Economic Crime: Law Enforcement

Liam Byrne Excerpts

Thursday 7th July 2022 Commons Chamber

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

I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) and my right hon. Friend the Member for Barking (Dame Margaret Hodge) for bringing this debate to the House and for all their work in bringing together the superb set of proposals in the economic crime manifesto. It is an important debate for us to have, even on a day like this, for the simple reason that at the heart of every autocracy, every dictatorship and every tyranny is corruption. Those who enable that corruption enable dictatorship, tyranny and autocracy. Our country led the industrial revolution and is a proud hub for the global financial services industry. Just as we once destroyed slave trading around the world, it is imperative that we destroy economic crime around the world in the 21st century. That is why the debate is so important.

I commend the all-party groups for the publication of their economic crime manifesto. I draw the House’s attention to the Foreign Affairs Committee’s contribution to the debate—our report published last week. The conclusion that we reached, which is set out clearly at paragraph 14, is a pretty damning indictment of where we have ended up:

“The Government’s unwillingness to bring forward legislation to stem the flow of dirty money is likely to have contributed to the belief in Russia that the UK is a safe haven for corrupt wealth.”

The ecosystem of wealth managers, lawyers, PR merchants, bankers and estate agents who enabled Putin’s kleptocrats have contributed to the strength of Putin in Russia and therefore to the prosecution of war in Ukraine—that is the conclusion that the Foreign Affairs Committee came to last week.

[Andy Slaughter]

My right hon. Friend is speaking very well on the subject, as he always does. We have heard that the oligarchs use Londongrad as a playground, not just for leisure and lifestyle but for criminal activity, because law enforcement is too weak. What adds insult to injury is that when journalists and private investigators step up to expose what is going on, they are subject to punishment from the institutions of this country—the courts—through SLAPP, or strategic litigation against public participation. The people who are getting away with it are the people who should be in the dock.

[Liam Byrne]

Exactly. My hon. Friend is absolutely right.

I will quickly run through five parts of the economic manifesto that have to be at the core of the next economic crime Bill. One of the virtues of having this debate today, at this moment of great flux in our politics, is that I hope to put on the record the cross-party consensus that now exists about the provisions that need to go into economic crime Bill 2.

Many of us argued for a long time for the first Bill, which was rushed through the House in record time for obvious reasons. Many of the amendments that improved the Bill came from participants in this debate. What we are saying to the Government today, through the good offices of the Minister, is that the Bill did not go far enough—it did not begin to touch the scale of the problem. There is therefore an expectation that when the Government draw together the provisions of economic crime Bill 2, they will look at the economic crime manifesto, the Foreign Affairs Committee’s report and the text of this debate.

[Kevin Hollinrake]

The right hon. Gentleman is making an excellent speech. May I recommend that the Minister —or the Minister responsible, when that Minister is in place—also reads the Treasury Committee’s report “Economic Crime”, which sets out recommendations similar to those of the Foreign Affairs Committee?

[Liam Byrne]

The hon. Gentleman is absolutely right. The joy of the Minister’s position must surely be that Members of this House have done the heavy lifting for him. Between us, we have sketched out a pretty comprehensive catalogue of measures for the Bill: we have not quite put the clause numbers in, but I think we have set out most of the measures.

Those measures have to start with information about the crime. That is why we need the whistleblower provision, because whistleblowers are so often the source of intelligence, and it is also why we have to reform the suspicious activity reporting regime. Not only does the regime need widening so that it bites on more organisations such as estate agents but we have to find a way of pooling the intelligence that comes from suspicious activity reports and focusing on where we think the harm is greatest. Our Committee has heard that loud and clear, not least in New York last week, where our excellent consular team pulled together a wide-ranging discussion for us. Lots of banks, law firms and so on are saying, “Look, we are spending all our time running platinum-plated processes, but without sieving the information intelligently and focusing on the 0.01% of reports to which we really should pay some attention.”

My hon. Friend the Member for Hammersmith (Andy Slaughter) has drawn attention to the way our courts are being used to shut down journalists, which is the third piece of the puzzle. We need courageous journalists to speak the truth; we cannot use English courts to shut them down, as is happening in London.

There are some changes that we need to make to ensure that we have good information and intelligence. We then need to ensure that the regulator is in place. The argument about needing a better Companies House has been well rehearsed; it is just crazy that the “know your customer” provisions that bite on so many commercial organisations do not bite on Companies House, so it is recording directors with names like Mickey Mouse, and in some cases not recording directors at all.

I fully agree that we need criminal liability for directors as a third set of provisions. The hon. Member for Thirsk and Malton is absolutely right to sketch out the parallel with the Health and Safety at Work etc. Act, which requires people to identify the harms of which their organisation may be guilty and put provision in place to prevent those harms from happening in the first place. Prevention is always better than cure.

We obviously need to transform enforcement. We need to double, at least, the budget for the National Crime Agency. We need to match, at least, the money that the private sector puts into law enforcement. We need to take steps to reduce the costs, which is the only way to start getting unexplained wealth orders through. In America they would love the power of unexplained wealth orders, but we have had to explain that they are currently useless because we just cannot prosecute them successfully through the courts.

On top of that architecture, we need to create one further set of offences to tackle the problem that in cases of corruption, the evidence that our agencies need is not carefully organised and filed away in Britain; it is offshore in jurisdictions where it is not available to us. When we cannot onshore the evidence, we have to somehow onshore the offence. We need to think about creating tough obligations on enablers, on company directors and on politicians in this House and the other place to declare anything that is suspect or corrupt. We almost need a suspicious activity reporting regime that allows us to prosecute people for failing to disclose things that they should be disclosing. That needs to carry a sanction which leads to civil proceedings for confiscation of assets. Unless we find a way of onshoring these offences, we will continue to be bedevilled by the problem of getting hold of the evidence that we need.

Out in the world, people are asking why on earth this place has not acted on economic crime. It is understandable that people should draw a connection between the flood of dirty money into our politics and our failure to act. It is a matter of tremendous regret that more than £7 million of the £54 million that has gone to the Conservative party in high-value donations has come from individuals with very suspect links to Russia.

Ehud Sheleg, who has been discussed in The New York Times, is deeply connected commercially with his father-in-law, Mr Kopytov. The New York Times recently revealed the way in which money came from his father-in-law to Mr Sheleg as a result of business activity in Russia—that was in the suspicious activity report—but when a number of us reported it to the National Crime Agency, the NCA just said, “Well, it has come from the bank account of a UK citizen; nothing to see here.” That is nuts, not least because there is now further evidence that Mr Kopytov is closely linked to business in occupied Crimea, and that money from that Crimean business went into Mr Sheleg’s account in 2018. Worse than that, Mr Sheleg’s father-in-law is now closely connected commercially to Alexander Babakov, who has been sanctioned by countries all over the world.

It is not a good situation for any of us when we have to raise concerns of this kind in the House, not least because we in the House will make mistakes. During a debate on 17 January, for instance, I said that Yuriy Lopatynskyy had questions to answer. I am glad that he has now answered those questions, and has given me reassurances that he has never had links with the Russian intelligence services. I am glad to be able to accept those assurances, and to apologise to him for any distress caused. However, it is not a good situation when we do not have regulators, intelligence agencies and police services that are able to tackle this kind of dirty money.

Dmitry Leus, I am afraid, is another example. There is clear knowledge of his recruitment by the FSB, who got him out of prison. He has a criminal record in Russia., and according to intelligence sources that I have seen, he is

“absolutely dependent on the FSB”.

However, he is also a significant donor to the constituency of Esher and Walton, the home of—I am not quite sure what position he is in at the moment, but he was Deputy Prime Minister last time I looked. The donation that went to the Prince of Wales’s charity was returned, but the Conservative party has not returned its donation.

We are not in a good situation when we are having to discuss this kind of money coming into political parties, and I therefore hope that the future economic crime Bill will ensure that the only money that can come into a political party is from profits that have been created here, in this country.

Let me end by again thanking the hon. Member for Thirsk and Malton and my right hon. Friend the Member for Barking for initiating the debate.