Countering Russian Aggression and Tackling Illicit Finance

Liam Byrne Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Amanda Milling]

Let me just finish this point. There are people of Russian origin in this country who are British citizens. Many are critics of Putin, and it is completely wrong and discriminatory to tar them with the same brush.

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

I am sorry that the Minister has to defend the indefensible. Will she confirm to the House today whether the vetting of Mohamed Amersi’s donation surfaced the news that he made $4 million in a business deal with a man who was President Putin’s telecoms minister? Did the vetting cover that—yes or no?

[Amanda Milling]

As I say, donations to the Conservative party are received in good faith. They receive appropriate due diligence, are from permissible sources, are properly and transparently declared to and published by the Electoral Commission, and comply with the law.

--- Later in debate ---

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

I congratulate Labour Front Benchers on calling this debate, because we are required to come together today to discuss, to expose and to unravel what could be the greatest coincidence in British politics. The cynical would say, in the words of Yogi Berra, that it is almost too coincidental to be a coincidence, although of course this House would not hazard such a judgment, but here it is: on the one hand we have a Government who have presided over the most comprehensive failure to tackle economic crime, which is a failure so profound that we have earned a reputation around the world as one of the world’s capitals of money laundering, yet on the other hand we have a flood-tide of money—not £2 million, not £3 million but over £4 million, and counting—that has come into Tory party coffers from generous souls with close ties to Russia. The ministerial code, for what it is worth, says that Ministers are required not only to avoid a conflict of interest but to avoid an appearance of a conflict of interest.

I therefore speak today in a spirit of great generosity to the Minister, because I want to try to extract him from the pickle that he now finds himself in. I am seriously concerned that Tory Ministers are now exposed to the allegation that they are quite simply poodles on roubles. In that spirit of generosity, I want to set out the two problems that the Minister will be required to resolve if he is to escape such an appearance over the weeks, months and years to come. Problem No. 1 is the gaping hole where a plan for tackling economic crime should be. We know the scale of the problem because the National Crime Agency has told us. It says that the scale of economic crime is some £100 billion a year in money laundering and £190 billion lost to fraud—a total of £290 billion. That is a significant chunk of our nation’s GDP, so this is not an insignificant problem: it is a monumental problem over which the Government are presiding. Secondly, the reputational damage is so serious that think-tanks in Washington are writing reports saying things like:

“uprooting Kremlin-linked oligarchs will be a challenge given the close ties between Russian money and the United Kingdom’s ruling Conservative Party”.

How on earth has the Conservative party got itself into this mess? Well, it is quite a story. I am going to rattle through the 10 key steps that have led the Government to get into this mess. First, they abolished the Minister in charge of economic crime. When the Minister was appointed—[Interruption.] Well, he was appointed with the title of Minister for Security and Borders, whereas his predecessor was known as the Minister for Security and Economic Crime. So the Government are taking economic crime so seriously that they deleted it from the title of the Minister who has been asked to wind up this debate.

Secondly, the Government have now tasked not one, not two but 12 different agencies with tackling the problem of economic crime without going to the trouble of appointing someone to be in charge of these 12 different agencies so as to lead the charge. Thirdly, they have neglected to implement 60% of the measures in their own economic crime plan. Going through the list of measures rated “red” by the Royal United Services Institute, some of them are pretty significant, such as making sure that the police get serious about tackling fraud and economic crime.

Next, the Government have starved the National Crime Agency of so many resources that its director general says that it will not take on cases where it thinks the legal costs will be too high. Then they have failed to equip Companies House with the powers to check information sent in by people setting up shell companies. According to the Minister, there are now 11,000 companies on the register that still have not filed returns on who is the person with significant control, yet how many prosecutions have we had? One hundred and nineteen. It is pathetic; it is lamentable. Then they have failed to bring forward a register of beneficial ownership of property, like the multi-million-pound mansions in Westminster. Then they have failed to use our unique role in the global financial economy to light up where bad actors are doing bad things. SWIFT, the financial messaging system, is based in the UK. We are the global hub, along with New York, of financial settlement worldwide. We could be using the panorama of information to which we have access to light up bad people, to create intelligence packages and then to ensure that those people are pursued to the ends of the earth.

We have failed to stop our courts being used as arenas to silence journalists such as Catherine Belton and Tom Burgis, who are pursuing bad and corrupt companies. Thank God for HarperCollins and Arabella Pike because, frankly, without such brave publishing houses, we would not have the truth brought into the public domain. Then we have the Government’s failure to introduce a foreign agents registration Act, despite the fact that it works in America and Australia. To cap it all, they have failed to offer us any kind of hard timetable for the economic crime Bill, which is an omission so serious that they lost their own Minister to it in the House of Lords.

Those 10 elements—this 10-step decent into chaos—is why we now have a situation where the grand total of unexplained wealth orders targeted against oligarchs is zero. Apart from the Magnitsky sanctions, which came from a list of the crimes handed to us in 2007, we have not proposed any sanctions for economic crime against Russian-born individuals since 2014. Some might say that is benign neglect; others might say it is malign neglect; and others might say that the Conservative party has been paid to look the other way.

I am sure we were all reassured by the Secretary of State for Instagram’s appearance on “BBC Breakfast” this morning, where she—the Foreign Secretary—told a grateful nation that the Tory party vets its donors and that we must not confuse Russian heritage with proximity to President Putin. I think we would all agree with that, which is why, in the spirit of generosity and helpfulness, I offer my vetting services to those on the Conservative Front Bench this afternoon.

Let us start with Lubov Chernukhin, who has donated £2.1 million. The Guardian revealed that her husband, Vladimir, who was appointed deputy chairman of VEB, which was not sanctioned yesterday, received $8 million from Suleiman Kerimov, who was sanctioned by the US Treasury in 2018. The transfer to Vladimir came on 29 April 2016, mysteriously just before a donation of £1.5 million to the Conservative party. Then there is Alexander Temerko, a man who, it is said,

“forged a career at the top of the Russian arms industry and had connections at the highest levels of the Kremlin”.

He was a former deputy chairman of Yukos Oil Company and somehow mysteriously escaped the purge of his colleagues. He has now donated £747,000. He has been working very closely with Viktor Fedotov, a director of Aquind, a source of great largesse to many Members in the House. Mr Fedotov is the former head of a subsidiary of Lukoil, and was revealed in the Pandora papers as a man who, along with two others

“made fortunes from the company in the mid-2000s, around the time it was alleged to have been siphoning funds from the Russian state pipeline monopoly Transneft.”

Then we have Dmitry Leus, who has donated £54,000. According to the Daily Mail, he was

“found guilty of money laundering and jailed in Russia in 2004. The conviction was later overturned and he insists the prosecution was politically motivated.”

Here is the mystery: he also donated to the Prince’s Foundation, which has decided to return Mr Leus’s money. The House will be amazed to hear that the Conservative party has not.

Then we have Mohammed Amersi. He and his wife have given £793,000 to the Conservative party. The BBC said he was involved in one of Europe’s biggest corruption scandals, which entailed $220 million being paid to a Gibraltar-based company owned by the daughter of the President of Uzbekistan. He has always insisted that his donations came from UK profits, but the Financial Times tells us that he

“received $4m from a company he knew to be secretly owned by a powerful Russian”—

Putin’s then telecoms Minister.

Then we have Murtaza Lakhani, whose firm Mercantile & Maritime has donated £500,000. This is the chap who Bloomberg tells us has been revealed as making large parts of his fortune through channelling

“a $6 billion torrent of cash”

from the Russian oil giant Rosneft to Kurdistan. The money flowed to a company registered in the tax haven of Belize, with a mailing address in Cyprus.

Then we have David Burnside, formerly of this parish. His firm has donated £200,000. Mr Burnside boasts links to senior figures in the Kremlin. The Guardian reported that he

“has introduced several prominent Kremlin figures to senior Conservatives”,

including Mr Putin’s old friend, Vasily Shestakov.

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. I note that the right hon. Gentleman has a long list. I wonder whether he could just deliver it a little bit faster.

[Liam Byrne]

I will conclude, Madam Deputy Speaker, because I think my vetting services have been exhausted for the Front Bench. I will conclude by saying that Conservative Ministers are behaving like innocents abroad in a world that is not innocent. No wonder people are now saying that the capital of Londongrad is not Mayfair but Matthew Parker Street, home of Conservative central office. The cruel would say it is 5 Hertford Street, co-owned by Jamie Reuben, scion of the family that made its fortune in the Russian aluminium wars and, as we know, the place where the Foreign Secretary insists on her £3,000 lunches.

The Government have to work harder to persuade us that there is not a coincidence. They have to persuade us that they are not poodles on roubles. They have to bring forward a proper plan for tackling economic crime, not least because of the fact that the financial services industry is worth £165 billion to this country, and it employs millions of people who work hard every day. But we trade on our reputation, and right now, this Government are destroying that reputation for good.

--- Later in debate ---

[The Minister for Security and Borders (Damian Hinds)]

I welcome this important debate. I thank the Opposition for securing it, and I am grateful for the manner in which the shadow Foreign Secretary opened it, the manner in which the shadow Chief Secretary to the Treasury closed it, and the tone in which it has largely, if not quite completely, been conducted.

Of course Government must be scrutinised and must be held to account. In our oppositional parliamentary liberal democracy, that is what we do, and I think it is what this House does rather well. But is also a great strength of this House that we can come together to show the unity of our ultimate purpose—the defence of freedom and democracy at home and abroad—and I believe that, collectively, we have done that today.

In his statement yesterday, the Prime Minister was clear. In recognising the supposed independence of the so-called people’s republics of Donetsk and Luhansk in eastern Ukraine, President Putin has flagrantly violated international law. Ukraine is a sovereign country, and has a right to choose its own security arrangements. It is clear that the deployment of Russian forces in sovereign Ukrainian territory amounts to a renewed invasion of the country. The Prime Minister referred yesterday to “our valiant Ukrainian friends”, and added:

“We will keep faith with them in the critical days that lie ahead, and whatever happens, Britain will not waver in our resolve.”—[Official Report, 22 February 2022; Vol. 709, c. 175.]

The United Kingdom also has an absolute commitment to defend our NATO allies. We have already doubled the size of our deployment in Estonia, where the British Army leads the NATO battlegroup.

Yesterday the UK, in co-ordination with international partners, announced a first wave of targeted sanctions. I say a first wave, but in fact more than 270 individuals are already sanctioned under previous programmes. Yesterday’s measures placed banks worth £37 billion under sanctions, in addition to more oligarchs, and there is more to come. My hon. Friend the Member for Basildon and Billericay (Mr Baron) rightly mentioned the importance of calibration. It is also vital that after this first barrage we continue to work in lockstep with our friends and allies around the world, as my hon. Friend the Member for Devizes (Danny Kruger) rightly pointed out. These measures will hit more oligarchs and banks close to the Kremlin, sending a clear message that the UK will use our economic heft to inflict pain on the Putin regime and degrade its strategic interests.

The UK will also sanction those members of the Duma and the Federation Council who voted to recognise the independence of Donetsk and Luhansk, violating Ukraine’s territory. We will extend the territorial sanctions imposed on Crimea to non-Government controlled territory in the so-called breakaway republics of Donetsk and Luhansk, and we are ready to go much further if Russia does not pull back from the brink. In the event of further aggressive acts against Ukraine from Russia, we have an unprecedented package of further sanctions ready to go. I will not, from the Dispatch Box, go into future designations or who we will target and with what measure, but Moscow should be clear that we will use these powers to maximum effect if Russia further invades Ukraine.

Corruption and illicit finance are the lifeblood of the kleptocratic Russian Government, and individuals associated with the Russian state can try to further their influence through investment. This Government are strongly committed to tackling—and we continue to act against—the threat from illicit finance. Through the economic crime plan launched in 2019, we are overhauling our suspicious activity reports framework against money laundering, including from Russia. We are increasing the number of financial investigators in the National Crime Agency, and we are substantially increasing funding for our economic crime response, with an additional £400 million over the next three years, funded in part by a new economic crime levy.

[Liam Byrne]

I want to clarify one point. The Minister seemed to imply that further sanctions would be contingent on a further roll-forward of Russian troops, but that is not what the Minister for Europe and North America, the right hon. Member for Braintree (James Cleverly) said to the House yesterday. He said that there would be further sanctions regardless of whether there was any further advance. Can the Minister clarify that point?

[Damian Hinds]

We will work together in lockstep with our friends and allies around the world. I will not go into detail now about what future designations might be or the precise nature of them, but as I said earlier, Moscow should know that we will use these measures to their full effect.