Global Anti-Corruption Sanctions Regulations 2021

Lord Sikka Excerpts

Wednesday 26th May 2021 Lords Chamber

[Lord Sikka (Lab) [V]]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Altmann. I have three broad questions for the Minister.

As previous speakers have pointed out, the SI does not define “serious corruption”, although I suspect the term is likely to be interpreted by the seven categories specified in the Government’s paper, Global Anti-corruption Sanctions: Consideration of Designations, published on 26 April 2021. One of these states that serious corruption is something that

“undermines a country’s democratic governance, the rule of law and human rights”.

I mention this because the Government have themselves colluded to protect organisations engaged in criminal conduct. During the passage of the Financial Services Act, I provided an example relating to HSBC which, by its own admission, was engaged in “criminal conduct” in the US. The Bank of England, the financial regulator and the then Chancellor secretly intervened and urged the US authorities to go easy on HSBC. This was done without any statement to Parliament, then or subsequently. I cannot see anything in the SI that will check this kind of corruption and its threat to democratic governance and the rule of law. Can the Minister say whether UK Ministers covering up corrupt practices are subject to this legislation?

Secondly, I am concerned about the poor enforcement already referred to by some previous speakers. The Financial Conduct Authority has yet to secure a criminal conviction. The SFO continues to flounder, and there have been no corporate prosecutions under the Criminal Finances Act 2017. Under the Bribery Act 2010, the Crown Prosecution Service secured one corporate conviction. The SFO has secured just one conviction under that Act and six deferred prosecution agreements. The future prospects of law enforcement in this area are also poor. The City of London Police has now received £1.5 million from Lloyds Bank for combating economic crime. This does not inspire any confidence in the police’s independence.

Numerous government and NGO reports have shown that accountants, lawyers, bankers and other professionals profit from corrupt practices, including money laundering, yet 22 of the 25 anti-money laundering regulators are accountancy, law and other trade associations. The director of the Office for Professional Body Anti Money Laundering Supervision, OPBAS, has publicly said that

“the accountancy sector and many smaller professional bodies focus more on representing their members rather than robustly supervising standards. … they believe that their memberships will walk if they come under scrutiny.”

This reliance on multiple regulators and trade associations is not helpful at all. I see no clarity in the SI on enforcement or independence of regulators. Who will be enforcing this SI and prosecuting: the FCA, the Serious Fraud Office, the Crown Prosecution Service, the National Crime Agency, the police, the Office of Financial Sanctions Implementation, the Foreign Commonwealth and Development Office, or somebody else? How will all these organisations, working to different standards and benchmarks, be co-ordinated and resourced? I hope the Minister can provide some answers.

The regulations are also being introduced without reform of company formation. Anyone from any part of the world can register a company in the UK without any authentication of their identity. Numerous UK- registered companies have fronted bribery, corruption, money laundering and other crimes, and the beneficiaries continue to escape retribution. No checks are made, even when the identity of the criminals is known. A well-known convicted Mafia criminal was once a director of a company called Magnolia Fundaction UK Ltd. Its filings at Companies House show that the name of one of its officers, when translated from Italian into English, was “The Chicken Thief”. The occupation given was “fraudster”, and the address given was “Street of the 40 Thieves in the town of Ali Baba”. Companies House routinely accepted all such returns.

On 14 September 2017, in response to a Written Question from Kelvin Hopkins MP, the Business Secretary answered:

“No action has been taken at this time against the promoters and officers of Magnolia Fundaction UK Ltd for filing inappropriate information in Italian at Companies House.”


In May 2018, I discovered that the same criminal was also a director of Business Bank Italy Ltd, which had a website inviting people to invest. A quick scrutiny of the accounts showed that the whole thing was a sham and a fraud. The matter was raised in the House of Commons by Anneliese Dodds MP. The company was dissolved only in August 2019. The Government’s consultation paper, Corporate Transparency and Register Reform: Powers of the Registrar, does not tackle any of these problems. I very much hope that the Minister will make a statement on this deficiency and how it may obstruct the fight against global corruption.