Economic Crime (Transparency and Enforcement) Bill

Andy Slaughter Excerpts

2nd reading
Monday 7th March 2022 Commons Chamber

[Priti Patel]

My right hon. Friend has made an incredibly important point and used a good example to show how the system is being used and abused. I want to reiterate to the House that this is a two-stage Bill. The first stage will deal with many aspects of this, but the full Companies House reform will come in the second economic crime Bill, where that detail will all be worked through. It is important to say this is the first step to making a clean sweep in terms of how we update, in terms of accountability, and in terms of holding individuals and their enablers—their managers and all the others responsible—to account. The House has just heard me speak about the penalties.

[Andy Slaughter (Hammersmith) (Lab)]

There seems to be bit of a gap between the Home Secretary’s rhetoric and the reality. Last week, the Government were briefing the press that they were drawing up plans to seize British property and use it to house Ukrainians fleeing their homeland. Well, if there are only 50 Ukrainians, that is probably only one property. However, where is the freezing and seizing of assets here? All that this Bill is proposing is a relatively generous time limit on the publication of information. When are we going to get the steps that actually bite?

[Priti Patel]

I have been speaking for a while and I would have hoped that the hon. Gentleman was listening to my remarks about the many tools that this Bill will bring in to enable asset confiscation, freezing and so on.

That brings me neatly on to unexplained wealth orders. The Bill removes key barriers to the use of unexplained wealth orders. Let me make it clear to people who think they can obstruct law enforcement investigations that that will end now through this Bill. I have already touched on the work of the National Crime Agency. Yes, we will be resourcing it and yes, there is more to do; we are very open and honest about that, and we have to be. We will reform the costs rule so that agencies acting to protect the public will be protected from substantial legal costs when they have acted reasonably in their investigation. The maximum period that a property can be frozen while unexplained wealth orders are in place will be extended, allowing the full force of the law and proper investigation.

Unexplained wealth orders will also be more effective against those who hold property in the UK through trusts. That is another complex entity that tends to lead to complex ownership schemes. Individuals will no longer be able to hide behind opaque shell companies, trusts and foundations. We will do everything in our power to counter the unwillingness of kleptocrats to provide reliable information. These reforms will have an immediate dissuasive effect.

--- Later in debate ---

[Andy Slaughter (Hammersmith) (Lab)]

I am sure we all agree that the Bill is urgent and that it is good as far as it goes, but it is inadequate because it has been hastily drafted, and it was hastily drafted because the Government dragged their feet.

If I understood the Home Secretary’s argument earlier, it was that the number of amendments that have been tabled shows the degree of support for the Bill. The number of amendments shows the gaps in the Bill and its inadequacies. Hopefully, we will correct some of them in Committee later, but I would like to hear from the Government which of the amendments they propose to accept. If they do not intend to accept them on technical grounds, I would like to hear them at least give assurances that during the Bill’s passage they will bring forward their own versions of the relevant measures.

I said earlier to the Home Secretary that there is a gap between the rhetoric and the reality. I was thinking of a briefing given to the Financial Times last week on the same day as the Bill was published, which said:

“UK cabinet minister Michael Gove is drawing up plans to seize British property owned by Russian oligarchs with links to President Vladimir Putin, without paying them compensation. Ukrainians fleeing their homeland could be housed in the lavish UK residences of oligarchs hit with sanctions under the proposals discussed by Gove”.

I do not see very much of that in the Bill.

What we have seen was initially 18 months and now six months to publish information. Yes, there will be penalties for the failure to publish that information, but there will also be ample warning and time to either disburse or transfer those assets. Whether the Government accept the proposal from the Chairman of the Justice Committee, the hon. Member for Bromley and Chislehurst (Sir Robert Neill), that it should be three months, or our proposal that it should be 28 days, that period has to be cut down.

In addition to that—I am looking at new clause 29, tabled by the right hon. Member for Haltemprice and Howden (Mr Davis)—we need the early freezing of assets to prevent them from being dissipated during that period. The Government, if one believes their own briefing, think that we should be seizing those assets. Where are those proposals? Where is the comprehensive coverage of people whose assets can be frozen and what assets there are likely to be? How are they going to drill through the elaborate network of shell companies in order to do that?

That brings us on to another point that is absent from the Bill: regulation and enforcement. Let us be clear: we need not more enforcement agencies, but the ones that are there to work properly, and the National Crime Agency and the Serious Fraud Office do not. That is partly because of a lack of funding, partly because they need staff of a higher quality and ability, and partly because of the revolving door between those agencies and defendant law firms, which goes on all the time at the moment. We have got to the stage now where the Attorney General has ordered an investigation into the head of the Serious Fraud Office because cases are collapsing, or because the wrong targets are being pursued—the minnows rather than the sharks. Indeed, we have the absurd position where the Serious Fraud Office itself is a target of SLAPP—strategic lawsuit against public participation—litigation by the Eurasian Natural Resources Corporation.

I hope that we will have time to discuss the amendments of my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) on preparing legislation on SLAPP and on protecting whistleblowers. These are difficult things to do. Oligarchs are entitled to lawyers, but they are not entitled to misuse the law in this country. This legislation requires careful drafting, as will the seizure of assets. These are draconian and dramatic steps that our courts are not used to taking. To make sure that they are watertight, but also fair to all parties, the measures require careful drafting; they must not be done at the last minute on the back of an envelope.

I was delighted to see Tom Burgis win his case against ENRC last Wednesday. It shows that, if they are given the tools, our courts are prepared to stand up in that way. I was astonished to read this comment by the losing party, ENRC:

“We have seen a growing campaign of xenophobia pervade aspects of the media and parliament that targets individuals and companies based on their nationality, including bizarrely ENRC, which is a UK company with Kazakh shareholders.”

I do not think that Tom Burgis is anti-Kazakh and that such prejudices were driving him when he wrote his book, “Kleptopia: How Dirty Money is Conquering the World”. On the contrary, he was doing us all a service. The Government need to rise to the challenge now. It does not help if they are not clear on where the donors to the Conservative party are coming from at present.