Economic Crime and Corporate Transparency Bill

Liam Byrne Excerpts

Report stage
Tuesday 24th January 2023 Commons Chamber

[Kevin Hollinrake]

I think it would be wrong to make any representations on any particular case, but seeking to enable somebody to avoid sanctions is entirely unacceptable, clearly. I am sure that those allegations will be looked into very carefully. We should definitely make sure that those are properly reviewed before we come to any firm conclusions, but in essence I agree with the principle behind the hon. Member’s statement.

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

Will the Minister give way?

[Kevin Hollinrake]

I will make a little progress, if I may. I appreciate that there are a large number of Government amendments, hence the need to make some progress. I would like to reassure the House that they are intended to ensure that the measures in the Bill will work as intended, and in most cases they reflect issues raised in Committee.

I will briefly summarise our amendments relating to parts 1 to 3 of the Bill. First, and importantly, our new clause 15 requires the Government to publish an annual report on the implementation and operation of parts 1 to 3, which includes reforms to Companies House.

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[Liam Byrne]

Let me echo the wide welcome that the Minister has received at the Dispatch Box. Has he had a chance to reflect on how the report that parliamentarians need actually stretches beyond the compass of Companies House to the business of tackling economic crime more generally? After this morning’s revelations, for example, it was said that a junior official in the Office of Financial Sanctions Implementation was the individual who signed off the new flexibility for one of Putin’s warmongers to fly over London lawyers in an attempt to silence English journalists in English courts. That is surely a matter of concern to the Minister and to all parliamentarians, and that is the kind of issue that could be surfaced in a more wide-ranging and forensic report, if he were able to publish it.

[Kevin Hollinrake]

Again, I think it would be wrong to comment on individual cases, but I take the right hon. Member’s point. In general terms, the UK sanctions regulations permit the OFSI to license reasonable legal fees. That is clearly something on which officials make decisions, rather than Ministers—I think it is important to say that—and the merits of any case are for the appropriate court to judge. However, he has certainly campaigned extensively for making sure that people cannot close down the raising of understandable concerns. In essence, I absolutely support that and the work on SLAPPs—strategic lawsuits against public participation—to which my hon. Friend the Member for Isle of Wight (Bob Seely) referred in introducing his ten-minute rule Bill earlier. So that is work in progress, rather than anything that relates specifically to this legislation.

We are taking a power to expand the registrar’s data-sharing ability. That will future-proof the legislation and provide scope to expand the data-sharing gateway, if needed. We are also strengthening the range of sanctions for non-compliance with the register of overseas entities. Our new clause 8 will mean that a director can be disqualified if they breach an obligation under part 1 of the Economic Crime (Transparency and Enforcement) Act 2022, ensuring a consistent approach to tackling non-compliance between that Act and the Companies Act 2006. Following discussions in Committee, we are also removing the power to exempt certain individuals from identity verification requirements, having concluded that it is not essential.

As well as those important amendments, we are making improvements to the limited partnership reforms. We will ensure that a limited partnership’s dissolution and deregistration is transparent and properly drawn to the attention of the public. There will be a legal requirement for these to be published on the Companies House website as well as in the Gazette. Again, this was discussed by Opposition Members in Committee.

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[Seema Malhotra]

My hon. Friend is absolutely right. The amendment would do two things. It would change the culture of how Parliament operates and plays a role in tackling economic crime. It would also shift the culture based on our expectations of business, how business should behave and how directors should be held to account, as well as shift the culture in Companies House and the work of the registrar. For all those reasons, it is an important area for development.

[Liam Byrne]

rose—

[Seema Malhotra]

Before returning to our new clause 16, I will briefly take an intervention from my right hon. Friend.

[Liam Byrne]

My hon. Friend is making a brilliant speech. Does she agree that it is vital that we have a much more wide-ranging report on the nature of economic crime? We know that 10 different agencies are responsible for policing economic crime, and we learned in Committee that the Bill’s provisions would not have stopped an individual such as Alisher Usmanov from buying a multimillion-pound London mansion only to be sanctioned a little later on. These are exactly the crimes that need to be brought to the House’s attention so that we can keep economic crime legislation up to date and not have to wait for 170-year cycles before we make substantial reform.

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[Alison Thewliss]

Yes. I have remarked in Committee, as the Minister will well remember, on the number of occasions when he agrees with himself, but not as a Minister. It is a curious situation and I will return to that when we get to the part of the Bill with which he is most associated.

As the Minister said, and as we all acknowledge, there is a lot here that we can agree on. It is unfortunate that more of the amendments have not been taken on board, because gaps remain in the Bill. We are all concerned that there will not be another opportunity to look at these issues again in this detail; unfortunately, parliamentary time does not work like that, so getting it right this time is important. We could get it right today or tomorrow, or if the Lords come forward with some useful amendments—as little as I like to give credit to the unelected peers along the hall, if amendments are tabled there, I would encourage the Government to accept them and make sure that they are acknowledged.

SNP Members have tabled a number of amendments, where we seek to create a unique identifier for directors; to put a limit on the number of directorships an individual can hold; to prevent directors in breach of their duties from taking public funds; and to prevent the practice of phoenixing, which causes so much harm to many of our constituents. It is not often talked about in the same bracket as economic crime generally, but phoenixing causes huge distress. My hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) will certainly return to this point in his remarks later.

Government new clause 8, on persistent breaches of companies legislation and the disqualification of company directors, is very important, because we have seen numerous reports in the press of people who repeatedly breach the law. There are huge issues of enforcement, and I intend to address those too. The Bill should include consequences for people who breach the rules.

I wonder what the House and the Minister think about a compliance case raised earlier today by Tortoise. It mentioned Balshore Investments Ltd Gibraltar, which in 2017 listed itself at Companies House as a person of significant control of a different company, Crowd2Fund. Its name was then removed in 2020, and that removal was backdated to 2016. In 2022 two directors, named on the register as Nadjat Al Zahawi and Hareth Nadhim Al Zahawi, were named as PSCs of Crowd2Fund.

Graham Barrow has told Tortoise that the retrospective changing of directors means that Balshore’s filings

“leave a huge gap of six years when, despite Balshore owning 40 per cent of Crowd2Fund, no declaration of the underlying owners of Balshore has been made, as required by UK law”.

This is a very interesting and topical case. I wonder what the consequences might be for, and what might befall, those who fail to comply with company law in this way under the new legislation.

Government new clause 15 is important in ensuring that this House is accountable on the measures within the Bill. I think that is fine as far as it goes, but Labour’s new clause 16 would go much further. It is important that the Minister looks at these measures and asks, “What does the House need to know?” Yes, there will be reports, but there is a good deal more detail in new clause 16, and I think it is important to look at that and think, “Actually, this is what the House might find useful and interesting to look at as regards the effectiveness of the Bill.”

[Liam Byrne]

Does the hon. Member agree that waivers for warlords is exactly the kind of information that the House would be interested in, to understand how effectively we are prosecuting economic crime and how well our sanctions are actually biting?

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[Liam Byrne]

Does my right hon. Friend agree that if the Minister does not agree with new clause 20, he is in effect asking for powers without giving the House any confidence that we can actually summon the resources to implement those powers if we so grant them?

[Dame Margaret Hodge]

Absolutely. The Minister always assures us that he will be on top of it, but he will not be there forever, much as he might like to be. We therefore have to embed these issues in legislation, otherwise we will never to the position where funding for the enforcement of economic crime will be a priority for a Government of any colour. That is why setting it here is really important. I have to say to the Minister that I just do not believe that the figures are not around. I think that by this stage in the cycle, he will have figures that demonstrate how much is required. If we have more duties, it may go up. That is not a bad thing, because if it goes up it means we will be more effective at policing the system, and therefore preventing and detecting.

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I fear that I have already taken up too much of the House’s time, so I will end there.

[Liam Byrne]

I wholeheartedly agree with the content, sentiment, analysis and explanation that the hon. Member for Barrow and Furness (Simon Fell) gave the House. Like him, and like my right hon. Friend the Member for Barking (Dame Margaret Hodge), I very much welcome the Bill coming to the House and to its Report stage. The Bill is overdue, but it is also underpowered. It is therefore open to improvement, which is why I hope the Minister will be listening so carefully to the debate on these amendments.