Overseas Territories: Tax Transparency

Joe Powell Excerpts

Wednesday 5th February 2025 Westminster Hall

[Joe Powell (Kensington and Bayswater) (Lab)]

I beg to move,

That this House has considered tax transparency in the Overseas Territories.

It is a pleasure to serve under your chairship, Mr Turner. Having worked on anti-corruption, open government and transparency issues for more than a decade, I am often asked why such issues matter when there are so many pressing challenges facing our country. It can often seem an intractable problem—billions and trillions flowing through the international financial system that will end up elsewhere. What difference does it make to our constituents? I hope this debate will show directly why it matters to our Treasury and our tax take; to the housing crisis; to the fight against organised crime; to the enforcement of our sanctions against Putin; to fighting poverty around the world; and to restoring trust, transparency and accountability to our democracy.

This Government have made a strong start on combating illicit finance and kleptocracy. I particularly welcome the Foreign Secretary’s personal campaign on this issue, which has seen an expansion of our sanctions, the appointment of Baroness Hodge as the UK’s anti-corruption champion, and a cross-departmental team of Ministers charged with developing a new anti-corruption strategy, to which I know my hon. Friend the Exchequer Secretary to the Treasury has a strong commitment.

The Foreign Secretary’s ambition to transform Britian from the dirty-money capital to the anti-corruption capital of the world is absolutely the right objective. It matters for our international reputation and our standing in the world. To be taken seriously as a leader on democracy and anti-corruption, our own house has to be in order. The uncomfortable truth is that while some of the most notorious and brazen enablers of illicit finance and money laundering are operating as part of the UK family, we will not be able to claim that leadership role. Despite years of warm words and communiqués about fighting economic crime, the overseas territories are still one of the premier global destinations for moving dirty money, and it is time for that to change.

Since the full-scale invasion of Ukraine in 2022, I have led the local Kensington Against Dirty Money campaign in my constituency of Kensington and Bayswater, where more than 6,000 properties are owned overseas. Our most popular activity is a local kleptocracy tour of often empty mansions owned by autocrats and their supporters from around the world. Transparency International found that £5.9 billion in suspicious funds had been used to purchase UK properties through shell companies registered in the overseas territories, with £1.1 billion of that in my constituency. The ownership vehicle of choice is an anonymous trust, with the most popular location being the British Virgin Islands. The BVI has a population of less than a quarter of my constituency, so it would be highly surprising if BVI residents were the beneficial owners of the properties.

Thanks to investigative journalists and a series of high-profile leaks from the Panama and Paradise papers to “Cyprus Confidential”, we know who the actual owners are. That is why the previous Government—with thanks to the right hon. Member for Sutton Coldfield (Mr Mitchell)—took action in the previous Parliament with cross-party support to implement a register of overseas entities. That gives us good and helpful information, but a glaring loophole remains. Trust-owned property does not need to be declared—and in the Royal Borough of Kensington and Chelsea that accounts for 40% of the foreign-owned property. That allows the UK property market to continue as a laundromat for illicit finance. I ask the Government to look at closing this loophole and adding trusts to the property register as soon as possible.

[Alex Sobel (Leeds Central and Headingley) (Lab/Co-op)]

Does my hon. Friend agree that without those actions there is a real danger that significant sums of Russian assets and money, which could be sanctioned and used to reconstruct Ukraine, will be left in the hands of the supporters and perpetrators of the war in Ukraine?

[Joe Powell]

I completely agree. Without transparency, we cannot follow the money. We have some prominent examples of properties owned by sanctioned oligarchs that came into the sanctions regime only after investigations uncovered those assets. Keeping the anonymous trust option available, without the requirement to declare the true owners, allows for exactly the sort of behaviour that my hon. Friend outlines.

The main opposition is from some highly self-interested trust lawyers, so I urge the Government to take on those claims and bring trust-owned property into the register, which would help us not only to fight economic crime but to revitalise our high streets, where buildings often sit empty because enforcement action cannot be taken when the true owners cannot be tracked down. Indeed, some of my constituents were evicted using a spurious section 21 notice by an anonymous landlord who was based overseas in a tax haven.

My local walking tour, as part of the Kensington Against Dirty Money campaign, ends outside Roman Abramovich’s frozen mansion, which he purchased for £120 million, on Kensington Palace Gardens. In the past week or so, Abramovich has again been in the news, this time for allegations that he owes approximately £1 billion in UK taxes. At the heart of this story are, again, the UK overseas territories. Abramovich and his advisers used a complex web of corporate structures, via Cyprus and the BVI, to use money from the sale of Sibneft back to the Russian Government at huge profit in 2005. They set up approximately 200 hedge funds and maintained that the operations were happening in the BVI, but it has now been uncovered that the real activity was continuing in London—indeed, in Stamford Bridge itself.

This is potentially the biggest tax case since Bernie Ecclestone, and it is vital that His Majesty’s Revenue and Customs has the resources it needs to investigate. Enforcement of the rules and regulations is critical to recovering as much money as possible for the Exchequer and supporting the Minister’s efforts to improve the public finances. It is also time to upgrade our anti-money laundering supervision regime for professional bodies such as accountancy and legal firms, so that dirty money does not flow through the City. The previous Government opened a consultation, but it has not been responded to.

This is urgent, because Abramovich’s is not an isolated case. For years, the BVI has been the global destination of choice for those seeking maximum secrecy for their money. It featured prominently in the Panama papers, in which half of the exposed entities were linked to the BVI. That is why Parliament has clearly stated its will that public registries of beneficial ownership should be implemented across the overseas territories and Crown dependencies.

At the first Joint Ministerial Council of this new Government, in November last year, the BVI, alongside other overseas territories, promised reforms to ensure maximum transparency, and the Government reiterated their commitment to full public access in due course. I absolutely support the Government in this mission, which is why it was so deeply disappointing to see the BVI’s proposals around company registries, which were published last month. Access would be severely restricted. One provision would even allow company owners to be notified not only that someone is attempting to uncover their identity, but of who is making the request and why, putting investigative journalists and anti-corruption activists at risk of legal or physical intimidation. Worse still, that warning system could tip off criminals and give them a head start, allowing them to move illicit assets before enforcement agencies can act. Such measures do not protect business or privacy; they protect kleptocrats and criminals.

We know it can be done: Gibraltar has shown us what can be achieved. It introduced a public register that is similar to the one that the UK has had for several years. If Gibraltar can do it and we can do it, so can the BVI, the Cayman Islands, Bermuda and all the overseas territories. We must not let our Crown dependencies off the hook, either.

Many overseas territories have cited the privacy concerns outlined in the European Court of Justice rulings, but I encourage them all to review the sixth anti-money laundering directive, which would ensure that journalists, civil society, law enforcement and businesses with anti-money laundering duties all have access to the register anonymously and in full. I continue to believe that public registers are the best solution for the overseas territories and Crown dependencies, but minimum progress would be to meet that European regulatory standard.

It is clear from all the evidence—I expect we will hear much more today—that we need to do far more collectively to support the overseas territories to make progress on economic crime. The path forward is challenging, but I know the Government are seized of its importance. The overseas territories must meet the June deadline to make progress towards public registers. There must be no further delays. Trust-owned property should be included in the register of overseas entities. AML supervision should be strengthened to halt the enablers of dirty money. HMRC, the National Crime Agency and other enforcement agencies must proactively make cases and have the skills and resources they need.

To galvanise our international partners, the Foreign Secretary’s proposal for a summit of financial centres here in London would create a focal point for aligning rules and policies. I hope this debate will galvanise support across the House for the vital mission of tackling corruption and economic crime.

[Karl Turner (in the Chair)]

I remind Members that they should bob if they wish to take part in the debate.

--- Later in debate ---

[Joe Powell]

I thank the Exchequer Secretary to the Treasury for his response, and I thank all hon. Members who have spoken for their contributions. This has been a productive and constructive debate. There has been a lot of agreement on the problem. We heard the tax case very strongly, particularly from the hon. Members for Strangford (Jim Shannon) and Carshalton and Wallington (Bobby Dean). We heard the housing and communities case, particularly from my hon. Friend the Member for Cities of London and Westminster (Rachel Blake). We heard the economic growth case from my hon. Friend the Member for Bolton West (Phil Brickell), the poverty and inequality case from my hon. Friend the Member for Bournemouth East (Tom Hayes) and the constitutional case from the right hon. Member for Sutton Coldfield (Mr Mitchell), which took us through the history over the past decade of missed deadlines and opportunities for the action we are talking about to be taken.

I hesitate to say that this will be the last debate in this place on this topic—I suspect it will not be—but I welcome the Exchequer Secretary’s commitment. I think he was being quite polite when he said that the Government wished to see an improvement to the BVI’s proposal. The BVI needs to go back to the drawing board and bring back a proposal fully in line with the principles that Parliament concluded were the best action for this problem, which is full public registries of beneficial ownership.

In final closing, I thank the spokespersons for the Liberal Democrats and the Conservatives, the hon. Members for Lewes (James MacCleary) and for Wyre Forest (Mark Garnier), respectively, for their constructive contributions. I agree that there may be some legitimate uses of offshore tax centres, in particular for companies in multiple jurisdictions, but the heart of the problem is that the BVI, the Caymans, Bermuda and others are still far too susceptible to very serious illicit crime.

If there is one message that I would like all hon. Members to take home it is that this is not an abstract problem. It is not something just to do with billions and trillions in the financial system. It is about constituents who are being chased by HMRC who feel the double standards; it is about our housing crisis and empty properties; it is about our sanctions, their enforcement, and support for autocrats such as Putin, and it is about our public finances.

We have a strong case for why we need to act, and I reiterate my thanks to the Minister for his outlining of the next steps. The June deadline to see progress from the overseas territories is imminent, but as the right hon. Member for Sutton Coldfield said, this area is littered with missed deadlines. We need a proper deterrent from the British Government to say what will happen if the territories pass those deadlines and no action has been taken.

[Mr Mitchell]

Will the hon. Gentleman give way?

[Joe Powell]

If I am allowed to.

[Karl Turner (in the Chair)]

Sure.

[Mr Mitchell]

We have another three minutes, so I am keen to help out.

To be clear, we are talking here about dirty money and the source of this money—money stolen from Africa and from Africans. The baddies have all the best tunes, and they have the money to get their way, so the forces of law and order are always fighting to catch up. It is important to emphasise the open registers. The mist fell from all our eyes when, thanks to the BBC and The Guardian newspaper, the Paradise and Panama papers were published. They showed that, without this open register approach, we cannot join up the dots to see what those clever villains are doing, catch them, trap the money and hopefully return it. The hon. Gentleman and I agree completely, but I hope that we can carry the Government with us.

[Joe Powell]

I thank my co-chair of the all-party parliamentary group on anti-corruption and responsible tax, where we talk about this a lot.

Exhibit A is the UK public register of company ownership—when introduced, we were told that there would be all sorts of capital flight and that people would not come here to buy properties and invest, but that has simply not been the case. The register has now been in existence for several years. In fact, many of the countries that were the source of corruption and dirty money are now implementing public registries: Nigeria, Indonesia and Kenya, to name but a few.

We know action is possible—Gibraltar and others among the overseas territories have already done it—and it is now incumbent on the others to follow suit. I implore the Government to keep the pressure on so that we do not have to come back too many more times to debates such as this to re-analyse the same problem that we all agree is there, when we know the policy solution is within our grasp.

Question put and agreed to.

Resolved,

That this House has considered tax transparency in the Overseas Territories.

UK-Ukraine 100-year Partnership

Joe Powell Excerpts

Monday 20th January 2025 Commons Chamber

[Mr Lammy]

I am very grateful to the right hon. Member for raising this issue. Ukraine’s rightful place is in NATO—allies agreed at the July summit in Washington that that was the rightful place of Ukraine over time. However, he is right that guarantees will be necessary. It is a matter of intense discussion. We have been the European country that has led on our military support for Ukraine, so he is absolutely right that we would expect to play a role in that when the day comes, working with other allies. As President Zelensky has said, the US would have to play a role in that, too.

[Joe Powell (Kensington and Bayswater) (Lab)]

I thank the Secretary of State and the Minister of State, Foreign, Commonwealth and Development Office, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), for their leadership on sanctions. We know that Putin’s shadow fleet is still a major source of financing for the war, and that cutting it off is vital to bringing him to the negotiating table and, crucially, preventing him from rearming later on. How does the Secretary of State plan to persuade allies and counterparts —including some of our own British overseas territories—to clamp down on sanctions evasion and expand the capture of the shadow fleet to the full extent of that fleet?

[Mr Lammy]

I am so grateful to my hon. Friend for the work he did on these issues prior to coming to Parliament, and for the work that he continues to do. He will be pleased that this is a subject we have raised, particularly with the overseas territories. It is also something I have raised with both the Indians and the Turks, where we have seen some going behind the rules that we have made in order to inadvertently benefit Russia.

Frozen Russian Assets: Ukraine

Joe Powell Excerpts

Monday 6th January 2025 Commons Chamber

[Joe Powell (Kensington and Bayswater) (Lab)]

I, too, thank the hon. Member for Tunbridge Wells (Mike Martin) for securing this important debate.

This issue matters deeply to my constituents. Kensington and Bayswater is home to a thriving Ukrainian community and is a hub for Ukrainian institutions, from the embassy and the consulate to the social club and the school. But in Kensington, regrettably, we are also at the epicentre of Britain’s historical addiction to corrupt, kleptocrat wealth—we are in close competition with my hon. Friend the Member for Cities of London and Westminster (Rachel Blake) in that regard. In the wake of Putin’s full-scale invasion of Ukraine in February 2022, I co-founded the Kensington Against Dirty Money campaign, alongside local community campaigners, to expose the vast sums of illicit capital hidden in luxury property in our community. As has been said, that dirty money undermines democracy both at home and abroad, and for too long kleptocrats have been able to sidestep the rules and hoard illicit wealth through opaque corporate structures.

[Helen Maguire (Epsom and Ewell) (LD)]

I thank my hon. Friend the Member for Tunbridge Wells (Mike Martin) so much for securing this debate. Does the hon. Member agree that if the west fails to act decisively in seizing Russian assets, that simply signals to authoritarian regimes worldwide that aggression and the violation of international law come with little consequence, which will destabilise the global order and increase the likelihood of future conflicts?

[Joe Powell]

The hon. Member is absolutely right. There are things the UK can do to be the trailblazer and there are things we need to do in partnership with our international partners, and shortly I will move on to how I think we can do more on the assets specifically.

I also want to take the opportunity to welcome the personal and relentless campaign by the Foreign Secretary and the Minister in relation to sanctions, including the recent action on the shadow fleet. However, in order for those measures to be fully effective, we must ensure that sanctions cannot be evaded, and there are still loopholes that need to be closed. My hon. Friend the Minister will know that I have been following closely the progress of our overseas territories and Crown dependencies in finally following the will of Parliament by establishing public registers of company ownership, allowing us to follow the money and detect where sanctions evasion may be taking place, for example in places such as the British Virgin Islands. It also means that we need to consider incorporating trust-owned property into our registers of overseas entities, ensuring that trusts cannot be used to conceal property that could be subject to sanctions.

As we have said, our residents deserve better than living in these communities hollowed out by wealth and built on corruption, where my constituents are suffering at the sharp end of London’s housing crisis. In the next-door constituency of my hon. Friend the Member for Chelsea and Fulham (Ben Coleman) there is the case of Chelsea football club. Over two years ago, Roman Abramovich was forced to sell the club, with approximately £2.5 billion pledged to humanitarian programmes for victims of the war, yet not a single penny of that money has been spent. Those Chelsea funds amount to five times the UK’s total humanitarian assistance to Ukraine since 2022, and they remain stuck in an escrow account. That is a travesty, given that releasing those funds would not cost the British taxpayer a penny. It would save countless lives, at a time when 15 million people require urgent assistance in eastern Ukraine alone and humanitarian agencies face a shortfall of £1.3 billion.

I welcome the UK’s leadership in the G7 on securing the additional $50 billion of support to Ukraine using the profits from the holdings of immobilised Russian sovereign assets, with over £2 billion coming from the UK’s share. We have led on sanctions, we have led on freezing assets and we have led on mobilising the interest on assets, and now I believe it is time for the UK to lead a coalition of willing nations to take decisive action to seize those sovereign assets in full.

[Cameron Thomas (Tewkesbury) (LD)]

I invite the hon. Member to recognise that there is an international precedent for the seizure of Russian assets. Back in 1990, following the Iraqi invasion of Kuwait, the US, the UK and France transferred Iraqi assets to Kuwait to directly correspond with reparations to Kuwait. Does he agree that should be the case with Russian assets?

[Joe Powell]

I agree. The moral and legal rationale for seizing these assets is clear. The total cost of Russia’s destruction of Ukraine has already far exceeded the total frozen state assets. It is inconceivable that Russia will ever pay for the irreparable harm it has caused Ukraine. Seizing these assets would not only increase Ukraine’s capacity to resist further destruction but help its leaders rebuild the country. It would be a downpayment on the reparations Russia will almost certainly be legally liable for, and will make it face the full consequences of its actions now.

Britain’s leadership on Ukraine—from military support to Homes for Ukraine to sanctions—has been exemplary and cross-party, but there is always more to do, so I ask the Minister to address my points about making our sanctions more effective by tackling evasion, closing the loopholes in our property register, releasing the Chelsea funds, and mobilising the international coalition to seize Russian state assets, so that we can support our friends on the frontline in Ukraine right now.

[Madam Deputy Speaker (Caroline Nokes)]

That brings us to the Front-Bench contributors, starting with James MacCleary.

Georgia

Joe Powell Excerpts

Tuesday 3rd December 2024 Commons Chamber

[Catherine West]

We believe that the Georgian authorities must investigate all irregularities and reverse the declining commitment to democracy, as the right hon. Lady has laid out. We fully support Georgia’s Euro-Atlantic aspirations, in line with the strong will of the Georgian people. Georgia is a valuable international security partner in the south Caucasus with which we enjoy a long history and close bilateral relations. We are therefore redoubling our efforts to connect with Georgians, to encourage restraint and peaceful demonstrations, and to encourage the investigation of those irregularities, so that there can be no doubt about what actually happened at the recent elections. The UK remains resolutely committed to Georgia’s independence and territorial integrity within its internationally recognised borders.

The right hon. Lady asked about soft power. Of course, in this House we all know the importance of soft power. That is why we are working hard with the British Council and groups that support democracy and young people in different democracies. Following 14 difficult years for soft power in the UK, when all funding was drained away from our important soft power organisations, that is also why we are seeking to rebuild our reputation for soft power, where perhaps we have stepped backwards a little over the past few years.

[Joe Powell (Kensington and Bayswater) (Lab)]

My Georgian friends and colleagues in civil society, with whom I have worked for many years, are calling this a Maidan moment for the country. Protesters have been brutally assaulted, and there have been reports of journalists being hospitalised. Given that many Georgian Dream officials have ties to the UK, will the Minister say whether, if this continues, the full range of Government tools will be considered? Sanctions, visa bans or financial restrictions, for example, would hit those responsible where it really hurts.

[Catherine West]

I thank my hon. Friend, who chairs the all-party parliamentary group on anti-corruption and responsible tax, for his pointed question and his support for freedom of the press. We know that journalists must be free to report the facts. Although he tempts me to speculate, he knows that I will not go there on any future sanctions arrangements; we always keep those quiet until we make the announcement, for obvious reasons. He commented on the backsliding on freedom of the press and on the links between Georgia and the UK, which we will certainly investigate. If he has specific questions or concerns in relation to those matters, could he write to us so that we can investigate?

Ukraine: 1,000 Days

Joe Powell Excerpts

Tuesday 19th November 2024 Commons Chamber

[Mr Lammy]

I am not foot-dragging. We are leading, but we must be careful not to discuss these plans in detail in the House. I gently say to the hon. Member that we must not abuse the fact that this is a democratic Chamber that Putin and others pore over. Trust me, we are leading in that debate. We want to put Ukraine in the strongest possible position. I was discussing that with the Ukrainian Foreign Minister just yesterday in New York, and I will meet the Ukrainian ambassador after this statement. We will ensure that they are in the strongest possible position.

[Joe Powell (Kensington and Bayswater) (Lab)]

I thank my right hon. Friend for his personal and relentless leadership on sanctions against those aiding and abetting Russia’s illegal invasion. He will agree that it is vital that those sanctions are well enforced. In his review, will he include the credible allegations of sanctions evasion via Hong Kong? Closer to home, will he do his utmost to end the continued delay to the release of the £2.5 billion from the sale of Chelsea football club, which remains untapped at a time when the humanitarian need is so high?

[Mr Lammy]

I thank my hon. Friend for that question and for his continued work. We are committed to strengthening sanctions enforcement. Through the October launch of the new Office of Trade Sanctions Implementation, we have introduced new civil monetary penalties for certain trade sanctions breaches and the ability to make details of breaches public. Yes, we will look at the situation in relation to those entities in Hong Kong. I saw that he raised the issue of Chelsea football club during questions to the Defence Secretary just a few weeks ago. Again, I confirm that that definitely remains in view.

Chagos Islands

Joe Powell Excerpts

Wednesday 13th November 2024 Commons Chamber

[Stephen Doughty]

There is a very clear difference. That is a training area, not a major base, and I will not go into the details of the operation on that base. I am surprised that the hon. Gentleman continues to ask for details relating to a base that is hugely important to our national security, when providing such information would put the security of the base at risk.

[Joe Powell (Kensington and Bayswater) (Lab)]

I know that the Minister is a strong friend of our overseas territories. Could he explain the importance of putting the US base on a legal footing, and give us a bit more detail about how that will enable us to work with our allies in countering any potential Chinese threat in the region?

[Stephen Doughty]

My hon. Friend has raised an important point, which has been raised in good faith by Conservative Members and, indeed, by others. I am absolutely confident that when the detail of the treaty is provided—along with other technical details, at appropriate levels—it will make clear our commitments to robust security arrangements to deal with the challenge to which he has referred, and that will include preventing the presence of foreign security forces on the outer islands. Let me reiterate that we simply would not have countenanced a deal that would in any way put our national security or that of our allies at risk.