Countering Russian Aggression and Tackling Illicit Finance

Pat McFadden Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I thank all the right hon. and hon. Members who have contributed to this debate. Many points have been made over the past few hours, but two in particular stand out. First, there was a consensus across all parts of the House—with the exception of one Member who spoke—that the Government have not gone anywhere near far enough with the package of sanctions that was announced yesterday. Secondly, there is an enormous gulf between the rhetoric employed by Ministers and the lack of action that we have seen on illicit finance over many years.

Let me reiterate the Opposition’s position on these issues. We support the Government in taking a firm stand against Russian aggression and in favour of Ukraine’s freedom to decide its future. We support solidarity with our NATO allies. We reject the imperialist notion of “spheres of influence” by which Russia seeks to limit the choices and freedoms of its neighbours.

There can, of course, always be a nationalist appeal to people who speak the same language living across different borders, but if we follow that route, we will be in a never-ending cycle of ethnically based conflicts. No one has pointed out the dangers of that road more eloquently this week than Martin Kimani, the Kenyan ambassador to the UN Security Council, who urged the world to leave behind the mindset of dead empires. His warning not to take refuge in nostalgia and grievance but to look to the future was a leadership lesson for our times. What a contrast between that powerful eloquence and the recent essay on Ukraine by President Putin. Anyone reading that will have seen declarations of love and common history laced with threats and denial of freedom on every single page, and the desperate, needy pleas for respect.

[Bob Stewart (Beckenham) (Con)]

I thank the right hon. Member, my friend, for allowing me to intervene. The real worry is that Putin’s forces have now gone into the area where his proxy forces have operated: Luhansk and Donetsk. Two thirds of those provinces are still in Ukraine, yet the Duma has said that they are now Russian, so at any moment, we can expect Russian troops to go across those demarcation lines. We therefore have to be extremely strong in response and our sanctions have to be much harder.

[Mr McFadden]

I respect the right hon. Member’s experience and agree absolutely with his intervention. Let us call things what they are: not breakaway republics, but step-by-step annexation; not peacekeepers, but an invading force. We have seen the pattern over and over again.

The former High Representative of the European Union, Baroness Ashton, has spoken about President Putin’s strategy of the wedge. He seizes part of the territory of a neighbouring country—Abkhazia and South Ossetia in Georgia, or parts of the Donbas in Ukraine. By holding the wedge, he seeks to limit the freedom of those countries to join international associations. He seeks to absorb the rest of the country in managing the conflict that he has created. He uses up resources, he creates a refugee problem and, if he cannot take over neighbouring countries entirely, he at least ensures that they are not free to develop as they wish because they are not whole and their freedom is compromised.

That “Greater Russia” mindset has been behind President Putin’s policy towards Ukraine for the past eight years. Right now, it is not fully clear whether he will be content just to hold the wedge or whether he will go further, but even what he has done so far is already limiting Ukraine’s options and choices for the future.

How should we respond? Some lessons have been learned. The solidarity shown by the United States, the United Kingdom and most European countries in recent weeks has been important and impressive. Calling out the troop build-up and the creation of flashpoint incidents and false flag pretexts has shone a welcome light on what is happening. The development of open source intelligence has exposed the ham-fisted propaganda emerging from Russia and its troll factories.

Allied unity is important, but so too is allied resolve. In the past, we have set red lines, but when they were breached we have drawn back. The result in Syria was the repeated use of chemical weapons and the ability for Russia to dictate the course of events for years afterwards. This time, if we talk about maximum sanctions for military action, we have to be prepared to carry them out. Who really believes that sanctioning just three people who have already been on the US list for years will deter President Putin from acting further? No wonder the Royal United Services Institute, the respected defence and foreign policy think-tank, described yesterday’s actions as like having

“turned up to a gunfight with a peashooter.”

The Government’s actions have to match their rhetoric. Yesterday, that simply was not the case. The Minister’s defence is that this is simply the first tranche and that there is more to come, but what is the case for waiting, given what we have seen? Is there anything in President Putin’s actions in recent days to suggest that he is in compromise mode? He is not. He is testing us every hour.

Not only do we need a sanctions regime that matches the seriousness of what has been done, but we need determined action to clean up what the Intelligence and Security Committee has called the London laundromat.

[Mr Baron]

Will the right hon. Gentleman give way?

[Mr McFadden]

I will press on, because we are short of time.

Our country and our capital city should not be a welcome home for illicit finance, the proceeds of looting and the proceeds of kleptocracy. There is a basic problem: if sanctions are to work, we have to know what people own. The Government have been sitting on a registration of overseas entities Bill for four years, and it has been six years since it was first talked about. How can sanctions be effective if we do not have legislation to show us what people own? Queen’s Speech after Queen’s Speech has passed without action. Only a few weeks ago, the Government’s own counter-fraud Minister resigned, saying that that legislation was once again to be set aside. Today, it looks as if it may be delayed further. It must be brought forward as soon as possible.

At the heart of money laundering is the use of shell companies to hide the true nature of ownership behind layer after layer of needless complexity. That lack of transparency is the fraudster’s friend. Reform of Companies House is long overdue, but, again, pledges to reform it have not been matched by action. If we are serious about policing kleptocracy and fraud, we have to change this situation and empower our register of companies to be a regulator, not just a library of information—and sometimes a library of dodgy information at that. The recommendations of the Intelligence and Security Committee’s report on Russia have to be implemented. Our agencies have to be resourced to use the powers that they have, otherwise the legislation that we pass in this place is just bits of paper. We also have to be alive to the network of enablers who act as the praetorian guard for the oligarchs here in the UK.

As has already been said, it is not only money that is laundered here, but also reputations. The donation to a university, the purchase of a football club, the sponsoring of a gallery, donations to the Conservative party—all that is designed to burnish the reputations of those involved. In the whole history of this, one fact stands out: the interests of finance have trumped those of security. Then, when people call this out, there is the punitive legal action designed to shut people up and designed to stop the brave investigative journalists whom we should be thanking for the work they have done in exposing what is happening.

The Prime Minister’s defence yesterday was to accuse those of us who question many of these actions of Russophobia, and indeed the Minister repeated that today in her opening remarks. Does she, and does he, really think that the CVs of those involved in this are those of ordinary Russians? Russia is a country where the vast majority of the wealth is owned by about 500 people. We should not confuse those who live off Russia’s wealth with the sweat and toil of the Russian people who created the wealth in the first place. That is no defence for the funding of the Conservative party, and it is no defence for the actions of oligarchs. How does the Prime Minister think they made their wealth in the first place? They did it with the support and backing of the Russian regime. It is the wealth of the Russian people that is being laundered, not the proceeds of exceptional talent or enterprise or creativity or ingenuity.

We stand at a dangerous moment, one that requires not only unity between allies but resolve, for weakness here will be noticed by those elsewhere in the world who are looking for territorial gains. This is not just a matter of finance; it is a matter of national security, and that means the maximum package of actions. It means sticking to the red lines that we have set. That is what we urge the Government to do, and it is action that today’s Labour party will support.