Countering Iran’s Hostile Activities

Debate between Baroness Hodge of Barking and Iain Duncan Smith

Wednesday 8th May 2024 Westminster Hall

[Dame Margaret Hodge (Barking) (Lab)]

I beg to move,

That this House has considered the matter of countering hostile activities by Iran.

It is a pleasure to speak under your chairship, Mr Henderson. I am particularly grateful to the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) for co-sponsoring the debate. My thanks also go to Redress and Labour Friends of Israel for the briefings that they have provided. Our focus is on the active role that Britain is wittingly or unwittingly playing in supporting Iran and its agents as they pursue their violent, repressive and hostile activities here in the UK and across the world. We have some practical asks of the Government, to which I hope the Minister will respond when she replies to the debate.

It is now almost a month since we woke up to the news that Iran had launched 300 drones and missiles at Israel, following Israel’s attack on the Islamic Revolutionary Guard Corps leaders in Damascus. That was the first direct attack by Iranians on Israel’s soil in the horrendous conflict that is taking place in the middle east, but it sits within a wider context of the threat that Iran poses not just to Israel, but to Britain and to our western allies. Iran is listed alongside Russia and China by our security services as a hostile state, and yet, in the words of the commissioner at the Commission for Countering Extremism, Robin Simcox,

“what is underappreciated is the scale of Iranian-backed activity in this country; and the extent to which Iran attempts to stoke extremism here.”

Mostly, Iran works through its agents. At their heart is the IRGC, Iran’s Islamic Revolutionary Guard Corps. We all remember the protests in Iran following the death in custody of 22-year-old Mahsa Amini, arrested simply for refusing to wear a hijab. The widespread protests that followed her death, with women removing their headscarves and chanting, “Women, life, freedom”, were violently crushed by the IRGC. More than 500 protesters were killed, more than 19,400 individuals were arrested and at least 27 protesters have been given a death sentence, of whom seven have been executed.

In Iran, the IRGC is renowned for its brutality and violence, for undermining human rights and democracy, and for being a terrorist paramilitary organisation that acts as the ideological custodian of the Islamic Republic. But its influence extends to Britain and to our allies. Since the fatwa against Salman Rushdie in 1989, the IRGC has targeted British nationals and Iranian opposition activists living in exile here on our soil. In 2022, the head of MI5, Ken McCallum, warned that Iran’s intelligence services had made at least 15 credible threats to kidnap or even kill individuals living here in Britain. Such actions pose a significant threat to our national security.

Attacks on journalists who seek to hold the Iranian regime to public account are particularly horrific. Those journalists have been described by Iran as “enemies of the state”. We had the terrifying attack on Pouria Zeraati, who worked as a journalist for Iran International, a Persian-language opposition TV channel, and was stabbed in the leg outside his home in Wimbledon. We learned about the threat and harassment meted out to BBC journalists working for BBC Persian. For example, Rana Rahimpour, who worked for the BBC for 15 years, had her car broken into, a listening device installed in it and her phone tapped, and the conversations were misleadingly edited and broadcast in Iran to suggest that she supported the regime. That led to attacks on her from those who oppose the regime. In the end, she quit her job because of the pressure on her and her family, saying:

“They don’t want fair, trusted or impartial news to reach the shores of my homeland.”

A recent report by Reporters Without Borders says that London has become a “hot spot” for transnational repression. Iran also seeks to influence public opinion by spreading propaganda. There are concerning ties between the IRGC and local Islamic centres in cities such London, Manchester and Glasgow. According to Policy Exchange, the Islamic Centre of England, which is located in a converted cinema in Maida Vale, is the centre of Iranian influences in the UK. The head of the centre is directly appointed by Ayatollah Khamenei. Senior clerical figures travelled freely from Iran to the centre in the UK to voice their repressive ideology, while at the same time Nazanin Zaghari-Ratcliffe was languishing in a prison in Iran.

Similarly, the Kanoon Towhid Islamic centre in west London is used as a meeting place for the Islamic Students Association of Britain. There, IRCG commanders lecture students on the evils of Israel and its western allies. “Death to Israel,” proclaimed one IRCG commander, who also claimed the holocaust was

“a lie and a fake”.

Another claimed that they are engaged in

“an apocalyptic war that will end the lives of Jews”.

All that is going on within our shores, in our communities and places of worship in Britain. That is just a small part of the nefarious activities in which Iran is engaged, which also include providing weapons to Russia in Ukraine, and to Hezbollah, Hamas and the Houthis in the middle east. Even worse, our financial institutions are facilitating Iran’s wrongdoing.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

The right hon. Lady is making an excellent speech to which I am listening carefully. I would press slightly on one other issue. It is quite clear, through links that I will set out later, that the Hamas attacks were organised by the IRGC. That came at a time when Russia had been under pressure in Ukraine. Iran has links to the Russians and this has taken the pressure off them, as most of the focus has gone to Gaza. Does the right hon. Lady agree that, on a wider front, this is an absolute threat to us all?

[Dame Margaret Hodge]

I absolutely take that point. My attempts to condense everything I wanted to say in the time available did not allow me to give more time to that very important link.

Our financial institutions are helping Iran and its agents to pursue their evil objectives. Two banks—Bank Saderat and Melli Bank—sanctioned by the USA for supporting the IRGC and other military-related activities, have active subsidiaries in London. They operate out of the heart of London in Lothbury and Kensington High Street, funnelling funds from Iran to the state-controlled agencies in the UK.

In February, the Financial Times revealed that two of the UK’s largest banks—Santander and Lloyd’s—had provided accounts for firms connected to Iran’s state-controlled Petrochemical Commercial Company. US officials believe that that company has funnelled hundreds of millions of dollars to the IRGC, and that it has worked with Russian intelligence agencies to raise money for the Iranian proxy militia. Money in the hands of rogue states and terrorists is a deadly weapon. There is a real risk of the UK becoming a safe haven for Iranian perpetrators of human rights violations and international crimes. Those bad actors must not be permitted to seek shelter, threaten UK citizens and residents or accumulate funds and other resources to support their actions.

I am afraid that our response so far does not match the scale of the threat we face. We are working with our allies to counter Iran’s hostile activities, but the Government must do more at home to target both the IRGC and its enablers. There are three key levers that I urge the Minister to consider. First, I call on the Government to act firmly and proscribe the IRGC as a terrorist group. Action against what is clearly a hostile state-sponsored threat is long overdue.

Secondly, the Government must ramp up their efforts to impose sanctions on the members of the IRGC. I recognise that significant strides have been made in sanctioning the IRGC as an entity and several of its commanders. Indeed, the Government’s new Iran sanctions regime gives us the enhanced powers we need to target those involved in supporting the Iranian regime’s human rights violations across the world. That includes those who finance or are associated with Iran’s hostile activities, as well as any entities involved in the production and export of Iranian weapons. Imposing sanctions on IRGC agents, or other associated entities, would allow us to freeze their UK assets, deport those without UK citizenship, and prevent any UK persons from dealing with them. We must make full use of those powers and target a far broader range of agents, including networks of individuals and companies associated with the IRGC.

Thirdly, we must ensure full transparency over who owns or controls UK companies, properties and trusts so that all the assets and individuals associated with the IRGC can be appropriately referred to the enforcement authorities. Any UK companies or individuals dealing with the Iranian Government or the IRGC, by facilitating transactions on their behalf or by supplying them with military equipment or other resources, is likely to be in breach of the existing UK sanctions regime. Entities regulated by the UK’s Financial Conduct Authority, such as Bank Saderat and Melli Bank, could be referred to the FCA for failures in their sanctions screening and failures in customer due diligence checks.

Those measures would send a message to Iran, to the IRGC, and to other hostile state-sponsored threats: the UK will not serve as a conduit for the financing of conflict and terror. The UK will not stand by as foreign agents intimidate and threaten people on our soil. Finally, the UK will not stand as a safe haven for perpetrators of human rights violations and international crimes.

Russian Assets: Seizure

Debate between Baroness Hodge of Barking and Iain Duncan Smith

Tuesday 14th March 2023 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

I join the right hon. Gentleman in welcoming the Ukrainian MPs who are with us today. A letter has been sent by 45 Ukrainian MPs to our Prime Minister urging him to do precisely what we want, which is not to freeze assets but to seize them. Given that support from the Ukrainian Parliament, does he not agree that there is now an urgent need for the Government to be bold and to act?

[Sir Iain Duncan Smith]

I do agree with the right hon. Lady. We have a lot of Russian assets that are currently frozen, while Ukraine is screaming out for money and support to help all those devastated areas. We can bring the two together, and that is what today’s debate is all about.

--- Later in debate ---

[Sir Iain Duncan Smith]

I absolutely agree with the hon. Lady.

I want to talk about what Russian state assets are frozen and what could be frozen. It is important to note that, in Congress right now, they are already discussing this—I spoke to someone there just 24 hours ago—and in Canada, they are seriously talking about it. European Parliaments are also discussing the matter. This is a moment for us to give a lead on this and help to shape the nature of it, as we have a conference coming up shortly and I wonder whether that might be the place to lead on this matter.

According to the Bank of Russia’s own 2021 annual report, £26 billion of Russian state reserves are in the United Kingdom and, on a wider level, western Governments have now frozen some $350 billion of Russian central bank reserves in response to the invasion. There is yet more that they could do. The combined value of frozen UK properties belonging to Russian oligarchs is at least £2 billion. Funds frozen under the UK sanctions regime are passive, and that is the problem. Those funds would enable us to finance the rebuilding of Ukraine and to show Russian dirty money the door. This is the key: we send the message and we help with reparations. Several countries, including Canada, as I said earlier, and the EU are already on to this process and I urge our Government to help to give a lead on this.

[Dame Margaret Hodge]

May I draw the right hon. Gentleman’s attention to the fact that the Canadians have gone even further? My understanding is that they have already started taking action by pursuing the forfeiture of US$26 million from Roman Abramovich’s holding in Granite Capital Holdings Ltd. If Canada can do it, surely we can, too.

[Sir Iain Duncan Smith]

I agree with the right hon. Lady. If countries do this individually, it will allow terrible regimes to dodge their money around from one financial centre to another, as some will not have done it. This has to be done in one go by all the developed world’s major centres, otherwise it will end up with disputes and problems. I applaud Canada for starting, but we need the City of London, New York, Zurich and all the other major centres to be serious about making sure this cannot happen and these assets will always be seized.

I can tell the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), that we understand the underlying problem, but my point is that the issues are not insuperable.

--- Later in debate ---

[Sir Iain Duncan Smith]

I agree. These individuals, Abramovich and others, may want this to be done, but somebody has to do it for them, and my hon. Friend is absolutely right to follow the chain down, because we have to capture all the individuals down the chain, not just the one at the top. That is the key, because without those, this does not happen. He rightly says that, to avoid the sanctions, three weeks before the war began Abramovich was busy restructuring radically his assets. I believe that my hon. Friend is right to say that between £4 billion and £7 billion was squirreled away as a result, and we were not able to do anything about it. But we should have been ahead of the game on that one.

[Dame Margaret Hodge]

The right hon. Gentleman is making an excellent contribution. I want to say one thing: I do not think the Government are using their current powers as effectively as they could on this issue. Under section 11 of the Sanctions and Anti-Money Laundering Act 2018, the powers can be used against somebody “associated with” the person sanctioned. If that is the case and I have read the legislation right, does he agree that the Government could have stopped Abramovich giving all this to his young children and could have sanctioned them because they were associated with Abramovich himself?

Economic Crime (Transparency and Enforcement) Bill

Debate between Baroness Hodge of Barking and Iain Duncan Smith

Committee stage
Monday 7th March 2022 Commons Chamber

[Sir Iain Duncan Smith]

It might not, but I think it would, because it covers the information that individuals are asked to declare. It may not cover the sanction on the individual, but it covers the knowledge of who that individual is. If there is a better way to do it, however, I am up for it. That is feasible, and it may be that my right hon. and learned Friend’s way of doing it is a better way.

[Dame Margaret Hodge (Barking) (Lab)]

I think we are all wandering around the same point. May I clarify it? The Minister agreed to look at our amendment 3, which addresses the question of whether this is an entity or an individual, and whether, if it is an entity, that entity can put forward a company provider and thus hide the identity of the owner of the property. The Minister has agreed to look into what could be a loophole in the legislation, and then consult with us on it. I think the point is valid, and I hope that the Minister will look at it and that, between us, we can all close that loophole.

[Sir Iain Duncan Smith]

I agree that clarity is everything in this instance. The Bill will be going to the other place, and by the time it comes back, we will be looking for those loopholes to be shut down and sorted out.

--- Later in debate ---

[Dame Margaret Hodge]

It always seems to me absurd that it costs £12 to establish a new company in Companies House. Obviously we want to make it easy for new businesses to enter the market, but £12 is absurd. We know that that gets exploited in relation to shell companies, but does it also facilitate economic crime? If we quadrupled that figure to £50, it would still not be a fortune, but we would then have a massive investment that we could put into our enforcement agencies without raising any further money through taxation. There are a whole range of mechanisms that would not have a direct impact on public spending. They may mean that the Treasury gets a little bit less than it thought it would, but they would not have a direct impact on public expenditure and we could employ them to make these enforcement agencies fit for purpose.

[Sir Iain Duncan Smith]

I wonder whether the right hon. Lady can see some way forward on a point that I made earlier. Europe, the UK and the USA all have separate sanctioning bodies, with the USA way ahead of the pack. If the USA is sanctioning somebody, it surely should be for this Government, or for that matter for European Governments, to argue why they will not be sanctioning the individual against the evidence that is shared by the USA, rather than why they are looking to sanction the individual here. It seems that, if we are all in this together, it would be far better if we had a much closer set-up, so that we sanctioned people if somebody else had found the evidence and we thought that it was okay.

[Dame Margaret Hodge]

There are already arrangements for the sharing of information and data, but it is not enough. It is absurd. When I talk to the enforcement agencies and the anti-money laundering people working in the banks, they tell me that they cannot share information. If one bank has information that makes it suspicious about a particular client, it ought to be able to share it around the banking system so that they can all take action. There are pragmatic steps that we could take to share information and knowledge across jurisdictions, from America through to Europe to us, which would massively improve things and actually bring in money.

Let me take one example that came out of the FinCEN files. Standard Chartered Bank is a British bank. In 2019, it was fined by both America and ourselves for poor money laundering controls and other offences, including breaching sanctions in Iran. The British bank was fined £842 million in America, but only £102 million here by the Financial Conduct Authority in the UK. The Americans have got it right. There are lessons that we can learn from them. There are also ways in which we could properly resource all the enforcement agencies. We could perhaps reduce them as well—we do not need all these people. Every time I refer a matter, whether it is for a corrupt or an illegal activity, to one enforcement agency, I am either told that it is the responsibility of another agency or it goes into a big black hole and I never see anything arising out of it again. That situation is completely and totally unacceptable.