Corruption in the United Kingdom

Baroness Kramer Excerpts

Thursday 13th October 2022 Grand Committee

[Baroness Kramer (LD)]

My Lords, I join those congratulating the noble Baroness, Lady Jones, on obtaining this debate. I wish it had a much wider audience. It really ought to be taking place on the Floor of the House because corruption, particularly in political life, impacts everything we do. I listened to the noble Baroness, Lady Jones, talk about the VIP lane that we were all aware of as a fast lane for friends and family to get PPE contracts during Covid. For many of us, that was almost the nadir of a collapse in standards. As we look far more broadly, every speaker so far has raised issues of that kind of corruption, all the way through even to our procedures, which now allow this structure of skeleton Bills and policy disguised in the form of statutory instruments so that it is not subject to refusal or amendment. So many areas need to be tackled.

In this country we are particularly vulnerable because we tend to be quite complacent. We believe that we, the British, may have our problems but we are so much better than everybody else. Having some real debate in the House, with major attendance, might persuade people that instead of resting on what we perceive as our historical and iconic laurels, we need to examine what we do in almost every aspect. I will pick up the focus that the noble Lords, Lord Sikka and Lord Evans, pursued and the other speakers touched on: the financial services sector. It is the one I know best.

The right reverend Prelate talked about the way in which we ignored the London laundromat. We tut-tutted about it but knew that oligarch kleptocrat money was flowing into the City and that it was a major facilitator, but until the invasion of Ukraine the Government were not particularly interested in taking any action. The legislation in the first round of the Economic Crime (Transparency and Enforcement) Bill had been sitting in an in-tray for at least a decade. It was ready to go and might, had it been introduced in time, have had a more significant impact in stemming that ongoing development of corruption.

When we passed the Economic Crime (Transparency and Enforcement) Bill, at the heart of which, noble Lords will remember, was the creation of a register at Companies House of overseas beneficial owners of property in the UK—one of the main mechanisms for washing dirty money—we put in place no meaningful verification system. I understand that there is some strengthening in the economic crime Bill version two, but I want to ask the Minister about that, because I am extremely worried that it seems to outsource to third parties the role of providing verification. I am not clear that there is command and control with the registrar of Companies House or whether the registrar has been given the resources to make sure that verification, which is critical, is effectively enforced.

I am focusing on the registration scheme as a narrow example. It relies heavily on enforcement. This issue was well described by the noble Lord, Lord Evans, in a broader context, because that enforcement has to come from the National Crime Agency. It has 118 staff in total to investigate financial crime despite the complexity of the issues. Frankly, the power of the enablers—the lawyers, accountants and property developers, all of whom are involved in money laundering—is often overlooked. They are capable of fighting back against any enforcement agency and making life extremely difficult. I do not understand why—perhaps the Minister can tell me—we do not say that at least some portion, if not all, of the money that comes from fines, forfeitures and confiscations of the wrongdoers should not flow back to the National Crime Agency, the Serious Fraud Office and even, when they are engaged with it, to local police forces because we might finally have a sufficiently funded resource to take action against corruption. We must also focus on those enablers. I do not understand why we do not have a failure to prevent anywhere that I can find in the economic crime Bill. They must be dealt with, and they must understand that they will pay if they engage in facilitating corrupt behaviour.

We also have a problem at the regulatory level, and again I will focus on the financial services area. Frankly, the Financial Conduct Authority and even to some extent the PRA are a busted flush when it comes to any kind of enforcement. I have two quick examples. One is HBOS. I sat on the Parliamentary Commission on Banking Standards and listened to weeks of evidence on the collapse of HBOS. It collapsed because senior management, including the last two CEOs, dropped credit standards to a ridiculous point so that they could grow their loan portfolio like mad, which of course resulted in very high bonuses in their take-home packets. They also funded the bank in the overnight markets, giving it no stability. The FCA and PRA came out this summer with a complete whitewash of the senior management. Obviously, a few junior people have been thrown to the wolves, but the senior management has walked away and has not being declared unfit. In the Libor scandal, which no one ever dares refer to these days, ordinary borrowers and businesses across the globe—because something like 60% or 70% of all lending was priced off Libor globally—will have last quadrillions of pounds, dollars, yen and other currencies in lending because false submissions were made to establish the Libor benchmark. Those submissions were deliberately falsified to enhance bank profits and the bonuses of senior bankers, and no one at senior level has ever been declared unfit as a consequence of all of that.

I am out of time but there is so much to be done. I would have liked to address whistleblowers, who are very badly treated under our current system, and I will say just one quick thing before I sit down. I ask the Minister to read my Private Member’s Bill on creating an office of the whistleblower to champion and protect whistleblowers. It is a mirror of a Bill produced by a member of his party down in the House of Commons. If we do not act on those people who are the citizen’s army that deters crime, we will never come to grips with the corruption that exists.