Criminal Finances Bill — House of Lords, 2017-03-09
Topic: Law and Crime
Jeffrey Rooker (Labour, Centre-left): My Lords, I pay tribute to our colleagues in the Commons for their work on the Bill. I will single out Dominic Raab, Margaret Hodge and Tom Brake The Bill does not reach all the parts that need reaching on financial crime, but it is progress. It remains the case that not a single UK financial institution has faced any criminal charges as a result of the 2008 financial crisis. Only individual employees have been charged. The employers—Barclays, USB and Deutsche Bank—have not faced charges, and we have the ludicrous position that it is still not illegal under current UK corporate liability law for companies to mislead their auditors I shall say one word on Brexit. As we seek new trading arrangements and relationships, it is crucial that our corporate liability regime is broadly equivalent to that of our major trading partners. In this respect, it is very worrying that the recent case, already referred to, of Rolls-Royce, reported extensively in the Financial Times on 21 and 22 January, might affect our trade deals. For directors to use nearly £700 million of shareholder funds to escape personal liability for their actions or the actions of those they supervise is questionable. The Serious Fraud Office must clean this up—but in view of my previous parliamentary run-in with Rolls-Royce in 1980, I will say no more. I shall make four brief points. The first is on unexplained wealth orders. They are proportional and measured and are subject to judicial oversight. In respect of overseas politically exposed persons, they are really useful as they do not require suspicion of serious criminality. The key issue is the laundering of money from overseas in the UK. As the noble Lord said, it should be easier for UK law enforcement to investigate and act on the wealth of kleptocrats and corrupt officials In February last year, I was on the first UK kleptocracy tour. I was the only parliamentarian amongst the researchers, campaigners and journalists—but it was on a Thursday. The tour was specifically in respect of Russians and Ukrainians buying property in London. I will give two examples from the eight tour stops. We started in Whitehall at the property lying above the Farmers Club at 4 Whitehall Court. Flats 138A and 138B were purchased by Igor Shuvalov, ranked the fifth most powerful official in Russia, for a sum of £11.44 million—some 80 times his salary. The Russian register of companies shows that he and his spouse have the beneficial ownership of the company, Sova Real Estate, which owns the apartments. They operate care of Tulloch & Co., Hill Street, London We were treated at each address to the story of who allegedly lived there, how much was paid, who owned it, where the money came from, and a magical mystery tour through the British Overseas Territories and local authority files on planning applications. We parked outside Witanhurst Place, Hampstead; a home second only to Buckingham Palace in size. It was built originally by a British soap merchant in the 1920s and is now worth £300 million. It was purchased through a British Virgin Islands company by Andrey Guryev, then a Russian senator, who in 11 years never included it in his asset declaration My second point is on the anti-money-laundering rules. The new corporate offence of failure to prevent tax evasion in the Bill, which has already been referred to, should be applied to economic crimes such as money laundering. This is an essential next step. I often wonder why more attention is not paid to the lawyers and estate agents involved in property sales such as those to which I have just referred. They are usually smart, blue-chip operations that do not like the searchlight of sunshine on their activities. As far as I know, no bank has ever been prosecuted in the UK for laundering corrupt wealth from another country We need to catch up with the United States’ anti-money-laundering legislation regime and—wait for it—the EU directive on human trafficking and money laundering, which has a corporate liability formula stronger by far than the current UK regime. The UK Government promised to catch up but never have. Is it not ironic that we are going to catch up with the EU as a result of Brexit On 18 June 2015, I initiated a short debate in Grand Committee on the Transparency International report on how corrupt capital is used to buy property in the UK. I want to remind the Minister of just one recommendation in the report. This is not the first time I have raised this with the Government—these are not new issues. The recommendation was touched on by my noble friend from the Front Bench. It is that there should be greater co-ordination between the 27 anti-money-laundering supervisors in the UK I got nowhere with the Minister in the Moses Room or with his letter afterwards. This issue still needs to be addressed. The lack of co-ordination means that there is a failure to identify risks; the approach to enforcement is inconsistent, and is not transparent or effective; and there are conflicts of interest. As my noble friend said, 15 of the supervisors are lobby groups for the sectors that they supervise. Only seven control for institutional conflicts of interest and, in a survey, one even admitted to carrying out no targeted anti-money-laundering legislation monitoring at all during 2013. What are the Government doing about this and why is it not in the Bill Public procurement—this is my third point—is not in the Bill and ought to be. The Government appear to have a blind spot regarding corruption in public procurement. However, the NHS and local government are potential massive risks in the awarding of contracts. In the local government case, of course, it owns very substantial physical assets. At the Government’s anti-corruption summit in 2016, they committed to introduce a conviction check process to prevent corrupt bidders winning public contracts. This promise has not been implemented. Furthermore, there is no public information on its progress I have a proposal—I have come with a positive suggestion. The Government should ask their own anti-corruption champion, Sir Eric Pickles, to conduct a review at national level to assess the risks of corruption in local government and the NHS, with particular reference to procurement. Very high standards are observed by councillors and officers, but they are undermined by cases of misuse of position A Transparency International report on the conditions for local government corruption found that the following were present: low-level transparency, poor external scrutiny, networks of cronyism, lack of resources to investigate, outsourcing of public services, significant sums of money in play, a decline in the robustness to resist corruption and the reduced capacity of our local press. Sir Eric should be asked to look into this area My final point is to pay tribute to Bill Browder, chief executive of Hermitage Capital and author of Red Notice. I have not met Mr Browder, although I was present at a meeting in the Commons in 2015 where he spoke. I had previously read Red Notice and said at the meeting that I shed a tear as I read the part of it relating to the death of his lawyer, Sergei Magnitsky. I cannot see how anyone would not need a tissue as they read the account of his murder in a Russian prison I salute Mr Browder for his dedication and perseverance in trying to bring those guilty of the murder of his lawyer to justice—and for his sheer bloody-mindedness. Chasing them legally around the world, and now in this Bill, is a must. The Minister must also confirm what was said in the Commons: that the Government will use the powers in the Bill. I support it.