Economic Crime (Transparency and Enforcement) Bill

Baroness Jones of Moulsecoomb Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will set out the context for the Bill and look at some of the bigger ways forward, while my noble friend Lady Jones of Moulsecoomb will concentrate more on its details.

[Baroness Jones of Moulsecoomb (GP)]

Will I?

[Baroness Bennett of Manor Castle (GP)]

I am sure she will.

Unoriginally, I begin by noting that a year is a long time in politics. In January 2021, we had Second Reading of the Financial Services Bill in your Lordships’ Chamber. The noble Lord, Lord Agnew of Oulton, was on the Front Bench, proclaiming with apparent pride that the UK had

“unwavering commitment to high-quality, agile and responsive regulation”.—[Official Report, 28/1/21; col. 1810.]

I said:

“We are a major global centre of corruption. The City is an Augean stables and the Bill is clearly sparing in its distribution of shovels.”—[Official Report, 28/1/21; col. 1861.]


It is clear that Greens lead in recognising problems, with others following eventually, and we offer solutions. I have joined many others—I note the leadership of the noble Lord, Lord Wallace of Saltaire, in particular—in calling for an end to golden visas, a long and disgraceful saga threading through Governments of three political hues that eventually, very late in the day, has finally been cut off.

The noble Lord, Lord Agnew, is no longer sitting on the Front Bench. It was the Government’s refusal to tackle another, largely unconnected corruption issue that led to his dramatic resignation. Our issue with corruption is clearly not contained to one sector, area or type. It is a pervasive UK issue.

As a nation, we are today like a guilty individual hastily pushing an illicit lover out of the window of their bedroom as the world’s media comes storming through the front door, this Bill being scanty garments hastily donned in ill order. The world, with its attention focused in particular down the road on the City of London, will clearly not be deceived about our state of disarray. According to the International Monetary Fund, as much as 5% of the world’s GDP is laundered money, and only 1% of it is ever spotted. Collectively, developing countries have lost $16.3 trillion to illicit leakages since 1980. A very significant chunk of that flows just down the road from here. The Thames is dwarfed by a far dirtier and deadlier stream of corruption, as the right reverend Prelate the Bishop of Leeds noted.

It is worth noting that we are here today because of President Putin. His actions forced our Government to react. We should not be reacting; we should have been proactive many years ago. As the right reverend Prelate said, we should not need this spur, yet clearly the Government are like a horse that has been baulking at the gate, not wanting to be pushed away from a lush, tasty pasture even when it has been made deadly ill by the colic of ill-gotten gains.

Colic is not a contagious disease, but our corruption is. Look at how Russia got to the state it is in today; back in the time of President Yeltsin, the guidance for reshaping the post-Soviet economy was largely handed to western lawyers, accountants and businesspeople. The Russians were told that the neoliberal market model was the way forward, and it actively encouraged what amounted to a 19th-century robber baron-dominated wild east, with what had been Soviet-era senior apparatchiks almost seamlessly switching to champions of the market. We still see some of them today, very close to home.

Of course, the oligarchs bear responsibility for their choices and actions, but so do those who encouraged and enabled them. The sicknesses of our society are many. We often talk about our productivity problem and our labour crisis, but what if the bankers, instead of serving the oligarchs, put their talents to optimising the outputs of our manufacturing? What if the accountants were tracking the movements of nutrients and micro-organisms, with the aim of producing good, healthy food? What if the lawyers were caring for our old and sick?

I am indebted to the noble Lord, Lord Sikka—I am very sorry that we will not hear from him shortly—for the figure that there are around 400,000 professionally qualified accountants in the UK. That is the highest per capita figure in the world. We have an economy that focuses on spreadsheets, not on the quality of our society. And what have we done in terms of delivering the rule of law? It is frequently claimed that we are at the centre of the camp defending it, but we have actually been leading its absolute undermining.

A book entitled Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals will be published tomorrow. It is definitely in the contest for the best-ever timed publication of a book. The author, Oliver Bullough, notes that we do not just need changes to legislation—we need changes to enforcement, as many noble Lords have noted, and to culture and politics.

In 2016, the Government estimated that the amount of corrupt money flowing into the UK had reached £100 billion a year, and Transparency International has identified at least £1 billion of suspect property bought with Russian money alone. But the flow is not just of money; of course, there has been a massive flow into the West of Russian oil and gas. The trashing of our planet and our economic and political systems are all intimately interlinked. The impoverishment of many and the destruction of our environment are linked to the benefit of the few.

I have some specific proposals and questions for the Minister. First, will the Government now reconsider their plan for freeports? Studies by the European Parliament and the Financial Action Task Force, among others, have shown that the secrecy and extraterritorial nature of freeports are a magnet for money laundering and tax evasion. These are the kind of things we are supposedly trying to act against.

Secondly, in terms of the Russian targets for these sanctions, we are talking about an opt-in system, identifying those oligarchs that are apparently close to Putin and his regime. Robert Reich, the former US Secretary of Labor and now a professor of public policy at the University of California, suggested the freezing of all offshore holdings of Russian nationals in excess of $10 million. He estimates that this would affect 10,000 to 20,000 Russians—those who, by definition, have benefited most from Putin’s rule. How about an opt-in system instead of an opt-out one?

Thirdly, due to the prod that led us to this Chamber today, we are of course focusing on Russia, but what about many other parts of the world? I think it was the noble Lord, Lord Carlile, who referred to the vicious actions of the Saudi state and our friends in the Middle East and arms customers. What are we going to do to address where Saudi money is in London and where it has come from?

I also stress to the Minister that the problem is not only people in the global south or in places that speak different languages or have different cultures from our own. There are also the tech billionaires and mining magnates, with their overweening wealth, tax dodging and exploitation of their workers. Illegally acquired wealth is far from our only problem. Unexplained wealth orders are meant to tackle that, but I suggest that we also need “all too well explained” wealth orders—you might call it a wealth tax. Many noble Lords have focused on the need to fund far better the enforcement of our laws; perhaps some of the money from a wealth tax could go towards that.

I have a final, practical question. The proposed registration will apply only to property bought in England in the last 20 years, or since 2014 in Scotland. Why not look at what is concealed by previous arrangements? Is it to be considered laundered clean, rather than just more dirty washing? Maybe there is not much desire to go further back. How much of the wealth of people in a place like this has deeply corrupt origins, stolen in the colonial and post-colonial periods?

The Greens can do nothing but support this Bill, which is a small step in the right direction. You can, however, sail even a modestly scaled superyacht through the gaps in it. I thank the Minister and his colleagues for a useful briefing that focuses on the need for a second Bill as soon as possible, but we need much more, and an acknowledgement that the problem is not simply the narrow legal framework, or individuals; the problem is our system.

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[Baroness Jones of Moulsecoomb (GP)]

My Lords, I am going to say something that I do not think I have ever said before: I have really enjoyed this debate. Virtually every noble Lord who has spoken has said, “I support this Bill but …”—and then has proceeded to give a list of reasons why it really is not a very good Bill. My noble friend Lady Bennett suggested that I was going to go into detail but, until this debate started, I thought I was going to follow the noble Lord, Lord Sikka, who has written an excellent 11-page briefing on the Bill, with three and a half pages that outline all the problems with it. I recommend that the Minister takes my copy afterwards and does something over the weekend to brush the Bill up a little.

The past two weeks have been very stressful, even being on the sidelines of watching a European war, and this seems to be the least we can do to actually fight part of that war for Ukraine. We all know that global capitalism is out of control—at least we really ought to know that by now. The mega-rich have been able to abuse their power and their wealth for far too long through investor visas, complex trusts and corporate structures, political donations—more of that in a moment—private schools, aggressive tax avoidance and legal tax loopholes. The mega-rich are actually able to pick and choose whether they obey the same rules and obligations as the rest of us have to do. It seems to me that we really need to get to grips with this. Governments all around the world allow them to get away with it. Worse, they lay out the red carpet and cut the red tape to try to attract them. We are told that cracking down on such people will just create unintended consequences and force them to flee to other countries. Well, we can hope.

These problems have been obvious for a long time, and this Government have ignored them for their 12 years in office. While I also welcome measures in the Bill and accept that it is urgent—because of course it has been urgent for quite a number of years—the Government have to face the shameful fact that they have dithered and delayed, until they have been forced to act by an illegal war. When a hard-line version of Brexit was pushed through Parliament in 2020—and I voted for Brexit; I did not realise that any Government could mess it up to this extent—we had 14 Ministers in Boris Johnson’s Government who had received donations from individuals or companies linked to Russia. Is that the reason why this economic crime Bill is so late and the measures in it so limited? Do the £3.5 million in Russian donations in the decade following 2010 explain why we have ignored Russian interference in our politics, why our intelligence services were not allowed to dig deep into the network of rich Russians and Conservative Party politicians, and why Parliament failed to push forward with the concerns brought to light by the Russia report?

I asked, I think last week—time goes so strangely here—what Russian donors to the Conservative Party get for their money. This is a question that the whole country would like to know the answer to. Is that money stopping the Government putting sanctions on large numbers of rich people who are close to Putin? Do the donations explain why we have fewer sanctions on Russia than the EU, Canada or even Switzerland? There are only just over 300 UK sanctions against Russia, 35 of which have been introduced since 22 February; and, before that, so few. By comparison, the US has sanctioned almost 1,200 individuals and companies, and a fifth of those sanctions have been introduced in the past two weeks.

So London is still a playground for oligarchs, oil barons and outright financial fraudsters—and, as has been said, it is not just Russians; there are unsavoury elites from almost every country on earth. This new legislation has to be used against all illegitimate, dubious members of the global elite, not used simply as a political tool against whoever we think our enemies are at that particular point. There has to be a constant tightening of the laws that constrain the mega-rich. The Government cannot be allowed to rest on this singular piece of legislation—or this double piece of legislation—and say, “We did it”. I regret that there is no sort of sunset clause so that we can look beyond this—the Bill definitely needs better writing.

The Bill can only be a starting point. The upcoming Queen’s Speech must include a raft of legislation to take these issues forward further and faster than many Tory voters or Back-Benchers might feel comfortable with. We really have to do more, and the Bill is only the start. The noble Lords who have explained this evening where we should be going really have to be listened to.

Economic Crime (Transparency and Enforcement) Bill

Baroness Jones of Moulsecoomb Excerpts

Committee stage
Monday 14th March 2022 Lords Chamber

[Lord Rooker (Lab)]

My Lords, I had not intended to speak today. I came to learn and listen to the experts on areas I do not know much about. But listening to the noble Lords, Lord Cromwell and Lord Clement-Jones, I am reminded of an example. I know this would not be classed as money laundering, but the well-known spiv, Aaron Banks, was responsible for what is, I think, the biggest political donation in British history—I think it was £8 million—during the Brexit referendum period. When it came to investigation by the Electoral Commission, which had the responsibility for doing this, he was not an unwitting enabler. His conclusion was, “We’re cleverer than the regulator.” The Minister does not want to be faced with that during the passage of this Bill and its actions, so he would be very wise to accept the spirit of some of these amendments.

[Baroness Jones of Moulsecoomb (GP)]

I think it is obvious that the Minister will accept a lot of these amendments, because they are from people who are much cleverer than most of us in this Chamber.

I support most of the amendments—even all the government amendments, because they are quite helpful, particularly those that require the disclosure of whether any beneficial owners of property are subject to sanctions, and the strengthening of the criminal offences for false declarations. However, it is obvious from the speeches of other noble Lords that the Government are still falling short and that the Bill needs to be tougher. For example, Amendments 23, 24, 57 and 58 all need to be inserted into the Bill.

All beneficial interests should be registered, not just those acquired on or after 1 January 1999. That is a completely arbitrary date and should be removed. The Minister shakes his head; I guess he will argue that it is a very important date. I disagree.

This legislation is being rushed through as an emergency, but the Government are content to wait another year, following initial registration, before any changes in beneficial ownership take place. I cannot see the logic in that and I think most people will not either. It makes much more sense to update the register within 14 days of any changes.

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[Baroness Kramer (LD)]

My Lords, my colleagues are doing all the heavy lifting from these Benches, and I am incredibly grateful to them. I have signed Amendment 92 in the name of the noble Lord, Lord Coaker, which I think found itself in drifting into the wrong group: it is actually part of group 3. One of the reasons why I signed it is this frustration, which I know the Government share, that, before a sanction is actually put in place, the individual who is likely to be sanctioned has, in a sense, plenty of warning signs and can use that opportunity to move various resources to a safe haven.

Much of the conversation around this Bill has been on fixed assets that are difficult to liquidate—property or complex companies—and I can understand why they might be less concerned about people knowing they are about to be sanctioned having the opportunity to move those. However, those same individuals tend to have very large investments in far more easily transportable assets—cash equivalents. I know that the Government are going to be looking at cryptocurrencies, which I have been very concerned about, when they get to the second phase of this Bill. It would, however, also be wrong to ignore such assets as jewellery and art. That is not just a tale from an Agatha Christie novel. I was a banker for many years in the mid-west, and most of my clients were exemplary people, but we certainly had one scoundrel who made the slight mistake of trying to impress a very charming young woman with an English accent and, as a consequence and with the aid of specialists, I was able to seize something worth close to half a billion dollars in artwork and jewellery against an attempt to defraud the bank. I ask therefore that the Minister think about these liquid assets, which play a part of the picture, but have been very little part of the discussion.

[Baroness Jones of Moulsecoomb (GP)]

I think that is a story for the noble Baroness’s memoirs, and I look forward to reading it.

There are lots of good amendments in this group but I want to speak to Amendments 56, 57, 61 and 62 about the implementation period. For me, the six-month implementation period makes absolutely no sense. We are trying to rush this through—we here are going to sit until I do not know what time tonight or tomorrow morning to make this emergency legislation happen, but we are still giving people six months to do this. The Government are taking so long that activists are going into oligarchs’ mansions and seizing them in London and Paris to house refugees, if we ever get any refugees here. I cannot blame this Government for the Paris seizure, but it suggests that people are getting very tired of the fact that they are being so slow about this. Why would anyone need six months? If they have been honest about paying their taxes, declaring profits and detailing the origin of their money, why do they need six months? Surely, any decent accountant—I am sure that there are several in your Lordships’ House—could sort this out within 14 days or, at the worst, 28 days. I think there is no reason for the Government not to support one of these two pairs of amendments that shorten the implementation period.

[Lord Pannick (CB)]

My Lords, I shall speak about Amendment 92 in the names of the noble Lord, Lord Coaker, and the noble Baroness, Lady Kramer, which would introduce a new clause headed:

“Asset freezing in respect of individuals considered for sanctions”.


Before I address that amendment, I need to give a fuller description of my interests—or, more accurately, my non-interests—than I would normally give. The reason for that is because in the House of Commons last week during the Second Reading debate on this Bill, Mr Matt Hancock complained that the 2018 Act contained amendments that

“came from those who are acting for oligarchs and then legislating for loopholes.”—[Official Report, Commons, 7/3/22; col. 31.]

The Home Secretary responded that she “wholeheartedly” agreed with Mr Hancock.

The position is this: with the noble and learned Lord, Lord Judge, who I see is in his place, I tabled amendments to what became the 2018 Act. They were designed to ensure a fair procedure and compliance with the rule of law. On Report, on 15 January 2018, the Government brought forward at column 442 amendments of their own on these subjects which were supported by me and, much more importantly, by the Labour and Liberal Democrat Front Benches. The House of Commons was content with the provisions approved by your Lordships’ House.

It is correct that in 2017 and 2018 I did not mention that I have advised and represented one client on sanctions matters in the last 10 years. I mention it today for the avoidance of any doubt. It was President Putin’s close associate Arkady Rotenberg. I represented him in 2014 and 2015 in the Court of Appeal on a sanctions issue in family law proceedings. I also advised him in relation to his claim in the General Court of the EU in mid-2015 challenging the sanctions against him, although I did not represent him at the hearing of his case in Luxembourg in 2016.

Of course, I did not put forward amendments to the sanctions Bill in late 2017 and early 2018 to legislate for loopholes. I put forward amendments with the noble and learned Lord, Lord Judge, as I have done on so many other Bills, because I am concerned about the width of ministerial powers and the need for fair procedures.