Victims and Prisoners Bill

Lord Garnier Excerpts

2nd reading
Monday 18th December 2023 Lords Chamber

[Lord Garnier (Con)]

My Lords, I will begin with the routine: reminding the House of my entry in the register of interests, including my practice at the Bar, which covers cases that have to do with the general subject matter of the Bill.

I now move to a unique, but none the less welcome, aspect of today’s proceedings. We have just heard the maiden speech of the noble Lord, Lord Carter of Haslemere—and it was, if I may say so, worth waiting for. As the noble Lord explained, his peerage was gazetted in 2019, but he was introduced into your Lordships’ House only a couple of weeks ago. He also explained why there had to be a hiatus: for the last seven years he has been general counsel to No. 10 Downing Street, giving legal advice to four successive Prime Ministers. I am sure that he provided a much-needed element of stability at that address. Listening to the dangerously quiet advocacy that he was able to deploy just now makes me grateful that there is such a thing as the Government Legal Service and that such intellects as the noble Lord’s are deployed in its service.

It would have been difficult for a government lawyer working at the very heart of the Administration, who was not a law officer, to speak without giving the impression that he was speaking for the Government and, more particularly, the Prime Minister. But now the noble Lord is one of us: free to speak his mind from the Cross Benches and to give us the benefit of his experience and undoubted wisdom acquired over his many years in the Government Legal Service. He has worked on dozens of Bills, taking them through their entire legislative cycle, from policy formation to implementation into law, so we will rely on him to ensure that legislation leaving this House is in better shape than it was when it arrived.

Like the noble Lord, I am a trustee of the Prison Reform Trust and I particularly look forward to his reforming the law on IPPs and other aspects of the criminal justice system, as well as his analysis of Home Office and Ministry of Justice Bills—I am sure that we will not be short of them—and his contributions to our debates on international and treaty law. Today we heard the overture, and it is with eager anticipation that we await the many, I hope, successive acts of the opera. The noble Lord is more than welcome, and we all wish him well as a Member of your Lordships’ House.

I turn to what I believe to be an important omission from the Bill, which otherwise I generally support. For want of time, I will not discuss the vital question of IPPs, but other noble Lords from right across the Chamber have already done so, and I dare say that others may yet do so. My noble friend Lord Moylan and other noble Lords will table amendments in Committee, and I will join them when they do.

The omission I would like to deal with is the absence of support for overseas victims of corruption and fraud. Thanks to the Economic Crime (Transparency and Enforcement) Act 2022, the Economic Crime and Corporate Transparency Act 2023 and the Online Safety Act 2023, economic crime, bribery, money laundering and fraud are back in the news and on political agendas—although they have not really been out of the spotlight over the last 20 years.

Multinational companies have been fined more than £1.5 billion over the past decade after investigations by the Serious Fraud Office into corruption abroad, but only 1.4% of those fines, amounting to about £20 million, has been used to compensate victim countries. That is according to research carried out by Mr Sam Tate, a partner of the City of London law firm RPC. This needs to change.

Much of this corruption occurs in African countries that are already suffering terrible economic hardship from food, climate and energy crises, as well as from inflation. They are in dire need of economic support to repair the damage caused by corruption. The British Government have been vocal in their support for compensating foreign state victims of corruption, but the action actually taken to compensate foreign states tells a different story and leaves us, I fear, open to charges of hypocrisy. Most corruption cases brought before the English courts involve foreign jurisdictions. This country steps in as the world’s prosecutor and prosecutes crimes that take place in other countries, but then keeps all the fines for itself.

This is important, because corruption causes insidious damage to the poor and to the not-so-poor, particularly in emerging markets and economies. The United Nations says that it impedes international trade and investment, undermines sustainable development, threatens democracy and deprives citizens of vital public resources. The African Union estimated in 2015 that 25% of the continent’s gross domestic product was lost to corruption. Every company convicted of overseas corruption in this jurisdiction should be ordered to compensate the communities they have harmed. That would be both just and effective. Compensation should come through investment in programmes targeted at decreasing corruption and benefiting local communities by, for example, building and resourcing more schools and hospitals.

At first glance, our law encourages compensation: it is required to take precedence over all other financial sanctions. So far, so good—but, as with many noble ambitions, the problems lurk in the detail. Compensation is ordered in criminal cases only where the loss is straightforward to assess, even though the trial judge is usually a High Court or senior Crown Court judge who will deal routinely with complex issues every day.

Let me refer to two completed cases that are matters of public record. In 2022 Glencore pleaded guilty to widespread corruption in the oil markets of several African states. Although it was ordered to pay £281 million, not a single penny has been ordered to go back to the communities where the corruption happened, largely because it was held that compensation would be too complicated to quantify. The Airbus deferred prosecution agreement tells a similar story: the company was required to pay £991 million to the United Kingdom in fines, but compensation to the numerous Asian companies where the corruption took place formed no part of the deferred prosecution agreement.

The process for compensating overseas state victims needs urgent simplification so that real money can be returned to them. An answer lies in incentivising the corporations that commit these crimes to pay compensation voluntarily on the understanding that it would not increase the total amount, including penalties and costs, that they would have to pay. The company could be further incentivised by receiving a discount on the fine it would still be required to pay to the UK Treasury, or an increase to the fine if it refused or failed to make redress.

The required changes are straightforward and would cost the taxpayer nothing. We could create a standard measure of compensation that would ensure consistency and transparency, as well as avoiding the difficulty of calculating a specific amount of loss or damage in each case. The compensation figure could equal whichever is the higher of the profit made by the company from its corrupt conduct or the amount of bribes it paid to obtain the profits. This already happens when companies are sentenced, save that all the money goes to the British Treasury. The defendant company would pay nothing more, but at least some of the money would benefit the victim state and its citizens.

This could be achieved by requiring the defendant companies to enter into an agreement with the relevant state that would include obligations to comply with UN guidance on the treatment of compensation funds and to identify projects for which the funds could be used. To encourage states to enter into these types of arrangements, corporations could be permitted to donate the compensation funds to the World Bank or the IMF for projects in the region instead—or to pay down the country’s debt if an agreement cannot otherwise be reached.

The benefit of this approach is that unlike at present, where there is no disadvantage in doing nothing, it puts the onus on the corporates to take restorative action. It also addresses the difficulties in quantifying loss by creating a simple approach that gives companies early sight of the amount they will have to pay.

I am not so naive as to think that compensation paid to some foreign Governments by, for example, British corporate defendants found guilty of overseas bribery in our courts, will necessarily be spent on good causes in that state. I accept that such a scheme might encourage corruption by permitting foreign government officials to benefit from the corruption and then to benefit from the compensation, but the time has come for us to design a scheme to increase dramatically the percentage of recovered money that repairs the damage caused by corporate corruption abroad.

If the Government are serious about placing victims at the heart of the criminal justice system—and I believe they are—that should include an effective, watertight compensation regime that makes a reality of the mantra that corruption is not a victimless crime. Overseas victims of complex financial crime such as corruption are currently finding it far too difficult to be recognised and to receive support and compensation in our courts. Compensation should be returned to those affected by corruption, in line with the principles that the United Kingdom committed to at the Global Forum on Asset Recovery, a continuing by-product of the Anti-Corruption Summit initiated by my noble friend Lord Cameron of Chipping Norton in 2016.

This Bill would be enhanced if victims of complex financial crime and corruption from other jurisdictions were recognised as victims and compensated appropriately. These reforms would comfortably fit into this Bill, I suggest, but they need the political will to amend the sentencing guidelines on corporate corruption. They will need a carefully designed set of rules to implement the practical aspects of the policy. If we do this, we can hold our heads high and enhance our national reputation in the fight against international corruption.