Criminal Finances Bill

Debate between Richard Arkless and Roger Mullin

Wednesday 26th April 2017 Commons Chamber

[Richard Arkless (Dumfries and Galloway) (SNP)]

Unlike some other Members, Madam Deputy Speaker, I did not make my maiden speech with you in the Chair, but I seem to have made a number of speeches in front of you, although some have been made to an empty Chamber. Perhaps, if we are both lucky enough to be re-elected, we will not be drawing the short straw during the next parliamentary term.

As the Minister said, the Bill’s passage has been widely consensual and co-operative. We have managed to work together across all party boundaries in Committee, at various meetings, in discussions with the Minister and during debates on the Floor of the House. We have reached a point at which we think that the Bill is a very decent start towards the longer-term goal of tackling and eradicating financial criminality. I think that everyone agrees with those aims. Of course, we think that the Bill could be improved, and I am sure that the Minister will be minded to agree, in theory, with the principles of the improvements that we envisage. I trust that we will work on that as time goes on.

Touching now on some of the Lords amendments, I was delighted to hear the Minister say that the threshold for unexplained wealth orders will be reduced from £100,000 to £50,000 pursuant to the submissions we made in the Bill Committee. It was gracious of the Minister to give us that credit at the Dispatch Box, and it is taken graciously. There are very good reasons why the threshold should be £50,000, and the Minister acknowledged them in his speech. The last thing we want is something in the terms and conditions—the facets and facilities—of an UWO that could be used by the criminals to get one step ahead and subvert that process. Bringing the threshold down goes a long way towards closing off the gaps for the criminals; I thank the Minister for that and am glad that this change will be in the Bill in its final form.

The inclusion of betting slips as a form of cash in the Bill is also welcome. That was a Scottish National party election pledge, and we are proud that it has been delivered in the Bill.

My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) has made significant political waves on the issue of Scottish limited partnerships, and special mention must go to the journalists David Leask and Richard Smith from the Herald—as acknowledged by the Minister—who have done some great investigative journalism on this subject over the last couple of years.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I had not intended to participate in this debate, but just want to acknowledge the co-operative way in which the Minister has responded.

[Richard Arkless]

I corroborate that: the Minister has never given any indication at any point in the process that he does not agree with the thrust of what we have been saying. It is heartening to hear that he has corroborated our position in the consultation. My only request to him—and I will take him at face value—is that he and his Department show the same energy in tackling this issue beyond the consultation period, so that we can finally get rid of the scourge of the awful vehicle of the Scottish limited partnership, which brings this place and our economy into disrepute.

The question of compelling jurisdictions to publish registers of beneficial ownership has been a hot topic during the debates on the Bill. I would have preferred a situation where we could justify persuading or compelling overseas territories to publish registers of beneficial ownership, although we in the SNP would, rightly, always stop short of allowing this place to tell another jurisdiction what it can and cannot do; clearly, that is consistent with what we believe on constitutional issues. For that reason alone, I am pleased, although not overwhelmingly so, by the new provisions in the Bill. There is a commitment for discussions and an assessment to take place in relation to the information-sharing between the territories and the UK Government. We have had good and constructive discussions with all the territories and with the Government, and they all assure us that, on a 24-hour turnaround, information can be ascertained to aid the tackling of financial criminality in the UK. That is a good and reassuring assurance, but it must be documented and proved in this House.

Criminal Finances Bill (Sixth sitting)

Debate between Richard Arkless and Roger Mullin

Committee Debate: 6th sitting: House of Commons
Tuesday 22nd November 2016 Public Bill Committees

[Richard Arkless]

The SNP generally supports that proposition—we would prefer that Crown dependencies and overseas territories held publicly available registers of beneficial ownership—but to further a point that I made earlier, as the Scottish National party, we are obviously reluctant to compel this place in primary legislation to legislate for jurisdictions where it perhaps does not have locus. Proposed new section 2AA(5) in new clause 5 highlights the constitutional quagmire that that would put this place in. It states that this place would

“take all reasonable steps to support the Crown Dependencies to consent”.

Are we going to try to persuade them to consent? I do not quite understand what that subsection is getting at. If we have jurisdiction, we have jurisdiction; if we do not have jurisdiction, we simply do not have jurisdiction.

In conversations that I have had with the Jersey authorities—I have forthcoming conversations with the Isle of Man authorities, which sent me a similar letter, although I perhaps would not describe it in such terms—they have been at pains to stress that this place does not have competency to make such legislative provisions. I am minded to agree, even though I think it would be a good idea if they did, under their own steam, make those public registers available. Our position is that we support the proposition in principle, but we do not see that this new clause is competent, given the jurisdictional capabilities of this place over the Crown dependencies.

[Roger Mullin]

The SNP has been very supportive of everything today, but I have to say that for the past year and a half I have been having discussions with the Isle of Man authorities, including with the First Minister there, and I have found them genuinely willing to engage in discussions. I think that the language used about the Isle of Man was unfortunate.

[Mr Wallace]

As the hon. Lady rightly says, this subject has been raised significantly, both on Second Reading and elsewhere. New clause 21 would set a legislative timetable for the UK Government to ensure that overseas territories have a public register of beneficial ownership, and to work with Crown dependencies to achieve the same outcome. There is considerable interest in this specific issue and I am pleased that this amendment allows us to debate it. I understand where the Opposition are coming from and appreciate the desire for these jurisdictions to have publicly accessible registers of beneficial ownership information—David Cameron made this an ambition in 2015. I would be grateful if the hon. Lady clarified why she chooses to treat Crown dependencies differently from overseas territories when it comes to some of the measures; that would be helpful to all Members.

While the overseas territories and Crown dependencies are separate jurisdictions with their own democratically elected Governments, and are responsible for their own economic diversification and fiscal matters, we have been working with them on their role on company transparency. If public registers emerge as a new global standard, the UK Government would expect all relevant jurisdictions to meet that standard. However, it would be wrong to say that, in the absence of public registers, no efforts have been made to increase corporate transparency and tackle tax evasion and corruption. The Crown dependencies and those overseas territories with financial centres are already taking a number of important steps on beneficial ownership and tax transparency, which will put them well ahead of most jurisdictions. This includes some of our G20 partners and other major corporate and financial centres, including some states in the United States. These measures will prevent criminals from hiding behind anonymous shell companies and mark a significant increase in the ability of UK law enforcement authorities to investigate bribery and corruption, money laundering and tax evasion.

I asked officials whether there has ever been an example of our imposing legislation on the Crown dependencies. As far as we can find out, in recent history there has never been an example of our imposing legislation on Crown dependencies without their consent. That is important—we have not gone around imposing our will on Crown dependencies as we see fit. Where we have done so on overseas territories, it has been on very strong moral issues such as capital punishment. Both in Crown dependencies and overseas territories, people have moved quite significantly and, I have to say to the hon. Lady, far more significantly than in 13 years of a Labour Government. We cannot sit here and ignore the elephant in the room.

Under our Government, we now have a position where the debate in this room is about the word “public” and whether registers are going to be public. It is not about whether these islands and other places will have a central register of beneficial ownership. By next year, they will either have a direct central register or linked registers and that is 90% of the way. By the way, our law enforcement agencies will have automatic access to that information.

The best thing, in my view, would be to say, “Yes, we know what David Cameron’s intention was in 2015 when he made that statement; yes, the United Kingdom pretty much leads the world in making our register public for the whole of the United Kingdom”, but also to say, “Let us revisit this once we get the Bill through, once we see whether our law enforcement agencies can use that access to prosecute, deter, change culture and show the way forward.” If that is not happening, of course we can have these debates again, but we should recognise that a lot of those countries have moved without our imposing our will on them, and we are hopefully giving access to our National Crime Agency and HMRC—all the things that we struggled to get for very many years. Let us see where that journey takes us. Our intention is clear. We pretty much lead the world in this. I urge hon. Members to recognise that we are going a long way.

Maxwellisation Process

Debate between Richard Arkless and Roger Mullin

Thursday 17th November 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is indeed an honour to serve under your chairmanship, Madam Deputy Speaker. One thing I know about your good self is that any interventions or judgments that you make in the course of the debate will be both independent and timeous—matters not unconnected to this debate. I say from the outset that my intention is to raise an important matter for discussion. I do so with humility. I do not pretend that I have all the answers, which may come as a major shock to many of my hon. Friends.

On a number of occasions here, I called for the early publication of the Chilcot report. I was met with sympathy from the Government, but it was clear that one reason for such a long delay in the publication was the Maxwellisation process that Sir John Chilcot chose to follow, when there was no statutory requirement at all for him to do so. It is also very clear that there has been a gradual adoption of the Maxwellisation process in areas of investigation and reporting which fundamentally calls into question whether reports are, in fact, truly independent.

In response to a query from my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) a short time ago, and to put it in layman’s terms, I should say that Maxwellisation is the process of sending extracts of reports to individuals who are criticised in some way, allowing them in many cases an extraordinary length of time to respond. We then are blind as to how far their responses lead report authors to change their judgments. This is not just a process of checking the facts, as competent inquiries will check the facts as they go along. This process allows individuals facing criticism to challenge the interpretation and judgment of report authors. That is a fundamental undermining of the independence of those report authors and it does a disservice to the House.

My own background makes me rather sceptical of, and concerned about, the approach. For well over 30 years, I ran a series of small research companies, and we were often commissioned to undertake investigations into organisations of many sorts, often involving the behaviour of groups that were undertaking activities that were disadvantageous to the organisation or the wider society. It would not be unreasonable to say that all my past clients valued the fact that at the end the day they knew they would be getting my conclusions and my recommendations alone. They might have gone on to criticise and debate those recommendations or amend them, but what they valued most was that somebody was investigating a situation and was willing to draw conclusions independently that could then set an agenda for others to pursue.

In another part of my life, I was sometimes involved in academic research. Much of the greatest academic research that is undertaken in, for example, the social sciences explores the role of human behaviour, often citing individual instances, but there is no requirement for academic authors to return to the individuals dealt with in their studies and ask them to comment on their interpretations. Indeed, that would be considered bad practice, as it would undermine their academic freedom. When it comes to politics, however, over the years we have developed for the House of Commons a process that allows people who are subject to criticism to be the only ones who are given sight of what is going to be said, and the only ones who are allowed to respond to authors.

Why has this issue arisen? Originally, the so-called Salmon letters emerged from an inquiry undertaken by the Royal Commission on Tribunals of Inquiry, which reported in 1966. The letters were intended to warn individuals of criticisms and give them an opportunity to respond, but the procedures set out by Lord Justice Salmon were heavily criticised for being more suited to an adversarial trial than to an inquisitorial process.

Then, some years later, along came that corporate crook Robert Maxwell. Maxwellisation developed from a judgment in a private action brought by him against the Department of Trade and Industry. Maxwell applied for an interim injunction to restrain inspectors from proceeding with their investigation. Mr Justice Forbes declined to grant the injunction, but said that natural justice demanded that draft conclusions that were critical of a person should be submitted to that person to give them an opportunity to respond. Maxwell then took legal action directly against the DTI. Mr Justice Wien found against him, and an appeal ensued.

Lord Denning, Master of the Rolls at the time, was one of the judges who heard the appeal against the second judgment, and he upheld Mr Justice Wien’s conclusions. Despite that, the myth has arisen that Maxwellisation developed as a result of a victory in court by Maxwell, although in fact he continually lost, and that Maxwellisation is a legal requirement, which it is not, although many people think it is. It is simply a kind of convention that has been adopted but has no legal force.

Creeping Maxwellisation has been leading to concerns in different areas. I have cited Chilcot, which was not a statutory inquiry but a Privy Counsellor inquiry established by my predecessor as Member of Parliament for Kirkcaldy and Cowdenbeath, but, more recently, the Treasury Committee has shown considerable interest in the subject. In April this year, it announced an inquiry into Maxwellisation. Its Chair, the right hon. Member for Chichester (Mr Tyrie), has been quoted as saying:

“It took seven years for taxpayers—who had to foot the £20.5 billion bail-out of HBOS—to obtain a full explanation of HBOS’s failure. Serious management, governance and regulatory oversight failures all contributed to the bank’s collapse. The seven year wait was prolonged”—

seriously prolonged—

“by Maxwellisation. The public will want reassurance that Maxwellisation is fair and proportionate, and does not lead to unacceptable delays…Maxwellisation was never intended to be a means by which interminable argument would develop about every last detail of a regulator’s report. To permit that would undermine confidence in the public review process.”

Indeed, it is perhaps not unreasonable of me to speculate that the lack of action against some rogue bankers was made easier by the absence of robust, independent reports.

One concern for those in favour of the process of Maxwellisation is that without it some individuals might be exposed to defamation action. I am guessing this might be a concern both for some individuals who are cited in reports in a critical way and for the report authors. However, I believe there is a means to bring Maxwellisation to an end without opening the prospect of defamation proceedings, thereby assisting both in having reports published more quickly and having greater confidence in their independence.

My understanding is that the best way to evade the legal difficulties raised by making criticisms of individuals without giving them the right to the process of Maxwellisation is to make the report of any inquiry a so-called return to Parliament. This was the case for the Scott and Hutton inquiries for instance. This ensures that the report enjoys the protection of the Parliamentary Papers Act 1840 and is subject to privilege. It is quite clear to me that there has been utterly inadequate scrutiny of the Maxwellisation process.

It is with great regret that I have to say that over many months I kept asking, very often at Business questions, “Where is the Chilcot report?” Many other Members were asking the same question. I am very sad now that I was unaware that there were ways in which we could have avoided this. I was unaware that Chilcot did not need to invoke a Maxwellisation process; it was simply his personal choice as chair of that inquiry. I think the time is coming when the Government need to think very seriously about whether this House is well served by a process that undermines the independence of reports brought it.

As I move towards a conclusion—I want to allow the Minister sufficient time to respond—I shall quote the journalist Chris Ames, who followed the Chilcot inquiry and wrote extensively on Maxwellisation. He feared that independence was being subverted in another way:

“Although the inquiry began in 2009, and all witnesses have had years to bring evidence to its attention, it appears that Maxwellees have been allowed to read and cite other confidential documents, besides those cited by the inquiry. Have any conditions or limitations been imposed on this exercise?”

We do not know. He continues:

“Without them, there is a clear risk that it could turn into an unlimited fishing expedition by Maxwellees in pursuit of material which would help their defence.”

How much new material they introduced into the process we still do not know.

In a former life—I have had many—I taught in the area of judgment theory. Those who have researched judgments know only too well that if we allow simply a one-sided process for people only to search out the evidence that suits them, we cannot have a balanced view. We cannot have confidence that we have a balanced view if the only people who were asked to submit to the report’s authors were those few who were criticised, but those who would make criticisms did not have the same rights of review, let alone, in the instance of Chilcot, the families who suffered the grievous burden of Iraq having the same rights as those criticised.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Does my hon. Friend agree that if the primary concern about Maxwellisation is the prospect of defamation, and defamation cannot happen unless the statement is false, would not one solution be that public inquiries get protection from defamation? Under Maxwellisation, the offended party could simply say, “It wasn’t me, guv” and persuade that there is an action for defamation, and then all those allegations fall. There is a simple solution, is there not?

[Roger Mullin]

I defer to my hon. Friend, who is a distinguished lawyer trained in both the Scottish and English jurisdictions. I would hesitate to criticise him at all. It strikes me that he is making another intervention on a reasonable point that the Government should consider. I hope that the Minister will respond in the same spirit and let us seek solutions that will allow us to preserve the independence of reporting to this House.

Criminal Finances Bill (Second sitting)

Debate between Richard Arkless and Roger Mullin

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[Roger Mullin]

Q Are you content with what exists?

Nausicaa Delfas: Yes.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Q I would like to push Ms Delfas on the point about banking culture. Do you see a link between banking culture and criminality? Do you think that a bad banking culture—to put it in layman’s terms—could be a conduit for criminality, or could exacerbate the potential for criminality in the financial sector?

Nausicaa Delfas: Obviously, we regard banking culture as incredibly important. We believe that it should be driven from the top down. We have not seen connections with criminality. We actually see that a lot of the sector operates well. Where there would be any issues around crime, they would obviously need to be detected and rooted out.