further substantial revision to UK company law to allow Companies House to operate in the same fashion as company formation agents.

Approximately 600,000 new companies are registered each year at Companies House. The customer due diligence measures required under the money laundering regulations are significant, and are required to be applied by regulated firms on an ongoing, risk-sensitive basis to prevent illicit actors making use of the financial system. They are not intended—either by international standards, EU law or UK law—to be applied by a public body to all companies that are incorporated within the UK. Were these measures to be adopted, they would be a significant, unfunded burden upon Companies House and would fundamentally alter its relationship with the company formation process. They would also unnecessarily delay the process of company formation. The overwhelming majority of UK companies are set up for legitimate commercial purposes. Applying this amendment as drafted would not address or identify higher risks of money laundering or terrorist financing, but would instead impose an across-the-board administrative burden on Companies House and individual companies.

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[Lord Naseby]

My Lords, I am grateful to the Minister, but he is just repeating the problem. I understand what he is saying about the EU directive, although I am not skilled in that area and would not claim to be. However, I am quite skilled in the practicalities of life, and if a quarter of a million companies are being registered and nobody is checking them, that is a huge loophole, and Her Majesty’s Government have to find a way around that. The commercial sector is doing its proper due diligence—yes, it does it for a fee—but the Government have to say, “Right, it shall all be done by the private sector and Companies House will carry on doing the little bit of work it does for £12”, or develop a section at Companies House to do it. I accept that more work may well need to be done, but we cannot have such a situation in this country.

I can even give the Minister a small case history of what could happen. Somebody goes to Companies House, pays their £12 and registers. It is then reported to HMRC that they have registered. They then write in four months later to say that they have ceased trading. That is a wonderful vehicle for money laundering: they are a registered company, and HMRC has forgotten about them because they have told it that they are not trading. If a quarter of a million of them are doing this—I am not saying there are quite as many as that—it is a huge loophole and Her Majesty’s Government have to figure out how to deal with that section of companies that are currently being registered fully through Companies House.

[Lord Bates]

I do not accept that all we are doing is describing a problem. We are of course doing that, but we are also highlighting that we are about to formally establish the office for professional body anti-money laundering supervision, which will be responsible for supervising the very professional body of trust companies to which my noble friend was referring. We will have to keep an eye on and watch out for this issue, but we are certainly not complacent about it; we are aware of it and watching it carefully.

[Baroness Kramer]

My Lords, perhaps I heard the same speech that the noble Lord, Lord Naseby, heard, because it seemed to me a speech in which basically all the loopholes were recognised. The argument was that we cannot do anything much about it. We have to co-operate with international regulators regarding companies based overseas with no UK presence that take advantage of Companies House; and regarding companies that go directly to Companies House, never get noticed again but, under the radar, can behave inappropriately. Some of them are entirely legitimate, I am sure, but within that pool there are bound to be some that are behaving very inappropriately.

Having recognised that there is a loophole, I am not vested in one set of answers to how we close it, but it needs to be closed. If the Minister has problems with the drafting or the way various phrases have been laid out, or if there are various other issues, surely all of those can be overcome once there is a decision in principle that this is a loophole and we ought to close it. I hope there is an opportunity for a conversation before Report, because I suspect that this House would be rather uncomfortable with walking away from a Bill like this and leaving a large and acknowledged loophole on the books and in the system. I beg leave to withdraw the amendment.

Sexual Violence in Conflict (Select Committee Report)

Lord Bates Excerpts

Monday 10th October 2016 Lords Chamber

[Lord Bates (Con)]

My Lords, like many Members who have spoken, I attended the global summit in 2014, convened by my noble friend Lord Hague. I attended a seminar hosted by the charity War Child. There our host, who led the proceedings, was a very impressive, well-spoken, British young lady. She began by sharing the fact she was born on Christmas Day 1992. I could see that people were flicking through the pages of the agenda and checking their emails. I confess I was one of them. She continued, “That was in Sarajevo in Bosnia during the war. My mother had been subjected to repeated sexual violence in a concentration camp. I was the result of this”.

She later went on to explain how her mother said she could not bear to hold her when she cried. “She wanted to strangle me,” she told others later, “so much was the trauma that lived on so long after the violence had passed”. She then explained how she had been adopted by a wonderful couple of British journalists who raised and educated her here in the UK.

As she sat down there was stunned silence. I remember thinking why that was. We had heard that all these things had happened; we had seen the videos and read the reports. That was why we were there: because we wanted to do something about it. Perhaps it was that we felt not just sympathy, but empathy with her, because this was someone who could have been our daughter, our sister, our granddaughter. It seemed to personalise the crime in a way we had not anticipated, but it also showed how sexual violence in war is a different category of crime that reached into future generations to destroy lives.

Moreover, where some victims of conflict—especially those involved in military organisations—may be regarded as heroes when they are injured, with sexual violence there is an insidious stigma and shame that perversely and bewilderingly falls on the victims rather than the perpetrators, as so many have said. Surely the first step to changing behaviour is therefore to ensure the perpetrators are labelled with cowardice and shame for such acts, and that victims and survivors are given the support they need to rebuild their broken lives.

This is why it is so important that this report has been prepared. I pay tribute to my noble friend Lady Nicholson, to all members of the committee for the thorough work they have done, and to my noble friend Lord Hague for courageously bringing this out of the shadows and shining a light on it to the international community. I also recognise the immense and ongoing work in this area by my noble friend the Minister, who is the Prime Minister’s special representative on preventing sexual violence.

I have just three comments or questions that I hope may add in some way to an outstanding report and to the encouraging response from the Government that we are debating this evening. First, it is very clear from the moving testimony of survivors in chapter 8 of the report the importance they attached to being able to talk openly about their feelings on what had happened to them and to overcoming the misplaced stigma, shame and so-called victim-blaming that often accompanies these crimes. The Department for International Development has done some important work on this, yet paragraph 82 of the Government’s response suggests that such services should be provided on a voluntary basis and only through informed consent. That raises a question as to how people were able to receive information to allow them to make an informed statement about consent and access to such services. I wonder whether my noble friend the Minister could say something on that, not in the winding-up speech, but perhaps in a letter following the debate.

Secondly, there is a need for justice to be done and to be seen to be done. The recent prosecution of the Congolese MLC leader Jean-Pierre Bemba Gombo at the International Criminal Court in March was a major step forward. Interestingly, the committee focused on one particular country—Iraq—to ask the Government to urge it to accede to the Rome statute, which the Government say they will do. But why stop there? What about the three permanent members of the UN Security Council—Russia, China and the United States—which have yet to ratify the Rome statute? What about other major influential states such as Turkey, India and Saudi Arabia? Should not pressure be placed on them, too? The best hope for reducing the level of violence is to have international systems of agreed laws with agreed justice systems to uphold them. It is deeply disappointing that countries are prepared to sign up to UN Security Council Resolutions 1325, 1820, 1888, 2242 and 2272 condemning sexual violence in conflict and then to withhold support from the very institution charged by the UN with investigating and upholding them.

The report sets out for the Government the clear and bold long-term aim of ridding the world of the scourge of sexual violence in conflict, yet surely the best way to stop war crimes is to stop war, under whose dark cover such acts are carried out: to end the scourge of sexual violence in conflict by ending the scourge of violence in conflict itself. Instead of spending our time picking up the pieces of broken lives, we can do more to help keep them intact. The preamble to the Charter of the United Nations, presented to its first General Assembly across the road from us in Methodist Central Hall, sets out the determination,

“to save succeeding generations from the scourge of war … and … to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women … and … to establish conditions under which justice and respect for the obligations … can be maintained”.

As the noble Lord, Lord Hague, said, we have all the words and the protocols—we even have the institutions—but the question is: do we have the will?

Ukraine

Lord Bates Excerpts

Tuesday 13th May 2014 Lords Chamber

[Lord Campbell-Savours (Lab)]

My Lords, will the Leader of the House call for shorter questions from Members?

[Lord Bates (Con)]

My Lords, let us hear from a Cross-Bencher.

[Lord Wright of Richmond]

My Lords, I welcome the passage in the Statement that refers to the need for the doors of diplomacy to remain open. Although that clearly relates primarily to the difficulties we have with the Russians on Ukraine, does the Minister agree that there are other subjects that urgently need continued diplomacy with Russia, such as the situation in the Middle East, Syria and Egypt and the threat of Islamic extremism, let alone climate change and energy? It is very important that, however we react to Russian misbehaviour, we do not close those doors.

--- Later in debate ---

[Lord Higgins (Con)]

My Lords—

[Lord Bates]

My Lords, I think we have had four questions from the Labour Benches and only two from this side.

[Lord Higgins]

Does my noble friend agree, first, that the combination of coalition government and fixed-term Parliaments seems to be resulting in longer and longer recesses and that there is a strong case for us having time to debate this issue in this House on a full-time basis? Secondly, is it not extraordinary that we have such elaborate arrangements on the military defence side of things yet very little thought seems to have been given to economic defence, with the result that we do not have the ability to reach agreement on short notice in the light of the present crisis on economic sanctions? What body is setting up the immediate procedure for dealing with the economic problems and the need to take economic measures in response to this crisis? Should we not have a permanent arrangement covering that?

European Court of Human Rights: Khodorkovsky Case

Lord Bates Excerpts

Tuesday 23rd July 2013 Lords Chamber

[Lord Bates]

My Lords, I would be happy to give way to the noble Baroness because I am sure that her remarks will be of greater interest to the House than mine. Like the noble Lord, Lord Hylton, I pay tribute to the noble Lord, Lord Trimble, for securing this debate and, also like him, I had the opportunity to meet Mr Khodorkovsky in 2003 at the World Economic Forum annual meeting, where he spoke very passionately and persuasively. He was the star of the show. At the time, he was Russia’s richest man and chief executive of Yukos and could seemingly do no wrong. He spoke of the importance of corporate governance and independent oversight and was innovative in bringing foreign investors on to the board of his company to improve oversight. He was passionate about shareholder rights and issues of that nature. We were all greatly impressed by this man. At that meeting he invited us to attend the first annual corporate governance summit on investment in Russia, which was to be held in Moscow later that year. We all dutifully turned up in Moscow only to find that our host and sponsor was in prison. That was a bit of a shock and did immense damage to foreign perceptions, particularly as regards foreign investment as many institutional investors had turned up.

I do not think there is any doubt about how this situation came about. Mr Khodorkovsky was a very rich and powerful man. In the period between the January Davos summit and his own summit in Moscow he had declared that he intended to stand down from the chief executive position at Yukos in 2007.Given that President Putin’s term was to come to an end in 2008, that was a very clear indication that Mr Khodorkovsky’s intent was to pursue political office. It would not be the first time that the lethal cocktail of oil, political ambition and extraordinary wealth led to some pretty unpleasant happenings. The mechanism by which the events happened became clear afterwards. In an article in Time magazine in January 2011, there was a very interesting interview with Igor Yurgens, who was principal adviser to President Medvedev. Igor Yurgens said:

“Everyone understood [the first trial] was a case of selective justice. They all broke the law and only one was put in prison”.

A senior official stated:

“No one said it out loud, but of course it’s impossible to mention Russia’s investment image”

abroad without referring to what happened to Khodorkovsky. Therefore, it was clear that immense damage was done to foreigners’ perception of the country.

William Browder, whose Hermitage Fund was the largest foreign investor in Russia, said in the Time article:

“It seems they’ve decided they don’t care what anyone thinks outside of Russia”.

Browder says that the Russians need to ask themselves why Russian stocks have a market value 50% to 70% below their peers in other emerging economies. The reason is simple: in Russia, you have property rights conditional on the whims of various corrupt officials who may decide your future. We hear all that and we think, “There the Russians go again. We have seen it all before. The Russians are up to their usual tricks. Putin is up to his usual tricks”.

I close by making a slightly wider point. I would argue that, going back through history, one of the greatest weaknesses of British foreign policy is that we have manifestly failed to understand Russia. Churchill famously described Russia in 1939 as,

“a riddle, wrapped in a mystery, inside an enigma”.

It has puzzled us and we have never quite got to grips with it or how to respond to Russia in foreign relations.

In a thoughtful paper by Andrew Monaghan for the Foreign Policy Centre entitled, UK-Russia Relations: a Bad Case of Mutual Misunderstanding, he says that the political other is the problem,

“particularly as often portrayed in an over-simplified, headline-based approach. Each appears to be a major target for the mass media of the other, which tends to emphasise and often exaggerate the conspiratorial element of the other, usually framed in spies, hostile intelligence operations, ‘cloak and dagger’ intrigue and murder, and competition for international influence”.

That is indeed probably a pretty accurate description of how relations have been, but in many ways, it belongs to the pages of a John le Carré novel such as Smiley’s People. We need to think about how our perceptions of Russia can themselves come in from the cold.

In this regard, we need to recall how, going back through history, Russian-UK relations have been a strength. As far back as the Napoleonic Wars, the Great War and the Second World War, we have been on the same side; our interests have been aligned. When we are tempted to engage in that rather simplified gesturing towards Russia, it does little to improve our misconceptions. If we really want to understand the Russian people, we need to start reading a little more of Pushkin, Chekhov, Tolstoy and Dostoevsky and a little less of John le Carré, because Russia is today an important point of reference for us in foreign relations. If we want to do anything about the bloodshed and the appalling situation in Syria, if we want to do anything about Iran and its nuclear aspirations, there is no question but that we cannot do it without Russian engagement.

The Russians, in my limited experience, are fully aware of the shortcomings of their own systems of government, but they are also hugely proud of their country and implacable in their belief that it is solely their responsibility to sort it out, because they are the only ones who truly understand it. In that respect, at least, they are rather like us.

Syria and the Middle East

Lord Bates Excerpts

Monday 1st July 2013 Lords Chamber

[Lord Bates]

It is a privilege to follow the noble Lord, Lord Hannay, who is always very thought-provoking. The only point with which I slightly take issue is more a moral one than a foreign policy one about the line between good and evil. Far too often we hear portrayed in public discourse, particularly in regard to foreign policy, that there are unblemished good people and despicable bad people. We align ourselves with the good but, when we intervene, we find out that they were not quite as good as we thought and the bad were not quite as bad as we thought. I am reminded of The Gulag Archipelago by Alexander Solzhenitsyn, in which he reminded us that the line between good and evil runs not through religious groups or nation states but through each and every human heart. That is something we need to bear in mind as well.

I pay tribute to my noble friend Lady Warsi for introducing the debate. The noble and learned Lord, Lord Morris, reminded us that she was on duty in this House on Thursday last week, replying to a Question, and here she is again today. Over the intervening weekend, she was in Afghanistan, Pakistan and, I think, Kazakhstan. She has amazing energy and dynamism. If there was ever an award for value for money on the part of Her Majesty’s Ministers, she would come top of the list in my view.

Like most people, I have been deeply moved by the scenes we have seen every day in Syria. Last year, during the Olympics and Paralympic Games, I could not quite bring myself to celebrate this great party in London when many of the parties to it were actively engaged in a humanitarian disaster in Syria. Therefore, I went to Lebanon, probably fairly naively in many people’s view, to try to offer humanitarian assistance, and ended up in the Bekaa Valley, where I saw the wonderful work that organisations such as World Vision were doing.

One of the hopeful things which struck me was that I had expected to see mass refugee camps in the Bekaa Valley but did not do so. When I asked where they were, I was told that such is the generosity and hospitality of the people in that region that they had taken all the refugees from Syria into their homes and the humanitarian aid was being distributed to the people who had taken them in. I was moved to find out that they would literally give the refugees their last cup of flour or their last glass of water.

After a couple of days, we went to Zahlé, a Christian town overlooking the Bekaa Valley, where one evening I went to the home of a very gracious academic from Damascus who had been exiled to Zahlé with his family. As is the wont of politicians, I wanted to know what the quick fix was and what needed to be done. In a fairly heavy Arab accent, he said, “You need to understand history.” When I replied, “Tell me about it”, he said, “No, you need to understand your history in our history.” Again, I did not quite understand, so he patiently explained to me that the best thing I could do was not necessarily to be there in that situation but to go back and learn more about our country’s history in that region.

I did not go back to London but to Beirut. Thanks to a backstage pass at the American University of Beirut, I managed to get access to a comprehensive reading list and sat in café-bars in Hamra reading up on what had happened. I was frankly amazed because there was much of the history that I had not appreciated. It stretched back to 1798 and the Napoleonic invasion of Syria, which then led the British to consider that their line of supply to India, the jewel in the crown of the Empire, was potentially under threat. We immediately decided to invade Afghanistan and had the first Anglo-Afghan war because that country was to be a buffer state. We did not like the person in charge there, so we changed him and put in someone we thought was more favourable to us. They did not last long and we were back 30 years later, involved in the second Anglo-Afghan war, this time with a larger force to back up a despotic leader who mercilessly oppressed his people. However, in exchange, he allowed his foreign policy literally to be dictated by the British. That situation continued for a while.

The Russians also had interests in and wanted to make moves towards India, and expressed a desire for a greater stake in Afghanistan. That led to a carve-up between Russia and Britain—no Afghans were involved—along the Durand line. If history tells us one thing about British foreign policy, it is that the one area in which we are deficient is drawing lines on a map. We do not have a particularly good track record in that regard, whether it was Radcliffe in India, Pakistan and East Pakistan, Durand, or Sykes-Picot in Syria. We made those and further agreements that culminated in the collapse of the Ottoman Empire, which the noble Lord, Lord Wood, mentioned in his excellent speech. The area was also divided up under the Mesopotamia mandate. I read writers such as Gertrude Bell, TE Lawrence and Aubrey Herbert and my eyes were opened to what had been happening.

I realised afterwards how important it is to understand how we are viewed in that region. Therefore, when we come in with thoughts about arming one group or another, or intervening in a particular area, it can be misconstrued. I have noticed that there are three historians in the Foreign Office, and my right honourable friend the Foreign Secretary, as a historian, is keen to expand our historical access in the Foreign Office. The current historian there has remarked that some of the people of Helmand think that the British are there today to avenge the defeats of the first, second and third Anglo-Afghan wars—I forgot to mention the third. Therefore, understanding history is crucial to all this. It was Edmund Burke who said:

“Those who don’t know history are destined to repeat it”.

If we can understand more about how we are perceived, we might draw a few conclusions. The first is that we do not have the basis or moral authority to act alone in that region. Going back 200 years is one thing, but I have to say that the past 10 or 20 years have not been too distinguished either. We need to be very conscious of that. The only legitimate means by which we can engage in the Middle East is through the United Nations. The fact that we cannot do more through the United Nations is in many ways a result of what happened when the Chinese and Russians felt that they were duped by certain resolutions relating to Iraq and Libya. Therefore, the first thing we could do would be to repair those relations with China and Russia so that we get a unified voice.

I do not think there is any doubt that the future of the Middle East lies in the hands of the people of the Middle East. They have to resolve this matter themselves. Part of our contribution to that will be to acknowledge that, whether it was the Russians during their imperialist time, the French during their imperialist time, the Germans with the whole episode of building the Berlin to Baghdad railway before the last war, the British or, more recently, the Americans, far too often we have seen the Middle East as something of a plaything or an instrument to be tackled.

I end with a quotation from George Curzon, a British Foreign Office Minister who went on to become viceroy of India. He categorised that whole period of 19th-century intervention in the Middle East as the “great game”. He said:

“Turkestan, Afghanistan, Transcapia, Persia—to many these names breathe only … utter remoteness … To me … they are the pieces on a chessboard upon which is being played out a game for the dominion of the world”.

We have a history in that region that is part of the problem in that region. Being honest and open about that and seeking to engage with people, encouraging them to make their own future without foreign intervention, is the only way forward.

Afghanistan

Lord Bates Excerpts

Thursday 14th March 2013 Lords Chamber

[Lord Bates]

My Lords, I, too, pay tribute to my noble friend for securing this debate and for the way she introduced it. She is a real breath of fresh air in an area which is often dominated by impenetrable foreign policy elites who have their own private conservations and reach their own conclusions, which sometimes bewilder us. Some of those elites were telling us 13 years ago that the invasion in 2001 would deal swiftly with the enemy. We then put in place the groundwork for the presidential election in 2004 and many people were suddenly telling us that the Taliban would be exposed, that we would have human rights and democracy, and that effectively we would have a country such as Denmark. However, we do not have that. That fact that 10 years later we are still wrestling with these impossible challenges is something that ought to humble us. That is very much the theme of my contribution today. I want to make the argument that essential to the success of the push for peace are truth and honesty about our roles on all sides. That then leads to humility and respect, and from that we can start to build trust. That is the foundation on which relations must be built.

Let us deal, first, with some harsh realities. These are very difficult statements to hear. My honourable friend in another place, Rory Stewart, who understands this region very well, wrote an article in the Financial Times in September last year saying that it was time to be honest about Afghanistan. He said:

“The gap between the language of policy makers and the reality is typical. It is time to be honest about Afghanistan: we face a desperate situation and an intolerable choice”.

He continued:

“They have tried ‘ink-spots’ and ‘development zones’; counterinsurgency and nation-building; partnering and mentoring; military surges, civilian surges and reconciliation. Generals and ministers called 2004, 2005, 2006, 2007, 2008, 2009, 2010 and 2011 ‘decisive’ years in Afghanistan. None was. None will be”.

That is pretty stark as a statement. Those who regard themselves as being privileged to live in this country recognise the honourable service and sacrifice of our British forces, 440 of whom have lost their lives and thousands of whom have been injured. However, I do not think that we honour their sacrifice by somehow dismissing the mistakes that have been made and the problems that exist. We honour their sacrifice by being honest and true and by expressing our determination that these efforts will succeed.

I want to point to where we can learn from our experience in Northern Ireland and talk about the elements that are important if there is to be a lasting peace. I very much welcome the push for peace announced by the parties at the Chequers summit on 4 February. The first point is that the parties to the conflict have to be the parties to the peace. We can all get on our high horse and say, “We’re not going to talk to them. They’re evil and guilty of atrocities. We’re not going to sit in the same room as them”, and so on. If we had done that, we would not have got anywhere near having peace on the ground in Northern Ireland, we would not have released people who had been guilty of terrorist outrages before their sentences had been expended, we would not have sat down and talked to Sinn Fein, and we would not have had the negotiations that led to the Good Friday agreement. So the parties to the conflict, however difficult it may be, have to be the parties to the peace. That means that there needs to be a role for the Taliban and for other organisations around the table because there can be no peace without them. I was interested in the suggestion from the right reverend Prelate that perhaps there is also a role for Iran. Everything within us says, “What? Iran? You’re kidding”. But if we want peace, we have to start talking rather than posturing. That is our lesson.

As preparations get under way for the Kabul follow-up conference next month, consideration must be given to that. I should be grateful if the Minister would comment on the role that the Taliban will play and whether, as some evidence suggests, it will lead to other very important parties, particularly from Pakistan, saying that they will not attend because the Taliban will not be present. We need to face up to that point. The second point, which has been very well covered by the noble Lord, Lord Parekh, is that whatever the solution, it cannot be imposed but must evolve and come from local people; it must be their solution, not ours. I made a note of the excellent line that Afghanistan cannot relive someone else’s history. That is very profound and true, and we need the centrality of Afghanistan having its own solutions.

We also know from our experience in Northern Ireland that the economy is critical to any success. We know that poverty and economic deterioration are challenges, whether in Northern Ireland or Afghanistan. That causes concern. I was reading a report from Oxford Analytica, which said:

“As NATO withdraws the economy will contract”.

Why will it contract? It stated that it is because,

“90% of the Afghan budget comes from foreign donors and 97% of the total economy is linked to the NATO presence and foreign aid”,

with the other 3% coming from opium production. That is not quite the basis for a long-term sustainable economy, so the economy is critical.

I come to my final point on the absolute rejection of violence as a means of achieving an end. Some will say, “That is completely unreasonable; you can’t say that in Afghanistan. Don’t you understand what is going on?”. We understood very well what was going on in Northern Ireland, yet it was only when it was laid down in the Good Friday declaration that all the parties affirmed their,

“total and absolute commitment to exclusively democratic and peaceful means of resolving differences on political issues”,

that progress began to be made. There needs to be an absolute rejection of violence by all parties around the table. But, of course, that means some tough points for us. I was disturbed to read that less than a week after the Chequers summit, which held out that positive hope of the push for peace, that NATO’s ISAF forces were called in to launch an air strike in a village in eastern Afghanistan where there were believed to be Taliban fighters. There were, but as well as the homes destroyed, 10 women and children were killed, and tens more were injured. That led to some forthright words from President Karzai; “How could they ask foreigners to send in planes and bomb our own houses?”. It is a problem. If there is to be lasting peace, there must also be restraint in these crucial days and months.

On 2 March, less than a month after the Chequers summit, we had that terrible incident, again involving NATO’s ISAF, when two boys, mistaken for insurgents, were gunned down by a helicopter gun ship. How could they be mistaken for insurgents? They were both under seven years old; they were gathering firewood in a field and were walking behind a donkey. These are serious charges. When we want to give an example of how Afghanistan can prosper in the future we must set harsh targets. Such conduct would not be tolerated at all in our own country. When Jean Charles de Menezes was shot, we had endless inquiries. There were inquiries into Patrick Finucane and Bloody Sunday. There have been endless inquiries in our own country, but we did not even acknowledge the names of the two boys who were killed in that incident. Elsewhere they are named as Toor Jan and Andul Wodood, and they deserve to be recognised and their families deserve to be cared for.

Such incidents undermine the push for peace, however well intentioned they are. We must exercise restraint in the conduct of violence. These people are not statistics; they are not collateral damage. They are real people going about their daily work in their own country and we need to recognise that. It is difficult but it is possible, but it will come about only if all the parties join together and renounce the use of violence. All the parties must acknowledge their mistakes and together express their desire to seek a justice system, a way of resolving disputes without violence and the prosperity of the people of Afghanistan. We all wish them well in that.

Syria: Olympic Truce

Lord Bates Excerpts

Monday 16th July 2012 Lords Chamber

[Lord Howell of Guildford]

I can understand the noble Baroness’s feelings. On the broad issue, Kofi Annan is now in Moscow pressing the Russians who—with the Chinese—are a key part of this story, so that we can move to a Chapter 7 UN resolution. As for safe havens, of course thought is being given to these matters, but the noble Baroness knows that for them to be policed and operated on Syrian soil means the involvement of personnel and conditions inside Syria which simply do not exist at the moment. They would involve much higher risks and many more dangers than we face even at present. As to safe havens, the authorities in Turkey have created some refugee havens and areas to which many people have crossed the border and entered. However, safe havens and corridors within Syria have been considered but are not a realistic possibility as we see it at the moment.

[Lord Bates]

Although I share my noble friend’s revulsion at the events in Syria, the fact is that Syria is a co-sponsor of the Olympic Truce resolution which this Government have done so much to promote, and which this Government proposed to the UN General Assembly last year. These are desperate times and there is a case for desperate measures. Could not one of those measures be to use the Olympic Truce which comes into force on 27 July as the basis on which a delegation involving the previous proposers of the Olympic Truce, China, and the next proposers of the Olympic Truce, Russia, could go to Damascus under the auspices of the UN and the IOC to plead for Syria to honour this important commitment?

[Lord Howell of Guildford]

First, I acknowledge and salute my noble friend Lord Bates’ work in promoting the Olympic Truce ideal, which is widely supported. Of course, the British Government took the lead in co-sponsoring UN Resolution 66/5 on, “Building a peaceful … world”. The question that my noble friend rightly poses, through some very creative thinking, is whether we could not somehow involve China and Russia in joint action to mount more pressure on Damascus—indeed, on both sides in Syria—to cease their appalling and violent activity. A short while ago my right honourable friend the Foreign Secretary agreed with Mr Lavrov, the Russian Foreign Minister, a joint statement on co-operation on the ideals of the Olympic Truce. There is a basis there for further discussion. I am also sure that Kofi Annan will be raising the matter in Moscow now while we are discussing it here. The basic ingredients are there for something along the lines that my noble friend mentioned. However, I am afraid that it is a long haul ahead and there are many difficulties in the way. But the truce is a potential asset in trying to move forward and get a grip on this horrific situation in Syria.

UK Industry: International Competitiveness

Lord Bates Excerpts

Thursday 5th July 2012 Lords Chamber

[Lord Bates]

My Lords, it is a privilege to take part in this debate and I, too, pay tribute to my noble friend Lord Jenkin for securing it and for the compelling way in which he introduced it by making the case for Britain. In listening to the debate, not least in following my noble friend Lord Sheikh, I have been struck by the deep level of expertise that exists in this Chamber to conduct such a debate. There is wide expertise at a very high level of serving on the boards of international companies and in international trade, none more so than that of my noble friend Lord Green on the Front Bench, who will respond to this debate.

I want to pick up on one point made by my noble friend Lord Sheikh in talking about making greater use of the resources within this House in trade missions. This is not a job application for me. I have spent most of my life in small and medium-sized enterprises, with a very strong emphasis on small, but I recognise that there are people with great expertise in this Chamber who really ought to be sent out there to bat for Britain. I am aware that there is sometimes just a little hesitation in diplomatic circles about having people who have rolled their sleeves up, and who have commercial expertise, engaging in this task.

I recently had occasion to walk across Europe, during which time I visited some 15 different embassies and consulates. I saw the fantastic diplomatic teams who we have there and the wonderful people working for UKTI. One of the most impressive people I met was the new consul-general in Milan, Vic Annells, who is doing a tremendous job there in securing investment. He came straight out of the private sector, having worked in trade in the Middle East, and was knocking doors out of windows, as they would say in the north-east. Sometimes we look a little sneeringly on people if they do not learn the language of the country they are in and we ask, “How can they communicate?”, but we have to remember that there is a universal language of business. People who are competent in that language are also required to make the case for Britain.

I want to divide my comments into three sections: first, on the competitiveness of UK plc and its finance, with a particular emphasis on its balance sheet and cash flow; secondly, on HR and R and D; and, finally, in terms of sales and marketing. In commenting on this debate, many colleagues have referenced the world competitiveness rankings. It is worth reading on a bit into the assessment that the World Economic Forum made:

“The United Kingdom (10th) continues to make up lost ground in the rankings … rising by two … places and … moving back to the top 10 for the first time since 2007. The country improves its performance across the board, benefitting from clear strengths such as the efficiency of its labor market … in sharp contrast to … many other European countries”.

The assessment went on to say that the UK has,

“sophisticated … and innovative … businesses that are highly adept at harnessing the latest technologies for productivity improvements … On the other hand”—

and I emphasise this point—

“the country’s macroeconomic environment”—

it is ranked 85th—

“represents the greatest drag on its competitiveness, with a double-digit … deficit in 2010 (placing the country 138th)”,

in the international league tables.

I mention that report because it is sometimes unfashionable to mention things such as controlling the deficit, which in this case is plan A, in strengthening our competitiveness but it is fundamental because unless we get the public finances under control, our AAA rating is at risk. France has already been downgraded and the only way that we are clinging on to that rating is by virtue of the fact that the Government are committed to getting that deficit down—and they have made progress on that. The deficit has reduced by about 25%, going down from £13.9 billion to £10.8 billion and is set to go down to £5 billion by 2014. That is fundamental to our success. As much as we want to herald the sales and marketing side and get excited about that, we sometimes need to remember that there is a real job of work to be done in keeping that deficit under control.

As managing director of the IMF, Christina Lagarde was absolutely right when she said that she shivers when she looks back to 2010 and considers what could have happened without fiscal consolidation in the UK. If we lost that AAA rating, the cost of our borrowing on the international markets would rise, not only for government but for corporations. The rise in those interest rates would force many firms out of business, and reduce our competitiveness on the international market. Repairing the balance sheet is obviously critical, but there is a second set of measures that need to be taken which come under the broad heading of supply-side measures. We cannot simply say, “We want to repair the balance sheet”. We need to make ourselves more competitive in the process. I believe that that is happening, most notably by reducing corporation tax rates, which now give us the lowest rate in the G7—and by the end of the Parliament we will have the lowest corporation tax in the G20; by raising the threshold of personal income tax to £10,000; placing a cap on benefits to ensure that people are always better off when they are in work; reducing taxes on jobs; reducing regulations; investing in infrastructure projects, such as £16 billion in Crossrail; the Green Investment Bank; the regional growth fund; public service reform; and by rebalancing the economy away from a dependence on financial services to manufacturing. Mention has been made of how manufacturing declined dramatically as a share of our international trade; that trend is now reversing. In my native north-east, we are celebrating the fact that we have had record exports for the second quarter in a row, and this is in the midst of a recession. It is quite phenomenal that this is happening. It is a reason to be encouraged; however, we need to reform public services and rebalance the economy. We also need to introduce rigour into the education system, enhance skills through expansion of apprenticeships and bear down on excessive regulation, despite the current legitimate outrage about LIBOR. We must remember that excessive regulation destroys jobs, and we want to be in the business of creating jobs.

On the banking crisis, there needs to be an honest conversation with the electorate. It will rightly join everybody in “banker-bashing”, as it is affectionately known in the press. The banks may well be—I am sure that they are—part of the problem and the reason why we are in this mess. However, it is only by the banks lending to small and medium-sized enterprises that we can get out of this. So we need to have a way forward. I would like to suggest that, rather than pillorying the banks, looking for fines, changing the regulations and so on—though I am sure that all that is right—it would be better for the banks themselves to come forward and say, “We realise that we have let this country down; we have let down small and medium-sized enterprises; we have not been lending as we should have been, despite our balances improving. We are going to engage in some restorative justice, by looking in the eyes of the people whose loans we have turned down and whose businesses have closed as a result, and apologising for that. We will go that extra mile to see how we can help British business export and compete in this market”.

I come to my final point, which is this. We must recognise that we have a bit of a confidence problem in this country at the present time. It is very much doom and gloom; a number of colleagues have referred to this. However, it is worth looking at the facts. The eurozone is undoubtedly in a mess; we are not doing particularly well. America is only doing slightly better. But that is not the true picture. The Office for Budget Responsibility points out that this year the economy will grow by 4.1% and next year it will grow by 6.4%. If we take world GDP as being roughly $70 trillion, 4.1% growth means that added to the world economy we will see a market for our business the size of France. Next year we will see added to the world economy, or a market for our business, an economy the size of Germany. Sure, exports to the EU may be down by 2.9% but exports to non-EU destinations have increased by 13.3%.

We will be welcoming the Olympics in a few weeks’ time and the world’s eyes will be upon this country. It is fantastic that the Government are tapping into that with their GREAT campaign, highlighting the great place that Britain is. More than 4 billion people will watch the opening ceremony. The GREAT campaign is tapping into the fact that this is still an outstanding country, despite its problems. It is a world financial centre; it is a world transport hub; it is the legal basis of international trade; it has the language of international trade; it is home to the top university, Cambridge; it has the winners of 76 Nobel prizes in science and technology—and we remember that in the week that we acknowledge the contribution of Peter Higgs, the theoretical physicist, to that list. It is the centre for the creative industries: Adele, Coldplay and Jay Sean accounted for 12% of global music sales and 23 Grammy awards. On sport, we are the home to Formula One, Wembley, Wimbledon, Lord’s for cricket, Newmarket for horse-racing, St Andrews and, of course, the birthplace of the Paralympic Games, in which we take immense pride. This is a great country and we have a lot to celebrate about the way we are going.

Lord’s Resistance Army

Lord Bates Excerpts

Monday 26th March 2012 Grand Committee

[Lord Bates]

My Lords, it is a privilege to follow the noble Lord, Lord Alton, in yet again highlighting this crucial human rights issue in such a powerful and consistent way. I want to focus on one issue relating to this: the International Criminal Court and the importance of the international rule of law in upholding human rights. By and large, most conflicts arise from one group of people feeling that they are superior to another or one group of people feeling that they are inferior to another. International law reminds us that we are all equal before the law and are all subject to the law. The International Criminal Court came into being in the Rome statute. Its objective has been said to be to,

“bring to justice the perpetrators of the worst crimes known to humankind—war crimes, crimes against humanity, and genocide”.

Joseph Kony was accused on arrest warrants of 12 counts of crimes against humanity and 21 war crimes. That evidence was mounted by the Office of the Prosecutor. I want to take a slightly sideways approach to this because Jason Russell did a huge international public service in raising this issue through the viral campaign on the internet, but I want to question who the target is. Of course, Joseph Kony ought to be, but what are we asking of the legislators? Is it really just to say that we want one man—one criminal—among many brought to the International Criminal Court, or do we want to see a day when we have universal application of human rights upheld by the International Criminal Court? In that case, his message needs to be directed to President Obama because the US remains a country that has not signed. It originally signed the wrong statue and then unsigned the wrong statute. How a nation that has done so much to uphold freedom and respect for human rights around the world can rest in not lending its support to the International Criminal Court in this prosecution needs a viral campaign many times more powerful than the one that we have seen. I hope that we will see that.

The question of resources is very powerful. The noble Lord, Lord Alton, referred to the fact that the US has taken initiatives and passed the Lord’s Resistance Army Disarmament and Northern Uganda Recovery Act, and it has promised $4.5 million per month to fund the campaign to try to track Kony down. That was sensational but why not have that channelled through the International Criminal Court to strengthen the court in its efforts to bring this man to justice? According to the latest records, the Office of the Prosecutor had a budget of €112,000—not per month but per year. It has one member of staff to bring this man to justice. If we want to see justice done and this man before a court, as we all desire, it behoves nations such as the United States to get behind us wholeheartedly and join the International Criminal Court, which will strengthen it in the process.

Manufacturing

Lord Bates Excerpts

Thursday 8th March 2012 Lords Chamber

Asked by

[Lord Bates]

To ask Her Majesty’s Government what assessment they have made of the United Kingdom’s international competitiveness in manufacturing, in the light of the recent investment by Nissan in north-east England.

[The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Green of Hurstpierpoint)]

My Lords, the United Kingdom has an internationally competitive manufacturing sector, with companies across a wide range of activities. The automotive sector is a great example of that. We were delighted to see the unveiling of Nissan’s new concept car in Geneva this week. We welcome the news that the production model will be built at the Sunderland plant next year, creating about 2,000 new jobs at Nissan and in its supply chain.

[Lord Bates]

I am grateful to my noble friend for that Answer. It is indeed very good news. Does he recall that three years ago the confidence of the north-east was shattered by three simultaneous announcements: the lay-off and mass redundancies at Nissan, the closure of the Corus steel plant and the shelving of plans for a £5 billion investment in new high-speed trains? Does he recognise that over the past year we have seen the reopening of the Corus steel plant, the go-ahead for the Hitachi investment in new trains, and now the thousands of new jobs coming through Nissan’s investment? Does he agree that this demonstrates restored confidence in manufacturing in Britain and also in the policies pursued by the Government?

[Lord Green of Hurstpierpoint]

Before I answer that question, I am sure that the whole House would like to join me in congratulating my noble friend on just completing a 3,000-mile walk around Europe in support of the Olympic Truce initiative.

Yes, I agree with my noble friend that this is a sign of confidence in the British economy and in the north-east in particular. There is recent evidence of inward investment into this country in a range of sectors—not just cars but also rail, as my noble friend mentioned, renewable energy and steel. The investment comes from a range of countries—Japan, India, Thailand, China, as well as the more traditional sources of Europe and the United States. This is a welcome sign of the rejuvenation of the British economy.