Economic Crime and Corporate Transparency Bill

Liam Byrne Excerpts

Report stage
Wednesday 25th January 2023 Commons Chamber

[Tom Tugendhat]

My hon. Friend is absolutely right, but I note that some hon. Members cheering would also cheer the provisions of the European convention on human rights that guarantee the right to private property and many of the areas that cause the difficulties that the UK has and Canada does not.

I do not deny that there is an enormous question for debate here and that many hon. Members would like to move quickly to seizure on many areas, but sadly, that may take a bit longer. One thing on which we all agree is that the UK’s place as a rule-of-law jurisdiction and as a home for justice, not just to ourselves but to many others around the world, is essential to our prosperity and to liberties around the world. It is therefore important to ensure that we correctly transfer from forfeiture to seizure, and recognise the rights and limits that we should respect.

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

I salute the Minister’s leadership on much of this agenda when he was a brilliant Chair of the Foreign Affairs Committee. He will not, however, want to go down in history as the Minister for mañana. In his responses to the hon. Member for Huntingdon (Mr Djanogly), he has said that the timing is not right and we must wait for future Bills. Can he put our minds at rest and give us a sense of when we might expect a Bill to come forward to address the concerns of the hon. Member for Huntingdon?

[Tom Tugendhat]

The right hon. Gentleman is extremely kind about my former work and, typically, slightly less so about my current employ. He can be assured that, no doubt, it will be temporary, as it is for all occupants.

That matter has seized my attention and has been of some interest to me in further discussions in different areas. I will not put a time on it, because it is not my ministerial responsibility; the right hon. Gentleman will know from his time in Government that talking across other Ministers’ briefs does not always help to advance the case. I assure him, however, that it has come up frequently in conversation with an intent to bring something forward. As I said, the Lord Chancellor has spoken about it to highlight that it is an area where various elements of change are necessary, so I look forward to hearing the proposals as they come forward. I certainly do not think that the matter can wait. We have sadly seen SLAPPs used against such inspiring examples as Eliot Higgins and Catherine Belton, who have stood up for justice in this country and around the world.

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[Liam Byrne]

I am grateful to my hon. Friend for making such a brilliant speech. Among the greatest victims of economic crime right now are the people of Ukraine. One virtue of his own proposal and the amendment tabled by the hon. Member for Huntingdon (Mr Djanogly) is that they propose a shift not just to freezing assets, but to seizing assets and recycling them into the reconstruction of Ukraine. Surely we should legislate for that work now and crack on with it forthwith.

[Stephen Kinnock]

As always, I agree absolutely with my right hon. Friend’s views on the matter. That cannot be beyond the wit of this place or the Government. I know there are legal complications around property and international law, but those are not insuperable. We cannot allow them to be insuperable because, with every day that passes, the people of Ukraine are suffering, and the barbaric acts of Vladimir Putin and his regime are not being held to account in a way that would contribute to the massive reconstruction effort that will be required for Ukraine. It is absolutely right that the person guilty of the crime should pay for the crime and that has to be the fundamental basis of our approach. We need urgency on this in the G20, the G7, and the United Nations. We need Ministers to get a grip of this issue so that we can do justice and deliver for the people of Ukraine, which we must do with great urgency.

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[Stephen Kinnock]

No. This is based on a fund that is generated through fines and through accountability for those committing the crimes. It is along the lines of what I said about Ukraine: the people who commit the crime, rather than the victims, should be paying for the crime. How will we address that question now? If the Government think that the current system is absolutely fine and that there is justice and equity in the system, the Minister should come to the Dispatch Box and say that. However, if he thinks that there is a clear, principled and moral argument in favour of ensuring that the people who commit a crime should be made to pay for it, and that that should contribute to the compensation, we can have that conversation.

[Liam Byrne]

Is my hon. Friend scandalised as I am that at the moment only 40% of fines from economic criminals are recycled back into the business of tackling economic crime, whereas in the United States it is 100%?

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I strongly agree. There is no such thing in this sphere as a victimless crime. We are all the victims of this behaviour, whether we are investors, consumers or taxpayers. Everybody is diminished as a result of such behaviour. It damages and undermines the reputation of our country.

[Liam Byrne]

The right hon. and learned Member is making a brilliant speech, and the proposals he is stewarding are incredibly important. Did he hear the independent reviewer of terrorism legislation’s evidence to the Bill Committee, when he said very clearly that economic crime is a national security issue? That is exactly the argument the Minister for Security made when he was Chair of the Foreign Affairs Committee—[Interruption.] I am told he still makes that argument today. That underlines why the right hon. and learned Member’s proposals are so important, not least because we have become the country of choice for corporate structures set up to launder billions of illegal money.

[Sir Robert Buckland]

I am grateful to the right hon. Gentleman. Jonathan Hall, the independent reviewer of terrorism legislation, was absolutely right. Indeed, his evidence echoed the Government’s own statement in pursuance of the action plan. The action plan says that it covers criminal activity that

“poses a risk to the UK’s prosperity, national security and reputation.”

That is the point. The policy direction the Government have adopted in recent legislation—most notably in legislation to protect industry from takeovers from parts of the world that we regard as a potential threat to this country—increasingly includes economic security as part of the wider national security agenda, and that is absolutely right.

This debate is happening in the context of a world where the old order is changing and giving way to forces that we cannot control and that we should rightly be suspicious about. Therefore, although we want a vigorous, lively, free market economy in this country, we need to be ever more vigilant about ensuring that its boundaries are policed effectively. I will say more about the prosecution of these offences, because it is, shall we say, a vexed question, and there are right hon. and hon. Members here who have direct experience from their work of the evidential challenges that prosecutors face day in, day out.

I do not want the Government to adopt new criminal offences only to find that their use becomes sporadic or ineffective. However, the offences I propose help to further drive a culture of compliance and lawfulness where corporates behave responsibly. There are examples of previous legislation that we can point to that have driven that culture forward positively. I think of the Health and Safety at Work etc. Act 1974, which the Under-Secretary of State has used as an example, and he was absolutely right to do so. As a result of the passage of that legislation, we saw a dramatic drop in the number of industrial accidents. Why? Because employers were enjoined to take the issue damn seriously. If they did not, there would be liability at the end of it.

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[Sir Robert Buckland]

Well, I am trying to be the diplomat and the reasonable interlocutor here. My hon. Friend is playing the bad cop with the Minister, and I am trying to play the good cop. I know that the Minister will eventually yield to that persistent approach; I hope that it will be done in a way that is neither oppressive nor unreliable.

[Liam Byrne]

I am incredibly grateful to the right hon. and learned Gentleman for his generosity in giving way. We appear to have an overload of rumness here.

[Stephen Kinnock]

Gallons of rum.

[Liam Byrne]

Yes. It is unusual for unity to break out on both sides of the House and on the Front and Back Benches. Given that ubiquity of unity, what, in the right hon. and learned Gentleman’s analysis, is the problem that is preventing these proposals from becoming the law of the land?

[Sir Robert Buckland]

I think that there are two things: time and capacity. I do not criticise officials. I have never believed in doing so: it is a bad Minister who blames their officials, just as a bad workman blames his tools. Officials have a lot of work to do under immense pressure, and obviously they want to get it right. I want to get it right, too—we all do—but the Bill might be our last chance to do so in this Parliament. My goodness me, if we cannot get it right here, the Government are really going to have to get it right in the other place.

Let me deal further with the identification doctrine. Opposition new clause 40, which is very well worded, alludes to the US concept of respondeat superior. In effect, it is a wrap-all approach to vicarious liability that captures the acts or omissions of even very junior members of a corporate, which can lead to that corporate being liable. In some ways that has proved advantageous to prosecutors in the US: they have been able to identify more junior officials in corporates and, in effect, get them to co-operate with the authorities, which has opened up evidence that might not otherwise have been available.

The Law Commission looked at that approach. It also looked at what I might call the corporate culture approach in Australian Commonwealth law, and at Canadian legislation on the acts and mental states of senior managers. The Law Commission said—rightly, I think—that neither the US approach nor the Australian approach would be right for our jurisdiction.

The wording of my new clause 5 reflects the Law Commission’s recommendations in two ways. First, as the Law Commission’s report sets out, it would allow conduct to be

“attributed to a corporation if a member of its senior management engaged in, consented to or connived in the offence.”

Senior management is defined as

“any person who plays a significant role in the making of decisions about how the whole or a substantial part of the organisation’s activities are to be managed or organised, or the actual managing or organising of the whole or a substantial part of those activities.”

We have taken the Canadian approach.

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[Madam Deputy Speaker (Dame Rosie Winterton)]

I have now to announce the result of today’s deferred Divisions.

On the draft Environmental Targets (Biodiversity) (England) Regulations 2022, the Ayes were 302 and the Noes were 166, so the Ayes have it.

On the draft Environmental Targets (Woodland and Trees Outside Woodland) (England) Regulations 2022, the Ayes were 302, the Noes were 166, so the Ayes have it.

On the draft Environmental Targets (Water) (England) Regulations 2022, the Ayes were 300, the Noes were 170, so the Ayes have it.

On the draft Environmental Targets (Fine Particulate Matter) (England) Regulations 2022, the Ayes were 301 and the Noes were 170, so the Ayes have it.

On the draft Environmental Targets (Residual Waste) (England) Regulations 2022, the Ayes were 301 and the Noes were 170, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

[Liam Byrne]

It is a pleasure to speak to new clauses 1 and 2 in my name and those of many others, and it is a pleasure to follow so many excellent contributions to the debate. I hope it has become clear that there is a wide and deep cross-party consensus about the need to take this overdue Bill and repower it with not only good laws but proper resourcing so that we can begin to ensure that economic criminals in this country are put under rather more pressure.

A lot is in a name, and the Bill’s name is the Economic Crime and Corporate Transparency Bill. As the hon. Member for Cheadle (Mary Robinson) pointed out, what is crucial to ensuring the corporate transparency we need to police economic crime is information. Much of that information comes from whistleblowers and, crucially, from courageous journalists who are prepared to take tremendous risks and go to tremendous lengths to pursue the truth, publish the truth and hold the guilty to account.

The challenge we have is that we know we cannot police economic crime without such transparency, but that old advice to journalists to follow the money in pursuit of the truth is becoming almost impossible because our courts—English courts, London courts, which were sanctuaries for justice for 1,000 years—are becoming the strike point of choice for oligarchs around the world to intimidate, to cow and to deter journalists from publishing the truth with the threat of sky-high legal costs. My friend the right hon. Member for Haltemprice and Howden (Mr Davis), who is not in his place, and I, together with the hon. Member for Isle of Wight (Bob Seely), have been pushing this argument for almost a year. Yesterday, the hon. Member for Isle of Wight presented to the House a first-class private Member’s Bill, which I was proud to sign. I commend the Minister for the work that he did when he was Chair of the Foreign Affairs Committee on ensuring that the cancer of strategic legal action against public participants is something that we know about and are collectively determined to act on.

Within the sub judice rules and exemptions that govern the debate, I can talk about some of the evidence that we now have on the record. There are now so many cases that it has become clear that there is a playbook for oligarchs. It is a playbook that all of them know and all of them follow. It is a playbook that is now predictable, and it is a playbook that we must draw to a close. We could draw it to a close this afternoon by agreeing to the amendments that we have tabled with cross-party support.

The first step in the playbook is to target the individual. Do not target the company, because companies are strong and individuals are weak. That is exactly why Arron Banks went for Carole Cadwalladr. He did not want to go for The Guardian or the Scott Trust; he wanted to go for an individual journalist. That is exactly why Prigozhin, as we now learn, decided to target Eliot Higgins and not Bellingcat, because of course an individual is always more vulnerable than a corporate organisation. In most of these cases, we see an oligarch taking aim fair and square at an individual and not the corporate organisation behind them to maximise the power of intimidation.

Secondly, having identified the individual, the task is to maximise the intimidation. Let us look at what Tom Burgis had to go through when he was writing his book about the Eurasian Natural Resources Corporation. The bad guys whom he was trying to expose actually went to the lengths of tapping his phone and bugging him. They must have done—that was the only way in which their investigators could turn up to a secret meeting that he was having with former Government officials in a car park. Those are the lengths that these people will go to.

Thirdly, there is the business of exaggerating the claims: taking some aside in a bit of written material and exaggerating it ridiculously to try to multiply legal costs. We saw that in particular with Mr Abramovich in his case against Catherine Belton and HarperCollins. It was a ridiculously exaggerated claim. Of course, the objective for Mr Abramovich was not to win his case. All he sought to do was maximise the legal costs for HarperCollins and Catherine Belton.

We see that now in a case in the Royal Courts of Justice, which I will not name but which I sat through a couple of weeks ago. That case is so thin. It entails an oligarch basically trying to claim that a number of emails that have been sent are in effect tantamount to a publication. Even though he is unable to name and specify the harm that has been done, he is seeking to bring a case for defamation. It is the flimsiest of cases anyone could imagine, yet hundreds of thousands of pounds have now been racked up in legal costs in an attempt to intimidate someone out of telling the truth.

Step four is to co-ordinate with others, which we saw in particular with Mr Abramovich, who decided to round up a number of his old mates to try to bring some kind of collective action—not just in this country, by the way, but in other countries such as Australia. That was a way to double the legal costs and maximise the pain against Catherine Belton and HarperCollins.

Then we have the attempts to rack up costs even though the grounds may be as flimsy as anything. Forensic News, for example, is being sued by Walter Soriano. Forensic News has a total of 12 subscribers in this country, yet Walter Soriano has been allowed to prosecute the case because of those 12 subscribers. Why could he possibly be doing that? Is it, as the right hon. Member for Haltemprice and Howden described, because our legal costs are so high that the pain can be maximised by bringing a case here?

We see the same in the case referred to by my right hon. Friend the Member for Barking (Dame Margaret Hodge) of the former rulers of Kazakhstan, who have brought a SLAPPs case against the Bureau of Investigative Journalism and openDemocracy. That was because openDemocracy had the temerity to expose the $8 billion siphoned off through Jusan Technologies, which is somehow now claiming that its economic interests in the UK have been damaged and therefore it is entitled to bring a case in the Royal Courts of Justice. As a result, openDemocracy and the Bureau of Investigative Journalism are forking out thousands of pounds to defend themselves against this onslaught.

The situation we now have in this country is so appalling that, as we heard in the urgent question this afternoon, we have the spectacle of a Russian warlord being licensed by His Majesty’s Treasury to fly his lawyers to London to polish a case to sue an English journalist in an English court in order to undermine the sanctions this country has imposed on him. That is how ridiculous, corroded and broken our system has become. An exemption was licensed by a servant of the Crown to spend thousands of pounds flying lawyers to service the needs of the head of the Wagner Group in St Petersburg and to refine a lawfare case in an English court.

[Layla Moran]

The right hon. Member is making his point powerfully. Does he not agree that they are laughing at us, surely? We impose sanctions, yet this still happens. We are talking about the head of the Wagner Group—a group that is operational in many countries across the world. Are we seriously meant to believe that he had no access to money in any other jurisdiction anywhere else in the world—that he had to access his British pounds in order to instruct lawyers to do exactly as the right hon. Member has described? The whole thing is farcical, is it not?

[Liam Byrne]

The hon. Lady is absolutely right. Here we are, licensing a warlord to draw down funds and move them into the NatWest bank account of a London law firm to prosecute a case that undermines the sanctions we imposed on that warlord in the first place.

Let us briefly go through the timeline of the case because it is so important and illustrative of just how broken the system has become.

[Clive Efford (Eltham) (Lab)]

I commend my right hon. Friend for the work he has done consistently over a long period on this issue. It is important to highlight the scale of the problem in London. Is it not true that there are more SLAPP cases being taken in the London courts than there are in Europe and America put together? Does that not illustrate the scale of the problem and the urgency with which we need to deal with it?

[Liam Byrne]

My hon. Friend is absolutely right. I said earlier that London is now the preferred strike point for oligarchs in intimidating journalists. When the Foreign Policy Centre, whose work I must commend, surveyed investigative journalists, it found that three quarters of them had suffered some kind of legal attack to silence them. The UK legal system accounted for more of those legal actions than the United States and Europe put together. That is how bad this has now become. That is how rotten our system has now become. That is why it is so outrageous that the head of the Wagner Group was given the licences. Let us be clear about this guy. This is someone who has been running mercenary operations in Sudan, Mozambique, Syria, Central African Republic, Libya and Mali—and, of course, his forces have now been redeployed to the theatres in Ukraine.

It was in August 2020 that Eliot Higgins and Bellingcat began running a series of stories that exposed the barbarities of the Wagner Group in Africa, including offences such as the murder of CNN journalists. It took the British Government and the Foreign Office until 31 December 2020 to put sanctions on Prigozhin, even though, by the way, he had been sanctioned much earlier in the Unites States for the quiet sin of running troll farms intervening in the American presidential campaign. None the less, we got around to it at the back end of 2020. In the citation for sanctions, the Foreign, Commonwealth and Development Office wrote that Prigozhin was providing

“a deniable military capability for the Russian state”.

That feels quite a big sin to me, running a deniable military capability for the Russian state. That sounds like a pretty good reason for sanctions. That sounds like a pretty good reason for not offering carve-outs to sanctions to undermine them in British courts.

When Mr Prigozhin found out about the sanctions he was not very happy, so he sought to undermine them by suing Bellingcat, or Eliot Higgins in an English court. He had a choice and in fact a debate: “Do we do it in a Russian court, a Dutch court or an English court?” The conclusion was to go for Eliot Higgins in an English court. To prosecute the case, he had to fly the lawyers out to St Petersburg, so the Treasury licensed £4,788.04 to help make that happen: over £3,500 for business class flights, £320 for accommodation at the Grand Hotel Europe Belmond, £150 for subsistence—that’ll buy a pretty good dinner—£200 for PCR testing and £400 for express visas. That is what servants of the Crown, under the supervision of Ministers of the Crown, signed off.

The discussions went a bit like this. “What are the objectives here, Mr Prigozhin? Well, we think that, rather than seeking damages, what we really need is to get Mr Higgins for defamation because that is how we undermine all those irritating articles” that led to the sanctions against Mr Prigozhin. Literally, we enabled the enablers. We enabled the cash flow of a Russian warlord to prosecute an English journalist in an English court. And that is why we have to act. No one in this House today thinks that this is okay. The Minister for Security does not think that it is okay. All of us here think it has to stop, but if it is to stop, we have to take aim at the original sin: the fact that it is courts in this country that are being used by oligarchs around the world to silence journalists.

Our new clause, which has drawn cross-party support today, is very simple. It would not stop all strategic legal actions against public participants, but it would stop anybody attempting to silence journalists who are trying to reveal economic crimes. It is within scope; I am grateful to the Clerks for their work helping to refine it and make it good. I know that the Minister will say, as he said in Committee, that this is not the right Bill for it, or that it would not solve all the problems, but that is an argument for making the perfect the enemy of the good.

We have heard the Lord Chancellor talking about his ambition to change the law, but we have also heard that he seeks to do so through the Bill of Rights. The dogs in the street know that the Bill of Rights Bill is dead. It is not coming back to this House any time soon, yet today—this week, next week, next month—journalists and indeed ex-Members of this House are in court, having to pay legal bills because we allow oligarchs to abuse our courts. Let us at least make progress now.

I say to the Minister: please do not be the Minister for mañana. Please be the Minister who did not make the perfect the enemy of the good. Please be the Minister who seeks to do what he can with what we have, where we are, today. We could use this Bill to make progress. Why do we not seize that opportunity with both hands?

I am very grateful for the concerted campaign by Members across this House. I will end by saluting the courage, fortitude and determination of so many good journalists in this country. Oliver Bullough, who wrote the brilliant books “Moneyland” and “Butler to the World”, makes an excellent argument in his openDemocracy article today. He says that journalists going into the business of tackling economic crime have an uphill struggle as it is, with a lot of barriers in their way. They have a pretty difficult job, and the knowledge that the British Government are on the side of the bad guys does not make that job any easier. It is time that we put the force of the state and the force of the Crown behind the good guys for once—and that means agreeing to our new clause today.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

It is a great pleasure to follow my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne). I applaud his commitment and thoroughness in the work that he has done.

I rise to support new clauses 1, 2, 4, 5, 6, 7 and 21. Economic crime is usually committed in the shadows, yet its impact is as clear as day: there are the American candy stores down Oxford Street, there are thousands of empty flats in London and—closer to my home—in Liverpool and Manchester, and we know how dirty money laundered here has financed the Russian invasion of Ukraine.

The crimes that the Bill aims to prevent are so often shrouded in secrecy. The Bill is necessary, as we can all agree, but the Government need to do it right. They need to accommodate sensible amendments—notably those investigated and researched by groups such as the all-party parliamentary group on anti-corruption and responsible tax, which my right hon. Friend the Member for Barking (Dame Margaret Hodge) has led tirelessly. Indeed, the Minister—the hon. Member for Thirsk and Malton (Kevin Hollinrake)—co-signed the manifesto on which many of today’s amendments are based, so I would expect him to support them. I urge him to do so.

New clauses 1 and 2 are crucial to getting a grip on the London laundromat. Journalists are the fourth estate in our society. They investigate and shed light on the secrecy that surrounds economic crime, yet only this week it was reported that journalist Eliot Higgins was hounded by a British law firm that was given permission by the Government to work on behalf of the murderous and barbaric Wagner Group. My right hon. Friend the Member for Birmingham, Hodge Hill has clearly outlined what has come out today and what he has been researching.

Wealthy oligarchs cannot be allowed to use English courts to threaten journalists with huge legal costs. If these wealthy individuals are able to abuse their wealth and power, no light will be shed on the secret world of economic crime.