Economic Crime (Transparency and Enforcement) Bill

Liam Byrne Excerpts

2nd reading
Monday 7th March 2022 Commons Chamber

[Alison Thewliss]

That is a fair point, and I absolutely agree. I will speak in the sanctions part of my speech about the fact that the Government do not know who has what in order to sanction them because the Companies House register is such nonsense, and we do not have a good enough understanding of who actually owns property in this country right now.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

Does the hon. Lady share my concern that there are still 11,000 companies at Companies House that do not have a person of significant control registered, yet there have been only 119 prosecutions? Surely we have to transform the regulatory power of Companies House to get rid of this nonsense.

[Alison Thewliss]

I absolutely agree. I was going to speak about Scottish limited partnerships later but will jump forward to that bit of my speech now, because it ties in nicely with the point the right hon. Member makes.

The House will have heard me speak on numerous occasions about SLPs, which have the distinction of being able to hold assets—property, yachts or whatever else—as a company. They have been used in the past as a means of funnelling money out of Ukraine as well other countries. OpenDemocracy reported last year that it had found €35.9 million in an SLP account which had been stolen from people in Ukraine through a fraud; Remini Consulting was the company involved in that. As the right hon. Member pointed out, the key to tracing those involved in such frauds is the persons of significant control.

SLPs have been obliged to have a person of significant control for several years now; that is a reform the SNP pushed for and the Government said they were going to introduce. Sure enough, the numbers of SLPs on the Companies House register decreased, and the number of people who were not registering as persons of significant control also decreased, but according to the most recent figures 203 companies are still SLPs with no person of significant control registered. That is just not right, and that is not being pursued either. Of all the thousands of SLPs that have existed and that still exist, only one has been issued with a fine for not having a person of significant control, and that fine was £210. That is absolutely pathetic, and it highlights that this Government are not even bothering to enforce the rules they have.

The Government are proposing in this economic crime Bill to fine companies that do not comply, but they are not fining companies that do not comply right now. That is not just about not enforcing the rules; it is money that is walking out of the Treasury—money they could have had to spend on services and do other things. They are not enforcing the rules, and they are not fining the companies that are not playing by the rules—they are not striking them off the register; they are not doing anything to make sure the rules are complied with.

This Bill does not go far enough to address that. The fines suggested are £2,500 a day, which is nothing to many of the companies who are shifting billions of pounds through shell companies. That is just the cost of doing business; it is nothing to the oligarchs with deep pockets stuffed full of Putin’s money, and the Government should be doing a hell of a lot more about that. At this moment, welcome as this Bill is, they are not doing anything to address that imbalance.

Economic Crime (Transparency and Enforcement) Bill

Liam Byrne Excerpts

Committee stage
Monday 7th March 2022 Commons Chamber

[Paul Scully]

First, I thought that when I said, “Essentially, yes,” it was a clear, two-word answer to a simple question. I will cover my right hon. Friend’s amendments in my closing remarks, but I wanted to speak to the Government amendments at this point. However, his new clause 29 would give a huge amount of powers not just to the Foreign Secretary in relation to Putin’s regime, but to future Foreign Secretaries. We need to tread carefully and look at that carefully before the House acts in that way.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

We can see that the sanctions regulations will become much stronger, but our sanctions regime is still a long way short of the kind of sanctions that have been imposed on, for example, Iran, whereby we are able to sanction secondary entities trading with sanctioned companies. Does this legislation allow us to enforce Iran-like sanctions on Russia, because ultimately, that is what will be needed?

[Paul Scully]

I think the right hon. Gentleman comes from a place of supporting the proposal from my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). I do not want delay the Committee in debating the amendments in full before I respond towards the end of the debate.

On the provisions on the register of overseas entities, we will increase the ceiling of criminal penalties for non-compliance from £500 a day to up to £2,500. Again, we have listened to representations from Members across the House. We are increasing the limit to allow for stronger enforcement mechanisms, but, by making it “up to” that amount, we are also making sure that we do not criminalise people who do not have their house in order but who are using these entities for perfectly legitimate reasons.

We are reducing the transition period for existing overseas entities to register their beneficial owners from 18 months to six months. We want to ensure that there is no place for corrupt elites and kleptocrats to hide, but there are many legitimate individuals and businesses that are likely to be holding property through overseas entities for understandable reasons, such as personal security. As I said, we want to make sure that we can work with people from across the House, including my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), to make that more secure and to see what more we can do to tackle the issues that we face here and now. It is important to remember that once the register is in place, new transactions will be caught on day one.

I am grateful for the engagement of the Scottish Government on part 3 of schedule 4. We are committed to consulting Scottish Ministers on regulations made under that part that contain provisions within the legislative competence of the Scottish Parliament. Similarly, we are committed to consulting Northern Ireland Ministers on regulations made under the similar mechanism for Northern Ireland in clause 32(4), (5) and (6).

--- Later in debate ---

[Layla Moran]

I thank the right hon. and learned Gentleman for his helpful intervention. I would rather that we deleted these lines now—they cause a lot of problems—and then, when the Bill goes to the Lords, he should by all means have a conversation with the Minister and perhaps it can be tidied up there. My concern is that if this stays in the Bill now, we then end up with too much to do in the Lords. So much is being put off and is waiting for the Lords to have a look at it that we may never get to these things. It is such a small thing, but its impact is huge.

We all want the same thing. Let us not get the enablers to start betting on clause 18(1)(b). Amendment 4 is very simple—it would delete this now. We might have to tidy a few things up in the Lords, but I would be really grateful if the Minister specifically addressed how he will ensure that clause 18(1)(b) does not end up ruining what is otherwise a good Bill that has been made much better by all the amendments that have been tabled, including by the Government.

[Liam Byrne]

Thank you for calling me to speak, Dame Eleanor. I thank the Minister for his presentation to the House and for the spirit that I thought he brought to his remarks at the outset. He slightly walked back from some of that consensus, but I make the point to him that many of us across the House think that the Government’s approach to tackling economic crime is all holes and no net. We have tried, in 27 pages of amendments, to turn what should be a net into some snares. That is why we cannot understand why the Government are not taking on board some of the smaller, technical drafting amendments that we proposed tonight—and frankly, some of the bigger moves. The Minister has it in his power to drive those through tonight so that by the time the sun rises tomorrow, we would have in our country a much stronger framework for tackling economic crime to take to the other place.

I want to speak to the two amendments in my name—amendments 37 and 38—and weigh in on the debate on amendment 26 and new clauses 2 and 29. Let me start with amendment 26, because I was a Home Office Minister for a couple of years, and I have won and lost many cases as a Home Office Minister. I have to say to the Minister that the failure to remove the words “knowingly or recklessly” from the Bill is frankly the oligarchs’ loophole—their “Get out of trouble free” card. I add my plea to those of other hon. Members that we remove those words. Otherwise, frankly, we will stand by and watch the richest people on earth driving a coach and horses through our legislation.

My second point is about new clause 2. As my right hon. Friend the Member for Barking (Dame Margaret Hodge) said, the heart of our problem with sanctioning—our frankly embarrassing performance on it—is that as well as not having the right powers, we just do not have the right resources in place. The fact that the Government took away the title of Minister for Economic Crime tells us everything we need to know about their performance and attitude hitherto.

As my hon. Friend the Member for Rhondda (Chris Bryant) said, the United Kingdom has sanctioned 34 individuals and entities since the extension of the invasion; the EU has sanctioned more than 500. Of the Navalny list of 35 that the hon. Member for Oxford West and Abingdon (Layla Moran) read out in the House the week before last, the UK has sanctioned just eight; the EU has sanctioned 19. However, what really troubles me is the question of resources, because that is obviously the core problem.

When I submitted parliamentary questions to the Foreign Office, the Treasury and the Home Office last week, I was frankly horrified. My question to the Foreign Office, which leads on sanctioning policy, was pretty straightforward: how much money is devoted to sanctioning, and how many civil servants are working on it? The answer from the Under-Secretary of State, the hon. Member for Chelmsford (Vicky Ford), was about 16 lines long and did not mention either how many civil servants are working on sanctioning or how much money is being spent.

An answer to the same question came back from the Minister for Security and Borders. In a way, I admire the number of tropes folded into his answer:

“The National Crime Agency welcomes the announcement on the Combatting Kleptocracy Cell…They have already surged additional officers to support existing efforts and will”—

wait for it—

“move at pace to enhance the unit further”.

I put the same question to the Treasury. The Treasury being the Treasury, it said:

“The staff in post in OFSI was 37.8 FTE…This information can be found in HM Treasury’s Outcome Delivery Plan”.

That is the level of precision that we ask of every Department. Frankly, the silence tells us that all is not well. That is why new clause 2 is so very important.

New clause 29, tabled by the right hon. Member for Haltemprice and Howden (Mr Davis), is incredibly important, but I push the Minister to go further. We need to be able not only to freeze assets, but to seize them. Paragraph 3.1.3 of the UK financial sanctions guidance in December 2020 says that the use of an asset, even when it is frozen, is not prohibited.

The Minister will forgive the Opposition for growing frustrated over the years at the economic policy that the Government have pursued, which has created a country of haves, have-nots and have-yachts. He can imagine how frustrated we are that the Government will not even seize the yachts when they belong to oligarchs. Somebody has very kindly shared with me a list of candidates that the Minister might want to consider: the My Solaris, owned by Roman Abramovich; the Eclipse, which is sailing in the north Atlantic and which the Government would have no means of either seizing or freezing as an asset if it docked at a UK port; the Valerie, owned by Sergey Chemezov, which is currently in Barcelona; the Lady Anastasia, which is currently in Mallorca in Spain; the Tango, which is also in Mallorca; the Palladium, which is currently in Barcelona; the Aurora, in Barcelona; Here Comes the Sun, in Mallorca; Ice, in Genoa; the Ragnar, in Narvik; Sailing Yacht A, owned by Melnichenko—

[The Chairman of Ways and Means (Dame Eleanor Laing)]

Order. I appreciate that the right hon. Gentleman has a long list. It is enlivening proceedings and we are all grateful, but we do not have time. Will he please truncate his speech? Just say, “and 12 more,” or something like that.

[Liam Byrne]

I am grateful for your guidance, Dame Eleanor, because I think I have made my point: the Government need to take on more power to seize and freeze these assets.

The final point I wish to make is about strategic lawsuits against public participation. We recently had a good debate on lawfare, sponsored by the right hon. Member for Haltemprice and Howden and myself. In amendments 37 and 38, we make proposals that the Government could adopt. I do not wish to press them to a vote tonight, but I would like the Minister to confirm what the Foreign Secretary and the Justice Secretary said in the media on Friday. The Justice Secretary told “BBC Breakfast” that SLAPPs were an

“abuse of our system and I’m going to be putting forward proposals to deal with that and to prevent that”.

The Foreign Secretary later told The Guardian that she had asked Government lawyers to “find literally any way” to crack down on SLAPPs. I would like this Minister’s confirmation that that is indeed going to happen, not in some consultation response to the Human Rights Act, but as a stand-alone piece of legislation, so that we can live in truth in this country. It is outrageous that English courts are being used as a means to silence journalists such as Tom Burgis, Carole Cadwalladr and Catherine Belton. I want great books such as “Butler to the World” by Oliver Bullough to be written with the freedom to tell the truth, and at the moment the oligarchs are denying us that freedom. They are launching a war on free speech in English courts, of all places. That scandal has surely got to stop.

I will conclude by saying that it is now clear that what our country needs Russia is a recontainment strategy towards Russia. That will entail a refortification of the NATO frontline to the east; resupplying the Ukrainian forces; and suppressing and repressing the Russian economy. Sanctions do not produce instant results—Presidents Mugabe and Maduro presided over economies in ruin for many years—but this would give us progress.

[David Linden (Glasgow East) (SNP)]

I rise to speak to amendment 63, which stands in my name and those of my colleagues. I am grateful to you, Dame Eleanor, for selecting it as a manuscript amendment, particularly at such short notice. I am not normally a fan of ramming a Bill through in such short order, but I understand the need for speed in this case.

As others said on Second Reading, the Bill is to be broadly welcomed, but it does not go far and fast enough. A much bigger and more wide-ranging debate stems from the Elections Bill, which is currently in the other place, and the eligibility of overseas voters and donors to influence our politics, but I do not think we want to go too far down that rabbit warren this evening. However, clause 38 makes provision for financial penalties to be applied in respect of overseas entities, and I support that.

My amendment seeks to close off a loophole: we could apply significant financial penalties to an individual, yet said individual, even if they lived overseas, would still be able to vote and, more concerningly, donate significant sums to UK political parties and influence our elections. I am the first to accept that our focus right now should be on applying the maximum economic sanctions on Russia to alleviate and end the military bombardment that it is subjecting the poor people of Ukraine to. It strikes me as a little bizarre that we can have a debate—and indeed legislate tonight—on the issue of dirty Russian money in these islands, but miss a trick by not also cleaning up our politics of said dirty Russian money. Countless warnings have been sounded on this issue, most notably in the Intelligence and Security Committee’s Russia report, which flagged up the vulnerability of our politics to Putin’s influence in cyber and in funnelling money into some political parties and referendum campaigns.