Sanctions and Anti-Money Laundering Bill [Lords]

Liam Byrne Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 1st May 2018 Commons Chamber

[Helen Goodman]

The hon. Gentleman makes the same point about the Crown dependencies as other Members have made about the British overseas territories. The current situation is as he describes it—if the law enforcement agencies want information and ask for it, the authorities in the relevant jurisdictions give it to them—but the problem is that, to crack down on serious and organised crime, it is really useful to see the whole picture, and we can see the whole picture only if we have all the information. That is the point of transparency and that is the lesson from the Panama and Paradise papers.

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

My hon. Friend is making a brilliant speech. Have we not learned that dark money will move to wherever the law is darkest? If we bring transparency to the overseas territories, most of the money is simply going to be relocated to the Crown dependencies, unless we change the law to cover them, too.

[Helen Goodman]

That point was made to me by the Minister and his officials when we discussed the Bill, and my right hon. Friend is absolutely right that, because we are making changes in respect of the overseas territories, we need to make changes in respect of the Crown dependencies.

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[Dame Margaret Hodge]

I thank my hon. Friend for his kind words, but it really has been a team effort, with people from throughout the House and across all the political tribes.

New clause 6 would simply put into legislation proposals that David Cameron first articulated in 2013, when he spoke about ripping aside the “cloak of secrecy” and repeated the well-known mantra, “sunlight is the best disinfectant”. It would do no more and no less than fulfil the commitment made by the then Prime Minister five years ago.

Britain sits at the hub of the world’s largest network of secretive jurisdictions, and British tax havens are central to the movement of illicit moneys around the world. The secrecy under which they currently operate facilitates wrongdoing on an industrial scale. We have a weak regulatory regime, some of which was enacted by the previous Labour Government and needs reform, and sadly we have lax policing of our system. Couple that with the secrecy that prevails, and Britain and our overseas territories have increasingly become the most attractive destination for crooks, kleptocrats and corrupt individuals who engage in financial skulduggery. If we do not accept new clause 6, we will be in danger of sacrificing our traditional reputation as a reliable jurisdiction by our failure to challenge the secrecy.

[Liam Byrne]

I very much echo the sentiments of my hon. Friend the Member for Chesterfield (Toby Perkins). Does my right hon. Friend agree that it is impossible for us to get unexplained wealth orders to work unless we put in place registers not only for our countries and the overseas dependencies, but for the Crown dependencies, too?

[Dame Margaret Hodge]

I entirely concur with my right hon. Friend’s important point.

Let me take Members through the argument, because it is important that we understand what we are dealing with. First, on the scale of the problem we are tackling, the National Crime Agency reckons that around £90 billion a year is laundered through the UK. We know that developing countries lose three times as much in tax avoidance as they get in all the international aid that is available to them. Half the entities cited in the Panama papers were corporations registered in just one of our overseas territories: the British Virgin Islands. We know that, in the past 10 years, £68 billion has flowed out of Russia into our overseas territories. That is seven times more going to the overseas territories than has come to Britain. We know that there are 85,000 properties here in the UK that are owned by companies registered in our tax havens, half of which are in just two constituencies in London, and a sample survey done by Transparency International suggests that two out of five of those properties have Russian owners.

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[Richard Benyon]

I understand the point that the hon. Gentleman is making. I am not completely wedded to that idea. I simply say that this is in our grasp—this is now Parliament’s duty. Following the very good discussions that I have had with my hon. Friend the Member for Totnes (Dr Wollaston), the Chairman of the Liaison Committee, and my hon. Friend the Member for Broxbourne (Mr Walker), the Chairman of the Procedure Committee, as well as with other wise heads and people with much more experience than I have, I know that we need to design something that really works. The crucial thing that works in Congress and in other Parliaments is what is known in the United States as the “congressional trigger”, under which it is possible to really ask questions of the Executive. Through the measure that we are discussing today, the Executive are giving Parliament the power to get this right, and we must take that duty very seriously.

[Liam Byrne]

I want to make two points in support of new clause 6 and to encourage the Government to take on board the arguments made by my hon. Friend the Member for Bishop Auckland (Helen Goodman). I also want to put on the record my tributes to my right hon. Friend the Member for Barking (Dame Margaret Hodge), the right hon. Member for Sutton Coldfield (Mr Mitchell) —my constituency neighbour—and the others associated with this step forward.

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[Mr Cox]

It is perfectly within our power—the Government have committed to do this—to institute a public register that requires the beneficial owners of any overseas entity wishing to own property in this country to be declared in public. We can do that as it is part of our jurisdiction. However, does the right hon. Gentleman not see that the step that is now being taken goes much further than that and requires the overseas territories to make things public even in relation to property that is not owned in the UK?

[Liam Byrne]

That is absolutely what I am proposing, and my reason is this country’s national security. Let me give the hon. and learned Gentleman a simple example. Back in November 2017, my right hon. Friend the Member for Exeter (Mr Bradshaw) raised the issue of some significant agents of influence in this country: the Chandler brothers, who happen to run an important think-tank that has enjoyed unrivalled access to Ministers during one of this country’s most important national debates. The risk—I put it no stronger than that—that we are running is that that support is financed from sources that derive from the Russian Federation, and it may therefore be part of the panoply of active measures that have been drawn together since the re-election of President Putin in 2012. He has made no secret of that. He set it out in a state of the union address to the Russian people in 2013. Some call it the Gerasimov doctrine, but, whatever it is called, we saw the sharp edge of that sword on the streets of Salisbury just a few weeks ago.

I want to give the House an example of how this influence can unfold in an innocent country like ours that has perhaps been a little inattentive to some of the risks that have been growing over the past few years. As the hon. Member for Isle of Man has mentioned—[Interruption.] As the hon. Member for Isle of Wight (Mr Seely) has mentioned—he would have a different kind of specialism if he were the hon. Member for Isle of Man—the individuals to whom he referred are men of influence who help to finance an important think-tank.

I note with interest that the think-tank is financed by the Legatum Institute, which is registered in the Cayman Islands—registration number FC028686, for those who take an interest in these things—but why should these brothers be of such interest to us? Well, we know that Christopher Chandler and his chief executive, Mark Stoleson, have both taken Maltese passports through the passport-selling operation Henley & Partners. They both publicly accept that they hold accounts at the Iranian-Maltese bank Pilatus, the assets of which were frozen and its chairman arrested at the behest of the FBI in March. Both Pilatus and Henley & Partners were the subject of investigations by the Maltese journalist Daphne Caruana Galizia, who was assassinated late last year.

The hon. Member for Isle of Wight has referred to more. Richard Chandler’s file contains the additional statement:

“Richard Chandler and his brother Christopher play an important role in the capital of the companies Lukoil and Gazprom (linked to longstanding…Russian figures who could be linked to organised crime).”

Furthermore, they maintain relations with an individual, a Chechen mafia figure, who was “expelled from Monaco”. They are connected with money laundering. These allegations are made in the file.

[Mr Bradshaw]

Is my right hon. Friend also aware of the relationship between Henley & Partners and the social media data companies that have been allegedly involved in helping with political campaigns, including that of the recently elected Government in Malta?

[Liam Byrne]

These are very real and very serious allegations, yet when I tabled questions to the Treasury about whether it was exploring the Maltese golden visa route, and the access to the European banking system and the Schengen area that it provides, it said no such conversations were under way.

The point is that I would like to know more about these brothers and whether they are beneficiaries of the money knocking around the overseas territories that derives from bad sources. I want to know whether that money is derived from Russian sources, and I want to know who the business partners were.

Global Witness has done this House an incredible service by highlighting how £68 billion of Russian money is now sloshing around the overseas territories. Given the national security situation that now confronts us, and given the update to the national security strategy that has just gone through, how can we be relaxed about our ignorance of where that £68 billion of Russian money, now buried safely and securely in the overseas territories and Crown dependencies, came from?

If there is innocence, it should be proved. It should be clear. That is why the disinfectant of sunlight is so important. What we cannot have is agents of influence peddling policies and proposals backed by dirty money from one of our country’s enemies. We cannot have that, and we in this House have a responsibility to ensure that we do not run that risk.

For far too long, good and bad money has been allowed to mix together in our overseas territories and Crown dependencies. There is good money there, but we need to be honest with ourselves that some of that money comes into too close contact with cash generated by economies of evil. It is our responsibility to take steps to shut down that regime, which is why new clause 6 and the arguments of my hon. Friend the shadow Minister are so important. I hope the Minister will listen.

[Mr Djanogly]

First, let me join many hon. Members in congratulating the Government and, in particular, the Minister on building a consensus within the parties and among hon. Members on the Magnitsky provisions, which I wish to speak to today.

Time is short, so I will make only a few brief points. On whether these powers are actually going to be used and on the methods of use, I do not yet see any significant change of Government policy. However, if this debate is going to be the herald of a new-found dynamism to clear the UK of the £90 billion of black money flowing through our banks, real estate market, private schools, Bond Street and the rest, I would certainly very much welcome that. My question is: will action now follow the law? I will be interested to hear whether the Foreign Office has had words with the Attorney General, the Home Office or other Departments in that regard—is there a strategy?

On the Government amendments, I see that new clause 3 provides for a reporting system for human rights violation-related sanctions. That is welcome, but my reading of this provision is that it is a retrospective check on what the Government have done and not so much on what they intend to do—if I am wrong on that, I would be grateful if the Minister would clarify the position. The measure in itself is commendable, and I agree that if the report is a sparse one, it would imply and provide evidence to support claims that the Government should be doing more. However, I was very pleased to hear the Minister suggesting today that we are also to have a list system that will be updated on an ongoing basis for those subject to sanctions, as this approach has clearly been so effective elsewhere. Having said that, will the Minister confirm whether people to whom the relevant sanctions have been applied would also need to be listed in the Government new clause 3 report? I believe the answer is yes, but I would be grateful if he would clarify that. Even if there is to be a running administrative list, it would be helpful to have the names set out in the report, with reasons given and an assessment.

There is another related issue here. Could the Minister confirm whether the visa bans attributed to section 1 -type sanctions would also be listed in the new proposed report? Again, maintaining the current system of secret visa bans is simply not as effective as people knowing that their lack of welcome here will be made public in a Magnitsky-list fashion. What these people fear, every bit as much as receiving a visa ban, is other people knowing about it.

My final point is that although this Bill creates a new post-Brexit framework for sanctions, it does not actually set out our policy for how sanctions will be considered or implemented on a multinational basis, which everyone agrees is the most effective approach, as has been said by my right hon. Friend the Member for Newbury (Richard Benyon). So will the Minister explain how these sanctions provisions would be considered within the European Union after we have left it? For instance, is consideration being given to setting up a new co-ordinating committee within the EU? In various speeches I have read, it seems clear that the EU will continue to wish to work closely with the UK on external security matters, so there seems to be goodwill to that end. I would be interested to hear more on how we propose that decision making on sanctions will be put into an institutional context.

We have mainly discussed Russia today. It is worth mentioning that the US aluminium sanctions on Russia were put in place only a few weeks ago, and I have since heard of a degree of kickback from other countries such as Germany and other negatively affected parties. Clearly, if we are going to get tough on sanctions, it will be important to continue to present a united front. So we are seeing progress, but ultimately this will need to be proved by a better UK record of sanctions, visa bans, asset seizures and active prosecutions. Will the law be backed by action? The days of the UK being a dumping ground for illegal black money need to come to an end, and I hope that this Bill will act as a spark to get the process moving.

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In the end, I see this all in the context of our relationship with the Russian Federation. I have been concerned for some time that we tend to take two steps forward and one step back, or sometimes one step forward and two steps back. After the Salisbury incident, it was great that the Prime Minister managed to secure such a strong backing from so many countries around the world for the expulsion of so-called diplomats, but if we do not match that action with action on financial liberality and people’s ability to slosh their dirty money around other parts of the world, the Russians simply will not take it seriously. It is interesting that the American sanctions on Oleg Deripaska have for the first time made him start to retreat from various different markets, including with En+, a business that frankly should never have been registered in this country in the first place.

[Liam Byrne]

Does my hon. Friend agree that the next big international opportunity to make progress on this issue is the G20 in November? If we are to help to lead the argument, we must have the moral credibility of having taken action ourselves.

[Chris Bryant]

I completely agree, and that is also why I agree with the kind of approach that the hon. Member for Isle of Wight tried to enjoin on the whole House—not only on those from different political backgrounds, but also on all the different silos, including defence, foreign policy, work and pensions and the Treasury—to try to make sure that we have a united, coherent, consistent and, to use a valleys word, “tidy” approach towards the Russians. That was not “a valet’s word”, but a valleys word—[Laughter.]