Business Banking Fraud

Debate between Stephen Kerr and Jo Stevens

Tuesday 9th October 2018 Westminster Hall

[Stephen Kerr (Stirling) (Con)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I thank my hon. Friend the Member for Hazel Grove (Mr Wragg), who secured this debate, for an excellent and powerful speech.

I will refer straight away to the speech made by Andrew Bailey of the Financial Conduct Authority at its annual public meeting just a month ago, in which he said the following, which I find quite shocking:

“Given the serious concerns that were identified in the independent review it was only right that we launched a…investigation to see if there was any action that could be taken against senior management or RBS.”

He was talking about the Global Restructuring Group, or GRG. He went on to say:

“It is important to recognise that the business of GRG was largely unregulated”—

what a telling statement—

“and the FCA’s powers to take action in such circumstances…are very limited.”

Surely that is where we have gone wrong—commercial lending to businesses was “unregulated” to the extent that those businesses were vulnerable to the indiscriminate action of the banks. I will leave the rest of that statement unread.

I also thank my hon. Friend for his fitting use of the metaphor of Lady Justice to represent the dire situation that so many business owners face. Indeed, I suggest that Lady Justice is not only blind and has her arms tied firmly behind her back but is gagged and silenced. Onerous gagging clauses were incorporated into confidentiality agreements, with the effect of silencing witnesses and ensuring that justice is never done. The use of those gagging clauses ensures that organisations responsible for wrongdoing can not only conduct an operation of denial and obstruction of justice but use the clauses as a tool of abuse, to suppress any evidence of criminal behaviour. We are aware of several instances of gagging clauses that specifically state that an individual is unable to voluntarily approach the police or regulators with concerns about potential criminal activity. Let us be clear: that is unacceptable.

At this point we need to turn to the solicitors who are, quite frankly, aiding and abetting concealment of potential criminal activity by writing contracts that contain such onerous gagging clauses. In essence, they are bullying victims into silence and preventing them from discussing their case with those who are there to protect them: the police, Members of Parliament and regulators. That is a deeply troubling fact.

One pertinent example of such practice, cited on numerous occasions by the hon. Member for Cardiff Central (Jo Stevens), is a constituent of hers who accused Lloyds Banking Group plc and the Law of Property Act receivers, Alder King LLP, of a fraud that robbed them of their business and their livelihood. Once the allegations were made by the individual to the bank, Lloyds Banking Group plc proposed to forgive the constituent’s indebtedness, which had ultimately been caused by the actions of the bank and Alder King LLP, in exchange for the signing of a confidentiality agreement that would have prevented any further discussion of the case. Thankfully, the constituent declined the offer, making it possible to discuss their case here today. It will be clear to everyone in attendance today that that tactic was used by the banks and their solicitors to hide abuse and allegedly criminal activity.

The Solicitors Regulation Authority, which is the regulatory body for solicitors in England and Wales, has a duty to society, and I encourage it to issue very firm guidance to prevent solicitors from contractually silencing allegations of criminal conduct.

[Jo Stevens]

I am grateful to the hon. Gentleman for giving way and for his reference to my constituent, Mr Shabir. In Mr Shabir’s case, not only was a gagging order presented to him, but he also has a legal opinion from Queen’s counsel saying that a criminal fraud has been committed against him. That is exactly the sort of circumstance that the hon. Gentleman is talking about.

[Stephen Kerr]

I thank the hon. Lady for her intervention. She made the point that I was just about to make, namely that it is not possible to contract out of criminal behaviour, and it may be that these gagging clauses are in fact unenforceable. However, that is not the point. Such clauses serve the purpose of instilling fear and effectively silence concerns, and potentially suppress valuable evidence. The all-party parliamentary group on fair business banking and finance has found dozens of cases like that one, and people are scared.

Time and time again in this House, we call for transparency and we hear a lot of lip service about the industry’s commitment to it, but there can be neither transparency nor fairness if people are being subjected to onerous confidentiality agreements that prevent the investigation of allegations of criminal activity and obstruct justice, stopping it being served.

This issue should be deeply troubling for all Members of the House. Greater scrutiny must be applied to the use gagging agreements and the role they play in the concealment of criminal activity.

Carillion: TUPE

Debate between Stephen Kerr and Jo Stevens

Wednesday 21st February 2018 Westminster Hall

[Jo Stevens]

The hon. Gentleman mentions the Government taking responsibility and not standing back and doing nothing. Does he agree that, given the company’s three profit warnings, the Government should have done something before the collapse?

[Stephen Kerr]

Many issues relating to those profit warnings and the circumstances leading up to them need to be thoroughly investigated. Yes, at some point all of the stakeholders involved in this rather sorry story will have to explain and account for their decisions. That is right and proper and the way in which we run things in this country. We will learn from what we discover as we go through the process of inquiry. However, I congratulate the Government on acting pragmatically.

I now ask the Minister to act pragmatically on behalf of those workers who have moved from employment with Carillion to employment with a new private employer. We all know of the limitations of the regulations as things stand: TUPE applies only when a worker is transferred to a new company from an existing functioning company; it does not apply in the event of bankruptcy proceedings or analogous insolvency proceedings. I therefore ask the Minister to consider steps to provide, as my constituent said, some form of justice to Carillion workers who are transferred—thankfully, at one level—to another private company. Surely something can be done to protect the pay and conditions of those workers, because that is what would have happened had the contract changed hands: they would have been TUPE-ed across, as the saying goes. Instead, they have been caught up in the failure of Carillion.

It is wrong that these workers, through no fault of their own, should pay the price of lower pay and lesser conditions for doing the same job for a new company as they did for Carillion. When the Minister replies, I very much hope to hear that the Government will insist, at least in the transfer of public sector contracts from Carillion to new private companies, on a transfer of undertakings for the workers affected.