Economic Crime and Corporate Transparency Bill

Debate between David Davis and Baroness Hodge of Barking

Consideration of Lords message
Wednesday 13th September 2023 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

Mr Deputy Speaker, I am conscious that we must vote in five minutes to remain in order, so I will simply say that economic crime is a national security issue and should not be a partisan issue in this House. I urge the Minister to set aside the party political views that he is expressing and to go with the consensus that has been built, not just in the House of Commons but in the House of Lords and in the non-governmental organisation sector outside.

[Mr David Davis (Haltemprice and Howden) (Con)]

The right hon. Lady is right. It is not just the parties but the different sides of the natural arguments over authority, libertarianism and civil rights that are not divided. I am a strong defender of the right to be presumed innocent, but there needs to be a rebalancing in this area, where the criminals we are up against are very sophisticated and will use smaller companies to get around this if they need to.

[Dame Margaret Hodge]

In the interest of trying to get to the vote on time I will close my speech, but I urge all Members to please support the amendments proposed by Conservatives in the House of Lords, which are eminently sensible, rational and pragmatic.

Economic Crime and Corporate Transparency Bill

Debate between David Davis and Baroness Hodge of Barking

Report stage
Wednesday 25th January 2023 Commons Chamber

[Mr Davis]

There is no doubt that the more recent you are, the more salient the case. Frankly, I can remember being ashamed of a British Prime Minister hosting Putin at the Olympics only a few years after Litvinenko was murdered in our country in the most cruel and overt act of state terrorism. Neither Government dealt with that. Cameron’s action was grotesque in the extreme, but neither Government dealt with it. Similarly, both Governments kowtowed to China after Tibet and all the rest of it. That has been done too many times. It is the entire system, not just one Government or another.

London is a fabulously attractive place for the Russians or the Chinese. If you want to be somewhere else than Russia, this is the place to be. We have facilitated that at every turn. Here comes the issue to which SLAPPs relate. We have a legal system that is probably the most brilliant in the world in delivering fair outcomes and good justice, but it is also phenomenally expensive, which means it is one-sided in its operation between an oligarch and an ordinary citizen, journalist or whoever they may be.

In conjunction with that are the things that flow from it, such as the behaviour of solicitors, to some of whom my hon. Friend the Member for Isle of Wight (Bob Seely), who is not in his place, gave a fair old pasting yesterday, but one that was deserved. The private investigators industry, unregulated, undertakes crimes to gather information for use as weapons against other people. Our courts—not uniquely, but outstandingly—allow that information to be used. In each individual case that might be the right decision, but the collective effect of that is to suck criminally based information into our system and therefore engender and help the industry.

All that is why new clause 1 and 2 are vital. That all had the effect of creating a vast, possibly unintentional institutional cover-up for criminal activity: money laundering, fraud and concealment of evil actions abroad. Let us bear in mind that some of the oligarchs we are talking about are murderers. The system murders people. It is evil activity. That is why new clauses 1 and 2 are incredibly important.

What the right hon. Member for Birmingham, Hodge Hill is proposing in new clauses 1 and 2 is a second best option. We already heard the best option in earlier interventions: a freestanding Bill immediately, because this is happening now. There are court cases going on as I stand here in which people are having their lives destroyed by SLAPPs. The next best is to have it in the Bill of Rights, but we know that that is way down the timetable, for all sorts of reasons. We may not see it before the next election, in which case we will have lost two more years.

The new clauses amount to a way of dealing with this criminal—or near criminal—activity in a way that is not susceptible to a finely turned piece of law. I listened with fascination to my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) on that point. Getting that right is difficult; getting this right is not, because the greatest enemy of evil is a free press. In our country in the last couple of decades we have allowed our free press to become gagged and crippled. If we can take that gag away and remove those bonds, we will suddenly expose all the things that we need to deal with. We will see the weaknesses I talked about—the SFO and the NCA—and put them right, one by one. That is why we should support new clauses 1 and 2. I talked before about the weaknesses of the SFO and the NCA. We will see those weaknesses and we will put them right, one by one. That is why we should support this measure today.

[Dame Margaret Hodge]

I shall be very brief, because I took a lot of time in the House yesterday. I strongly support many of the new clauses being moved by Back Benchers across the Chamber today. If I can just say something about politics, this heartens me and shows that there are ways in which we can work together to pursue the national interest across the political divide. It breathes a bit of confidence and life back into the political process that we have all chosen to join in our careers, so I commend those individual Back Benchers who have put themselves forward and who are speaking today.

The proposals from the hon. Member for Cheadle (Mary Robinson) on strengthening the support for whistleblowing are hugely important. Whistleblowers are an essential part of our armoury in the fight against money laundering and fraud, and we know that, despite all the legal rights, they are not protected. People lose their jobs, their families get destroyed and they are left penniless. Therefore, the establishment of a capability that will do nothing other than protect and promote whistleblowers in the crucial work they do is really important, and I hope that it will be adopted.

The importance of legislating to tackle the abuse of our legal system by oligarchs and others, which the right hon. Member for Haltemprice and Howden (Mr Davis) has just talked about so eloquently, is also really important. I want to be blunt about this and say to those on the Government Front Bench that, if they do not accept this new clause, they will not get a Bill during this Parliament. I bet that is right, so for heaven’s sake let us use this opportunity to get this bit of legislation in. It does not cover everything we would like it to cover, but it will have an impact. It will also give us the experience to see whether we have got the legislation right. I am sure that all the lawyers who helped to draft these new clauses put their best brains into them, but if they have not got them right, we will be able to learn those lessons when we come to extend these measures beyond economic crime.

The right hon. and learned Member for South Swindon (Sir Robert Buckland) made an excellent contribution on the reform of criminal corporate liability, and I want to say something about that. It is not that we want to suddenly bang up a whole load of lawyers, accountants, companies, service providers and all those people who we know are the ones that facilitate or collude with much of the economic crime that takes place. Only the best preventive mechanism that we can think of will force a change of behaviour, and we are not doing that on the back of hope; we are doing it on the back of reality. We know from the Bribery Act 2010 and from the regulations on tax evasion and on health and safety at work that putting this sort of liability on individuals and corporations is the only way to transform behaviour. Last week’s amendment to the Online Safety Bill by the Conservative rebels showed the mood of the House, and I would urge Ministers to think about that. The mood of the House is to use this effective tool to try to transform behaviour in all spheres of life, whether in relation to online harms or to economic crime.

I hope that we will hear from the hon. Member for Huntingdon (Mr Djanogly) soon on the issue of “freeze not seize”. I know he is going to make a number of propositions, and I hope he will not mind if I say something about this. We have been working with an extensive group of lawyers to see whether we can move to a position where we do not just freeze the assets but seize them in order to repurpose them and, particularly in the current context, use them to support the reconstruction of Ukraine. We have finally got a chink in the armour in that regard, but let me say something else first. The lawyers we have talked to work with non-governmental organisations in this field, and the advice they give is always going to be slightly different from the advice that comes from the lawyers working in the Government service. I think we bring a new perspective, and I urge Ministers to listen to what we have to say. The chink is worth examining at this stage, even if we do not go for the further propositions, to show that we mean it when we say that we want to seize this money.

Online Safety Bill

Debate between David Davis and Baroness Hodge of Barking

Report stage
Monday 5th December 2022 Commons Chamber

[Mr David Davis]

The right hon. Lady and I have co-operated to deal with international corporate villains, so I am interested in her proposal. However, a great number of these actions are taken by algorithms—I speak as someone who was taken down by a Google algorithm—so what happens then? I see no reason why we should not penalise directors, but how do we establish culpability?

[Dame Margaret Hodge]

That is for an investigation by the appropriate enforcement agency—Ofcom et al.—and if there is evidence that culpability rests with the managing director, the owner or whoever, they should be prosecuted. It is as simple as that. A case would have to be established through evidence, and that should be carried out by the enforcement agency. I do not think that this is any different from any other form of financial or other crime. In fact, it is from my experience in that that I came to this conclusion.

Lawfare and Investigative Journalism

Debate between David Davis and Baroness Hodge of Barking

Monday 17th October 2022 Commons Chamber

[Mr Davis]

I will come back to that very point in a moment, but as the hon. Gentleman implies, defending oneself against a libel claim, especially by an oligarch or other wealthy person, is often cripplingly expensive. In fact, it is typically cripplingly expensive. The risk is not losing the case, which is improbable in most of these cases. The penalty for exponents of free speech is the sheer cost of a vexatious process, which is what Nazarbayev wants.

[Dame Margaret Hodge (Barking) (Lab)]

I am grateful to the right hon. Gentleman for giving way and congratulate him on securing this debate and on making a fantastic speech. He has been a passionate and effective campaigner on the growing problem of egregious strategic lawsuits against public participation—SLAPPs—and has argued, along with the hon. Member for Isle of Wight (Bob Seely), for urgent action to stop these abuses.

I want to raise the case of Dmitry Leus, a UK resident of Russian-Turkmen origin, who is threatening libel action against Chatham House because of his inclusion in its excellent report, “The UK’s Kleptocracy Problem.” Leus was a Russian banker, convicted of money laundering in Russia in 2004, who arrived in the UK on a Cypriot passport. He has donated to the Conservative party and chaired his local Conservative association. He tried to donate £500,000 to the foundation of the then Prince Charles, but the donation was spurned when the charity learnt of his conviction. In July my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) said in this House that Leus is “absolutely dependent” on the Russian security services.

Economic Crime (Transparency and Enforcement) Bill

Debate between David Davis and Baroness Hodge of Barking

Committee stage
Monday 7th March 2022 Commons Chamber

[Mr Davis]

My hon. Friend is right. If we put the measure in place, there would be a decision at some point as to whether someone was on the list or no longer on the list—“We’ve decided that you’re not subject to sanction.” That clearly has to be part of the operation. By the way, I am afraid police bail does not quite work the way my hon. Friend thinks it does: in the case that I had in mind, there is no case but they have been on police bail. That is just an example to demonstrate that the idea in my new clause is not an unheard of option.

I see Dame Eleanor is looking at me, so let me finish by saying that if we back new clause 29, we will ensure that our sanctions regime will often have real effect. It is proportionate and simple and it would be effective.

[Dame Margaret Hodge]

I rise to speak specifically to new clause 2, on the funding of enforcement agencies, but I wish to say a couple of things about the amendments in general. First, I am grateful to the Minister for the Government’s spirit and approach in respect of the amendments. We all want the same thing and are attempting to find the most effective wording and mechanism to achieve our shared objectives. I hope the Minister sees the amendments on which there are votes tonight as utterly constructive. I assure him that they really do have cross-party support among Back Benchers in the widest possible sense. A lot of people are behind them and I hope that reassures him that we want to help and are not here to cause him problems.

I am grateful for the concessions that the Government have already made on penalties, on the implementation period, on speeding up sanctions—I very much welcome those new clauses—and on the reporting of unexplained wealth orders, which I have been after for a long time. As I have said to the Minister privately, our amendments include drafting amendments. I am glad he is going to talk to us about amendment 3. He will have heard the general concern throughout the House about whether the wording targets the individuals we wish to target. The other amendments are about strengthening the Bill.

To talk generally, some of the amendments point to the fact that this is not an economic crime Bill. A range of vital issues have to be addressed in a substantial and substantive economic crime Bill. A lot of people have talked about Companies House and tougher regulation; I would include company formation agents in that. We have talked about other enablers and effective enforcement, which is covered in our amendment. My right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) raised SLAPPs, and issues in respect of whistleblowers and Scottish limited partnership are also important. That all shows that we do need a comprehensive Bill, but I accept that this is a very important first stage.

Sanctions

Debate between David Davis and Baroness Hodge of Barking

Tuesday 1st March 2022 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

I found much to agree with in the comments from the hon. Member for Cardiff South and Penarth (Stephen Doughty), as I did in those of the Minister. Today’s moves to prevent Russian banks and businesses from accessing our financial system and to ban key exports to Russia are much-needed and, frankly, long overdue. We should have been doing some of these things—not all of them—some time ago.

Yesterday, the Foreign Secretary said that this legislation would immediately be applied to Sberbank, VEB, Sovcombank and Otkritie. These measures will undoubtedly inflict damage on the Russian economy and punish the Russian state, but we must go further. It may be that I have not completely comprehended the Minister’s intentions, but why are we applying this immediate legislation only to those specific banks? The hon. Member for Rhondda (Chris Bryant) made a good point on this. Why not immediately apply it to VTB, Gazprombank or Alfa-Bank—Russia’s second, third and fourth biggest banks? I note that the Americans have sanctioned the same banks in the same way, and I assume that this is to protect the operation of fundamental European infrastructure such as oil and gas.

That was the point I was trying to draw from the hon. Member for Cardiff South and Penarth when I asked whether he thought we were trying to ensure we did the maximum damage to Russia but the minimum damage to our allies if we had to maintain this for a long time. I am interested to hear the Minister’s answer, because by excluding those banks in the immediate term, we will to some extent undermine our strategy. Time is against us and troops are bearing down on Kyiv as we speak. The longer we wait, the longer Ukraine and her people will be subject to indiscriminate missile strikes and the terror of Putin’s forces.

Similarly, I would like to hear what the Government are doing to stop these measures being bypassed by Russia’s erstwhile friends, allies and fellow travellers: China, India and Brazil. Again, if we allow 30 days and those countries are willing to facilitate it, Russia could bypass a very large component of what we are trying to do. There might be rouble-support operations by China, for example. How would we cope with that? If we do not succeed in this strategy, frankly, we risk Ukraine being turned into a European Vietnam, a prospect too horrible to countenance.

As damaging as today’s measures are to the Russian financial system, they will not hit Putin where it hurts most. For that we need to target many more of his allies and facilitators who have bought their way into British society. That is what is missing from these statutory instruments.

We need to target those who own businesses on our stock exchange. We need to target those who own London homes that we can no longer afford because of Russian operations in London. We need to target oligarchs who own football clubs that many of our citizens can no longer afford to attend because they are so expensive. For too long, we turned a blind eye to dirty money flooding into the City of London. The right hon. Member for Barking (Dame Margaret Hodge), my successor as Chair of the Public Accounts Committee, has a very strong record on this, and she will know that we have failed to use the tools we already have.

For example, we have had unexplained wealth orders at our disposal since 2017. In theory, they force a suspect to reveal the source of their wealth, and failure to do so results in the property under consideration being seized. Since 2017, only nine of those orders have been presented against four people, and only two of them succeeded.

[Dame Margaret Hodge]

I am very much enjoying the right hon. Gentleman’s contribution, and I thank him for what he said. Does he agree that, until we target the enablers—the accountants, lawyers and banks—supporting individuals or companies in laundering dirty money, we will not hit the heart of the dirty money industry that we are trying to attack with this legislation?

[Mr Davis]

The right hon. Lady makes a point that will be made by my hon. Friend the Member for Isle of Wight (Bob Seely) and others, and I have a lot of sympathy, but we have to be careful that we do not take away ordinary citizens’ rights—indeed, the proper rights of any individual—in how we deal with the lawyers, the accountants and so on.

Particularly in the lawfare area, a huge industry of enormous margins and enormous profits has been developed by various law firms, in particular, that have developed the tactics for defeating the Government’s imposition of proper laws.

--- Later in debate ---

[Dame Margaret Hodge]

I will not read the list of more than 100 names, but I have picked out 10 that demonstrate not only the importance of tackling individuals, but their links to the UK. So we are complicit in this and we are facilitating it by not tackling this.

Alexander Abramov—my apologies if I mispronounce names—is the co-owner and chair of a multinational company registered and headquartered here in London, Evraz, which is a metals company. Together with his partners Roman Abramovich and Alexander Frolov, he owns a nearly 25% stake in TransContainer, which is the largest Russian container railway operator. His wealth is estimated at $6 billion.

Andrey Guryev is the majority owner and deputy chairman of PhosAgro, which is one of the world’s largest producers of fertilizers. It might well have been involved in the disaster in Lebanon—I am not alleging that, but the explosion in Lebanon arose from fertilizer that came through Russia. He has given 20% of the company to Putin’s university professor Vladimir Litvinenko, who is thought to be a proxy for Putin. He owns Witanhurst palace in London, which is valued at about £450 million, and his joint wealth with his family is estimated at $5.5 billion.

Leonid Mikhelson is the founder and chairman of natural gas producer Novatek, which is also listed on the London stock exchange. In 2017, he bought a 17% stake in petrochemical company Sibur from Putin’s reported former son-in-law, increasing his stake to 48%. His partner is Gennady Timchenko, a billionaire who is also a close friend of President Putin and whom the UK has also sanctioned. His wealth is estimated at $21 billion.

Mikhail Fridman has already been sanctioned by the EU. Fridman controls Alfa Group and LetterOne, both headquartered in Luxembourg. Fridman was investigated by the Spanish National Court between 2019 and 2021 for his role in the Zed bankruptcy. He owns £90 million of property and permanently resides in London. His worth is estimated to be $13 billion.

Vladimir Lisin is majority shareholder and chairman of NLMK Group, a leading manufacturer of steel products and responsible for one fifth of Russian steel production. NLMK is listed on the London stock exchange. Lisin also owns the railway operator First Cargo, as well as some ports and shipping companies. His estimated worth is $24 billion.

Petr Aven has been sanctioned by the EU. He is head of the largest Russian private bank, Alfa Bank. With his partners German Khan, Alexei Kuzmichev and Mikhail Fridman, Aven co-owns Alfa Group and LetterOne, both headquartered in Luxembourg. He is tipped to be the group’s direct link to Putin from his days as the Russian Minister of Foreign Economic Relations. He owns a mansion in Surrey and is a renowned art collector. His worth is estimated at $5 billion.

Suleiman Kerimov was sanctioned by the US in 2018. He gets most of his fortune from his 76% stake in Russia’s biggest gold producer, Polyus. He profited from co-investing in Russian shares together with the then First Deputy Prime Minister Igor Shuvalov, who was responsible for the Russian economy. The FinCEN files show that Kerimov paid £6 million to the Chernukhin family, who have been well exposed in the UK press. Kerimov’s family is worth some $10 billion.

Vladimir Potanin acquired a stake in Norilsk Nickel during Russia’s privatisation in 1995. Today, he owns just over a third of Russia’s largest nickel and palladium producer. Norilsk Nickel is also listed on the London stock exchange. Potanin also owns a pharmaceutical company, Petrovax Pharm, and a ski resort, Rosa Khutor, near Sochi. His worth is nearly $26 billion.

Yelena Baturina—sorry, she is a woman; Russia’s wealthiest, apparently—is the widow of Yury Luzhkov, who was the mayor of Moscow from 1992 to 2010. During her husband’s time as mayor, Baturina owned the construction company Inteko and cement factories, which benefited from the city’s commissions. She was the previous owner of the British property Witanhurst.

Finally—I have only chosen 10 out of the list—we have Vladimir Yakunin. He is an ex-KGB colleague of Putin. He ran state-owned monopoly Russian Railways between 2005 and 2015. He and his family extracted nearly $4 billion in assets and commissions from Russian Railways, in Navalny’s estimates. Most of those assets are now administered by his London-based son via a Luxembourg-registered investment fund. Yakunin is the founder and president of the Putin-linked World Public Forum “Dialogue of Civilisations”. We do not know, because we do not have a public register of ownership, but we think he owns two north London properties. I will undertake to send the Minister the complete list, from which I have raised only 10 examples.

[Mr David Davis]

My right hon. Friend, if I may call her that, will be able to work out, as a former Chair of the Public Accounts Committee, that 35 plus 105 comes to 140, which is the number I was using before. These are the people I was thinking of. The reason I say that is that although Vladimir Putin theoretically has no assets, in practice he is estimated to have something like $200 billion, and that $200 billion will be being held by the 140 people we have talked about. In targeting them, we are targeting him directly, and that is the incentivisation we are aiming at in this exercise.

[Dame Margaret Hodge]

Hear, hear. We all agree. I will send the complete list to the Minister. I ask him and his colleagues in the Foreign, Commonwealth and Development Office and elsewhere to forensically examine the circumstances of the people on that list and to come back to us all, so that we have confidence that the Government are enacting what they say they want to do and taking real firm action against those cronies of Putin who are propping him up and allowing him to create havoc in Europe.