Economic Crime (Transparency and Enforcement) Bill

Lord Carlile of Berriew Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Lord Carlile of Berriew (CB)]

My Lords, it is a pleasure to follow a speech of such forceful clarity as we have just heard from the noble Lord, Lord Eatwell. I should start by declaring my interests. The first is similar to those declared by the noble and learned Lord, Lord Garnier, as a practising barrister, although these days I do not do contentious advocacy in courtrooms. The second is that I am the director of a consultancy company that provides advice to foreign entities and foreign individuals—although, I hasten to add, not Russians. I shall say a little about the sort of interests that arise in a few moments.

In ordinary circumstances, I suspect that many of us in your Lordships’ House would be reluctant to support a Bill such as this without the normal debating time that we are given in conventional legislation. A high degree of trust is being placed in the Government to ensure that the Bill reaches the statute book fit for purpose and is applied in a way that means it will bite. However, we are in extraordinary circumstances. There is no doubt that the war being conducted by President Putin, and indeed Russia, against Ukraine is funded at least in part by the product of money that has passed, and passes, through the United Kingdom, and that it is in many ways money that has been obtained illegitimately through the plundering of the public purse of Russia.

That is brought into high relief today by the news that the Mariupol children’s hospital was bombed by the Russians, including its maternity unit, and the photographs of what is left are terrifying and ghastly. Russia has now become a clear enemy of international law, and its agents, including its oligarchs, have no right to expect us to apply in full our normal ethical legal standards to their behaviour, as in their complicity with the Russian state. Indeed, our prime task, alongside doing whatever we can to assist Ukraine, is to protect our own country, the United Kingdom, against being used as an unwitting instrument of international crimes against humanitarian law.

I shall start in substantive terms by referring, as others have, to unexplained wealth orders. I echo what was said by the noble and learned Lord, Lord Garnier, and my noble friend Lord Vaux in their very eloquent speeches. UWOs have been around for a long time but it is a fact that very few proceedings have been taken by the National Crime Agency. There have been four cases, of which one failed. I can tell your Lordships that around the members of the legal profession that I speak to, and there are many on a daily basis, there is astonishment that the NCA has not brought scores of applications to court for UWOs. The reason for that is plain and twofold: one is the risk of costs, which can be dealt with, but the other, which is more difficult to deal with, is that the NCA is simply horribly understaffed to deal with these cases. It is not that there are not people who could do it, but we have to commit to employing those people and they have to be of sufficient quality. They need to be good lawyers and good investigators so that we are not standing here in a few months’ time saying, “The NCA really hasn’t been effective”.

Then, as the noble Lord, Lord Eatwell, referred to, there is the role of Companies House. It just so happens that professionally, in my consultancy company, I made an application on behalf of a client to Companies House some weeks ago now, in full detail, for a company to be deregistered. The evidence in the case could not be clearer. The company concerned is an impostor; it is pretending by its name and its fraudulent activities to be a very great international entity, but it is not—it is just a bunch of fraudsters. It is probably six weeks since I sent that application to Companies House. It is not just that they have not done anything; they have not even acknowledged—apart from the most formal immediate acknowledgment—the receipt of the application that I put in on behalf of my client. So I am absolutely with the noble Lord, Lord Eatwell: Companies House either is not fit for purpose or has to wake up and achieve that part of its purpose. Companies House, like the NCA, needs the staff to deal with these issues because it does not have them.

I have two other substantive points. The first I raised in the debate on Ukraine on 28 February, which was answered clearly, eloquently and helpfully by the noble Lord, Lord Ahmad of Wimbledon. My point relates to law firms and, indeed. other professionals—I deliberately turn to a chartered accountant when I say that—who, mostly in perfectly proper circumstances before this conflict arose, without any breach of law or ethical standards, have been involved in actual or intended transactions that may well have brought financial benefit, and therefore belligerent facilitation, to the Russian state. Some of those are property transactions, although not all, and some are transactions that are worked on but not fulfilled. A great deal of work is going on in law and other professional firms in relation to transactions that benefit the Russian state and it could tell us a great deal about what the Russian state is doing, as well as revealing criminal activity. I hope there is no single lawyer in the UK, whether in the square mile or elsewhere, who would find it ethically acceptable to bring benefit to an enemy of the United Kingdom, but the opacity of the sorts of transactions that I am describing means that lawyers and other professionals may well be complicit—entirely unintentionally, although there are of course rogues in every profession—in the sorts of transactions that I have referred to.

It is important that legal professional privilege should continue to apply to legitimate transactions. I hope that no one in this House wants to wipe away legal professional privilege in a transaction because someone happens to be a Russian; after all, there must be some very respectable Russians around because quite a lot of them have given money to one of the major political parties in this country. I hope that will not be taken amiss, but as far as I can tell it is true. So how do we achieve the scrutiny of such transactions?

After the debate on 28 February, I wrote to the noble Lord, Lord Ahmad—I have not heard from him yet but this was very recently so I would not have expected a reply—suggesting that we should adopt the architecture of the National Security and Investment Act 2021, an architecture that is now up and running in, among other places, the Ministry of Defence, with a substantial group of people working on it. They are applying the national security principles, the 17 national security categories, that are exactly relevant to the sorts of transactions that I am referring to. I respectfully suggest to the Government that they should adapt the NSIA architecture to a register of transactions by lawyers that lawyers and other professionals would have to report in clearly described circumstances, even though legal professional privilege would continue to apply as an inviolable principle unless there was an effect on our national security, as described in the NSIA. It seems to me that that sort of architecture would satisfy what is in my view a need for professional firms, if they participate in transactions that now seem to be politically dubious apropos the Russians, to be examined.

The other issue I wish to raise is about non-Russians who own property in London. A significant number of special purpose vehicles have been created for well-known foreign people to purchase. These people are huge investors in this country—entirely honestly, in good faith and with strong ethical standards—who do not wish it to be known that they, as individuals, are the beneficial owners of those properties. They have good reasons. One good reason, as one might think, is simply to protect their privacy from unwelcome curiosity and criminals. Another possibly legitimate interest may be to protect themselves from unwanted curiosity from overcurious journalists. A third reason, and possibly the most important, is for national security issues—not ours, but theirs for the country in which they live.

I will briefly give a couple of examples. I remind your Lordships of the events of 2 October 2018 when Jamal Khashoggi was murdered in Istanbul by agents of Mohammed bin Salman and the Government of Saudi Arabia. This is an example of a Government finding out everything they need to know so that they can take out an enemy of the state in completely unlawful circumstances—in a friendly country—through an outrageous and brutally executed crime. People are entitled to defend themselves against that, as are the victims of Russian-led incidents. On 23 November 2006, in Bloomsbury, just yards from my own office in Gray’s Inn Square, Alexander Litvinenko was taken out by the Russians. By whose agents was he murdered on our territory using radioactive material? Vladimir Vladimirovich Putin. Perhaps we should have been warned then. Afterwards, there were the shocking events which took place in Salisbury and affected life in one of our most beautiful cities.

When he replies, I would be grateful if the Minister could confirm that, when registration is required, the legitimate privacy and interests of good foreign investors will be protected under the provisions of this Bill, particularly Clauses 21 to 25.

Finally, I apologise for not being able to be here next Monday when the Committee takes place. This is because I have a long-standing commitment aboard, otherwise I would have come to contribute further.