Economic Crime and Corporate Transparency Bill

Debate between Lord Trevethin and Oaksey and Lord Young of Cookham

Committee stage
Tuesday 9th May 2023 Grand Committee

[Lord Young of Cookham (Con)]

My Lords, I shall speak briefly to Amendments 93 and 95. Amendment 95, in the names of the noble Lord, Lord Faulks, and my noble and learned friend Lord Garnier—who, sadly, cannot be here—is closely related to Amendment 93 but has a key difference in that subsection (3) of the proposed new clause says that the annual report must detail how much money has been brought in and how much has been spent in securing it.

UWOs were introduced by the Criminal Finances Act 2017. At the time, I was Treasury spokesman in your Lordships’ House. I have no recollections of piloting this legislation through, but I have some memories of some of the statutory instruments that flowed from it. The background was that this had been tried in other countries with varying degrees of success. I do not think anyone can argue with the principle: an individual has at his or her disposal substantial sums of money for which there is no reasonable explanation—they may be an official working for, or who used to work for, some totalitarian Government, whose official salary in no way could support their standard of living. I see the case for UWOs but, as we just heard from the noble Lord, Lord Coaker, they have not been a stunning success.

When the Bill was going through, the noble Lord, Lord Faulks, tabled some amendments to give the SFO more powers but also to understand the ambition of the Home Office with that legislation. A Home Office assessment in 2017 predicted that there would be about 20 UWO applications per annum. We just heard from the noble Lord, Lord Coaker, that, to date, there have been nine applications against four individuals, with not a lot of money realised. In fact, in one case, the cost of failure against the Aliyev family was about £1.5 million. Since then, we have a cap on the costs that can be awarded against the SFO or the prosecuting authority, but I wonder whether that goes far enough and whether we should not provide that there should be no order for costs against the SFO unless the proceedings were brought maliciously or without any reasonable justification. That would place a burden on the person against whom the UWO was claimed to show, in effect, that the institution of proceedings was abusive.

Related to this, last year the register of overseas entities was introduced, following the invasion of Ukraine. A Joint Committee, chaired by the noble Lord, Lord Faulks, looked into the register of overseas entities and to what extent it could relate to the UWOs. Can my noble friend the Minister update us on that? The register should provide some valuable information in seeking an UWO, and a failure to provide relevant details, or the provision of inadequate details, would clearly be of immense value.

However, at the heart of the problem is something that the noble Lord, Lord Browne, referred to in a previous debate: the inequality of arms in the firepower available to each side. The targets, by definition, will be well resourced, and the SFO considerably less so. This is not the first time in our debates on this Bill that we have emphasised the importance of resources in the fight against economic crime.

My final point is this: we have had two Bills in quick succession on economic crime, and I think we can now expect a legislative silence in this area while Governments of whatever complexion concentrate on other issues. Hence the importance of a provision to keep the Government up to the mark in telling Parliament how they are using the valuable powers that Parliament gave them with the UWOs. That, in effect, is what these two amendments seek to do.

[Lord Trevethin and Oaksey (CB)]

My Lords, having spoken briefly to the noble and learned Lord, Lord Garnier, who regrets that he is not able to speak to his amendment, I think I know broadly what he would have said, and I agree with him. I shall try to articulate it briefly.

The point made by the noble Lord, Lord Cookham, about inequality of arms in this area, is critical. It is very strange and troubling that there have been so few applications of this nature since the jurisdiction came into existence, and the reason, unquestionably, is that the SFO, which is responsible for deciding whether to make these applications, is understandably very wary of the cost consequences of losing.

As the noble Lord, Lord Young, said, by definition, the respondents to these applications will be well resourced. They will retain City firms whose partners charge £600, £700 or £800 an hour or more—and, in responding to the applications, which will tend to raise quite tricky points of fact and complex issues of foreign law, they will swiftly run up legal bills that extend to hundreds of thousands, even millions, of pounds. If the principle that the loser pays applies to these applications without qualification, the cost consequences of losing, from the point of view of the regulator or prosecutor, will be a considerable deterrent to making applications, even when there is obviously a good reason to do so.

The points that I am considering in these short remarks may come into focus later on this afternoon when we discuss another amendment. The reason for me making them now is that it seems to me that the information that would be yielded by the amendment in the names of the noble Lord, Lord Faulks, and the noble and learned Lord, Lord Garnier, would be of great value both to Parliament and to those who make decisions in this area in deciding how the regime needs to be restructured so that applications are made when they should be made.