Illicit Finance: War in Ukraine

Liam Byrne Excerpts

Thursday 13th July 2023 Commons Chamber

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

My gratitude goes to the Chair of the Liaison Committee, the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), and the Chair of the Backbench Business Committee, my hon. Friend the Member for Gateshead (Ian Mearns), for tabling the debate. My gratitude for this timing is matched only by my sadness that members of the Foreign Affairs Committee are travelling in Africa at the moment, in pursuit of their inquiry into counter-terrorism, and so the House will have to put up with me. I am not speaking on behalf of the Committee, but I am at least sharing the Committee’s analysis of what the Government have got right and where they have further to go—in some cases, much further.

I associate myself with the support for the motion expressed so eloquently by the hon. Member for Harwich and North Essex. The motion is well drafted and deserves the support of the whole House. I want to complement his excellent speech by sharing some analysis of the report by the Foreign Affairs Committee at the centre of the motion.

The truth is that many Members of the House—I can see some of them in the Chamber—have been warning about the need to re-contain Russia since President Putin’s speech to the Munich Security Council back in 2012. Threats always evolve, and today they are evolving faster than ever. There are new spectres abroad, but the most dangerous of those spectres is Russia.

At the core of the debate is an argument about how we defend our freedom, by reinventing our security for new times. Because Russia is the principal of those spectres, it is right that we spend most of our time today discussing how we re-contain Russia. In truth, it is about not simply supporting Ukraine in its fight, but understanding the new theatres of violence where Russia is on the march. As I hope we will see in the defence Command Paper next week, they will require us, as a country, to re-enforce our defences in the Arctic and our alliances in central Asia, and, crucially, transform our presence in Africa, where the Wagner Group is still a threat in some 14 to 15 countries, where it has extracted at least a quarter of a billion pounds to cashflow the wars of President Putin.

That takes us to the core of the argument set out in the Foreign Affairs Committee report. The threats that we have to confront now are not simply places on a map, but domains; they are the political, cyber and, crucially, economic worlds. We have to recognise that the way we will be attacked will not simply be by states, but by states acting together with others.

Those proxy forces will be more dangerous, in many ways. Sometimes it will be organisations such as the Islamic Revolutionary Guard Corps, acting in concert with the Government of Iran, but at other times it will be private military companies, such as the Wagner Group. Increasingly, these nexus threats will couple with organised crime groups and together they will exploit our vulnerabilities in the economic crime space, to generate the millions needed to cashflow violence. That is why the Foreign Affairs Committee, under the leadership of the then Chair, the right hon. Member for Tonbridge and Malling (Tom Tugendhat), who is now the Minister for Security, spent so much time over the past couple of years looking at the question of illicit finance.

Russia is at the centre of the debate because we have to learn the simple truth that we have to re-contain Russia. When we look at Russian history, we see one clear lesson: Russia is constantly in the business of invading its neighbours. We have to remember the throttling of Berlin in 1948 and the invasions of Hungary, Czechoslovakia, Afghanistan, Georgia, Moldova and Ukraine. We in this House have to learn the lesson that a mainstay—a cornerstone—of our security policy has to be a strategy for re-containing Russia. We cannot change the geography of Russia, but we can and must end Russia’s ceaseless choreography of war.

With Sweden’s admission to NATO, along with Finland, we have now rebuilt NATO’s eastern flank. That task will not be complete, as the Chair of the Liaison Committee said, until Ukraine, and I hope one day Georgia, join NATO. But we have to recognise that there is an awful lot more that we need to do to close down the domains of politics, cyber and economy.

The Foreign Affairs Committee report focuses on the economic world. Frankly, it is a shame that it took the invasion of Ukraine to prompt the Government to get serious about bringing forward the Economic Crime and Corporate Transparency Bill, which is currently in the other House. At least the Government have made progress. I hope that we can build on what I hope is an emerging consensus in the other place about some of the reforms that will be needed. Together, we have to ensure that we have shut down Londongrad for good. For many years, our country has not simply been a target, but a crime scene. We have been the place where hundreds of billions of roubles, stolen from the Russian people, have been laundered and, in many cases, recycled into Putin’s ceaseless war of violence.

In the Foreign Affairs Committee’s report, we set out four basic sets of reforms needed in the fields of prevention, intelligence, enforcement and prosecution. In the realm of prevention, it is obviously vital that we impose upon directors some much tougher obligations and finally ensure that Companies House becomes a regulator, not a library where accounts are filed to gather dust.

Not many of us will remember this, but when this House decided to create limited liability laws, back in 1851, the Prime Minister of the day, Viscount Palmerston, confronted quite a contentious debate and a divided House. At one point he had to threaten the House with sitting right the way through to the summer in order to get the legislation on the books. Limited liability partnerships are not found in nature; they are the creation of us as legislators and create significant privileges for those who want to come together and form a company. Viscount Palmerston said that it would allow Britain’s army of small savers to combine their small pots together to create great firms of the future

“for the advantage of the community as a whole.”

He told the Commons:

“There is nothing that would more tend to the general advantage of the public.”—[Official Report, 26 July 1855; Vol. 139, c. 1390.]

Yet today many are exploiting the licence to create companies, to create firms, that subvert the common good. We should stop them. That is why our Committee underlined the imperative of building a stronger Companies House and creating stronger obligations on directors, their proxies and their enablers. The Economic Crime and Corporate Transparency Bill does offer some progress, but it could be stronger. Crucially, we need to create a duty on the registrar to verify information, not simply provide a power that enables the registrar to do something. We need to toughen the obligations of corporate criminal liability. In fact, the report cited in the motion says that

“reform of outdated and ineffective corporate criminal liability laws which mean that it is difficult to hold large companies to account for economic crimes”—

should be reformed.

On this front, the Government commissioned a report from the Law Commission some years ago. The options for change have been on the table since the summer of last year. I gently say to Ministers that it is time to move forward on those options.

It is not simply directors who need stronger obligations; enablers do, too. That is why our report advised the Government to study the lessons from, for example, the enablers Bill from the United States Congress and the Countering America’s Adversaries Through Sanctions Act. These contain protections that should be aligned with UK law. The Economic Crime and Corporate Transparency Bill makes it easier for the Law Society to impose penalties on bad lawyers, but far more important are Lord Agnew’s amendments to the Bill, which were passed in the other place. I hope the Minister can confirm that the Government will not resist those amendments when that Bill comes to us in the next week or two. These require nominees to declare who they are working for. That will help us to identify who the persons of significant control are. It introduces an offence for nominees who do not declare themselves. That is a recommendation of the Financial Action Task Force, and the investigations by both the BBC and The Times have underlined just why we need it. They found that Viktor Fedotov, a Russian-born oil executive accused of £143 million-worth of contracting fraud in Russia, owns two properties in the UK via offshore trust structures, administered by the wealth management firm JCC. But owing to the nominee loophole, Mr Fedotov is not named as the beneficial owner of the corporate trustees that hold property in his name. That is the kind of loophole that made Londongrad possible. We should close it and we should close it together.

The other place has also supplied amendments that close exemptions for trusts, which would stop trusts in the Register of Overseas Entities being used as an opaque vehicle for illicit finance. The other place has also introduced amendments creating sanctions for directors failing to prevent money laundering. It has also closed the loophole that allows small and medium-sized enterprises to escape these sorts of obligations. The amendments are sensible. They are supported by both sides of the House. I hope the Minister, when she winds up, will be able to confirm that the Government will not seek to oppose those amendments.

Secondly, our Committee reflected on the kind of intelligence that we will need to track down bad people who finance Putin’s regime. We thought it was therefore essential that the Government now fulfil their commitment to publish their review of the tier 1 golden visa scheme. That has been promised repeatedly and it is time that we saw it on the table here in the House. Crucially, our Committee was unanimous that better protection was needed for journalists under a revised and comprehensive anti-SLAPP set of laws, but also new protections with a whistleblowing Bill. We asked the Foreign, Commonwealth and Development Office to push for a whistleblowing Bill to offer protection for those who speak out or uncover economic crimes. As yet, we have had no plans from the Government to fulfil that recommendation.

The third area, which is possibly the most significant, is the enforcement gap. We know that this is a problem. Organisations such as the Atlantic Council have been so concerned that they have warned that the UK’s effort to tackle kleptocracy is

“in severe danger of being shown as a paper tiger”.

Obviously, the key is to increase funding for law enforcement. The Government have promised £400 million to fund a three-year programme, but economic crime costs this country £350 billion. In 2019, the head of the National Crime Agency said that the budget needed for the NCA was closer to £3 billion. The Royal United Services Institute says that annual investment of at least a quarter of a billion pounds is needed. We could raise that money if only we took on the argument of setting, say, a £100 fee for setting up new companies, which is, of course, the fee level recommended by the Treasury Committee. That is double what His Majesty’s Government are currently proposing. We need stronger proposals from Ministers to plug the gap where our credibility should be.

Finally, enforcement will mean little if we cannot prosecute the criminals once we find them. That is why we welcomed the sanctions that have been passed by His Majesty’s Government, but, like many people in this House—I suspect that the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) will pursue this point—we are also clear on our Committee that assets should be seized, not simply frozen. We know that it will take some international action at the United Nations to change the norms in international law around immunity for organisations such as central banks. It is also important that we move ahead with the prosecution of Russia for aggression, so that it cannot claim in some way that it is a victim under the terms of the European convention. But, again, what most of us in this House want to see is a Bill on that table that shows how we will seize assets, not simply freeze them.

Important measures have been brought forward in the other place, too. The Economic Crime and Corporate Transparency Bill would widely extend cost caps beyond simply unexplained wealth orders. Again, it is extremely important that Ministers accept rather than reject those measures. But, taken together, we have now taken, through the work of many people on both sides of the House, some serious measures that will shut down Londongrad, and that will learn the lessons from the way in which Putin was able to cash-flow his violence through exploiting his friends in the City of London and elsewhere. We must accept that, even when Ukraine is triumphant, the Russian threat will simply transform itself once again. That is why we must ensure that our economic system, which we have worked so hard to create, is disrupted and denied to those who wish us ill.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I am grateful to be called to speak in this debate. I congratulate my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) on securing this debate and on having spoken so clearly and passionately.

It is always a pleasure to follow the right hon. Member for Birmingham, Hodge Hill (Liam Byrne). As he knows, we have been following each other for some time over the past few years—actually I wish to rephrase that; this is not a stalking issue, but it could be seen to be something similar to that in a political context. It is good to follow him on this particular subject because he speaks a lot of common sense. I wish to go back to the last section of his remarks, which deal with seizure and the debate that is going on about that.

First, though, in response to the opening remarks of my hon. Friend the Member for Harwich and North Essex, it is hugely welcome that NATO membership has now expanded on the northern frontier. That is very important. It sends a strong message to Russia. Russian aggression has always been there below the surface. Sometimes it boiled over into remarks, but we always ignored it. The tendency of democracies and believers in freedom, freedom of speech and human rights is, sadly, too often to deal with countries on the basis of how they wish they were, rather than on the basis of what they are telling us what they are and what they will do. It happened in the 1930s. We ignored the nature of “Mein Kampf” and Hitler’s clear objectives, which he laid out endlessly. We kept saying that only one more step would satisfy that dictator and that he would be fine; it would not be a problem. But in fact, the more we gave him, the more he determined on and we ended up in a war. Appeasement did not work. It does not work here. And 60 million people died directly as a result of our failure to understand that, when dictators tell us what they are about to do, it is always good to recognise that they are actually sending us a signal, not wishing for something else.

That has happened here with Russia. Russia made it very clear what it was going to do, right the way from South Ossetia to the invasion of Crimea and the Donbas. These were very clear first steps in telling us that Greater Russia was on the move and was an objective of Putin, not just an idea. On the Minsk agreements, I remember sitting in Cabinet on this. I am not saying I was ahead of anyone else, but I remember saying, “How many of us here are really worried about the fact that there is an agreement now granting the right for Russia to sit on territory that it has invaded and occupied?” Everybody shrugged slightly and said, “Well, there’s not much we can do about it.” That, of course, was the signal to Putin that we were not prepared to stand up. That first phase only established for him the entirety of his project and its feasibility, and then there was the constant supply of weapons and the terrible shooting down of the airliner. Those were all constant steps, telling us the direction and that he was testing us. Every time he tested us, he succeeded: we backed down and did nothing. The result has been this final full invasion—or attempted invasion—of Ukraine.

In that context, I am slightly sorry that NATO was not able to send Ukraine a stronger signal about its future with regards to NATO. I agree with my hon. Friend the Member for Harwich and North Essex in that I applaud much of what the NATO-Ukraine Council did and think it is an excellent start, but I think we could have been more positive. America and Germany particularly stood in the way of the general mood of the council to offer more to Ukraine. I know that we probably could not have brought Ukraine in immediately, but everyone harped on about article 5 being the problem because it committed people to go to war. It does no such thing, by the way; it is always worth reading these things before pronouncing on them. Article 5 does not commit the nations in NATO to go directly to war. It commits them to agree together to take action as they deem “necessary”. Simply put, it is quite important that it is not an absolute: the declaration of a war against one is a war against all is then followed by actions as deemed necessary in nations. That means that, by and large, we will probably come together and do that, but it does not mean that we would have to be at war in Ukraine. We could have offered that relationship, and reading the article tells me that that is the case.

I commend the leadership of my right hon. Friend the Prime Minister in all this, as I commend the UK’s leadership. The beauty is that the Government and Prime Ministers have led the way on the issue in so many ways, as my hon. Friend the Member for Harwich and North Essex mentioned. The good news, of course, is that this House has not been divided on any of it. The House has sent a strong signal that Parliament stands by those in Ukraine and by the Government’s actions in trying to support them. That is very important because it is not always the case; in America, it is not necessarily the case at the moment. This Parliament has stood head and shoulders among most others, and it is because of that that we have been able to lead in terms of equipment, support, and recommendations with regards to NATO. The UK is influential in these matters and long may it remain so.

I return to the question raised by the right hon. Member for Birmingham, Hodge Hill: how do we deal with Ukraine’s aftermath? Right now, there is a debate taking place about frozen assets. We have frozen the private assets of some oligarchs and we have frozen the Russian national Government’s assets here in the UK, in America, in Canada and in various other nations through their markets. It is quite an interesting debate, though. We can certainly seize private assets, although even that has been debated—but it is quite clear that under international law it is wholly feasible for us to do so—but the real debate begins when it comes to very extensive Russian national assets that are now just sitting there. How can we deal with those? It is not the case that doing this immediately opens the door to the Chinese and others to seize our assets should they wish to. There are a number of arguments, which I will quickly run through.

There are a number of routes around the problem of sovereign immunity in relation to claims against Russia for its conduct in the war and an attempt to obtain access to those assets. Customary international law permits the imposition of sanctions and restraint of assets in furtherance of international peace and security and legitimate foreign policy objectives. That means that, if asset-freezing measures are failing to achieve those aims, it would seem—this is important—very permissible in principle for measures of seizure to be adopted as a necessary and proportionate next step. They are not ruled out; they are by a natural extension. We must view international law as a movable process that is not set in stone. It has always been capable to shift international law by what nations agree. This is an important, feasible point. States are obliged under international law to take all necessary and proportionate steps to bring an end to a breach of peremptory norms of international law. That is important, because it sets the tone for why we may look at this carefully.

[Liam Byrne]

The right hon. Gentleman is making an excellent speech. Is he as perplexed as I am about why NATO allies have not sought to bring forward, for example, a motion at the United Nations that could help to crystallise that change in norms? If we are to effect, for example, the interpretation of immunity laws, he is absolutely right that norms need to change. One way to do that is through a vote at the United Nations, which I would have thought we could win.

[Sir Iain Duncan Smith]

I agree; we are probably all going to agree. We have talked about the military alliance, but now we are in the realms of the economic alliance, because that is really where we win the peace. We may yet win the war, but that is no good if we leave behind a shell of a country that is incapable of operation, democracy or even economic wellbeing. Winning the peace is as vital, and we need to be planning for it now; they did that during the second world war. It is worth reminding ourselves that by the end of that war, they were very clear about what they were going to do.

Whether it is NATO, an alliance, the G7 or whoever, it is important that we form a bloc on these matters and agree, although I know there is a little resistance to that elsewhere. Furthermore, I believe that international law is not fixed, but is capable of development. Although the leadership of the UN Security Council is foreclosed because of Russia’s power of veto, there could be sufficient development to allow adjustment of the boundaries of state immunity in customary international law to allow enforcement of such international awards. For example, international law permits state assets to be frozen without any international court’s adjudication. We did not need permission for it; we did it. The reason it is done is because an action has taken place. International law could be developed to allow seizure pursuant to such adjudication.

The UN General Assembly has already adopted a resolution calling on Russia to pay reparations, and there is no reason why regional bodies such as the EU or the Council of Europe—not just NATO, but other bodies that could come together and do this—could not adopt specific resolutions providing a pathway to compensation and enforcement. That point was also made by the right hon. Member for Birmingham, Hodge Hill.

Frankly, there would appear to be no obstacle in international law to a state that imposes sanctions on Russian assets making it a condition for release of those sanctions that the Russian state honour any award made by the International Court of Justice or the European Court of Human Rights. This is another route that allows us to sanction Russia; if they fail to meet their requirements under the sanction, we simply seize their existing assets in balance with the sanctioning that was necessary. Overall, for those and many other reasons, the details of which I will not go through now, I think there is more scope for sanctioning.

It was Lord Bingham who said that the public policy consideration that had greatest claim on the loyalty of the law—this is really important—was that where there was a wrong, there should be a remedy. We must always be governed by that in law. That is why I believe it is wholly feasible for us now to start the process by which we may undertake the pathway to the potential seizure or subsequent seizure of Russian assets for reparations.

I will conclude by mentioning, as I did in a previous question to the Prime Minister, that I came back a few days ago from Ukraine. It was a privilege to be there, working with a remarkable charity that I have now supported twice in Ukraine, called Siobhan’s Trust, which—in a classically British kind of way—just set off when Russia invaded Ukraine and went towards the danger. The people from that charity have been feeding those dispossessed of their properties and fleeing the war. They moved into Ukraine and have now moved down near the frontline, and they feed people there from pizza trucks. They have made over 1 million pizzas for people in Ukraine, and they produce joy and hope in people’s hearts when they are there, as they wear what they call Ukrainian kilts and they put the boombox on. People’s faces really lift when they see this peculiarly quixotic British crowd—who seem impervious to the idea that they are within the range of shell shot—having fun; it lifts their spirits and brings them great hope.

The thing I discovered while I was out there, and the one thing I know from having served, is that war is terrible. War is horrendous. War hurts those who are not directly involved in it—more, perhaps, than those who are. It is a terrible, terrible affair, to be avoided at almost all costs, except when justice must prevail. However, talking to the military and to some of the guys I saw down there near the front about their problems and issues, I must say to the right hon. Member for Birmingham, Hodge Hill that we still have so much more to do.

Ukraine is the frontline of NATO. There is no beating about the bush: if Ukraine fails on this, we all fail, and the repercussions, as the right hon. Gentleman said, will be terrible. Ukraine’s war is already our war, whether we give it membership of NATO or not. It is our war. We started that when, much to Putin’s shock, we stood by what we said we would do.

The war in Ukraine has exposed our own failure to understand what war fighting really means. The truth is that almost all of us in NATO have abandoned the idea of the sheer extent of a full-scale war. When I talked to the Ukrainian soldiers, the amount of ammunition they told me they use on a daily basis is astonishing. We have forgotten that, so we do not have stockpiles appropriate to fighting war, and we have to replenish those in double-quick time, because they need that ammunition. They are running short of artillery ammunition, not because we do not want to give it to them, but because so many of us do not have enough artillery ammunition to give them right now, having placed contracts only recently. America, by and large, has many more stockpiles than we do, but it is a fact of life that if we wish to avoid war, we must prepare for it, and we simply have not prepared for it over the years to the extent we needed to.

The Ukrainians need that support. They need training; many of their soldiers get two or three weeks’ training and then they are on the frontline. I swear to God, having been a soldier myself, that it takes a long time to understand proper fieldcraft, and the less someone knows, the more likely they are to be wounded or killed, because they will take the wrong decisions. I will not say exactly what is required, but I must talk to the Government about what they could do. Ukraine also faces conscription issues.

The reality is that Ukraine must win this war, but it needs us to be literally, as Roosevelt once said, the “arsenal of democracy”. It is for us who are not on the frontline to supply those who are, so that they may achieve their goal of victory. With victory comes the second phase of reparations and restoration. We must be in that right to the finish, for if Ukraine fails first in the war, or fails subsequently in the peace, we will carry the blame for it, and rightly so. We will never be forgiven. I simply say to my right hon. Friend at the Dispatch Box, “This is our war. We must win it with them, or else we will all lose.”

--- Later in debate ---

[Catherine West (Hornsey and Wood Green) (Lab)]

I thank the hon. Member for Harwich and North Essex (Sir Bernard Jenkin) for bringing this motion before the House. I also thank the hon. Member for Rutland and Melton (Alicia Kearns), who is currently travelling, and the Foreign Affairs Committee for their efforts in authoring the report, which shines a light on the scourge of illicit finance that continues to erode our economic and political institutions, the impacts of which have been made all the more apparent by Putin’s illegal and egregious war of aggression against Ukraine.

As was outlined in the integrated review of 2021 and reinforced in the refresh, Russia remains the UK’s most acute threat. Our national security and that of our closest allies is intrinsically linked to the outcome of the war in Ukraine, and it remains incontrovertible that assets laundered through London and the UK are having a direct impact on the Kremlin’s capacity to wage that war. Labour has been in lockstep with the Government all along on this question, and we will continue to be, should the Government bring forward further steps to strengthen the UK’s position. However, we consider it our duty as an Opposition to make clear where we believe the Government need to do more, and today is a good example.

I wanted to focus on the NATO question, but we went through it quite thoroughly this morning. In light of the Prime Minister’s challenge to us all to look back on what Mr Stoltenberg said at the conference and on page 4 of the report—I was making notes—perhaps collectively we should go back, look at the conference and its findings, and come back with a further strengthening of our position. I can guarantee that Labour will be in lockstep with the Government on this; I think both this debate and this morning’s statement have shown that.

Let me address very briefly the matters that have been raised in the debate. My right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) outlined a number of concerns. He watches this issue closely and has been involved—together with my right hon. Friend the Member for Barking (Dame Margaret Hodge)—in these questions for many years in this House. It is imperative that the Government come forward as quickly as possible with the measures that are needed.

I extend my thanks to the charity that the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) mentioned. We all have examples of people who have come forward in the past couple of years and shown amazing compassion and strength. I know so many families in Hornsey and Wood Green who have opened their doors and had families stay, even beyond the six months. Even though the scheme was not perfect—we all knew that—it was fantastic to see our citizens come forward to help.

To move on to the substance of the FAC’s report, it is clear that if the Government had introduced the necessary legislation in time, they could have stemmed the flow of illicit finance prior to Russia’s full-scale invasion of Ukraine. However, kleptocrats and oligarchs have been emboldened, believing fundamentally that their vast wealth will be safe in London and that their assets will flourish. To go further on that thought, perhaps we could do more on the question of property and China, rather than waiting until tensions develop in that particular relationship.

The Labour party has been pressing the Government for action for years, and has raised the issue of illicit finance several times on the Floor of the House. In January, the shadow Foreign Secretary, my right hon. Friend the Member for Tottenham (Mr Lammy), made it clear that when we are in Government we will answer calls from the US and beyond to establish a transatlantic anti-corruption council to co-ordinate the international fight against corruption, money laundering and illicit finance. In a speech just this week at the Bingham Centre, my right hon. Friend announced that Labour would join calls for the establishment of an international anti-corruption court designed to prosecute the most egregious acts of corruption across the globe.

The FAC report illustrates that the measures adopted in the Economic Crime (Transparency and Enforcement) Act 2022 did not go far enough to tackle to the problem. It states that the steps taken by the Government since February last year

“are not preventative but rather constitute damage limitation”—

damage brought about by years of apathy on the issue. The new Economic Crime and Corporate Transparency Bill finally acts on some, but not all, of the promises in the Government’s 2019 economic crime plan. Indeed, the six-month delay between the two pieces of legislation has allowed thousands more illicit companies to register.

We welcome the Bill, but it must go much further to ensure not just that we keep up, but that when it comes to cracking down on illicit finance, Britain holds the gold standard. It was therefore profoundly disappointing that in Committee back in January there was little in the way of movement from the Government, even when they struggled to find fault with our amendments and new clauses. Every single effort by Opposition parties to strengthen the Bill was met by resistance from Ministers, and every Opposition amendment that was pressed to a vote was defeated. As a result, Committee stage amounted to little more than a litany of missed opportunities, forcing us to return to those arguments once again in this debate, as we will no doubt have to do again during the Bill’s remaining stages.

Although we welcome the fact that the Government have finally U-turned on introducing a corporate criminal liability offence, the Bill’s provisions on Companies House and the supervision of third-party enablers, especially trusted company service providers, are too weak and do not match international standards. The Bill also fails to set out a strategy to recoup assets seized through economic crime enforcement and to compensate the victims. The right hon. Member for Chingford and Woodford Green mentioned righting a wrong—finding a remedy.

Indeed, although we also welcome the steps taken in the Bill on cryptocurrencies, what consideration is being given to sanctioning cryptocurrency mixers Tornado Cash and Blender? [Interruption.] It is not a cocktail! The US Treasury has sanctioned both; why have we not? Will the Government bring the UK into line with the US Treasury’s approach? Putin and his cronies are more than capable of exploiting such gaps in our regime, so why are we so slow and allowing that to persist? That example is illustrative of the Government’s strategy when it comes to tackling Russia here at home. The report outlines that well:

“Although Ministers have spoken eloquently in the House about the need to clamp down on kleptocrats, rhetoric has not been matched by constructive action. Meanwhile, corrupt money has continued to flow into the UK.”

More broadly, even the limited progress that the legislation offers is hampered by the fact that the Government are not sufficiently resourcing the bodies tasked with enforcing the changes. The hon. Member for Inverclyde (Ronnie Cowan) went into the question of resource in detail, so I will not repeat that point, but the report finds that 0.042% of GDP is spent on funding national-level economic crime and enforcement bodies. As a result, money laundering prosecutions have dropped by 35% in the past five years.

[Liam Byrne]

My hon. Friend is making a brilliant speech. On her point about enforcement, one thing the Government could commit to this afternoon is the Prime Minister appointing a new anti-corruption tsar, which would help. Many of us in the House are grateful for the leadership of my right hon. Friend the Member for Barking (Dame Margaret Hodge), who is not in her place. She has written to the Prime Minister asking him to make that appointment. Surely that is something that the Minister could give us some good news about.

[Catherine West]

I will allow that message to pass straight across the Dispatch Box to the Minister so that she can answer it. That query was going to be in my concluding remarks, so now I will not need to repeat it.

Spotlight on Corruption highlights that the Bill

“only funds the first two years of the plan”,

so we need to plan for more and more finance, particularly as this sort of crime and online crime become more complex. Will the Minister outline how the Government will ensure that the plan has necessary funding to ensure that public investment matches the scale of the challenge that we face? The National Crime Agency, the Serious Fraud Office and other bodies urgently need further resourcing to row back years of inactivity in this area and to protect legitimate business and safeguard our national security.

We must also do far more to oppose those who seek to use their wealth to avoid scrutiny, skirt the law and remain beyond the reach of those who enforce it. We therefore welcome the fact that the Government are, through amendments to the Economic Crime and Corporate Transparency Bill, finally providing judges with greater powers to dismiss lawsuits designed purely to evade scrutiny and stifle freedom of speech. We in this House all followed the case of the excellent author Catherine Belton, who was taken to court on a frivolous basis, on one of those trumped-up charges, and suffered a great deal of distress as a result.

In January, revelations came to light that in 2021, the Treasury, which was then under the leadership of the current Prime Minister, issued special licences allowing Wagner Group warlord Yevgeny Prigozhin to circumvent sanctions issued before Putin’s illegal invasion of Ukraine and to level legal proceedings against a UK journalist. That highlights fundamental problems in the Government’s competence—not only on SLAPPs, but in their seemingly flippant issuing of general licences and exemptions to our sanctions regime, with virtually no ministerial oversight. As my right hon. Friend the Member for Barking made clear in a letter to the Prime Minister, and as my right hon. Friend the Member for Birmingham, Hodge Hill reminded us, it has now been 400 days since the Government’s anti-corruption champion resigned.

Labour will continue to push the Government on the full seizure and repurposing of Russian state assets. There has been little or no movement from the Government on that issue in more than 500 days, despite our Opposition day motion of three weeks ago setting out the means to do so, and despite the fact that our allies are finding the courage to forge ahead. We must keep up. When can we expect the Government to introduce legislation that would allow the repurposing of Russian state assets? The Canadians have already done it; when will the UK Government catch up?

That issue is coupled with the challenge of closing loopholes in our regime that still allow the prohibitions established in secondary legislation to be circumvented. I understand that the Minister will write to the shadow Minister, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), after he raised at a statutory instrument Committee on Monday the question of the continued flow of Russian oil.

Fundamentally, the FAC report catalogues a litany of errors and shortfalls, and illustrates the extent of the Government’s sluggishness in bringing forward legislation fit to tackle the challenges that it outlines. We support the steps taken in the Economic Crime Act and the Economic Crime and Corporate Transparency Bill, which has been in the other place, but changes in the law must be accompanied by a decisive shift in culture on tackling illicit finance, on Government proactiveness, and on authorities having the means, resources and focus to tackle the issues at their core.

I thank all colleagues for their contributions, and particularly the Foreign Affairs Committee for its forensic and fair appraisal of the UK’s performance in this area. Positive steps have been taken, and we welcome them. We have made it clear that we will support the Government where we believe they are getting it right, but progress cannot now beget apathy and complacency. There is a long way to go to expunge dirty money from this country entirely. We owe it to the people of Ukraine to tear such finances from our institutions root and stem.

I hope that the Minister has heard the views of colleagues and will provide assurances that the Government will not take their foot of the pedal when our priority must be to build on the progress that has been made.

--- Later in debate ---

[Anne-Marie Trevelyan]

If my right hon. Friend will give me a moment, I shall attempt to answer that question in due course.

[Liam Byrne]

I am grateful to the Minister for giving way; she is being characteristically generous. Could she tell the House whether that bearing down on economic criminals will include Government acceptance of the excellent amendments tabled by Lord Agnew in the other place, which have widespread support in this House?

[Anne-Marie Trevelyan]

The right hon. Member will know that I am unable to answer that at this point—it is a question for the Leader of the House—but I have no doubt that it has been heard and that the cross-party support for that measure has been duly noted.

We are working closely with our international partners to address the impact of Russia’s war on global food prices and food security for the world’s poorest. That includes working to keep exports of Ukrainian grain flowing through the UN Black sea grain initiative, which has helped more than 32 million tonnes of grain and other foodstuffs to reach countries around the world.

To respond to the point that my right hon. Friend the Member for Esher and Walton (Dominic Raab) made about Turkey’s commitment—that country’s assistance in keeping that grain initiative flowing despite the continued challenges—we should all commend its efforts, quietly and behind the scenes, to make sure that those flows of food can continue. Its commitment has been exemplary.

Russia continues to delay and obstruct inspections of ships, but food cannot be a weapon. It is reprehensible that Russia is threatening not to extend the deal, which would increase food prices for the world’s poorest, so the UK is supporting Turkey and the UN in their very focused efforts to ensure that the initiative can continue unimpeded, and to renew the grain deal beyond 17 July. Just yesterday, the UN Secretary-General sent a further proposal to Russia to address concerns over the export of Russian food and fertiliser. The UN offer on the table will give stability to both the Black sea grain initiative and Russian agricultural exports, helping to provide easier access to food across the world.

[Anne-Marie Trevelyan]

I thank my right hon. Friend for his intervention. Turkey, in particular, is making incredible efforts and has continuing negotiations and conversations as a close neighbour and the guardian of the Dardanelles—that critical piece of water through which all these ships have to pass. It is clearly managing that situation, and we continue to support Turkey’s efforts to find ongoing solutions. My right hon. Friend the Foreign Secretary will be chairing a session of the UN Security Council next week to discuss exactly these issues—the impacts of the war, both in Ukraine and across the world.

Turning to an issue that colleagues are rightly focused on, we are of course looking to the future while dealing with the present-day challenges of supporting the Ukrainians as they prosecute the war. We are supporting the office of Ukraine’s prosecutor general to help it investigate and prosecute alleged war crimes. The UK provided £2.5 million of funding to support Ukraine’s domestic investigations and prosecutions in 2022, and we intend to provide similar levels of funding this year. We welcome the steps taken by the independent International Criminal Court to hold those at the top of the Russian regime to account, including Vladimir Putin. We have provided an additional £2 million to the ICC for evidence collection and support for victims and witnesses, and in May, along with 40 other states, we signed an agreement to create a new international register of damage caused by Russian aggression against Ukraine. That is an important step in the pursuit of justice for the Ukrainian people.

Just a few weeks ago, in June, we co-hosted with our Ukrainian friends the 2023 Ukraine recovery conference here in London. That conference raised over $60 billion, including a new €50 billion EU facility and $3 billion in UK guarantees to World Bank lending. Almost 500 companies from 42 countries, worth more than $5.2 trillion, pledged to back Ukraine’s reconstruction through the Ukraine business compact. The conference also agreed to forge a new G7+ clean energy partnership to help Ukraine rebuild a net zero energy system connected to Europe.

Members rightly want to see continued sanctions, asset freezes and travel bans during this very difficult time. Just last week, I was proud to bring in new legislation that will enable sanctions to be maintained until Moscow pays compensation for the reconstruction of Ukraine and a route is developed for Ukrainian reconstruction. We will, of course, also be creating a route to allow individuals to voluntarily hand over those assets of theirs that are presently frozen into a fund to support reconstruction. That will be a one-way ticket: if those people feel that they have realised the error of their ways, it will be an opportunity for them to support Ukraine’s reconstruction.

[Liam Byrne]

I am grateful to the Minister, because I do not think the House had had a chance to cross-examine her on that point. Is she saying that sanctions will remain in place until Russia has stumped up the full bill for reconstruction, and if so, what are the expectations of the amount that Russia will need to pay in order to get those sanctions lifted?

[Anne-Marie Trevelyan]

The right hon. Member asks an important question. Sadly, that figure grows day by day—I think the latest assessments are that something like $400 billion is expected for the reconstruction, but as the war goes on, that figure is likely to grow as more infrastructure is damaged. Greater reparations would be required to help Ukraine get back on her feet completely, but the new legislation will enable existing sanctions to stay in place until agreements on that compensation payment are reached. Discussions about what that might look like will continue in due course.