Sanctions

Debate between Lloyd Russell-Moyle and David Lammy

Tuesday 22nd February 2022 Commons Chamber

[Mr Lammy]

My right hon. Friend is exactly right. In this city of more than 7 million people, with at least a quarter of a million properties owned in London by foreign nationals, just three individuals have been named, when the EU has already indicated the naming of 27.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Will my right hon. Friend give way?

[Mr Lammy]

I will give way one last time, and then make some progress.

[Lloyd Russell-Moyle]

It does sometimes seem that the Government play hot and cold with Russia. They accept donations from Alexander Temerko and others, and then do not provide the fullest sanctions possible. This is not a new issue, is it? This is a long-running dispute. We know that Russia has been the aggressor here for a long time. Is there not a danger that this is a bit too late and too little, and is actually a signal to the Kremlin that it can keep getting away with its bully-boy tactics?

[Mr Lammy]

My hon. Friend has put it very well indeed. We must not fall into the trap of the past in taking actions that are too limited and too late, so Labour will continue to make the case for a fuller and more comprehensive package of sanctions now. President Biden is expected to announce, as soon as today, measures which will go further than those outlined by the Prime Minister. There are also reports that the EU is close to agreeing a package of measures including the targeting of more than 300 Russian Government officials and new restrictions on trading in Russian state bonds. Can the Minister reassure us that we will move in lockstep with our international allies?

Let me now turn to the actual text of the legislation. Although the Opposition of course welcome the spirit of what the legislation is seeking to achieve, we have some major concerns, and some suggestions as to how the Government could go further.

Concerns have been expressed to us that, given how the legislation is currently drafted, oligarchs who are close to Putin will find it too easy to avoid the impact of the measures. Although they may not hold a formal role in a sanctioned bank or company, they may exert significant control behind the scenes. Consequently, some of the most influential and notorious oligarchs—oligarchs who are close to Vladimir Putin, and have purposely structured their enterprises to avoid the appearance of majority ownership and control—would go untouched.

We believe that that is a crucial mistake. We know that Putin could not care less about sanctions laid against his country or the Russian people; that is one of the reasons why sanctions failed after the invasion of Crimea. The only sanctions that he really cares about are those against the richest people closest to him, and that must be the Government’s target. It would be a grave error to provide any loophole that would allow these people to escape sanction.

The Government could easily close that loophole by including a new category of person in the legislation which would encompass any oligarch close to Putin who obtains a benefit from, and supports, the Government of Russia. These designations should be made without fear or favour, and should include individuals with UK interests or even UK passports. In the same way, some of the oligarchs closest to Putin could currently slip through the net cast by this legislation, and so can Russian Government officials who have supported Putin’s regime and its goals. As it stands, paragraph 4 of the legislation would allow sanctions to be laid against individuals on the board of companies with certain links to the Russian Government but it would not enable sanctions to be laid against officials who enable the Russian Government to pursue their policy of aggression in Ukraine. The EU appears to be moving quickly on this, and this Government must keep pace.

It is not just Russian officials who could escape the pain of these sanctions, but also members of the Russian legislature. Paragraph 7 of the legislation defines what is meant by the “Government of Russia”, but it does not include members of Russia’s legislative branch, the Federal Assembly. This seems to be a remarkable oversight, and I would be glad to hear from the Minister what the rationale was for not including members of the Russian legislature in the scope of the instrument. We also have to ask what action the Government are taking to clamp down on assets owned by family members of those subject to sanctions. For example, will the Government also designate businesses that are owned by family members but controlled by a designated person?

[Lloyd Russell-Moyle]

The Government have yet to enact the registration of overseas entities Bill, which would require property owners and other business owners to show who the real beneficial owners of those overseas entities were. Is that not a huge weakness in our armoury?

[Mr Lammy]

My hon. Friend is right. Why do we have a system that is so opaque? What is the delay? I have raised this issue at the Dispatch Box at least three times, and I am happy to raise it on a fourth occasion, as my predecessor has done.

At present, this legislation provides for asset freezes of designated persons, but there is space for wider sectoral measures, such as those we have applied to other countries in the past. Will the Government bring forward other legislation to address this?

As Opposition Members have indicated, sanctions on their own are nothing unless they are rigorously enforced by the responsible agencies in the UK. Since the Office of Financial Sanctions Implementation was given powers in 2017, it has imposed penalties on only five occasions. If the Government have designed the most comprehensive sanctions package in our history, as the Minister assures us, it must be backed up by the most comprehensive resources it has ever been given. Will the Office of Financial Sanctions Implementation get those resources? What steps will the Minister take to ensure that enforcement agencies are able to function and take action under these new measures?

As my hon. Friend the Member for Blaenau Gwent (Nick Smith) has already asked, is this not the moment to publish the Russia report? Lay it before the House! Put it in the Library so that we can see its contents, and so that we can act, move forward and worry those in the Kremlin. We believe that we must go further now. Only five banks and three individuals are facing sanctions as a result of the UK Government’s actions today. This is not a big enough punishment for the blatant breach of international law that has already been made. Let us not be too slow to act and fall behind our international partners.

We should be introducing the full set of sanctions that is available to us now. Russia should be excluded from financial mechanisms such as SWIFT—the Society for Worldwide Interbank Financial Telecommunications. We should ban trading in Russian sovereign debt. Donetsk and Luhansk should be subject to comprehensive trade embargoes. Putin’s campaign of misinformation must be tackled by preventing Russia Today from broadcasting its propaganda around the world. We should be working to support our allies in the EU to cancel Nord Stream 2. The Foreign Secretary says that we are in lockstep with our allies, but the reality is that our allies have gone further in sanctioning individuals in Putin’s regime. Why have we not done the same?

This is not simply a matter of individuals, of course; it is about fixing a broken system. Ending our openness to fraud and money laundering, our inadequate regulation of political donations, our lax mechanisms of corporate governance and our weakness to foreign interference requires a barrage of new measures, long called for but as yet undelivered, to shut down the shell companies that obscure the origins of wealth and hide corruption, to lift the veil on who owns property and land in the UK through a transparent register, as mentioned time and again, and to bring forward an economic crime Bill that will target the corrupt elites who store their wealth under our noses.

Sadly, due to Putin’s expansionism, targeting Russia may not be enough. The regime in Belarus is supporting Putin’s aggression, playing host to Russian forces and potentially being set up as a springboard for a wider assault on Ukraine. Are the Government considering expanding the powers they have to designate people in Belarus should a wider invasion take place?

This is not the time for half measures. Putin has made his move, and the wider threat that Ukraine faces is immediate. The consequences for Europe and the west are stark. The effects of this moment will depend as much on our response to this aggression as on the aggression itself. Autocrats around the world are watching to see whether we meet the test of our strength and resolve. The Minister will have seen the strength across the House today. We need to go harder, deeper and broader, and we need to do so now. We stand ready to work with the Government to achieve this.