Countering Russian Aggression and Tackling Illicit Finance

Alison Thewliss Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

Thank you, Madam Deputy Speaker. I am sorry that you were drawn into such a Pythonesque sketch show, but it is indicative of some aspects of the situation that I feel we are in with the Government today. They are absolutely all over the place on this issue. I could not quite believe it when the Minister said that the Government were taking it seriously, because we would not be here today if there were any sense whatsoever that they were taking it seriously. They have not taken it seriously, and that has been the case for years.

I thank the official Opposition for initiating the debate. It seems as though we have spoken a fair amount about economic crime in the past few weeks, but this motion could not be more topical or more significant.

During the sanctions debate yesterday afternoon, Members on both sides of the House rightly made clear that we have no quarrel with the people of Russia, and I want to start by reiterating that today. The cities of Glasgow and Rostov-on-Don have been twinned since 1986, hosting exchanges and working together to build bonds of friendship.

Rostov-on-Don now finds itself on the Russian frontline, and my thoughts are with residents there, as well as, of course, with all those in Ukraine, who must be very fearful of what more is to come after eight years of hostile action taken by Russian forces. We on these Benches are very clear about the fact that Ukraine and its sovereignty must be respected, and its people protected from Russian aggression.

I found it striking yesterday afternoon that Members in all parts of the House—perhaps forbye the Minister—were standing up to say that sanctions against five banks and three individuals were not enough. They are quite clearly not enough. These individuals have been on the US sanctions list since 2018, and are hardly likely to find this additional step a surprise or, indeed, an inconvenience.

It was billed that, post Brexit, the UK would be able to act in a nimble fashion and sanction more and more individuals as it saw fit, but it seems that we are not even going as far as the EU. Germany’s ending of Nord Stream 2 yesterday was a hugely significant move. European Union Foreign Ministers agreed unanimously on Tuesday to sanction 27 Russians and entities, as well banks and the defence sector, and to limit Russian access to European capital markets. The EU’s measures will also target as many as 351 members of the Russian Duma, as well as individuals and businesses linked to Russian actions in the separatist regions.

I appreciate that the Prime Minister said during Prime Minister’s questions, and the Foreign Secretary said this morning, that they will escalate sanctions in the event of full-scale invasion, but by that time it will be far too late.

[Wayne David]

Does the hon. Member agree that it is important that, as far as possible, Britain acts in concert with its allies, and that it is therefore strange that the Government have come forward with a very weak package of sanctions while the European Union has a very strong package?

[Alison Thewliss]

I agree completely. This package is very weak, and commentators across the board have described it as very weak.

[Jonathan Edwards]

Does this whole crisis not demonstrate the strategic malfunction of the Conservative party’s obsession with the European Union over the years, especially given all the negative energy that has consumed politics in this place over the last five years in the fallout from Brexit? We have taken our eye off the ball when it comes to the biggest foreign policy challenges that the UK—the state—faces.

[Alison Thewliss]

The hon. Gentleman is absolutely correct on that. There is a real need to work together on this, but the UK has been several steps behind, unfortunately.

I note with interest that it was reported that shares in Russia’s two biggest banks went up yesterday, in relief that they had not been targeted. The five banks targeted represent a mere fraction of the Russian banking sector. Only one of the five is on the Russian central bank’s list of systemically important credit institutions. The Black Sea bank is Russia’s 197th largest bank by assets, IS bank is 155th and GenBank is 92nd. They were hardly the biggest fish to go after. Ministers have assured us that there will be a ratchet process, but it feels to many that they are not moving fast enough or taking enough action to make a real impact here. Those cronies and oligarchs who have money to shift will no doubt be doing so already. The Minister of Foreign Affairs of Ukraine, Dmytro Kuleba, has tweeted this morning:

“To stop Putin from further aggression, we call on partners to impose more sanctions on Russia now. First decisive steps were taken yesterday, and we are grateful for them. Now the pressure needs to step up to stop Putin. Hit his economy and cronies. Hit more. Hit hard. Hit now.”

The UK Government should listen to that plea from our allies.

There was much talk during the recent statements of military action and of sending tanks and guns, and while that might be of immediate assistance in an escalating scenario with tens of thousands of Russian troops on the march, we must not neglect to tackle the long-standing scandal on the doorstep of this Parliament that has allowed President Putin to gather his strength and finance his corrupt regime. What frustrates me, other colleagues across this House, anti-corruption experts in the field and the Glasgow Central constituents who email me is the lack of action and urgency on illicit finance. The UK Government alone have this responsibility, but they have not taken the ample opportunities they have had over the years to stop the flow of Russian dirty money through the City of London. The Minister for Security and Borders, the right hon. Member for East Hampshire (Damian Hinds) told the Treasury Committee that he was not happy, and we are not happy either. The Government could have taken stronger measures in the Sanctions and Anti-Money Laundering Bill Committee, on which I sat. They did not do so. They have their registration of overseas entities Bill, which is still waiting for action. They have had ample opportunity to reform Companies House and to tackle Scottish limited partnerships and the lack of investment in enforcement agencies. People are getting away with this corruption through a lack of proper enforcement.

One of the most egregious examples is the Russian laundromat case, in which some 113 Scottish limited partnerships played critical roles in a massive Russian money-laundering scheme that moved $20.8 billion out of Russian banks. One of those involved was Igor Putin, cousin to the Russian president. I would like to pay tribute to my former colleague in this House, Roger Mullin, who did so much to tackle the scourge of the misuse of SLPs, along with the researcher Richard Smith and the journalist David Leask. The UK Government’s actions to tackle that were painfully slow and they have still not nailed the issue of the abuse of SLPs or the lack of enforcement on persons of significant control. Money has been taken from Ukraine recently via SLPs as well. Some £36 million in a scam being investigated by authorities last year ended up in the bank account of the SLP Remini Consulting.

Let us not kid ourselves: this is profitable business. The lack of enforcement has allowed an industry to flourish unchecked in the leagues of enablers right here in the UK. The journalist David Leask has pointed out:

“The mundane, unhappy reality is that we have outright crooks and a fair number of white-collar professionals happy not to look too closely at where money comes from. These ‘enablers’ here”—

in Scotland—

“and in England are a threat to the UK and to the wider world. They corrode our democracy and distort our markets. And they are laced throughout our society. They are company formation specialists, corporate lawyers and accountants who provide financial services to oligarchs, gangsters and corrupt politicians. They rarely think of themselves as bent. But that is what they are, ethically if not legally .”

The UK Government cannot talk seriously about tackling illicit finance if they do not go after those who enable it. They ought to start by looking in their own coffers for the donations with dubious sources and for those whose funds allow them to come into the Government’s inner circle. The Conservative party has accepted nearly £2 million in donations of Russian-linked money since the Prime Minister came into office in 2019, with a quarter of the Cabinet reportedly having Russian-linked donations. The Prime Minister and the Minister said that these were legitimate donations from British citizens, but handing them golden visas first, before getting the money, completely undermines the whole principle. I have constituents who have waited years for a visa, but anyone with enough money can waltz right in and do what they like.

[Dame Angela Eagle (Wallasey) (Lab)]

The hon. Lady and I both sat and listened with increasing incredulity during the Treasury Committee hearings on economic crime. Does she share my frustration at the Government’s seeming inability to act on any of their stated concerns?

[Alison Thewliss]

I absolutely agree with the hon. Lady. The evidence is so clear but the action is non-existent. It just is not being done.

[Stewart Hosie]

On the issue of golden visas, prior to the tiered scheme there was the old UK investor visa, which was introduced in 1994. It ran from the end of the Major years through Blair, Brown, Cameron and all the Prime Ministers since, and now the tier 1 visa scheme has been done away with. Is my hon. Friend as frustrated as I am, given that the issue of dirty Russian money is not new, that the action is always too late and never quite enough?

[Alison Thewliss]

My right hon. Friend is absolutely correct. The Government are several steps behind those who wish to bend the rules and wash their money through the City of London.

This morning, in response to questioning about a photo taken with Lubov Chernukhin, the wife of Putin’s former Finance Minister, the Foreign Secretary said:

“I think we’ve got to be very careful to distinguish between those who are supporters of the regime, those who are propping up Vladimir Putin and those people who may have moved from Russia years ago and who are part of the British political system.”

I would gently suggest to the Government that when those oligarchs and good pals of President Putin are seen by the British Foreign Secretary as being “part of the British political system”, it really does illustrate the scale of difficulty that the Conservative party has got itself into.

[Chris Bryant]

On that particular individual, it does seem odd that dual nationals can give vast amounts of money, especially when they have hidden nearly all of their assets from clear view and when, on top of that, it is pretty clear that a lot of their ownership has sprung from their time spent prospering under Putin.

[Alison Thewliss]

That is absolutely correct. No questions seem to be asked about where this money has come from, the legitimacy of it or even who it really belongs to in the end.

A notable absence from the Prime Minister’s sanctions announcement was any commitment to extend them to those Tory party donors. Maximilian Hess, a fellow at the Foreign Policy Research Institute, has described some Russian business people as

“a champagne glass removed from Westminster’s political elite”.

And it comes to Scotland too. At a Tory black and white ball in 2018, the then Scottish Conservative leader, Ruth—now Baroness—Davidson, auctioned off a lunch with herself to Lubov Chernukhin, who bid £20,000 to win it. It is said that Baroness Davidson has not yet even come good on that lunch, but if the £20,000 has been accepted, it is a significant donation, whether or not sandwiches, cakes and tea have been taken.

The Prime Minister repeatedly refused to allow publication of the report by Parliament’s Intelligence and Security Committee in the run-up to the 2019 general election. The Times quoted sources suggesting that his reluctance was due to his embarrassment at the links the Committee had discovered between Conservative party donors and the Kremlin. His Government have yet to act on the recommendations of that report. To make matters worse, the Tories’ Elections Bill will water down the Electoral Commission and make foreign donations easier, so their denial just now, stating that it is not foreign money, is not even going to stand when that Bill comes into force.

[Emma Hardy]

The hon. Lady is making an excellent speech. Does she share my concern that when the Prime Minister’s spokesperson was questioned about these donations, they just repeated the same answer, which was that due diligence had been met, but when they were asked what that due diligence actually consisted of and what was involved in it, they were unable to give an answer?

[Alison Thewliss]

Yes, the hon. Lady is absolutely correct. It is a disrespect to everybody who donates with honesty to political parties in this country—those small donors who give a tenner or put money into a raffle—that so little is asked about these absolutely massive donations that go to the heart of our democracy and compromise the very place in which we sit today.

The Government must also act on the economic crime Bill. We heard earlier that it would be introduced in the next Session. We have heard before that it will be introduced when parliamentary time allows. Well, there has been tons of parliamentary time over these past couple of years and yet no economic crime Bill. The disappearance of that Bill was part of the reason that Lord Agnew resigned as the Minister for economic crime.

We have not yet seen the Government’s registration of overseas entities Bill. The register of overseas entities was supposed to be up and running last year, but we are still waiting to see the legislation. I sat on the Joint Committee on the draft Bill, and this morning I dug out the Committee’s papers and our report to refresh my memory. The Committee made suggestions to improve the Bill by closing loopholes such as trusts and introducing verification, the lack of which makes the current register at Companies House so utterly useless and full of guff.

Lord Faulks, the former Conservative Minister who chaired the Joint Committee, recently revealed that, under the previous Prime Minister, Downing Street leant on him when he tabled amendments to introduce a public register of overseas property owners. He said:

“I was obviously misled because nothing has subsequently happened. I can only think a deluded desire to protect the City of London has led to all these delays.

It is a real irony that our reputation for protecting the rule of law is one of the things that attracts people who have very little regard for the rule of law themselves and come from countries which ignore it almost altogether.”

That is the nature of the money being attracted.

Meanwhile, the anti-corruption watchdog Transparency International has said that Russians accused of corruption or of links to the Kremlin own around £1.5 billion-worth of property in Britain, 28% of it in the City of Westminster on the doorstep of British democracy.

This House is united in our cross-party support for the Government and people of Ukraine. Members across the House want to see more action by way of sanctions against those involved in Putin’s regime, but this report rings hollow when this Government have, time and again, failed to take action to halt the flow of dirty money through the City of London, tarnishing both credibility and reputation.

The Scottish Parliament does not have the powers to act on this, although my colleagues and I dearly wish it did. This UK Government have a chance to put that right, and they must do so without further delay, else the stream of questions as to why not and who benefits will become a flood.

[Several hon. Members rose—]