Lord Parkinson of Whitley Bay
Main Page: Lord Parkinson of Whitley Bay (Conservative - Life peer)Global Anti-Corruption Sanctions Regulations 2021
Lord Parkinson of Whitley Bay Excerpts
Lord Parkinson of Whitley Bay
That the draft Regulations laid before the House on 26 April be approved.
Lord Parkinson of Whitley Bay (Con)
My Lords, as noble Lords will be aware, on 26 April Her Majesty’s Government laid these regulations under the powers provided by the Sanctions and Anti-Money Laundering Act 2018. These regulations were made on 23 April.
As has been noted many times in your Lordships’ House, corruption is one of the key drivers undermining human rights, democracy, development and the rule of law around the world. It undermines global trade and prosperity. The World Economic Forum estimates that corruption increases the cost of doing business for individual companies by as much as 10%, distorting markets and deterring trade and investment. Corruption also undermines our national security, by exacerbating conflict and facilitating serious and organised crime. This new sanctions regime is a significant step forward for the UK’s global leadership in combating corruption around the world.
The instrument before the House will enable us to prevent and combat serious corruption around the world by imposing asset freezes and travel bans on individuals and organisations involved. The scope of the regime is deliberately targeted to combat corruption around the world, and to prevent corrupt actors and their enablers using the UK as a haven for dirty money. Its scope also draws on the corrupt practices that almost all countries in the world have agreed to combat through the UN Convention against Corruption.
As set out in the regulations, the activities which come into the scope of the regime are bribery and misappropriation. The regulations define bribery as both the giving of a financial or other advantage to a foreign public official and the receipt by a foreign public official of a financial or other advantage. They define misappropriation of property as improper diversion by foreign public officials of property entrusted to them in their official role, for their own benefit or that of a third person. Property can include anything of value, including contracts, licences or concessions.
The regulations also enable us to target those involved in corrupt acts in other ways, such as those who facilitate, profit from, conceal, transfer or launder the proceeds of serious corruption and those who obstruct justice relating to serious corruption. As my right honourable friend the Foreign Secretary noted in his April Statement:
“whatever the particular circumstances, at the heart of this lies the same debilitating cycle of behaviour: corrupt officials ripping off their own people”.—[Official Report, Commons, 26/4/21; col. 58.]
These sanctions send a clear message to those involved in serious corruption around the world: that the UK will not tolerate them, or the proceeds of their corruption, coming into our country.
In the interests of clarity and transparency we have published a policy note which sets out how we will consider designations under these regulations, as well as an information note designed to help NGOs engage with the sanctions regime. As required by the sanctions Act, we have also published two statutory reports: one under Section 2 of that Act about the purposes of the regulations, and another under Section 18 setting out the criminal offences created by them. As with all UK sanctions, we adhere to rigorous due process and protections so that the rights of others are respected. This means that those designated under the sanctions regime will be able to request that a Minister reviews the decision and can subsequently apply to challenge that decision in UK courts.
As noble Lords will be aware, the Government made immediate use of this new tool and announced sanctions last month on 22 individuals from six countries who have been involved in serious corruption. These names are published online on the UK’s sanctions list for these regulations. Each designation is underpinned by evidence and meets the tests set out in the sanctions Act and the regulations.
The designations include 14 individuals involved in the diversion of $230 million of Russian state property through a fraudulent tax refund scheme, uncovered by Sergei Magnitsky—one of the largest tax frauds in recent Russian history. We imposed sanctions on Ajay, Atul and Rajesh Gupta, and their associate Salim Essa, who were at the heart of a long-running process of corruption in South Africa which caused significant damage to the economy of that country. We also designated the Sudanese businessman Ashraf Said Ahmed Hussein Ali, widely known as al-Cardinal, for his involvement in the misappropriation of significant amounts of state assets in South Sudan, one of the poorest countries in the world. His actions, in collusion with South Sudanese elites, have contributed to ongoing instability and conflict. Finally, we announced sanctions on several individuals involved in serious corruption in Latin America, including people who had facilitated bribes to support a major drug-trafficking organisation and others who had misappropriated funds which led to citizens being deprived of vital resources for development. This is just the first tranche of designations. Given the sensitivities involved, however, I cannot speculate on whom we may target in future.
All targeted sanctions are most effective when backed by co-ordinated, collective action. The steps that we have taken to expand our sanctions framework, to cover corruption as well as human rights, give us similar powers to the Magnitsky frameworks of the United States of America and Canada. This will enable even closer co-operation and co-ordination with our like-minded friends and partners to combat and prevent corruption and its corrosive effects.
I welcome this opportunity to hear the views of noble Lords on these regulations. I beg to move.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am very grateful to all noble Lords who have taken part in the debate on these regulations. Like the noble Baroness, Lady Smith of Newnham, I feel rather like the understudy here. I hope I will be able to rise to the occasion, as she did.
It would be appropriate to start, as my noble friend Lady Altmann did, by paying tribute to Sergei Magnitsky, who was, I believe, the same age as me when he died at the end of the ordeal he went through. Like many noble Lords, I also pay tribute to the long campaigning work of Bill Browder, which has brought about regulations such as these. The honours process is, of course, separate from government, but my noble friend’s point about it will have been well heard.
The noble Lord, Lord Anderson of Swansea, started off with a generous understanding of why we have taken the time we have to get these regulations right. This is a complex and important matter and I am grateful to the noble Lord for his understanding of that and for his congratulations to the parliamentary draftsmen who were involved in it. I am sure that they will have heard that with gratitude. I am also grateful for his tribute to the zeal and work of my right honourable friend the Foreign Secretary, who has taken a long-standing interest in this from the Back Benches through to the Cabinet table.
A number of noble Lords asked about the definition of “serious corruption”. It is not, as my noble and learned friend Lord Garnier said, a tedious or lawyerly point; it is an important one. These regulations focus on serious corruption in order to target the worst offenders and the most harmful cases of corruption. As is the case with the Global Human Rights Sanctions Regulations, the term “serious” is not defined in these regulations, but we have published a policy note which sets out factors that are likely to be relevant to the consideration of designations. I will not cite them all, but they include
“whether the conduct is systemic, for example involving senior officials or political figures with broad powers and responsibilities;”
whether, in response to the point made by my noble friend Lady Altmann about financial value,
“the financial value of the bribe(s) or assets diverted or the benefit derived are significant relative to the local context”
and also whether
“the conduct is sophisticated and/or systematic, requiring a degree of planning”.
So I hope noble Lords will feel that the policy document fleshes that out in the way they were seeking.
A number of noble Lords also asked about our engagement with the European Union. Although the EU does not currently have the powers to impose sanctions for corruption, we would welcome any co-ordination if it gained such powers in the future. The UK will, of course, continue to seek opportunities for international co-operation on sanctions, including with the EU, as well as with our close allies such as the US, Canada and Australia. As a number of noble Lords have said, sanctions are most effective when multiple countries act together to constrain or coerce a target’s ability to carry out unacceptable behaviour. In relation to the sanctions that I mentioned at the outset, 20 of the 22 individuals have also been sanctioned by the United States, which we welcome.
My noble and learned friend Lord Garnier and the noble Baroness, Lady Smith, asked about reasons for the delay in scrutinising these regulations under the affirmative procedure compared with another place. As the noble Baroness, Lady Smith, pointed out, we did have Prorogation before the start of the new Session—but I will take her point back to the usual channels.
My noble and learned friend Lord Garnier, the noble Baroness, Lady Wheatcroft, and others asked about resources for the OFSI. There is no target level for resources as such; rather, it is based on operational requirements and is continuously evaluated to make sure that they are being met.
The noble Baroness, Lady Wheatcroft, asked about Regulation 6(2)(d) and the term “associated with”. The use of that term is mandated by Section 11 of the sanctions Act; it is required to be included in all regulations, and has its usual legal meaning.
The noble Lords, Lord Rooker and Lord Sikka, among others, asked about resources for law enforcement agencies and those following up the sanctions. The Government are investing in their economic crime capabilities. Last year’s spending review allocated an additional £63 million to the Home Office to fund the continuing expansion of the National Economic Crime Centre and other initiatives; £20 million was also allocated to Companies House to support register reform transformation work. The Government have further announced proposals for an economic crime levy on firms regulated for money-laundering purposes, to raise up to £100 million a year for money laundering prevention and law enforcement efforts. So we have robust mechanisms in place to ensure that sanctions are adhered to.
The noble Lord, Lord Rooker, and others asked about co-operation with the devolved Administrations. This is a reserved matter for the UK Government but the regulations have force in the whole of the UK, including in Northern Ireland. We have no concerns about the co-operation of the devolved Administrations in implementing the regulations and tackling the corruption that they are aimed at.
The noble Lord, Lord Sikka, asked who in government has responsibility for this. The Foreign, Commonwealth and Development Office holds policy responsibility for sanctions, asset freezes are enforced by Her Majesty’s Treasury through the OFSI, and travel bans are enforced by the Home Office, but there are of course roles for the National Crime Agency, HMRC and others in enforcement.
In her rather wide-ranging speech, the noble Baroness, Lady Jones of Moulsecoomb, asked what the UK is doing more broadly to tackle corruption. The UK was the first G20 country to establish a public register of the beneficial owners of firms, so that secretive shell companies could not be used to hide the real owners of assets and companies. Now, 109 countries around the world have made commitments on beneficial ownership disclosure. We have some of the strongest anti-corruption law enforcement powers, including a gold standard Bribery Act and new powers such as account freezing orders, which enable investigators to freeze money quickly during complex financial investigations. London is home to the first ever International Anti-Corruption Coordination Centre, which was set up in 2017 to boost collaboration between our national law enforcement agencies to pursue the corrupt people who launder money across jurisdictions. We are taking serious action.
The noble Lord, Lord Jones, asked about engagement with the security and intelligence agencies and others. As noble Lords would expect, these regulations were developed in consultation with a range of departments and agencies with a stake in anti-corruption work, and we work across government to implement them.
My noble friend Lady McIntosh of Pickering asked about the situation in Belarus. As the Foreign Secretary said yesterday, the scenario as reported is a shocking assault on civil aviation and international law. The regime in Minsk must provide a full explanation for what appears to be a serious violation of international law. We have already a separate UK sanctions regime for Belarus and, as the Foreign Secretary said yesterday, we will not speculate on specific action in advance. We are, however, consulting our allies and seeing what evidence we have, which is of course needed for targeted sanctions. But we have done this before: we imposed 99 sanctions after the rigged elections in Belarus. The UK led the way on that occasion and we stand ready to do so again.
The noble Baroness, Lady Smith of Newnham, asked whether people or companies in the UK can be designated under these regulations. Yes, they can; they can be designated for involvement in serious corruption if the criteria are met, but involvement in corruption falling within the UK’s jurisdiction would of course be covered through our domestic law and law enforcement measures.
The noble Baroness and others asked what further steps we might take—what next? As my noble friend Lord Ahmad said in a Statement repeat on 27 April,
“we are going through an evolutionary process on the whole concept of sanctions. Two years ago, we did not have anything in this space on the specifics of the framework of sanctions. We now have two distinct sanctions regimes”.—[Official Report, 27/4/21; col. 2204.]
Of course, in implementing those regimes, we keep our minds open to what more can be done.
The noble Lord, Lord Collins of Highbury, paid tribute to his noble friend Lord Hain, as I do, in particular for his work on the Guptas. I hope that he will welcome the action that is being taken now. The noble Lord also asked about parliamentary engagement. I repeat what my noble friend Lord Ahmad said about our willingness to listen to Parliament. I hope that he and other noble Lords will also see that some of the sanctions we have brought in have responded to concerns raised in your Lordships’ House and in another place. Noble Lords and Members in another place can of course write if they wish to raise matters in further and more formal detail.
I am running close to my time limit. I hope that I have covered a number of the points made by noble Lords. I will of course consult the Official Report and make sure that I pick up any other questions and follow up with further details. With those answers, I thank noble Lords for their contributions.