Economic Crime (Transparency and Enforcement) Bill

Lord Rooker Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Lord Rooker (Lab)]

My Lords, I very much agree with the contents of virtually all the speeches we have heard so far. The right reverend Prelate the Bishop of Leeds said that he wanted to introduce some ethics into the debate. I deeply regret that before I finish I shall introduce some politics into it. The constant theme in the House of Commons on Monday was that alarm bells have been ringing for years and been ignored by the Government. It is sad to say that this is an entirely fair point to make. I shall therefore go through a bit of the history. I make no apology for saying “I told you so”.

In March 2015, Transparency International published a detailed analysis, Corruption on Your Doorstep: How Corrupt Capital is Used to Buy Property in the UK. I will not go into any of the details given there but the Government knew about it because I initiated a debate on it on 18 June 2015. The present Government Chief Whip replied.

Another alarm bell around the same time was rung in the Financial Times on 6 June 2015, when it reported that more than half the homes costing £1 million-plus were being bought with cash. The newspaper reported that 76% of the most expensive homes costing above £5 million were paid for by entirely by cash. Alarm bells?

In Singapore in July 2015, the then Prime Minister made what I have said previously was a seminal speech on corruption, which was never really followed up with action, even though that Prime Minister said in his 2017 lecture on corruption that he thought action was being taken forward. He was taken in.

In early 2016, Roman Borisovich launched the Kleptocracy Tours. The idea was to show people what it was all about—to visit locations and explain about the owners, or what was known about the owners, the lavish properties and something about the sources of wealth. That was before the emergence of unexplained wealth orders, a matter raised in the original Transparency International report. The tours started in Whitehall and went through Knightsbridge, South Kensington, Hampstead, Highgate and so on.

I shall highlight just two examples and I shall do so because I have done it before—at least four times. There is no argument about what has been going on and been ignored by the Government. The start was outside the Igor Shuvalov’s property at 4 Whitehall Court, which are two apartments, now knocked into one—138a and b—and are above the Farmers Club for those familiar with the location. This apartment was worth more than 80 times Mr Shuvalov’s annual income as a Russian government official. Due diligence there was none. The extract from the Russian registry of companies disclosed the beneficial ownership of Sova Real Estate by Shuvalov and his spouse. The purchase price of £11,440,000 is well known. The lender: none. The London end was cared for by Tulloch & Co of Hill Street.

My other example is relevant for two reasons. The person is Ukrainian and the sellers of the property were the UK Government. There is much more detail. When I prepared this speech, I saw the “Long Read” in yesterday’s Guardian by Oliver Bullough, so the details are there. It relates to a property that I have driven past for decades on my way here—a dwelling attached to the old Brompton Road Tube station. Dmytro Firtash paid over £100 million for it. He made his fortune selling Russian gas to Ukraine. He was living in Austria fighting extradition to the United States on bribery and racketeering charges. That continues today.

The matter is relevant because the Tube station closed in 1934 and during the war was used for various matters related to the Anti-Aircraft Brigade. In 2014, while Mr Firtash was still in Austria fighting the extradition charges, the owner of the site—the Ministry of Defence—sold it to him. He claimed that he wanted to convert it to residential use. He paid £53,375,000 to the Secretary of State for Defence. The property now still appears to be three separate buildings but is in fact one. In June last year, according to Reuters, the Ukraine Government headed by President Zelensky imposed sanctions on Firtash for selling products that ended up being used by Russian military enterprises. Did the MoD do any due diligence before the sale of its property? It was known that Firtash was in Austria—he was not living there. I asked about this some years ago and was simply fobbed off.

I should say in passing that the tour went past the house of Roman Rotenburg, owned through a Cypriot company. He received his father’s and uncle’s sanctioned foreign assets in 2015. I mention that only because others in this House are more capable than me of explaining the background, although they are not here tonight.

If the Government are still pleading ignorance, in 2018 along came Moneyland by Oliver Bullough. I will quote a brief extract from the flyleaf, which states:

“Once upon a time, if an official stole money, there wasn’t much he could do with it. He could buy himself a new car or build himself a nice house or give it to his friends and family, but that was about it. If he kept stealing, the money would just pile up in his house until he had no rooms left to put it in … And then some bankers in London had a bright idea.”


These matters and other examples were raised again and again, especially during the passage of both the Criminal Finances Act 2017 and the Sanctions and Money Laundering Act 2018. So why has no action been taken until Ukrainian blood is being spilled at the level it is today? The Bill is a token because it has been brought about only because of that. The issue was always there anyway. Our economy is being distorted at a crude level because if half the money disappears all at once it will be highly damaging. But we knew that because we knew that the money was coming in.

The impact assessment for the Bill, which the Minister signed on 25 February 2022, on page 5 uses as a reason for action the very report from Transparency International in 2015 that I mentioned at the start. That was seven years ago. The impact assessment to justify the Bill is based on something that the Government knew about seven years ago and has been repeatedly raised with them—but they did nothing about it.

I am not going down the road of the former Prime Minister, when Home Secretary, refusing the inquest into the death of Alexander Litvinenko because of “international relations”. Then there is the present Prime Minister, who is so close to the Russian KGB family that he dumped his security detail to go to meetings and parties—one of which was the in the week of the first Covid lockdown in March 2020. Missing five COBRA Covid meetings was okay because the top priority was to report to the Russian he could not get into this House at the time.

The common theme is the active involvement of both those top UK Government members in fundraising events—all on the record—to obtain Russian-based money into the Conservative Party. This has spread to many other Ministers. I cannot understand it. Constituency parties in this country have received donations from people who are living here legitimately and are on the electoral register. Did those constituency parties not ask why this money is coming in? We do not really need to ask any more, do we?

Economic Crime (Transparency and Enforcement) Bill

Lord Rooker Excerpts

Committee stage
Monday 14th March 2022 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I shall speak to Amendment 53. I thank the noble Lords, Lord Cromwell and Lord Vaux, for their support, although I understand that they would like to see this tweaked to go further. I also thank the noble Lord, Lord Eatwell, for his supportive comments.

The Bill needs to be comprehensively amended to close the loopholes that currently allow professional enablers to undermine the effectiveness of, and even circumvent, the checks aimed at detecting, disrupting and deterring economic crime. One of the key ways this can be done is by imposing a positive duty on professional enablers to disclose knowledge or reasonable suspicion that misleading, false or deceptive information has been provided to the registrar of overseas entities.

As I set out on Second Reading, professional enablers, such as lawyers, accountants and bankers, are the gatekeepers of economic crime and the Government need to adopt a comprehensive strategy towards them. Given the nature of their work, there is an inherently high risk that these professionals may unwittingly enable economic crime, but there are also enablers that specialise in services aimed at concealing the source of wealth or ownership so as to frustrate the objectives of the law.

This poses a particularly acute challenge in the context of the Bill’s attempt to tighten the checks around the beneficial ownership of property by overseas entities. The UK’s 2017 national risk assessment of money laundering and terrorist financing revealed that 50% of suspicious activity reports related to the legal sector in 2016 were linked to the property market, illustrating that real estate transactions are especially susceptible to money laundering.

As the noble Lord, Lord Vaux, very eloquently deconstructed, the Minister prayed in aid regulation by the Solicitors Regulation Authority and the Institute of Chartered Accountants in England and Wales on Second Reading. Does the Minister really believe that these regulators are the way to tackle these professional enablers? The current model for supervising professional enablers is fragmented and weak. In the legal and accountancy sectors alone, there are 22 different professional body supervisors, or PBSs. In its 2021 report, the Office for Professional Body Anti-Money Laundering Supervision found that the vast majority—some 81%—of these legal and accounting PBSs do not implement an effective risk-based approach to supervising their members as required by the money laundering regulations. Where is the evidence that they can do the kind of job needed to root out corrupt behaviour in sanctions avoidance or as envisaged by this Bill?

In summary, it is critical that the Bill addresses the heightened risk that professional enablers, particularly conveyancers and lawyers, will frustrate the objectives of the register of overseas entities. Beyond this modest amendment, urgent reform is needed—I hope it will take place in the second Bill—to ensure that there is effective, comprehensive supervision of professional enablers. This should be fully addressed when we come to the second economic crime Bill.

[Lord Rooker (Lab)]

My Lords, I had not intended to speak today. I came to learn and listen to the experts on areas I do not know much about. But listening to the noble Lords, Lord Cromwell and Lord Clement-Jones, I am reminded of an example. I know this would not be classed as money laundering, but the well-known spiv, Aaron Banks, was responsible for what is, I think, the biggest political donation in British history—I think it was £8 million—during the Brexit referendum period. When it came to investigation by the Electoral Commission, which had the responsibility for doing this, he was not an unwitting enabler. His conclusion was, “We’re cleverer than the regulator.” The Minister does not want to be faced with that during the passage of this Bill and its actions, so he would be very wise to accept the spirit of some of these amendments.

[Baroness Jones of Moulsecoomb (GP)]

I think it is obvious that the Minister will accept a lot of these amendments, because they are from people who are much cleverer than most of us in this Chamber.

I support most of the amendments—even all the government amendments, because they are quite helpful, particularly those that require the disclosure of whether any beneficial owners of property are subject to sanctions, and the strengthening of the criminal offences for false declarations. However, it is obvious from the speeches of other noble Lords that the Government are still falling short and that the Bill needs to be tougher. For example, Amendments 23, 24, 57 and 58 all need to be inserted into the Bill.

All beneficial interests should be registered, not just those acquired on or after 1 January 1999. That is a completely arbitrary date and should be removed. The Minister shakes his head; I guess he will argue that it is a very important date. I disagree.

This legislation is being rushed through as an emergency, but the Government are content to wait another year, following initial registration, before any changes in beneficial ownership take place. I cannot see the logic in that and I think most people will not either. It makes much more sense to update the register within 14 days of any changes.