Anti-Semitism in the UK

Lord Leigh of Hurley Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord Sharpe of Epsom (Con)]

I agree entirely with the noble Baroness. She will know that I am not brave enough to restrict her freedom of speech in any way. I think this goes back to what I said when I quoted Rabbi Sacks. He pointed out that anti-Semitism may begin with the Jews but it does not end there, so it is for all of us to combat it.

[Lord Leigh of Hurley (Con)]

My Lords, I thank the Minister for his words, and particularly for reminding us of the wise words of the late Chief Rabbi, Lord Sacks of Aldgate. I echo the comments of the noble Lord, Lord Mann. It is as he says, but it is actually worse.

I was talking to a beauty journalist yesterday and she was telling me of the tweets going around about beauty products, telling people not to buy from certain businesses as they are owned by a Jewish person and not to buy from certain businesses as they are owned by a person who supports Israel. It is biting, and it is not just beauty products but clothing products and any Jewish business. This is truly shocking. This last happened 70 years ago. It is spiralling out of control. Jewish businesses are being targeted because they are owned by Jewish people, and people are responding to it. I do not know what the Government can do about that.

As I mentioned earlier in this Chamber, I am president of Westminster Synagogue. On Saturday, the police told us that they would protect us. They sent 20 police officers and four vans, because the demonstration walked past our synagogue, and they felt that was necessary. That demonstration included people chanting anti-Semitic slogans and the expression “From the river to the sea”, which means genocide of the Jewish people in the State of Israel. Of course, the police did not do anything to stop those chants and protests. They did, however, take one person away. That person was standing behind a railing with a banner saying, “Hamas are terrorists”. He was manhandled by the police, his arms were locked and he was walked away. My noble friend the Minister says that the police are restricted in what they can do; they seem to be selective in deciding what to do.

Of course, I do not expect my noble friend the Minister to have answers to all these specific instances tonight, and I can only add to the praise of CST, of which I am proud to be a supporter. I commend Sir Gerald Ronson’s incredible work in promoting CST to the organisation it has become.

I add that it was extremely disheartening to see the disgraced academic David Miller allowed to tweet out his vile abuse of Jewish charities, and it was very disappointing that the University of Bristol failed in its case. One can only think that it did not try particularly hard. I hope the Government will think through how they can take action to stop people like David Miller from posting such vile abuse to people who are just trying to be philanthropists and to help others in need.

[Lord Sharpe of Epsom (Con)]

I thank my noble friend. I heard his comments about the synagogue and the march this afternoon in another Question. On that incident, as I said, it is very difficult to second-guess the police after the fact. I appreciate where my noble friend is coming from. The decision obviously has to be context specific. But the police are accountable for their actions and, speaking from a personal point of view, I read a good article in the Spectator yesterday by our noble friend Lord Godson. He was right to raise the questions that he raised in that article, and we are all right to question the police, after the fact, about why they did what they did, how they did it and all the rest of the operational matters that they have to remain responsible for. On the targeting of businesses, I have seen some of this stuff online, and I am afraid it disgusts me as well. I am not sure what the Government can do, but this is obviously noted, and I will take it back to the Home Office.

National Security Bill

Lord Leigh of Hurley Excerpts

Consideration of Commons amendments
Tuesday 4th July 2023 Lords Chamber

[Lord West of Spithead (Lab)]

My Lords, I will speak to Motion B1, an amendment to government Motion B. I am very pleased that the Government have finally proposed an alternative amendment, recognising that only the ISC can undertake effective scrutiny of intelligence and security work undertaken by the Government.

The ISC supports the government Motion on the basis that my Motion is also accepted. It removes the requirement for consideration of whether the ISC’s MoU needs to be updated to commence within six months. We are concerned that such a time restriction may have unintended consequences; it might inadvertently affect the ability of the ISC to oversee security or intelligence activity related to the Bill. For example, if the Government commence new security or intelligence activity as part of the Bill outside the ISC’s remit—beyond the six-month period—the Government could attempt to argue that they will not consider any commensurate update to the ISC’s MoU as considerations are required to start within six months of the Bill coming into force.

Because of the Government’s long-standing refusal to update the ISC’s MoU, and their continued arguments to justify their refusal to accept independent oversight of the committee, the committee is of the view that it will be much safer for us to remove this time limitation to avoid any possible confusion in the future. Although that sounds like a lawyer’s argument, this is a lawyer’s issue; it is something we have to be quite careful about.

While the government Motion will not remedy the significant gap in ISC oversight that already exists in relation to intelligence and security matters, it at least seeks to stop the oversight gap becoming even bigger. I hope that this reflects a turning point and the beginning of a shift in the Government’s position, including their acceptance of the need for robust, independent and democratic oversight of secret intelligence matters.

However, the House should not forget the wider problem, and we should continue to insist on a remedy. With my ISC colleagues in the other place, I have already explained repeatedly why the ISC’s MoU needs to be updated more broadly. I will not repeat those arguments now, other than to say that currently there is insufficient parliamentary oversight of the Government’s intelligence and security activities.

Intelligence and security matters are too important for there not to be comprehensive parliamentary oversight. There can be no activity by the Executive which escapes democratic oversight. The Motion is the first indication from the Government that they have begun to grasp this fundamental principle and the importance attached to it by those in this House. Despite the Motion’s significant limitations, I support it being added to the Bill, with my own Motion, to ensure that there are no unintended consequences which may negatively affect the ability of the ISC to oversee the entirety of this regime. I encourage the Government to use this as a foundation for constructive engagement on the rest of the ISC’s MoU, which, as I have explained, urgently needs updating.

[Lord Leigh of Hurley (Con)]

My Lords, I will speak to this closing part of the Bill. I declare my interest as the senior treasurer of the Conservative Party. It is not on the register of interests, because the registrar does not accept it as a declarable interest; I do not know why, but I bring it to your Lordships’ attention now.

I wish to speak because, as this debate concludes, it would be unfortunate if the reader of this debate and previous debates was left with the conclusion that political parties are in any way seeking to obtain donations from foreign parties or do not take considerable steps to ensure that foreign parties or intermediaries do not make donations to political parties. In the previous debate, the noble Lord, Lord West, commented that

“it is perfectly possible for companies to make significant donations to political parties despite clearly not making operating profits and therefore with limited explanations of how they can afford such donations and where the money comes from”.—[Official Report, 21/6/23; col. 237.]

However, many companies can of course raise substantial sums of money and not make operating profits— I have personal experience of that. That is not the issue; the issue is that regulated donees have to be UK-registered companies incorporated in the UK which carry on business in the UK. I know from my experience that considerable lengths are taken to ensure that those companies are companies that carry on business, by any definition, in the UK. That is a requirement of the Political Parties, Elections and Referendums Act 2000.

The companies must also be registered with Companies House. Later this afternoon, we will finalise our debates on the Economic Crime and Corporate Transparency Bill, in which I have had a large involvement. From that, it is clear that Companies House will have substantially greater access to information on companies’ accounts digitally to assess who the persons of significant control are.

Accepting or funnelling unlawful donations is already illegal. Every donation over £7,500 is declared and you can take my word for it that any donation that one might think is, shall we say, unusual leads to lots of inquiries from the press, which is perfectly reasonable, and others such as political opponents. The Electoral Commission has 233 staff. It has resources this year of £25.5 million. It is responsible for looking after political parties, not much more than that.

It is not particularly obvious to me what more political parties could do. They are not banks; they are not HMRC. It would be inappropriate to create a very false impression. Donors do not control parties. They do not influence or determine policy. They typically give modest sums of money because they believe in supporting a party and wish it to succeed. We do not wish to slip into state funding, which would be a very dangerous route. In fact, donors to all political parties should be thanked and recognised for their contribution to civil society.

[Lord Carlile of Berriew (CB)]

I slightly despair listening to the noble Lord. Can we just ask for a little humility from treasurers of all political parties? I am afraid there is plenty of evidence that the garden is not as perfect as the noble Lord, Lord Leigh, is saying.

[Lord Leigh of Hurley (Con)]

I beg to disagree and am happy to offer humility. I note that recently the Labour Party returned a donation from a Mr Ian Rosenblatt which it decided was inappropriate. All credit to it. It happens regularly. This is not a political issue; this a cross-political matter. As I say, every donation is listed, so there is 100% transparency. I welcome my noble friend the Minister’s proposals, which I think are extremely sensible and helpful to this argument.

[Lord Wallace of Saltaire (LD)]

We on these Benches very much welcome the concessions that the Government have made. I disagree with the rather overoptimistic interpretation of where we are from the noble Lord, Lord Leigh. In the last exchanges, the Minister said that the National Security Bill was about national security and not about donations to political parties, but donations to political parties from foreign powers are a matter of national security.

Indeed, in the last Commons debate on this, a number of rather distinguished Conservatives intervened to say how strongly they supported the amendment as put forward by the noble Lord, Lord Carlile, on the last occasion. I recall Sir Jeremy Wright saying that he found it “very difficult to disagree” with anything in the amendment. He is currently on the ISC and was previously a member of the Committee on Standards in Public Life when it was writing its report on public finance.

I have just read a paper on political finance that the Institute for Government has just published. That stresses how rapidly the context is moving and how the law needs to adjust to cope with that. It particularly stresses the extension of overseas voting rights to British citizens who have been resident abroad for a very long time, many of them dual nationals. Checking on where the ultimate source is for those things is going to be extremely difficult and probably impossible, but political parties should be on their guard against undue influence and the suggestions the Government are now making perhaps will help political parties to take further moves in that direction

I was also struck by the speech that David Davis made in the Commons last week about a donor to the Conservative Party who had given £750,000—not a modest donor, even by the terms of the noble Lord, Lord Leigh—who had spoken openly about buying influence and “access capitalism” as part of what he expected. This was a dual national whose fortune appears to have come largely from contracts within a number of post-Soviet states.

There is a problem there, and it requires investigation, and I welcome the Government’s acceptance that there is a problem and that it needs further investigation, and we look forward to reading the text of the amendment that the Government will move in the Commons and to the further work that they will do then—we hope in co-operation with other parties—to last beyond the next election. This is an area where we need to have electoral rules that are agreed by all the participants.

Economic Crime and Corporate Transparency Bill

Lord Leigh of Hurley Excerpts

Report stage
Tuesday 27th June 2023 Lords Chamber

This is very simple. All businesses should take reasonable steps to stop economic crimes such as fraud and money laundering being committed on their behalf by their employees. I hope that the noble and learned Lord will insist on these amendments, and I will support him if he does.

[Lord Leigh of Hurley (Con)]

My Lords, my noble and learned friend Lord Garnier wonders why the noble Baroness, Lady Bennett of Manor Castle, supports his amendment. I have heard wags tell me that he is referred to as a Green Peer, on account of the number of times he recycles his gags. That might be a little unfair—I hear disapproval, but never mind.

I will speak to these amendments, having followed the Bill extremely closely. The noble Lord, Lord Vaux of Harrowden, is of course right to pinpoint what we are debating: fraud perpetrated to benefit a relevant body. However, the noble Lord actually said “on the company’s behalf”, and that is not right. I do not think it is necessarily to capture exclusively where a company seeks to benefit itself; it could also, quite rightly, seek to capture an employee who commits fraud to benefit himself or herself because of a bonus arrangement or other matters. So it is not just on a company’s behalf.

In Grand Committee and elsewhere, I have argued that there should be exemptions for small and medium-sized companies, in opposition to Amendment 110. I totally agree with my noble and learned friend Lord Garnier that the numbers proposed by the Government—any two of the following: a turnover of £36 million; a balance sheet of £18 million, which is undefined; and 250 employees, which is easy to define—are not appropriate. As he said, they capture only 0.5% of companies, but of course they capture the most important companies, which is where this legislation is perhaps intended to attack—it covers pretty much every FTSE and AIM company, which would perhaps have someone to put their mind to undertaking a fraud.

Although I have reservations about Amendment 110, curiously enough I support my noble and learned friend Lord Garnier’s Amendment 117, which is eminently sensible and deals with the issue. He has specified a turnover of more than £10 million, a balance sheet of more than £3 million, and more than 25 employees, which is sensible and fair. However, that applies only to fraud. His Amendment 125D does not have any SME exemption but simply says that the Secretary of State must issue guidance specifically for SMEs and particular micro-enterprises. He recognises that there is a difference for SMEs and micro-enterprises, and I think we should do so. I am nervous about this legislation: we just do not know what that regulation might be and do not understand what the guidance might be, how it might work and what effect it will have on SMEs and micro-enterprises.

I had a micro-enterprise at one point; I started a business. I refer your Lordships to the register of interests, which discloses that the business grew quite substantially, but it was originally micro by any definition. I do not know how many of your Lordships have started and run a micro-business, where everything revolves around survival and one’s entire life revolves around next week’s and next month’s wages, paying suppliers and creditors, and dealing with HMRC. There are so many pressures on micro-businesses, growing through to SME businesses, and we should think very carefully about putting another hurdle in place, however small, that makes an entrepreneur say, “You know what? Maybe I won’t bother. The Government are saying that I’ve got to take care about failure to prevent fraud. Really? Is that something I should worry about at this micro level? Have I not got enough to do to try to survive?”

I urge caution in adopting Amendment 110. If it is passed, I urge the House to adopt Amendment 117. I would be very careful about adopting Amendment 125 without clarification of exactly what will be in Amendment 125B.

[Baroness Morgan of Cotes (Con)]

My Lords, I will speak briefly to this group. I thank my noble friend the Minister for the steps that the Government have taken in relation to the failure to prevent fraud offence and the identification doctrine. These are significant steps, and he is right to say that they will obviously be followed up in future Bills.

It is worth remembering the scale of fraud in England and Wales in particular. Some 40% of crime is fraud against individuals, and clearly the scale of the cases against small, medium-sized and large businesses is also devastating. On Friday, we will debate the wider issues relating to fraud looked at by the committee on digital fraud, which I was privileged to chair. I am grateful that, from that committee and the work with my noble friend, the Fraud Strategy was published in early May.

I support my noble and learned friend Lord Garnier’s Amendment 110 and the associated Amendment 121, and have added my name to them. He and the noble Lord, Lord Vaux, set out clearly why these amendments are necessary. There is no SME exemption in the Bribery Act or in relation to tax evasion.

I want to take on one of the points raised by my noble friend Lord Leigh. He talked about the survival of SMEs, and he is of course right to do so. I have not set up a small business but I have set up a small charity, and many of the issues are similar. If that small business or small charity were the victim of fraud, it would be absolutely devastating. One of the arguments here is the burden on small businesses of having to set up fraud-prevention measures, but they have to do it anyway these days because they have to be very cautious about anyone attempting invoice fraud or utility fraud. If they have an employee, they have to make sure that they are making best use and correct use of the corporate credit card, for example.

Noble Lords rightly referred to Clause 192 and the guidance that the Government will publish. We already have an example of it, as the Government have published the outline of how it would look. If this amendment is passed, it would be perfectly within the rights of the Government to set out clearly how that guidance should be interpreted by small and medium-sized enterprises, which are quite used to reading extensive amounts of guidance. If we want to have a broader debate about red tape and regulation, that is perhaps for another day, but they are used to dealing with much guidance. If they are likely to be victims of fraud, they will take that guidance very seriously.

I support these amendments and I support my noble and learned friend’s Amendment 125A on expanding the failure to prevent offence to money laundering. If we are going to introduce the failure to prevent offence, which I thoroughly welcome, we might as well do it properly and expand it to money laundering, which is also a huge a problem and one that the Bill seeks to tackle as well.

Economic Crime and Corporate Transparency Bill

Lord Leigh of Hurley Excerpts

Committee stage
Tuesday 9th May 2023 Grand Committee

[Lord Fox (LD)]

My Lords, I will speak briefly because we have heard some excellent speeches from the noble Lords opposite.

I just want to say, observationally, that we have debated a number of different groups where inequality of arms has been at the centre. When we talked about SLAPPs, we talked about inequality of resources. We have just talked about whistleblowing, where it is the same issue, and here we are again. In a sense, the Government are in different places with different elements of this. We need to have some sort of integrated response on how all people can be equal before the law because they can afford to do it—in other words, they can afford not to win, which is the issue here. We have our law enforcement agencies, we have perfectly innocent people going about their businesses trying to blow a whistle, and we have people who are trying to report issues publicly but are being SLAPPed. All of these important elements are being blocked through the inequality in access to the courts.

To refer back to this group of amendments, it seems to me that, if this amendment is not the answer, there must be some other answer. I look forward to the response from the noble Lord, Lord Sharpe, because it is quite clear that unexplained wealth orders have failed to deliver on whatever promise they may have had. Perhaps the Minister can explain how many of them there have been and what exactly the barrier has been, as well as what the cost per prosecution would be; that is an interesting point of view.

In the end, this is about inequality of arms. The first point here is that the Government must recognise that this is an issue; they then have to settle down and find ways of working with people who understand the law in order to eliminate that inequality. Otherwise, most of what we are talking about here will not happen.

[Lord Leigh of Hurley (Con)]

My Lords, I am prompted to rise by the words of the noble Lord, Lord Trevethin and Oaksey. I think he was referring to Amendment 106C, which we will come on to later this afternoon and which would extend the costs cap beyond UWOs. In the certainty that my noble friend the Minister will seek to ensure that Amendment 106C is agreed to, let me simply say that the amendment we are debating now, in the names of the noble Lord, Lord Faulks, and my noble and learned friend Lord Garnier, would be complementary and extremely helpful to Amendment 106C.

[The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)]

My Lords, I thank noble Lords for proposing their amendments. I thank the noble Lord, Lord Coaker, for moving Amendment 93 on behalf of the noble Lord, Lord Hunt of Kings Heath. I also thank the noble Lord, Lord Faulks, for Amendment 95, which was spoken to by my noble friend Lord Young. Both amendments relate to reports connected with unexplained wealth orders, henceforth known as UWOs.

I turn first to Amendment 93, which would require the Government to lay annual reports on UWOs where the property has been obtained through economic crime and taken from vulnerable adults. Economic crimes not only result in financial gain for criminals but leave a trail of suffering. They inflict financial and personal loss, including on the most vulnerable members of our society, which this amendment importantly recognises.

--- Later in debate ---

[Lord Leigh of Hurley (Con)]

I share the disappointment expressed by other noble Lords. When UWOs first came out, I was very pleased to see them. They are a classic accountancy tool to establish what is going on in respect of an individual who may have accumulated wealth in an unexplained way. It is incredibly disappointing to learn that so few have been issued with, frankly, teeny sums of money, given the nature of the world that we are discussing. Can my noble friend take back our concerns to his colleagues and, in particular, ask whether targets could be set for the coming year on the number of UWOs that might be issued and the amount of funds that they might realise?

[Lord Sharpe of Epsom (Con)]

I am certainly happy to take my noble friend’s concerns back but, as regards targets, that would invite me to stray into operational matters, which I will not do.

--- Later in debate ---

That is why I support these amendments that my noble friend Lord Coaker has tabled and ably explained. I hope that the Government will engage with these and other aspects of the Bill, with the strong, cross-party power that they have in Parliament, to make the Bill work as they want it to and protect our country from the £300 billion a year—I think—that we are losing to economic crime.

[Lord Leigh of Hurley (Con)]

My Lords, I rise briefly to urge the Minister to not allow the concept of a tier 1 investor visa scheme to be rubbished. This country has benefited enormously from foreign direct investment. I have seen a large number of UK small and medium-sized businesses benefiting from individuals coming to and living in the UK and putting money into and running the businesses, and those businesses flourishing thereafter. It is an important part of what we offer overseas investors, if done correctly.

I am a little disappointed that the noble Lord, Lord Fox, seemed to imply—and probably stated it; I may have missed it—that the reason that this information has not been published is that the Home Secretary is worried about disclosure of people who may have made donations to the Conservative Party. I do not think that is in the spirit of the debate; I do not think it is correct. The noble Lord laughs, but it is particularly surprising from the Lib Dems, which took money from Michael Brown, to make allegations like that, and it is a shame because I think there is great consensus in the Committee about the purpose and merits of the Bill.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords, who have made some extremely thought-provoking points in this debate. I will do my best to address them all.

Scrutinising the activity of government is obviously a key function of Parliament, and of course the Government are entirely supportive of it. I reassure the noble Lord, Lord Browne, that this particular part of the government machinery is always grateful for any help that is offered and will receive it in that spirit. However, the amendments in this group are unnecessary, as they are duplicative of existing reporting arrangements and scrutiny structures.

On investor visas, I take my noble friend Lord Leigh’s points. If done in the right way, they are potentially an important engine of economic growth—that should be acknowledged. Of course, we should not forget that they were introduced by a Labour Government and maintained during the coalition years. However, on Amendment 102, tabled by the noble Lord, Lord Wallace of Saltaire, and moved by the noble Lord, Lord Fox, I am aware that there are concerns about how the now-closed tier 1 investor route operated—in particular, that it was used by those relying on funds that had been illegitimately acquired and those who may have posed a wider risk to the UK’s national security.

It was because of those concerns that the Government committed in the first place to the review of the visas issued under the route between 2008 and 2015. As has been acknowledged, the Home Secretary made a Written Ministerial Statement on 12 January setting out the findings of that review. This included that the review had identified a minority of individuals connected to the tier 1 investor visa route who were potentially at high risk of having obtained wealth through corruption or other illicit financial activity or being engaged in serious and organised crime. The Statement of 12 January represents the Government’s substantive response to the commitment to undertake a review and publish its findings, including its findings in respect of economic crime.

Obviously, there was a delay; we are aware that considerable time elapsed between the commissioning of the review and the setting out of those findings. However, delay is regrettable but not unreasonable when issues of national security are at stake. Let me expand on that a little, if I may. It would have been preferable had the review been able to include more information about specific individuals but we have had to act sensibly and responsibly with regard to the UK’s national security; this includes striking the right balance between setting out the review’s broad findings and observing the constraints on disclosing sensitive details, which must be withheld, at the request of our operational partners, to protect our border and the vital work of our law enforcement agencies.

The noble Lord, Lord Fox, raised the subject of party-political donations. Without getting into a slanging match on this subject, I think it is worth restating that UK electoral law already sets out a stringent regime of spending and donation controls that prioritise transparency and safeguard the integrity of our elections. All political parties recognise that third-party campaigners and candidates must record their election spending and report it to either the Electoral Commission or their local returning officer. This information is all publicly available. The measures in the Elections Act 2022 also updated the political finance regulatory framework by increasing transparency and fairness and strengthening the controls against ineligible foreign spending on electoral campaigning. That is a fairly comprehensive transparency regime concerning the funding of political parties.

The House has considered similar amendments to other legislation, most recently during the passage of the National Security Bill. As before, the Government’s view is that this amendment is not necessary. The Government have set out the key findings of the review of the operation of this route and have acted to close it. I therefore ask the noble Lord, Lord Fox, to withdraw the amendment.

--- Later in debate ---

[Lord Agnew of Oulton (Con)]

My Lords, this amendment would help to protect enforcement bodies from the serious risk of high adverse costs when undertaking recovery action against deep-pocketed suspects who can afford the very best legal representation. This risk creates a huge downward pressure on law enforcement activity. The Government introduced a new costs order in March last year for the use of unexplained wealth orders; we have talked about those a lot. It ensured that costs would not be awarded unless the law enforcement authority had acted unreasonably, dishonestly or improperly.

UWOs are just one tool for recovering assets in the UK’s recovery regime and, as we have discussed this evening, are arguably less important in the eyes of law enforcement than other recovery tools. Extending the costs orders introduced in the ECA 2022 would significantly increase the appetite for undertaking recovery cases and inevitably lead to more asset recovery. Even the Law Commission in a recent report recommended that in confiscation hearings following a criminal trial, if the prosecution is unsuccessful but can argue that their application was reasonable, each side bears its own costs. Given that this is a Law Commission recommendation for criminal confiscation and that limited liability for costs has been introduced for UWOs, we are proposing to extend this limited liability to all cases of civil criminal asset recovery.

Civil society and civil servants at the NCA and the SFO have all reported that adverse costs can play an important role in cutting agencies’ appetite to pursue costs. In fact, no cases seem to have been undertaken against Russians in the UK since the outbreak of the Ukrainian invasion. Evidence I have heard from law enforcement bodies suggests that there is a significant caseload of potentially high-risk cases in the pipeline which bring significant cost risks. This includes more than 60 cases being reviewed by one prosecution authority with close to £1 billion in assets frozen by an enforcement body.

Tackling kleptocrats and politically exposed persons will involve going against the very best and most expensive lawyers, unpicking complex corporate vehicles and reams of evidence. Cost exposure poses a real hurdle to the use of civil recovery. In addition, as we have heard so often during this series of Grand Committees, this is not a party-political issue. Indeed, it has been raised previously by Conservative MP Nigel Mills, who sought an amendment during the passage of the Criminal Finances Act 2017, which we heard about briefly from the noble Lord, Lord Faulks, so that the costs could be awarded on an indemnity basis.

In the six years or so that have elapsed since then, we have had the huge move in principle by the Government to allow this capping to take effect for UWOs. Given that that Rubicon has been crossed, I simply do not understand why the Government are reluctant to extend it. We hear so often in the rebuttal of our amendments that it is not the right time, there is no room in the legislative calendar, the cost is too great and the principles are not there, but this is a situation where none of those issues exists. The Government accept that the principle can apply in some forms of recovery. All I ask for in this amendment is that we broaden the scope of the cost capping, which will dramatically improve our ability to go after some of these bad actors. I beg to move.

[Lord Leigh of Hurley (Con)]

My Lords, I will speak to this amendment, which I have signed. Once again, I find myself agreeing with every word that my noble friend Lord Agnew has said, so I will be very brief.

The extension of a new cost regime to all of Part 5 of POCA in the case of economic crime would encourage law enforcement bodies to act ambitiously but also reasonably in bringing civil recovery cases, and it has the potential to ensure that significantly more stolen assets and proceeds of fraud and corruption can be recovered and returned to the victims—as we would all want—but also reinvested back into law enforcement agencies themselves, which is the major problem, through the asset recovery incentivisation scheme. That would help them enhance their capacities and give them the confidence to go after cases which they are not doing at the moment.

A number of us had the honour to be briefed by Bill Browder on the Bill. Of the many subjects that we discussed, this was the one amendment that he felt would be helpful and useful for us to pass. What greater man is there than Bill Browder to suggest to us that we adopt a particular route? If the man can create a Magnitsky Act which has been adopted by pretty much every civilised country in the world, perhaps we can just take one clause in this Bill to enhance our fight against economic crime.

Economic Crime and Corporate Transparency

Lord Leigh of Hurley Excerpts

Committee stage
Thursday 27th April 2023 Grand Committee

[Lord Garnier (Con)]

My Lords, I thank my noble friend Lord Sharpe for the courtesy he has shown to me and other noble Lords in holding meetings, along with his officials, to explain the Government’s case on failure to prevent and the adjustment of the law of corporate liability. It has been very helpful to have some understanding of where they are coming from and where they intend to go. It is fair to say that he was more forthcoming in those meetings than he was in providing an explanation for the SME carve-out this afternoon. I thank not only him but the noble Lord, Lord Fox, for tabling his amendments, which I support, and for his mention of the amendments I have tabled.

The amendments that I have tabled are exactly the same, almost to the semicolon, as amendments that I have tabled not only in this Parliament, since the 2019 general election, to Bills dealing with economic and financial crime, but also to Bills that I spoke to when a Member of the other place. I have taken an interest in how we deal with economic crime since I became the Solicitor-General in 2010. I appreciate that that was a long time ago and that my noble friend the Minister probably did not have a particular interest in the subject all that time ago. None the less, I appreciate that many will find what I have to say unoriginal, not least because I have said it so many times before but also because it aligns with what others on all sides of the House and in both Houses have been advocating for some little while.

I will first deal with the SME carve-out, which is provided for in one of the government amendments. I suppose it is fair to say that half a loaf is better than no loaf and that a bird in the hand is better than two in the bush. However, after nearly 15 years, following the banking crash of 2008-09, the subject of economic crime and corporate misfeasance has been if not on the top of everyone’s agenda every day then certainly close to it. For the Government to come up with a carve-out in the way that they have—bear in mind that we are only talking about failure to prevent fraud at the moment—is disappointing.

What we are here required to understand by Amendment 84C, proposed by the Government, is that if a company or business has a turnover of less than £36 million, has a balance sheet total of less than £18 million and has fewer than 250 employees, it should not be caught by the failure to prevent fraud.

[Lord Leigh of Hurley (Con)]

Two or more of those.

[Lord Garnier (Con)]

My noble friend Lord Leigh is entirely right: you have to pick two of this lucky trio and you are away.

One only has to think briefly about start-up businesses and the pressures that they come under when they may have very few employees and a turnover of much less than the Government indicate to realise that the danger of an associated person committing an act of fraud is not predicated on the size of the company. It is also possible to say that there will be people who will so construct their corporate affairs that each bit of their corporate existence is by some happenstance just below or well below the Amendment 84C cut-offs.

In any event—I have bored my noble friend the Minister with my feeble sense of humour on a number of occasions—there is no similar cut-off for failure to prevent bribery under the Bribery Act 2010 and no equivalent cut-off under the Criminal Finances Act 2017. Although my noble friend tells me that, after much consultation and because they do not wish to impose unnecessary burdens on business, the Government have come up with these numbers, as I think the noble Lord, Lord Fox, indicated, I have yet to hear a reason why they have landed on those figures or why as a matter of principle they have chosen to have a carve-out at all.

Here comes my feeble joke, so stand by. A burglar of five foot four should be prosecuted just as vigorously as a burglar of six foot six. There is no carve-out for small people committing crimes and there should be no carve-out for small businesses that fail to prevent crimes. When the prosecuting authorities—I look with respect at the noble Lord, Lord Macdonald of River Glaven—come to consider whether it is in the public interest, assuming that there is evidence, to initiate the prosecution, no doubt one of the factors that they will take into account is whether it is in the public interest to pursue that prosecution, bearing in mind the small size of the company and the mitigating steps that it took to do its best to avoid an associated person committing a criminal offence.

--- Later in debate ---

In short, there are two major flaws: the limitation to large bodies and the scope of those who are to be within the amendment. To refer to associated persons is fine as far as it goes, but it does not extend to all the people you really need to capture.

[Lord Leigh of Hurley (Con)]

I find some of these amendments tricky, really. Clearly, we are all keen to prevent fraud but I frequently wear the hat of the SME company. I should make the further declaration that I am the director of a number of SMEs and an investor in many more—not many successful ones but, none the less, I put my money in and hope. I have read the Law Commission’s options paper and the briefing papers from the APPG on Anti-Corruption and Responsible Tax, and I have had the pleasure of innumerable discussions with the very persuasive Margaret Hodge and her extremely capable team. Congratulations to them; they have got the Government to move to the much-promised amendments from the other place, the debate on which I read carefully. Clearly, we all want to beef up failure to prevent and the amendments go a long way to doing that.

I broadly support the principle of excluding small companies and I shall explain a bit more about why. However, I agree that the terms here are a bit odd. Needless to say, I am a bit worried about a company with 250 employees turning over only £36 million—it is more bust than small. I suspect, however, that these are EU figures, translated from the euro; I do not how they were arrived at but they may need some polish. They are definitely more “M” than “S”, and thought might be given to restricting ourselves to “S” rather than “M”. Needless to say, one looks at one’s business to see whether one is within scope —and, of course, I was reminded that the problem is with the balance sheet qualification. Ordinarily, I never thought that it would apply but, as fellow members of the Institute of Chartered Accountants in England and Wales will recall, the recent brilliant accounting standards brought in require one to capitalise leases in the balance sheet, meaning that companies’ assets are, frankly, grossly inflated. This definition refers only to gross assets, not net assets, so you will capture many more companies than you thought you might if you stick to that definition. I urge another look at the actual definition, if this route is taken.

It is certainly possible for large companies to develop procedures and systems, but smaller ones are, frankly, stretched with other matters, such as, essentially, how to pay the next payroll and survive. It is not reasonable to expect many of them to stop working, sit down and have a cup of tea and dream up preventive procedures. Of course, business owners do not want to see fraud because, at the end of the day, they will be the main losers. However, I can see lawyers advising on the purchase of massive amounts of belts and braces, given the penalties, which could be a massive distraction from the incredibly challenging job of trying to run a business and make a profit, which is difficult enough. I suggest that we see how large companies cope with the Bill, what it means in practice, what “preventive measures” —the guidance is yet to come—actually means, and then give ourselves the power to bring in small companies if we feel it is appropriate at a later stage, once we see what happens in practice.

I also have some concerns about Amendment 101, on the senior manager responsibilities. Of course, I strongly support measures which are likely to reduce economic crime. However, I note that an assessment produced by the Law Commission on individual criminal liability concluded that

“in principle, directors etc, should not be personally criminally liable on the basis of neglect if the offence is one which requires proof of a particular mental state. Liability for directors on the basis of neglect should be restricted to offences of strict liability or negligence”.

We have some way to go to make me feel comfortable that those are right.

There are other outstanding issues concerning senior manager liability, specifically how this would be monitored and enforced. The legal obligations on senior managers at the moment affect the UK’s competitiveness, particularly when trying to recruit talent at senior levels. So I would be reticent to encourage the introduction of significant legislative change without a broad assessment, which I would welcome, of the likely impact. That means consulting with industry and an official impact assessment that considers international comparisons of the effect, particularly on recruiting senior staff. Therefore, I would welcome some more consultation and consideration of the consequences of this reform.

On the proposed changes to the “identification doctrine”, clearly, amending it is essential to tackle the most egregious intentional behaviour; I get that. Here, of course, it is easier to see that in a small company—the Victorian brothers example—the directors could be guilty of this behaviour and, in an overzealous environment of trying to score wins, they could be prosecuted first, quickly and more easily. However, where you have a company consisting of tens of thousands or even hundreds of thousands of people, can we be certain that the act of a few rogue managers or even one manager a long way down the reporting structure should rightly lead to the sort of punishments suggested in some of these amendments?

That does not sit easily with me, and again, I still want to be convinced that we are in sync with our major international competitors. Let us not forget that while FDI into the UK has historically been very high, it is not now. The UK stock market is out of fashion, and countries all around the world are seeking to attract our businesses to set up offshore. Any legislation we bring in has to be very mindful of that.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I think it falls to me to start the winding-up speeches, but noble Lords will be pleased to know that I will not try to repeat everything that everybody else has said. I declare my interest as a director of both a large company and small companies; I set up my own first business in 1981, so I have spent most of my life as a business owner.

In this group I support the amendments mainly led by the noble and learned Lord, Lord Garnier. I hate to break with the gentle congratulations that have been given to the Government for at least doing something, but having such a weak amendment could well be counterproductive. The Government could think that they have done something when, as has already been exposed by many colleagues, it does very little. It will exempt most companies and it probably will not touch where action is needed most.

--- Later in debate ---

I finish where I started. In the end, the challenge for the Committee is that all these amendments are virtually universally supported here, but what difference will that make to the Government’s thinking on adapting their own amendments before Report, so that we get the Bill we want, because we all want it to be successful?

[Lord Leigh of Hurley (Con)]

Before the noble Lord sits down, will he clarify Labour’s position from the Dispatch Box: that it would be happy with one clause that requires prevention procedures to apply to an extremely large, multinational financial services company, for example, and to a local sweet shop which was incorporated? The noble Lord says that everyone agrees. According to the soundings I have taken from small business organisations, they would not be happy with that.

[Lord Coaker (Lab)]

I said everyone on the Committee —with the possible exception of the noble Lord. I was talking about how people feel about the Bill as drafted, with the carve-out for small and medium-sized enterprises. The noble Lord was referring to something that might include not the small but the medium, and that is a matter for debate, but the general view of the Committee was that the Government’s current carve-out is not acceptable. Where you put the threshold—whether you apply to a little sweet shop at the end of the road with a turnover of a few thousand pounds the same regulation you apply to a multinational company—could be sorted out in regulations, and if we saw them, we could suggest that they take into account the small sweet shop to which the noble Lord referred.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

I appreciate the point that the noble Lord was making and apologise for not addressing it more directly. I will refrain from answering that now and will write. I think I know how it is done, but I am not an accountant and I do not want to say something that he will pick apart. If he will indulge me, I will write on that subject with greater clarity to make sure that I am not making a mistake.

I thank all noble Lords for their participation in this debate and for their patience as I have taken them through a fairly long speech on the Government’s positions on these issues. We agree that reform is needed and, as we have made clear, the Government’s amendments represent a major step in delivering it. I hope that further explanation has reassured noble Lords on why we have presented the amendments with the scope and reach that they contain, and that the Government are committed to reform of the identification doctrine. I therefore very much hope that noble Lords will support the government amendments and not seek to move their own.

[Lord Leigh of Hurley (Con)]

I appreciate that my noble friend is at the Home Office, but none the less can he give us a commitment that the Government will look again at the definitions used in the Government’s clause for SMEs? I appreciate that they come from the Companies Act 2006, which themselves were cut and pasted from EU regs, but now that we are out of the EU we are free to choose definitions that suit our circumstances and our institutes’ accounting standards.

[Lord Sharpe of Epsom (Con)]

Yes, I am happy to give that reassurance.

--- Later in debate ---

[Lord Coaker (Lab)]

My Lords, I rise briefly to support Amendment 85 from the noble Lord, Lord Alton, to which I have added my name, and to support the comments of the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett.

As my noble friend Lord Ponsonby said, the question for the Government concerns giving teeth to the sanctions regime in respect to designated individuals. If it is not dealt with like this, what do the Government propose to do? There is clearly a gap, sanctioned individuals are finding ways around the law and we are not able to confiscate or seize the assets we want to seize. Criminalising a failure to disclose as a form of sanctions evasion, so that those assets can be seized, as referred to by the noble Lord, Lord Alton, is a very important step forward. Although this is just one amendment, Amendment 85 is really important.

As I said, if the Government do not believe that this amendment is appropriate, what are we going to do about the situations and individuals the noble Lord, Lord Alton, spoke about, and the huge sums of money, which are beyond the scope of the British state to collect from individuals? We all think we should be able to do something about that.

Just so the noble Lord does not feel on his own in being sanctioned, I am sanctioned as well, so we are in good company, as is the noble Lord, Lord Faulks. We could have a sanctions party here.

[Lord Leigh of Hurley (Con)]

I join the sanctions party. I rise to say that, as this amendment has the support of Cross-Bench, Lib Dem and Labour Peers, I add my support, even if I missed out on adding my name to those proposing it.

National Security Bill

Lord Leigh of Hurley Excerpts

Report stage
Tuesday 7th March 2023 Lords Chamber

No doubt the Minister will say shortly that the Government do not routinely comment on the issues, and I understand that case: no Government have in the past, and I suspect that no Government will in future, for good reason. But one question on the IRGC that the Minister can answer is whether, as it is constituted, the IRGC would meet the statutory test of the 2000 legislation. Another question that the Minister can answer today is whether the Wagner Group would meet the statutory test for an organisation to be considered. If so, we would have a bit more clarity. I hope that the Minister can give us positive news today.

[Lord Leigh of Hurley (Con)]

My Lords, I have not spoken on the Bill before, and I appreciate that we are very near the end of it, but I am moved to stand by the amendment of the noble Lord, Lord Coaker, which, as it is written, I support.

I have only voted against the Government once and, in retrospect, I think that was a mistake, in that I got confused about what the legislation said. But in this particular instance there is an opportunity for us to stand up and say that the IRGC is an organisation that should be proscribed. It is clear that large parts of government and MPs, including the Tory MPs referenced, believe that, and it is clear that a group of people in the Foreign Office take a different view. That is not a new position. I appreciate that my noble friend is a Home Office Minister and does not have a Foreign Office Minister with him but, none the less, an inflection moment is in front of us. I hope that my noble friend the Minister might find a way of supporting this amendment or explaining how he will satisfy the questions raised tonight.

[Lord Polak (Con)]

My Lords, my noble friend Lord Leigh led the way, and I shall follow. Along with the noble Lord, Lord Alton, I am one of the two Members of this House who have been proscribed by the Iranian regime and the IRGC, and I have consistently called for it to be proscribed by the Government.

I listened carefully to what the noble Lord, Lord Coaker, said and, if there is an issue with the organisation being part of the Government, how were we able, when Sajid Javid was Home Secretary, to proscribe Hezbollah, which had Members of Parliament in Lebanon? This was always the argument against it, but it was done because it was the right thing to do. I remind noble Lords that Hezbollah and Hamas, which we all proscribed, are in fact the unruly children of the parent body—the IRGC, which needs to be proscribed.

Criminal Finances Bill

Lord Leigh of Hurley Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 3rd April 2017 Lords Chamber

[Lord Rosser (Lab)]

My Lords, I will speak to my Amendment 166, which is also in this group. It would require the Secretary of State to issue a public consultation on new criminal offences for corporate criminal liability and for economic crime within six months of the day on which the Bill becomes an Act, and for the Secretary of State then to bring forward legislative proposals in response to the consultation within 12 months of the day on which the Bill becomes an Act.

The Bill makes it a corporate offence to fail to prevent tax evasion and adopts a similar approach to prosecution of bribery offences. However, as the noble Baroness, Lady Bowles of Berkhamsted, said, gaps remain in the law as regards the practical possibility of prosecuting companies for important economic crimes such as fraud, false accounting and money laundering, let alone the severe harms caused to individuals, including those overseas.

As the noble Baroness, Lady Bowles of Berkhamsted, again indicated, the issue was raised at Second Reading, when the Government said that,

“it would be wrong to rush into legislation in this area”,

of corporate liability for economic crime, and that there was,

“a need to establish whether changes to the law are justified”.

The Government said that they launched a public call for evidence—the closing date for which has now passed—and that if the responses,

“justify changes to the law, a consultation on a firm proposal would follow”.

Accordingly, the Government declined to comment on a timetable for reform,

“should that be the way forward”.—[Official Report, 9/3/17; col. 1518.]

The Business & Human Rights Resource Centre recorded just over 300 allegations of human rights abuses made against 127 UK-linked companies between 2004 and 2014. Although there is clear evidence that some companies were potentially serial offenders, it seems that there have been no corporate criminal prosecutions. Nearly half the allegations were made against extractive companies.

If there is a consultation following the call for evidence—and that may well be a big if—will the Government also consult on the need, or otherwise, to change the law on corporate criminal liability on human rights violations as well as economic crime? When an individual injures or kills another person, a criminal prosecution is initiated, but when a company is involved in causing similar harm—not least overseas—the ability to prosecute companies successfully is much reduced to the point of it being almost a deterrent to proceeding at all.

Overall, the corporate criminal law needs to provide that companies can be held liable for committing offences and not just for omitting to prevent them. No UK financial institution has faced criminal charges as a result of the 2008 financial crisis, and there appear to have been some recent serious issues which have resulted in no prosecution against companies as opposed to an ability to resolve the matter through financial payment.

There is also the issue that it appears from a relatively recent case that, under corporate liability laws, it is not illegal for companies to mislead their auditors. As has been said, current laws seriously disadvantage small and medium-sized businesses compared with larger businesses. SMEs, where directors are more involved, are much more easily prosecuted under the existing corporate liability regime, since current UK corporate liability laws rely on a “directing mind” test that requires prosecutors to prove that senior board-level executives intended the misconduct to occur. The Crown Prosecution Service, for example, stated that because of corporate liability laws it could not mount a successful prosecution against the companies involved in the phone-hacking scandal.

When do the Government intend to commit themselves to address this issue of the deficiencies within the current corporate criminal liability laws? They could do so today by accepting one of the amendments in this group. They could do so today by accepting my amendment, with its timetable for a public consultation and then legislation. If that is more than the Government are prepared to do, they could today at least announce that there will definitely be a public consultation on a firm proposal on the issue, following the call for evidence, and say when that public consultation is likely to commence.

[Lord Leigh of Hurley (Con)]

My Lords, I declare my interests, principally as a member of the Chartered Institute of Taxation. I wish to speak particularly on Amendment 161. The noble Baroness, Lady Bowles of Berkhamsted, is right that the mood of the public has changed dramatically and significantly against those who practise tax evasion—and to some extent tax avoidance, which I think she mentioned, although we are focusing here on tax evasion—so having such a clause in the Bill is very welcome.

Turning my mind back to 20 or 30 years ago when I was a tax practitioner, in many respects it would have been remarkable to think that this clause might appear in a Bill. Indeed, many of your Lordships may have noticed in Sunday’s and today’s national papers a two-page advertisement by a large Swiss bank protesting that it does not in any way condone tax evasion. It is quite extraordinary to see that—and most welcome—and it has no doubt come about in part because of the pressure to change public opinion brought to bear by the Government and Members of this House.

However, in respect of Amendment 161, I agree that the damage caused by economic crime is very serious. I welcome the Government’s consultation on corporate criminal liability for economic crime, but this is an extremely complex legal area that could significantly impact on the UK’s financial sector, in which I work, and in particular on the UK’s SME financial sector, which has a lot on its plate at the moment. Therefore, I hope that the Government will bring forward a consultation on possible options for reform following the conclusion of the call for evidence, which I think has just ended or will close shortly. We should wait until that is completed before a decision is made on introducing new legislation.

[Lord Beith (LD)]

My Lords, my noble friend has explained with magnificent clarity the purpose and nature of her two amendments. However, in discussions that I have had with her, she has still not quite convinced me that the use of a statutory instrument to create further facilitation crimes is something that I ought to be enthusiastic about. I well understand the purpose that she is pursuing and the care with which Amendment 161 incorporates various safeguards both within its own text and by reference to other legislative provisions. My concerns are not raised by Amendment 163, which she offers as an option.

As your Lordships look further at this matter, I just hope that we can focus a little attention on the fact that, if anything is created as a crime by a statutory instrument, it is done by a process which, although affirmative in terms of the amendment, is not capable of amendment. Therefore, any defect in the way it is worded or presented can only result in either it going through in a faulty way or the Government accepting that they should withdraw the amendment and come back with a better one. I wish that they would do that more often and quite quickly, because it would resolve some of the problems that we have with statutory instrument procedure. However, I listened to that part of the debate with still unresolved anxiety about the use of a statutory instrument without further qualification.

--- Later in debate ---

[Lord Leigh of Hurley]

My Lords, I spent quite a lot of time reading the amendment and trying to understand it. I am grateful to the noble Baroness, Lady Hamwee, for explaining it to us. As I understand it, the clause does not require relevant bodies to put these procedures in place; it just mandates the Chancellor to produce some presumably helpful guidelines, which the amendment would then require those relevant bodies to adopt. I think that is the gist of it.

If the amendment is prompted by concerns raised about the guidance the Chancellor will have to offer as a result of the clause, I hope the Minister might consider returning to that issue at subsequent readings as no explanation is given in the clause as to what the guidance will be. It would be very helpful for corporations affected to understand how they can rely on the defence of “reasonable prevention procedures”, so that they can put in place an appropriate strategy to ensure compliance with their new obligations if those are put on them through this amendment, or possibly—as is perhaps my great concern—at a later stage in the Bill or by statutory instrument.

It must be sensible to allow corporations to build on their current policies and procedures already in place under other legislative requirements to show that they have a defence to this offence. If not, the compliance costs would be significant. Even where current policies are acceptable there will still be costs involved in training staff, certification and reporting processes. There is, therefore, clearly a need to ensure that the measures can be implemented in a way that mitigates additional costs as far as possible.

Guidance can help corporations to identify how they can demonstrate that they have followed satisfactory due diligence procedures and have a “reasonable care” defence in the event that one of their associates is discovered to have criminally facilitated tax evasion. However, it must be recognised that every business is different. The importance of the guidance will be enhanced if the legislation explicitly states that the courts should “have regard to” it. This would provide a valuable extra—although not absolute—safeguard for corporations that have relied on the guidance when implementing their procedures, although, of course, it cannot be a safe harbour.

In short, the amendment will be onerous to apply to every relevant body. I therefore speak against it.

[Lord Kennedy of Southwark (Lab)]

My Lords, I support Amendment 162, proposed by the noble Baroness, Lady Hamwee. It would strengthen Clause 44, which is in a part of the Bill concerned with corporate offences of failure to prevent tax evasion. Failure to pay the right levels of tax due as an individual or as a corporate body hurts everyone. Having robust procedures in place to combat these offences is important. Some corporate entities will employ lawyers and accountants to minimise their tax liability, but where that steps over the line into tax evasion we have to be prepared to take swift action.

The clause so far will place a requirement on the Chancellor of the Exchequer to publish and prepare guidance, using the word “must”, which is not something we often see in government Bills—I have always thought parliamentary draftspersons preferred “shall”—but since it uses the word “must”, noble Lords can draw from that that great importance is implied about this guidance on the procedures. The idea is to help relevant bodies. The Bill then moves on and says,

“can put in place to”,

which negates the emphasis in the earlier part of the clause.

The amendment from the noble Baroness would place the right emphasis, saying that relevant bodies “shall have regard to” this important advice prepared by the Treasury and published by the Chancellor. The Government clearly thought it was important that companies should be aware of this advice. I hope they will tell us why they think their wording is sufficient and that that of the noble Baroness is not necessary in this case.

--- Later in debate ---

I very much take the point that the noble Lord, Lord Rosser, is making with his Amendment 168 on the failure of the UK to establish a proper register of beneficial interests in UK property. That has to be tackled. It really is an appalling scandal and a great weakness, and I can understand why many of the overseas territories point to that when they argue their own case. I join very much with the noble Lord, Lord Eatwell, in pointing out the inadequacies of Companies House and the regime that we have there. We have to fix those, but we surely do not stop at that point in time. It is for that reason that I support Amendment 167.

[Lord Leigh of Hurley]

My Lords, it may come as a surprise to some, but having carefully researched the matter, I find I have no interests or conflicts to declare in respect of this matter—perhaps sadly.

The financial services sectors of the overseas territories and the Crown dependencies are crucial as global hubs. Our close connections with them contribute to the UK’s position as a global financial centre—which is of course close to all our hearts—and, now more than ever, it is important we maintain and strengthen our ties with key economic partners.

At the same time, as with all financial services, there must be appropriate transparency to prevent abuse by those who would seek to exploit them for criminal purposes, as the noble Baroness, Lady Kramer, has just so eloquently said. It is quite clear to me that the UK is leading the way in this, which is in no small part due to the foundation stones set down by the former Prime Minister, David Cameron, who ensured that the issue of transparency was prominent in the coalition Government, from the time he chaired the G8 summit in Lough Erne and it was at the top of the agenda of that meeting.

That led to the PSC clauses in the Small Business, Enterprise and Employment Bill, on which I spoke quite extensively. Those applied only in the UK, but I recall that the noble Lord, Lord Watson of Invergowrie, commented in Committee that the overseas territories and Crown dependencies were next. Accordingly, I welcome the subsequent commitments made by the overseas territories and Crown dependencies to establish central registers of beneficial ownership—clearly, those territories are listening very carefully to Labour Peers in Committee. Once these have been implemented in June 2017, UK law enforcement will gain access to previously inaccessible information on entities registered in those jurisdictions. That will enable it to investigate corruption and money laundering through BOSS—beneficial ownership secure search systems. These are significant benefits for UK law enforcement, and I am pleased to see the overseas territories and Crown dependencies make strides towards improved financial transparency and integrity. It is an approach that will reap dividends for our law enforcement agencies and their ability to investigate financial crime, while maintaining the positive relations that we enjoy with these territories.

It is right that we should aspire to public registers of beneficial ownership, not just for the overseas territories and Crown dependencies but for all jurisdictions. I welcome the continued government commitment for public registers to be the global standard, as an aspiration. But it is clear we will achieve more by working in partnership and collaboration than by forcing legislation—to the extent we can—on independent jurisdictions with their own elected legislatures. If we threaten that, I foresee that those territories might not continue to co-operate gladly with the UK on issues such as this. We may even take backward steps.

My heart skipped a beat when the noble Baroness, Lady Stern, said that 3 April was an auspicious day: had someone told her that it was my birthday? No, it was because of the Panama papers. Panama is very different. To make the comparison with Panama is a false parallel. Part of Panama’s very different business proposition is a far lower level of financial regulation. The Financial Action Task Force gave Panama the worst rating—non-compliant—for 14 of its 40 recommendations in its most recent evaluation of Panama, one of the worst records for any country in the world.

Law enforcement agencies do not support public registers, as they do not improve their capabilities. David Lewis, formerly of the NCA and now heading the global anti-money laundering standard-setter, the Financial Action Task Force, told the Commonwealth anti-corruption summit last year:

“Incomplete, unverified, out of date information in a public register is not as useful as law enforcement agencies being able to access the right information at the point they need it”.


Tax authorities also do not support public registers, as they encourage people to report less fully and accurately. The OECD stated that for taxpayers to abide by their obligations, they,

“need to have confidence that the often sensitive financial information is not disclosed inappropriately”.

Those multilateral organisations, and the efforts to raise standards globally, are undermined by unilaterally adopting different standards, such as public registers. That is why OECD Secretary-General Angel Gurría said:

“A proliferation of different standards is in nobody’s interests”.


Indeed, much of the United States’ aversion to implementing international standards, as explained by my noble friend Lord Naseby, is the belief that it will lead to pressure to make personal information public. I cannot imagine that that situation will improve much with President Trump in the White House.

The UK rightly wants to raise implemented standards globally, but it cannot do so by undermining multilateral efforts to create a level playing field. We should not impose legislation on independent jurisdictions when financial services are matters for their internal affairs and their citizens have no representation in this House or the other place. Instead, I ask the Government to increase their efforts to raise global standards and make public registers the norm. The overseas territories and Crown dependencies have said that, should that happen, they will comply.

Equally, I am not convinced that we should unduly disadvantage the overseas territories’ economies. Indeed, an amendment such as that of the noble Baroness, Lady Stern, which excludes Gibraltar and the Crown dependencies, may give them an unfair advantage when competing for new investment with the Caribbean overseas territories. There should be a level playing field, but that means the vast majority of major financial centres moving in that direction, with encouragement from international bodies such as the Financial Action Task Force.

However, I encourage the Government to keep this matter under review and Parliament updated. That way, we can return to this issue in due course and assess the effectiveness of the central registers. That is the right thing to do, rather than hypothetically committing to legislation in two years’ time.

[Lord Thomas of Gresford (LD)]

My Lords, the right reverend Prelate the Bishop of Peterborough reminded us that corruption in the modern world is a moral issue—and so it is; perhaps one of the greatest moral issues that we face. I was reminded by the speech of the noble Lord, Lord Naseby, that the great moral issue of the late 18th century and the beginning of the 19th century was slavery. It was the judgment of Lord Mansfield in the 1780s that put an end to slavery in this country.

The anti-slavery movement then began to campaign on the basis that if slavery is abolished in this country, how can it be that we permit it in our colonies, so that when a slave from the colonies comes to this country, the shackles fall away? It took until 1833 for William Wilberforce to lead a movement to pass the anti-slavery Act. Even then, it did not abolish slavery in the East India Company territories or in Ceylon.

However, at that time slavery continued in the United States; it took a civil war to put an end to slavery in the United States. The arguments advanced then were that if we abolished slavery in the colonies and the West Indies, it would undermine the economies of those territories. The same argument again was used: how will those colonies in the West Indies be able to compete with the United States in the production of sugar and cotton if slavery is abolished there?

The important point is that this country laid down the standard. We did not wait for global standards to be brought about; we took the lead. I urge the Government to take the lead, along the lines that have been advanced today by the noble Baroness, Lady Stern, who sees not only the importance of having registers in the overseas territories but that there should be something behind it—the possibility of an Order in Council to deal with that moral issue if they do not take up the cudgels in the way that they should.

Criminal Finances Bill

Lord Leigh of Hurley Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 28th March 2017 Lords Chamber

[Lord Sharkey]

If it were absolutely clear that you cannot obtain an unexplained wealth order without satisfying that condition, I would be happy, but I am not entirely sure that it is, and I would welcome the Minister’s confirmation that the noble Lord is correct.

Amendments 22 to 25 will allow the Minister to point out—if other noble Lords do not do so beforehand—where I have entirely missed the point. They refer to page 7 and subsections (2), (3) and (4) of new Section 362H. These subsections allow rules of court to provide for the practice and procedure to be followed relating to unexplained wealth orders before the High Court in Northern Ireland. There are similar but not identical subsections later in the Bill dealing with the same matter in Scotland. However, the Bill seems to be silent on how these matters are to be dealt with in the English and Welsh courts. I am sure I have missed something obvious here and would be grateful for enlightenment from the Minister.

There is another apparent anomaly in the sections dealing with the variation or discharge of an unexplained wealth order. I notice that the provision in Scotland is significantly different from that in Northern Ireland. On page 18, line 43, to line 1 on page 19, the Bill allows applications for variation or discharge to be made by “Scottish Ministers” or by,

“any person affected by the order”.

That is not the case for Northern Ireland, where application can be made only by the enforcement authorities or the respondent. Why is there this difference between Scotland and Northern Ireland? My Amendment 24 makes the process in Northern Ireland the same as in Scotland but, again, what about England and Wales? I look to the Minister to put me right on all this.

[Lord Leigh of Hurley (Con)]

My Lords, I welcome the legislation on UWOs. I have a number of declarations of interest, and I own residential and commercial property in the UK. I do not think that I have any unexplained wealth, but I have some experience—admittedly, some 30 years ago—of working as a tax adviser. It was quite common in those days for the Inland Revenue, as it was then, to demand explanations of what it thought was unexplained wealth from various taxpayers. That was quite common practice, so the concept of the state seeking an explanation of wealth is not new in practice.

We have a situation where, certainly in central London, a shocking number of multimillion pound properties lie dormant and are owned by overseas parties. To the extent that this goes some way to change that situation, it must be very welcome. It would also be quite welcome if the Government were to take a more holistic approach, perhaps using this Bill to address that problem as well as considering other solutions, outwith this legislation, including penal rates for dormant properties owned by overseas people. None the less, the UWOs are likely to make a significant change in helping our law enforcement agencies to investigate money laundering in the London property market and, in particular, recovering proceeds of crime.

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, I do not pretend for a moment to have the drafting skills of the noble and learned Lord, Lord Brown of Eaton-under-Heywood, but I associate myself with all the other comments that have been made on the amendment. Rather than repeat the issues that have been so well described, I want to pick up the point that the noble Lord, Lord Faulks, made—that this Bill is a real and rare opportunity to tackle this problem, which, as he will have heard, exercises Members on all sides of the Committee and is essentially a non-partisan series of concerns.

When I had the privilege of sitting where the Minister is sitting, I brought a Bill through this House which was fondly and informally known as the “Dump it in here” Bill. It is perfectly possible, even at this stage, for the Government to come forward with some well-drafted language that would achieve the goals that have been described by various noble Lords today and by others who have been concerned about this issue. The Government have been looking at it for a long time. Given the fact that it will be difficult to get new legislation through in the next couple of years, I urge the Government to look at drafting that language—they have the capacity to do it and would be in a position to do it—that would bring into the Bill the kinds of remedies that would require the public register of beneficial interest for property ownership that presently we do not have in the UK. I met representatives of the British Virgin Islands the other day. The British Virgin Islands actually has such a register and would be delighted to provide mechanisms and recommendations to the British Government if they felt they needed advice in this area.

[Lord Leigh of Hurley]

My Lords, I have touched on this subject already. As president of Westminster North Conservative Association, I have spent many long evenings tramping along the streets of Westminster North, knocking on doors of properties that are clearly unoccupied and turn out to have no registered voters so are probably owned by offshore companies. While I am not convinced that the amendment, placed where it is, achieves the effect that the noble Lord, Lord Faulks, wants, I echo the remarks of the noble Baroness, Lady Kramer, that this might be an opportunity to seek to make progress.

The point made by the noble Lord, Lord Deben, about not wanting to be xenophobic is well taken, not least because of the concerns that some people have that the actual beneficial owner of these overseas companies is in fact a person in the UK who might well allegedly be the tenant. The fact that it is an overseas company does not mean that it has an overseas owner. Noble Lords ask whether their children will be able to afford to live in the house that they live in. Invariably, the answer is no.

Immigration

Lord Leigh of Hurley Excerpts

Monday 12th September 2016 Lords Chamber

Asked by

[Lord Leigh of Hurley]

To ask Her Majesty’s Government what steps they are taking to determine accurately immigration into the United Kingdom.

[The Minister of State, Home Office (Baroness Williams of Trafford)]

My Lords, immigration figures are estimates produced by the Office for National Statistics based on the International Passenger Survey. These estimates have been assessed by the UK Statistics Authority as having national statistics designation, being accurate and reliable for measuring immigration to the UK. The ONS continues to take steps to refine the survey design and to publish information on how figures relate to other sources.

[Lord Leigh of Hurley (Con)]

I thank my noble friend the Minister for that Answer. Indeed, the ONS does rely on the International Passenger Survey, which asks less than 0.7% of arrivals of their intentions, on a voluntary basis and with no verification. As the Minister knows, UK border officers are not allowed, under EU freedom of movement legislation, to ask arrivals whether they are immigrants or temporary visitors. Therefore, we have a situation where, over the past five years since July 2010, the ONS estimates for immigration are less than half of the national insurance numbers that have been issued to the same group. Does not the Minister agree that, given the events of the summer, the British public deserve better analysis and statistics?

[Baroness Williams of Trafford]

My Lords, there are various sources of statistical information and all of them useful in the round. My noble friend talked specifically of the discrepancy between national insurance numbers and the ONS figures. That is due, in the main, to large numbers of short-term migrants who stay for less than 12 months. The official figures are based on the UN international standard definition of a long-term migrant: one who changes their country of residence for a year or more.

Foreign and Commonwealth Office: Funding

Lord Leigh of Hurley Excerpts

Thursday 19th November 2015 Lords Chamber

[The Earl of Courtown]

My Lords, as the noble Lord will be aware, not long ago we had an interesting debate on the responsibility to protect, to which I was able to respond from this Dispatch Box. It is up to noble Lords to put down debates on this subject at any time, and I am sure that the noble Lord will attempt to do so.

[Lord Leigh of Hurley (Con)]

My Lords, does my noble friend agree that it is not just about the amount of the allocation but about the efficiency with which the money is spent? Will he join me in welcoming the comments made by many businessmen, both from SMEs and from large businesses, about the dramatic change since 2010 in the FCO’s ability to help exporters abroad?

[The Earl of Courtown]

My Lords, my noble friend is quite right. Perhaps I should underline the facts about the good work being done by UKTI. The Foreign and Commonwealth Office has helped to deliver some £37.6 billion-worth of business wins for UK industry. We also have the GREAT campaign, which emphasises that this country is a great place to visit, a great place in which to study and a great place to do business in.