Corruption

Baroness Stern Excerpts

Thursday 18th June 2015 Grand Committee

[Baroness Stern (CB)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Graham of Edmonton, who brings a wealth of experience from a lifetime trying to better the conditions of disadvantaged people in this country. I also thank the noble Lord, Lord Rooker, for initiating this very worthwhile debate and for introducing it so effectively.

In my view, corruption is one of the most damaging of the many current ills of the world. I come to this from what I know about the other end of events—those events that lead to corrupt money being used to buy luxury homes in London. I am thinking of a country I know where the people are very poor, and where in the winter, when it gets very cold, they have electricity for just five hours a day, if they are lucky. I am thinking of the woman who opens a little shop to sell embroidered products, and she discovers that 25% of what she makes has to go to someone connected to the President’s family, otherwise—although she is not doing anything wrong—her shop will be closed by the tax authorities.

I was very privileged to be at the founding meeting of the All-Party Parliamentary Group on Anti-Corruption in 2011, when John Githongo from Kenya spoke about his experiences from 2002 to 2005 as the Permanent Secretary for Governance and Ethics in the Kibaki Government. He explained why he eventually resigned, death threats being one reason; they were presumed to have come from those whose corruption was in danger of being uncovered by his office. Eventually he had to leave his country in a great hurry. He had a very powerful impact on his audience and on me, and subsequently I was privileged to become an officer of that APPG.

This debate provides a very welcome opportunity to thank Transparency International for this excellent report, which was so ably introduced by the noble Lord, Lord Rooker. It also provides an opportunity to show appreciation of the excellent organisations that highlight corruption, particularly Global Witness. Last year, the all-party group organised a visit for Members to the City of London Corporation and the City of London Police, and then a tour around the banks in the City led by Stuart McWilliam from Global Witness. We gathered at the entrance of a number of the big banks, one after the other, and he listed for us all the on-the-record actions of each bank that had assisted corruption in other parts of the world. It was an eye-opener.

Central Asia is a part of the world I know quite well, and one sees there all the time the effect of corruption on the people and their everyday lives. That brings me to the core issue of the Transparency International report: houses bought with laundered money, corruptly obtained. Kyrgyzstan became an independent country in 1991. I was very lucky to be there at the second anniversary of that independence, and I remember well the atmosphere of hope and excitement, and the huge enthusiasm for being able to live in a different way. It is therefore very sad to read that their democracy has not had an easy path, and corruption has become a large problem for them.

The case of Maxim Bakiyev, the son of the former Kyrgyz President Kurmanbek Bakiyev, is an illustration. Maxim Bakiyev came to the UK when his father was ousted from government by a popular uprising against the corruption practised by the Government. According to Global Witness in its report, Blood Red Carpet, Maxim Bakiyev arrived in a private jet in June 2010, and in August he took up residence in a new luxury property in Surrey, bought for £3.5 million by a company registered in Belize called Limium Partners Limited. At that time he was apparently under an Interpol red notice because of his role in the corruption case going through the courts in Kyrgyzstan. Apparently he has been living here ever since. Belize is one of the secrecy jurisdictions referred to in Transparency International’s report, so we do not know for sure who, ultimately, owns the company Limium, but Global Witness claims that the evidence that Bakiyev is the beneficial owner is overwhelming and it is highly probable that the money with which the house was bought is linked to the large amounts that left Kyrgyzstan corruptly during the Bakiyev years.

The case of Maxim Bakiyev’s house in Surrey has been exposed. This happens rarely. We know about the Hampstead home of James Ibori, a former state governor from Nigeria, and about Saif Gaddafi’s property, also in Hampstead, which was recovered by the Libyan Transitional Government. We know that 80% of the 76 homes sold in 1 Hyde Park were bought through anonymous companies registered in tax havens. The director of operations of the Metropolitan Police Proceeds of Corruption Unit has said:

“Properties that are purchased with illicit money, which is often stolen from some of the poorest people in the world, are nearly always layered through offshore structures”.

The UK is 14th in Transparency International’s corruption perception index. That is quite high—although we should note that there are 13 countries better than us—but we have to ask ourselves how far what we do in this country adds to the corruption in other countries. The Prime Minister said at the recent G7 meeting:

“Corruption is the cancer at the heart of so many of the problems we face around the world today. … Our efforts to address global poverty are too often undermined by corrupt governments preventing people getting the revenues and benefits of growth that are rightfully theirs”.

Corruption is also a contributor to the disillusion with politics that we now see; a disillusion that can have dangerous consequences. John Githongo, the Kenyan campaigner, talking recently in South Africa, said that it is decades of corruption in Kenya that has prevented Kenya establishing an effective security sector, thus leaving it vulnerable to terrorist attacks. We in this country should be doing everything we can to prevent corruption. We should be making it much more difficult for London to become the place of choice for those with ill-gotten gains to invest, or to come and live in houses bought with ill-gotten gains. As the noble Lord, Lord Rooker, has said, we should therefore look very carefully at the thoughtful and detailed recommendations set out in the Transparency International report. I endorse his welcome for what the Government have already done and I hope we shall hear from the Minister that they will do more.

Finally, it is most welcome that DfID funds the Metropolitan Police Proceeds of Corruption Unit, which is shortly to be incorporated into the National Crime Agency. I understand that there are concerns about that. Can the Minister offer reassurance that the reformed Proceeds of Corruption Unit will have enough investigators to pursue corruption cases adequately?