Countering Russian Aggression and Tackling Illicit Finance

Jonathan Edwards Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Mr Lammy]

My right hon. Friend is exactly right. Over two thirds of our economy is the service sector. The consultants, lawyers and accountants are absolutely a part of the process of dirty money and the laundromat. We must act to deal with them. [Interruption.] Of course not all of them, but there are facilitators and we expect to see the appropriate clauses in the economic crime Bill.

Defeating Putinism starts with leadership that represents our values. If we are to be taken seriously on the world stage when we talk about democracy, we cannot be watering it down at home with unfair reforms such as voter ID and loose rules about overseas donations. If we are to be credible champions of international law, our leaders must practise the laws they set at home. The best way to defend the rule of law is to follow it.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

The right hon. Gentleman rightly emphasises what the UK can do to clean up matters in the UK. One commentator has talked about the need to tackle what he calls the ecosystem of Russian influence over UK democracy, which would mean going further and including direct donations to politicians—some of whom are Members of this House—the actions of public affairs companies and lobbying companies, and in particular the funding of think-tanks. Does he agree that a very comprehensive package of measures is needed?

[Mr Lammy]

The hon. Gentleman makes the list more comprehensive and he is exactly right.

Enough is now enough. Putin has invaded Ukraine, a sovereign state and a friend and partner of the United Kingdom. That is an attack on the hopes, dreams and aspirations of ordinary Ukrainians. We can no longer let him exploit the holes in our system at home to enable his aggression abroad. This is not a partisan issue, and nor should it be difficult. It is shameful that the Government have not acted long ago. We want to work with the Government not only to win against Putin’s aggression abroad, but to defeat the ideology of Putinism at home. We are united in this House in support of NATO, in support of freedom, and in support of democracy and equality. Let us send a clear message to President Putin and authoritarians around the world that the UK is no longer a haven for dirty money.

--- Later in debate ---

[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.

[Jonathan Edwards]

Will the Minister give way?

[Amanda Milling]

I will make progress, if the hon. Gentleman does not mind. I think I have been pretty generous so far.

Over the coming weeks, we will extend the territorial sanctions imposed on Crimea to territory occupied by Russian forces in the so-called breakaway republics of Donetsk and Luhansk. We will also sanction those Members of the Russian Duma and Federation Council who voted to recognise the independence of Donetsk and Luhansk, in flagrant violation of Ukraine’s territorial sovereignty.

This will not be the end. Yesterday’s announcement was just the start of our upward ratchet.

--- Later in debate ---

[Amanda Milling]

If the hon. Gentleman does not mind, I would like to make a little progress.

That package of sanctions will include measures to stop the Kremlin’s access to UK financial markets for sovereign debt, which means the Russian Government will be unable to access UK services to raise capital through the issuing and trading of sovereign debt. These measures will curtail the ability of the Russian state, and Russian companies, to raise funds on our markets, and will further isolate Russian banks’ ability to operate internationally. We will also introduce measures to limit Russia’s ability to trade internationally, and to degrade the development of its military industrial base for years to come. We will keep ratcheting up the pressure, targeting more banks, elites and companies that are of significance to the Kremlin.

[Jonathan Edwards]

rose—

[Wayne David]

rose—

[Amanda Milling]

I will give way to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he has been quite persistent.

[Jonathan Edwards]

I am grateful to the Minister. Is there not a danger that the UK has taken a peashooter to a bazooka contest? As we are targeting a few individuals and a few peripheral banks, the Kremlin can sit back and allow oil and gas prices to rise, which will hit every single household in the UK.

[Amanda Milling]

I thank the hon. Gentleman for his intervention, and also for his persistence. As I have said, this is the first tranche of measures, and we are prepared to go further.

In conclusion, as we have shown consistently in recent years, and in recent days, the UK takes the threat of international illicit finance, including that from Russia, extremely seriously. We have taken decisive action to demonstrate that corrupt elites and individuals who seek to exploit our financial systems to hide their illegitimate wealth are not welcome in the UK, and we can and will go further to ensure that the UK is safeguarded from these threats.

--- Later in debate ---

[Alison Thewliss]

I agree completely. This package is very weak, and commentators across the board have described it as very weak.

[Jonathan Edwards]

Does this whole crisis not demonstrate the strategic malfunction of the Conservative party’s obsession with the European Union over the years, especially given all the negative energy that has consumed politics in this place over the last five years in the fallout from Brexit? We have taken our eye off the ball when it comes to the biggest foreign policy challenges that the UK—the state—faces.

[Alison Thewliss]

The hon. Gentleman is absolutely correct on that. There is a real need to work together on this, but the UK has been several steps behind, unfortunately.

I note with interest that it was reported that shares in Russia’s two biggest banks went up yesterday, in relief that they had not been targeted. The five banks targeted represent a mere fraction of the Russian banking sector. Only one of the five is on the Russian central bank’s list of systemically important credit institutions. The Black Sea bank is Russia’s 197th largest bank by assets, IS bank is 155th and GenBank is 92nd. They were hardly the biggest fish to go after. Ministers have assured us that there will be a ratchet process, but it feels to many that they are not moving fast enough or taking enough action to make a real impact here. Those cronies and oligarchs who have money to shift will no doubt be doing so already. The Minister of Foreign Affairs of Ukraine, Dmytro Kuleba, has tweeted this morning:

“To stop Putin from further aggression, we call on partners to impose more sanctions on Russia now. First decisive steps were taken yesterday, and we are grateful for them. Now the pressure needs to step up to stop Putin. Hit his economy and cronies. Hit more. Hit hard. Hit now.”

The UK Government should listen to that plea from our allies.

There was much talk during the recent statements of military action and of sending tanks and guns, and while that might be of immediate assistance in an escalating scenario with tens of thousands of Russian troops on the march, we must not neglect to tackle the long-standing scandal on the doorstep of this Parliament that has allowed President Putin to gather his strength and finance his corrupt regime. What frustrates me, other colleagues across this House, anti-corruption experts in the field and the Glasgow Central constituents who email me is the lack of action and urgency on illicit finance. The UK Government alone have this responsibility, but they have not taken the ample opportunities they have had over the years to stop the flow of Russian dirty money through the City of London. The Minister for Security and Borders, the right hon. Member for East Hampshire (Damian Hinds) told the Treasury Committee that he was not happy, and we are not happy either. The Government could have taken stronger measures in the Sanctions and Anti-Money Laundering Bill Committee, on which I sat. They did not do so. They have their registration of overseas entities Bill, which is still waiting for action. They have had ample opportunity to reform Companies House and to tackle Scottish limited partnerships and the lack of investment in enforcement agencies. People are getting away with this corruption through a lack of proper enforcement.

One of the most egregious examples is the Russian laundromat case, in which some 113 Scottish limited partnerships played critical roles in a massive Russian money-laundering scheme that moved $20.8 billion out of Russian banks. One of those involved was Igor Putin, cousin to the Russian president. I would like to pay tribute to my former colleague in this House, Roger Mullin, who did so much to tackle the scourge of the misuse of SLPs, along with the researcher Richard Smith and the journalist David Leask. The UK Government’s actions to tackle that were painfully slow and they have still not nailed the issue of the abuse of SLPs or the lack of enforcement on persons of significant control. Money has been taken from Ukraine recently via SLPs as well. Some £36 million in a scam being investigated by authorities last year ended up in the bank account of the SLP Remini Consulting.

Let us not kid ourselves: this is profitable business. The lack of enforcement has allowed an industry to flourish unchecked in the leagues of enablers right here in the UK. The journalist David Leask has pointed out:

“The mundane, unhappy reality is that we have outright crooks and a fair number of white-collar professionals happy not to look too closely at where money comes from. These ‘enablers’ here”—

in Scotland—

“and in England are a threat to the UK and to the wider world. They corrode our democracy and distort our markets. And they are laced throughout our society. They are company formation specialists, corporate lawyers and accountants who provide financial services to oligarchs, gangsters and corrupt politicians. They rarely think of themselves as bent. But that is what they are, ethically if not legally .”

The UK Government cannot talk seriously about tackling illicit finance if they do not go after those who enable it. They ought to start by looking in their own coffers for the donations with dubious sources and for those whose funds allow them to come into the Government’s inner circle. The Conservative party has accepted nearly £2 million in donations of Russian-linked money since the Prime Minister came into office in 2019, with a quarter of the Cabinet reportedly having Russian-linked donations. The Prime Minister and the Minister said that these were legitimate donations from British citizens, but handing them golden visas first, before getting the money, completely undermines the whole principle. I have constituents who have waited years for a visa, but anyone with enough money can waltz right in and do what they like.