Sanctions and Anti-Money Laundering Bill [HL]

Lord Northbrook Excerpts

Ping Pong (Hansard): House of Lords
Monday 21st May 2018 Lords Chamber

[Lord Anderson of Swansea]

My Lords, with the public register of beneficial ownership it should be possible to obtain those figures. It would be absurd if money that fled from the London property market went to the overseas territories and sought a haven there. Anyway, the figures that are given—I am very happy be told that the they are incorrect—are that £34 billion of Russian money is currently in the overseas territories, £30 billion of which is in the BVI, and there has been over £100 billion over the past decade. Surely a proportion of that at the very least is dirty money, and the question must therefore be posed: are we prepared to countenance dirty money finding a haven in the overseas territories? That is what is suggested.

We have to respond very sensitively. Of course there will be an economic impact, and that will only be exacerbated by the impact of the hurricane, particularly in the BVI. Because of the UK’s responsibility to these overseas territories, we will have to bear at least part of the cost, but surely we should not countenance the position that I have mentioned. If the Minister has figures other than this £34 billion, I am very happy to hear them, and if he suggests that none of that is dirty money then I will be happy to hear his view, but surely it is in everyone’s interest that dirty money be pursued wherever it is and that there be a publicly accessible register.

At the same time, the economic impact should be recognised, along with the possible damage to the constitutional position. If those countries wish to go independent, so be it. Fairly recently there was a report on the contingent liabilities to the British taxpayer of the overseas territories. I wonder where the balance would lie, if a number of these countries went independent, regarding the amount currently spent by the British taxpayer. I am happy with that, but the question must remain: if these figures are correct, and if it must be that a portion of that sum is dirty, are we prepared to allow that to continue?

[Lord Northbrook (Con)]

My Lords, is the noble Lord, Lord Anderson, aware that none of the overseas territories is on the EU blacklist of non-co-operative tax jurisdictions as of December last year?

[Lord Anderson of Swansea]

That may well be the case, but I pose the question again. There is this £34 billion of Russian money. We know that the oligarchs look for areas where they can usefully hide their assets. Are we prepared to continue to allow that?

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[Lord Judd (Lab)]

My Lords, first let me say how much I appreciate the tremendous amount of work undertaken by the Minister in all that he has done on this front. I know that he has shown a great deal of personal commitment—as indeed did his predecessor. That should be put on record by all of us. We have moved a long way forward.

The noble Lord, Lord Naseby, said that he would not take lessons from Oxfam and Save the Children because of their record. I declare an interest: in the 1980s and 1990s I was a director of Oxfam and I have stayed very close to that organisation all my life, and remain as close now as I ever was—perhaps closer. I want to tell the noble Lord that the dismay and disgust in Oxfam at what happened in Haiti at the beginning of the decade cannot be overstated. There is profound dismay at what some people decided to do, and at the damage it has inevitably done both to the organisation and, more importantly, to thousands of people whom the organisation is now unable to help in the way that it would have liked because resources have inevitably dwindled.

That brings me to why this debate is so important. We have been discussing the technicalities of law and the constitution, and talking about the democratic rights of people—but what we are really talking about is justice, social responsibility and the accountability of wealth and power in the world. My noble friend Lord Anderson referred to the Select Committee’s report. It is a very important report, which we should all take very seriously, but it is operating in the context of parliamentary democracy and responsibility. All this Russian and other accumulated wealth that we are talking about—let us not dodge it; we have had allusions to property wealth finding its way to some of these territories as well—is not simply the wealth of those who are handling it; it is wealth that has come from countless ordinary people throughout society. That means that we all have a responsibility to ask: what are we doing, with teeth, to make sure that people who deceive, cheat and accumulate riches wrongly and unfairly are brought to account?

That is why I say how much I appreciate the tremendous work that the Minister has been doing. He has demonstrated the importance of diplomacy and the reality of the world that we live in. It is a matter not just of stating these things, however strongly we state them, but of how you move towards achieving what you want to achieve, and I take his arguments very seriously.

In the time that remains for this debate, I ask your Lordships to remember that we are talking not about money, although that may be a way of measuring the size of the problem, but about people—people from whom this money was accumulated and the countless people across the world for whose benefit it could be used through fair systems of taxation and through policies devised to meet the needs and help the development and emancipation of those who are exploited. This is not just a technical debate. I know that it is not fashionable to say it in this House but it has to be said: it is a debate about morality, justice and fairness. We have to stop sentimentalising about our commitment to those things; we have to make sure that there are teeth and muscle in meeting that commitment.

Perhaps I may come back for a moment to the challenge thrown down by the noble Lord, Lord Naseby, about my old organisation. I invite any of your Lordships to come and meet the staff, the trustees, the volunteers and the people across the world in the organisation who are busting a gut to make sure that something that happened at the beginning of the decade and let down the whole cause can never occur again.

[Lord Northbrook (Con)]

My Lords, I support the amendment in the name of my noble friend Lord Naseby. The Minister, to his credit, spent quite a lot of his speech arguing against government Amendment 22. I wondered why the Deputy Speaker did not call the government amendments and had some suspicions, now proved, that they were tabled too late. I add my disappointment at the seemingly lackadaisical attitude of the FCO. That, as my noble friend Lord Naseby said, is deeply disappointing when the issue is so important.

I should like to refer to one or two points that have been raised. First, none of the overseas territories ais on the EU blacklist of non-co-operative tax jurisdictions. Secondly, as I understand it, money laundering is a devolved issue for the overseas territories. Therefore, I question the assertion of the noble Lord, Lord Beith, that it comes under the area of international relations or international treaties. To legislate without even consulting their parliaments, let alone asking for their consent, is deeply wrong. In addition, the EU withdrew its proposal for public registers in December 2016 on the ground of concern about human rights. Could this be another case that the overseas territories could pursue?

Most countries are not adopting public registers. For the Caribbean overseas territories, the rival centres are the USA, Hong Kong and Singapore. They do not have public registers. To use an Order in Council for financial regulation, when the overseas territories have already adopted international standards, could expose the UK to legal challenge and be overturned on judicial review. I do not regard this as an exceptional circumstance where the UK Government should make laws.

The other place may think it good short-term politics, but the serious economic consequences and damage to our relationship with the overseas territories, and with the Commonwealth, will be long lasting. Perhaps one of the noble and learned Lords in the House will give their services pro bono for judicial review.

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[Lord Collins of Highbury]

My Lords, I might as well begin by declaring what is not really a direct interest. My father was born in Bermuda and his father was born in Bermuda, so I think that entitles me to go and live there at some point and not have to deposit the $30 million that I think is currently needed if you want to live there. It is a very nice island, and I do love it and I love its people.

This debate is a reflection of constitutional concerns. There are concerns over the rights of people to determine their own laws and no one can disagree with that. But it is also a very strong moral debate, because we know that developing countries lose three times as much in tax avoidance as they get in all the international aid that is available to them. That is the scandal of this world we now live in. The Paradise papers and the Panama papers highlighted just how much of an issue this really is, and that is why we have such huge public concern. If we want to break the business model of stealing money and hiding it in places where it cannot be seen, transparency is the answer. I agree completely with the words of David Cameron in 2013 when he spoke about ripping aside “the cloak of secrecy” and repeated the well-known mantra that “sunlight is the best disinfectant”. I think that that commitment by David Cameron in 2013 is what this debate is about.

Last week, I had the opportunity of meeting the Prime Minister and Leader of the Opposition of the British Virgin Islands. They made their case very strongly to me about their concerns over this amendment. However, whatever position you are taking constitutionally, no matter what the concerns are, there is one thing that everyone agrees on, and that is that the scandal of money flowing out of countries and being hidden is something that has to stop. The Prime Minister of the British Virgin Islands acknowledges that transparency is important. We have heard about the actions of Bermuda and other places. David Cameron was actually trying to change the global position, to get to a position where we would have global agreement on addressing this issue.

How do we get global agreement? David Cameron believed it was by giving a lead. There is an issue here about reputation and being able to influence things. While we are in the European Union and saying, “You’ve got to ensure that all territories within the European Union comply with this”, and when we are in other global fora, we should be able to say that we will be acting on this. We know that the excuse of the overseas territories is often used by others to say, “If you’re not doing it there, why should we do it here?”. That is something that we have to address.

I absolutely understand the need to ensure that all the territories have the proper opportunity to consider this, but this is something that they have been acting on for some time. I respect the Minister’s undertaking to ensure that they have the necessary means as well as the necessary policy and advice.

[Lord Northbrook]

When the noble Lord talks about the relevant means, does that mean he expects the UK Government to substitute the revenue that these overseas territories are going to lose? He may say that some dodgy money will go out there, but some reputable people with money out there will take their money elsewhere. Is he saying the UK Government will have to take their place with our duty of supporting these overseas territories?

[Lord Collins of Highbury]

I am grateful to the noble Lord for raising that point. We have been talking about money flowing out. We have had debates elsewhere. I have also spent time working in Gibraltar and I know that on financial matters—Bermuda is another good example—it has built its reputation on having proper transparency and controls. That is what we need to establish: that there is a good way of doing this that will help expand the industry. Reputational interests are incredibly important.

The noble and learned Lord, Lord Brown, is absolutely right that we do have time; the point was also addressed by the noble and learned Lord, Lord Mackay. We have had some considerable time already on this issue, but we have time to ensure that we can get everybody on board with this principle. The only way we will get global agreement is for the United Kingdom to go into those international fora and say, “No more—we need transparency”, because transparency is what will ensure that we can find all those activities, particularly tax avoidance.