Countering Russian Aggression and Tackling Illicit Finance

Emma Hardy Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Mr Lammy]

I will give way one last time and then make some progress.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

Further to that point, my right hon. Friend will be aware that the Treasury Committee has published a report on economic crime in which it calls for an economic crime Bill, so this matter is supported not just by Opposition Members but by many Conservative Members. There is support right across the House, so why is there a lack of urgency from the Government?

[Mr Lammy]

My hon. Friend is right. We are talking about foreign ownership of property in our country, and that ought to command cross-party support. Just six or seven years ago, I would never have thought that this would feel like a partisan issue and be the basis of an Opposition day debate. It should have had time on the Floor, and we should have had an economic crime Bill years ago, but it takes the Opposition dragging the issue into the public domain to get a response.

To stand up to Putin in the long term, we need to stand up to Putinism, because Putin is not unique; he is the figurehead of an ideology that is being emulated by despots and dictators around the world. Putinism is imperialism. Putinism is authoritarianism. Putinism is ethno-nationalism. The Russian regime represents a fundamental geopolitical threat and we will not defeat the broader threat until we tackle the ideology that underlies it. Part of our message to Putin must be that his actions are a historic mistake.

This is not the first time that a Russian leader has waded into conflict as a result of his ideology. The same thing happened in East Berlin in 1953 when the USSR moved in to suppress riots. It happened in Hungary in 1956 when Russia sent in troops to invade the country as well as in Czechoslovakia in 1968 and in Afghanistan in 1979. None of those acts of aggression was a success in the long term for Russia, and civilians caught in the middle always pay a terrible price. In the invasion of Czechoslovakia, Russian soldiers strode in convinced that their invasion was liberating the Czech people from capitalism, but, when they are arrived, normal Czechs surrounded the invading forces and said, “Why are you here? You aren’t liberators—you are aggressors.” The Russian troops were deflated; the propaganda that they had been fed was a lie. The same thing will happen if Putin moves on the rest of Ukraine.

Only the Ukrainian people should have the freedom to determine their own futures. That fundamental belief in self-determination is shared across so many of our borders. It is a founding principle of so many of our closest allies and partners across this great continent and beyond it. The logic of democracy is why Putin will never win in the end. Any reward that he gains will be pyrrhic.

Putin has made his move. The wider threat that Ukraine faces is immediate, but the consequences for Europe and the west are also stark. This is likely the end of the post-cold war era, but we do not yet know what era is next, because it has not been decided. The effects of this moment will depend as much on our response to this aggression as on the aggression itself.

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[Mr Lammy]

My hon. Friend mentions £100 billion a year: money that could have been spent on schools, money that could have been spent on hospitals, money that could have been spent on our post-covid recovery.

[Emma Hardy]

I thank my right hon. Friend for allowing me to intervene once again. The words the Minister for Security and Borders, the right hon. Member for East Hampshire (Damian Hinds) used when giving evidence to the Treasury Committee were that he was “not happy”—that is the quote in our report—with the progress the Government have made in tackling economic crime. That is in the Treasury Committee report. I share his unhappiness with the progress the Government have been making. If the Minister is not happy with the progress the Government are making and we are not happy with the progress the Government are making, we can only guess why there still seems to be a lack of progress.

[Mr Lammy]

I have to say to my hon. Friend that it is challenging all our consciousness when the Government say they are not happy and the Minister says he is not happy and nothing happens. They are in charge and they have to fix this.

Sanctions are the way we punish Russia for its crimes, but there is so much more action we should have taken years ago to defeat the corruption, crime and lies that define the ideology and operating system of Putinism. That means rooting out the dirty money that is corrupting our economy and our democracy. It is no use tackling Russian aggression abroad while doing nothing to tackle Russian corruption at home. For a decade, the Tories have failed on this. Worse, they have enabled it. We are working with the Government on standing up against Russian aggression in Ukraine, but we must work in the UK to get our own house in order. It is a great shame that the UK is regularly described as the money laundering capital of the world. It is shameful that our US allies have said they are concerned that the influence of Russian money has compromised us. It is shameful that the Tories have failed to stop Russian money from turning London into a laundromat for ill-gotten gains.

Our openness to kleptocracy and its money has weakened our country. Dirty Russian money props up Putin’s regime by shielding the dark money of the Russian oligarchs and Putin himself. It fuels crime on our streets. When kids risk their lives to deal drugs on county lines, that is dirty money. When vulnerable women are trafficked across the country to be abused, that is dirty money. When people are forced to live in fear because of criminal gangs on the streets, that is funded by dirty money. Dirty money makes the housing crisis worse by inflating prices and buying up properties to lie empty as assets not homes. And it leads people to ask questions about the Conservative party, which has accepted £2 million in donations since Boris Johnson took power in 2019. Mr Speaker, it must give that money back.

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[Amanda Milling]

We are conscious of all influences from different states. I will come on to some of the measures that the Government have taken to combat illicit finance and some measures that we will take forward.

[Emma Hardy]

I believe that there are Ministers and Government Members who are frustrated at the lack of progress that the Government are making in tackling money laundering and fraud, which brings me back to the question of why. The Government have the majority that they need, they control the timetable and they have been in power for more than a decade, so why is there a lack of progress on the issue of Companies House? Our Treasury Committee report again talked about the slow pace and the lack of progress. What else does the Minister need for us to make progress on this issue, when we in the Opposition are offering an open door and saying, “We will support it.”?

[Amanda Milling]

I am very grateful to the hon. Lady for her intervention. I will set out the steps that the Government have taken and come on to—[Interruption.] Let us start with the actions that we have taken and then look at what we will do.

First, we have announced significant new investments. In the 2021 spending review settlement, £42 million was announced for economic crime reforms and £63 million for Companies House reform. In addition, the introduction of the economic crime levy will raise an estimated £100 million a year from 2023-24 to fund new economic crime initiatives.

Secondly, we are strengthening our law enforcement powers. The Criminal Finances Act 2017 introduced new powers to combat dirty money in the UK. It allowed for the proactive investigation of assets owned by suspected criminals and corrupt public figures.

Thirdly, we are developing new tools to target illegitimate wealth. [Interruption.] I will come back to these points. In April last year, the UK launched the global anti-corruption sanctions regime, which allows the Government to impose asset freezes and travel bans on those involved in serious corruption around the world. That is a strong personal deterrent and has been used so far to sanction 27 individuals in 10 different countries.

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[Amanda Milling]

The point that I want to make is about where we are today and where we have been for the past few days, weeks and months. Let us be honest: the build-up of troops on the border of Ukraine has been happening over some time.

We are committed to bringing forward the economic crime Bill. It will establish a new public register of beneficial ownership of overseas companies and other entities that own or want to buy UK property. It will ensure that individuals and entities can no longer hide in the shadows. It will also include reforms to Companies House that will bear down on the thousands of UK companies and other corporate structures used as vehicles for facilitating international money laundering, including from Russia.

We have increased checks on private flights, customs and freight travel under existing powers to prevent security threats to our people. On 17 February, the Home Secretary took decisive action to shut the tier 1 investor visa route to all new applicants of all nationalities, with immediate effect.

In response to the Russian invasion of Ukraine yesterday, we announced our first package of sanctions measures. With immediate effect, we froze the assets of five Russian banks. Four of those banks are involved in bankrolling the Russian occupation: Bank Rossiya, which is particularly close to the Kremlin; Black Sea Bank for Development and Reconstruction; IS Bank; and GenBank.

[Emma Hardy]

Will the Minister give way?

[Amanda Milling]

Sorry, but I will just make a little progress. [Interruption.] Just a moment—just hold fire for a second, if you do not mind.

The assets of one further bank—Promsvyazbank, the pivotal bank in propping up Russia’s defence sector—have also been frozen. We will also freeze the assets of, and impose travel bans on, three oligarchs: Timchenko, Russia’s sixth richest oligarch; and Boris and Igor Rotenberg, long-standing associates of the regime.

[Emma Hardy]

The Minister is being very generous in giving way. I am hearing that apparently No. 10 is telling the media that sanctions on the Duma members who voted are still being finalised because it needs evidence. What more evidence does it possibly need, considering that the EU has already announced that it is sanctioning 351 Members of the Duma?

[Amanda Milling]

The hon. Lady is very lucky to be looking at her mobile phone. I am not looking at my mobile phone; I am fairly focused on the debate in hand. [Interruption.] I am going to focus on the sanctions that we announced yesterday and the statutory instrument that the House approved.

To go back to my last point, no UK individual business will be able to deal with them until they have returned to Ukrainian control.

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[Alison Thewliss]

That is absolutely correct. No questions seem to be asked about where this money has come from, the legitimacy of it or even who it really belongs to in the end.

A notable absence from the Prime Minister’s sanctions announcement was any commitment to extend them to those Tory party donors. Maximilian Hess, a fellow at the Foreign Policy Research Institute, has described some Russian business people as

“a champagne glass removed from Westminster’s political elite”.

And it comes to Scotland too. At a Tory black and white ball in 2018, the then Scottish Conservative leader, Ruth—now Baroness—Davidson, auctioned off a lunch with herself to Lubov Chernukhin, who bid £20,000 to win it. It is said that Baroness Davidson has not yet even come good on that lunch, but if the £20,000 has been accepted, it is a significant donation, whether or not sandwiches, cakes and tea have been taken.

The Prime Minister repeatedly refused to allow publication of the report by Parliament’s Intelligence and Security Committee in the run-up to the 2019 general election. The Times quoted sources suggesting that his reluctance was due to his embarrassment at the links the Committee had discovered between Conservative party donors and the Kremlin. His Government have yet to act on the recommendations of that report. To make matters worse, the Tories’ Elections Bill will water down the Electoral Commission and make foreign donations easier, so their denial just now, stating that it is not foreign money, is not even going to stand when that Bill comes into force.

[Emma Hardy]

The hon. Lady is making an excellent speech. Does she share my concern that when the Prime Minister’s spokesperson was questioned about these donations, they just repeated the same answer, which was that due diligence had been met, but when they were asked what that due diligence actually consisted of and what was involved in it, they were unable to give an answer?

[Alison Thewliss]

Yes, the hon. Lady is absolutely correct. It is a disrespect to everybody who donates with honesty to political parties in this country—those small donors who give a tenner or put money into a raffle—that so little is asked about these absolutely massive donations that go to the heart of our democracy and compromise the very place in which we sit today.

The Government must also act on the economic crime Bill. We heard earlier that it would be introduced in the next Session. We have heard before that it will be introduced when parliamentary time allows. Well, there has been tons of parliamentary time over these past couple of years and yet no economic crime Bill. The disappearance of that Bill was part of the reason that Lord Agnew resigned as the Minister for economic crime.

We have not yet seen the Government’s registration of overseas entities Bill. The register of overseas entities was supposed to be up and running last year, but we are still waiting to see the legislation. I sat on the Joint Committee on the draft Bill, and this morning I dug out the Committee’s papers and our report to refresh my memory. The Committee made suggestions to improve the Bill by closing loopholes such as trusts and introducing verification, the lack of which makes the current register at Companies House so utterly useless and full of guff.

Lord Faulks, the former Conservative Minister who chaired the Joint Committee, recently revealed that, under the previous Prime Minister, Downing Street leant on him when he tabled amendments to introduce a public register of overseas property owners. He said:

“I was obviously misled because nothing has subsequently happened. I can only think a deluded desire to protect the City of London has led to all these delays.

It is a real irony that our reputation for protecting the rule of law is one of the things that attracts people who have very little regard for the rule of law themselves and come from countries which ignore it almost altogether.”

That is the nature of the money being attracted.

Meanwhile, the anti-corruption watchdog Transparency International has said that Russians accused of corruption or of links to the Kremlin own around £1.5 billion-worth of property in Britain, 28% of it in the City of Westminster on the doorstep of British democracy.

This House is united in our cross-party support for the Government and people of Ukraine. Members across the House want to see more action by way of sanctions against those involved in Putin’s regime, but this report rings hollow when this Government have, time and again, failed to take action to halt the flow of dirty money through the City of London, tarnishing both credibility and reputation.

The Scottish Parliament does not have the powers to act on this, although my colleagues and I dearly wish it did. This UK Government have a chance to put that right, and they must do so without further delay, else the stream of questions as to why not and who benefits will become a flood.