Economic Crime (Transparency and Enforcement) Bill — House of Lords, 2022-03-14
Topic: Law and Crime
Susan Kramer (Liberal Democrats, Centre to centre-left): My Lords, I will try to be brief on this issue. Amendments 40 and 41 both refer to whistleblowers and protection for them. Whistleblowers will be absolutely crucial if the register proposed in this legislation is to be accurate, but they will also be crucial for unexplained wealth orders and sanctions to be fully effective. Where those whistleblowers expose kleptocrats, hidden assets, money-washing schemes and individuals linked with owning, hiding and laundering, they will be taking really serious risks, both for themselves and for their families Confidential disclosure to a regulator or an enforcement agency only sometimes provides anonymity. It may be obvious who the whistleblower is because the information is held by so few people, or, as we have seen in many instances, it may be that the less scrupulous—whom we are going after—hire investigators in order to expose the identity of whoever spoke out At the very least, we need to be sure that there are genuine safe disclosure channels, and they need to be communicated in a very powerful way to everyone who might have information. The risk is not just physical harm by criminals, although that comes to mind when we think of the particular pool of individuals that this legislation is aimed at; it is also retaliation by enablers—the banks, the legal firms, the accounting firms and others. I fear that they have an unfortunate track record of quite devastating retaliation. Some obviously are very much better than others, but I anticipate that the kinds of entities that are sufficiently lax internally that they are willing to provide support to those engaged in money laundering and whose money has come through kleptocracy will be among the sternest in using retaliation against a whistleblower Individuals who lose their job or their contract are informally but effectively blacklisted—that probably is the least of their problems. Those who lose their jobs turn to employment tribunals. I know that the Government often pray in aid employment tribunals, but I suspect that many people are not aware of how costly an employment tribunal is for the individual seeking to make their case: we are talking about thousands of pounds and it can easily reach £100,000 or more. The entity they are up against can obviously afford the best lawyers and the most significant QCs. It is also very possible for an employer to string out an employment tribunal through various legal tools. Three years is not at all unusual, and seven years is not unknown, even for a successful whistleblower. During that time, the whistleblower has no income and must pay the high legal costs, with all the consequences for their family and their friends, from whom they borrow. This inequality of arms and the general stress of the whole process force many whistleblowers to settle and to sign agreements that prohibit disclosure The Government will say, "They can always make disclosures to regulators and enforcement agencies", but it is certainly true that many whistleblowers become so afraid after they have been through the grinder of this process that they do not even dare to do that. This is part and parcel of how legal firms and others try to shut down anyone exposing wrongdoing by the powerful. We discussed SLAPPs at Second Reading, when my noble friend Lord Thomas went through some of the kinds of strategic lawsuits against public participation that have been levied against authors and journalists who have exposed kleptocrats. Imagine that same energy and attention turned on someone who is seen as an insider or an employee—it would be an even more bitter and devastating reaction The United States knows the value of whistleblowers in a way that is, frankly, ignored in this country. It is why we have a history of so many fewer prosecutions and convictions. Indeed, most financial scandals are exposed first by the Americans. You can almost go through a list—if there is any American connection, you can pretty much guarantee that it was a US agency that first exposed the problem. US prosecutors, and I have talked to many, will tell you that at least half of the convictions for financial crime in the US depend fundamentally on whistleblower evidence. Whistleblower evidence also assists in many more cases. In this country, if you ask the regulators and enforcement agencies, they will say that whistleblowers make only minor contributions. That may explain why prosecution in this country is, frankly, quite rare Last year, the United States, in anticipation of the issues we are facing now, passed the Kleptocracy Asset Recovery Rewards Act with extraterritorial reach, both as an incentive to whistleblowers and to compensate them for what are recognised to be career-ending and, in these particular instances, potentially life-threatening disclosures. There is a very interesting preamble to the legislation that makes clear the depth of concern that Congress had. At this moment, I would have to say to any potential whistleblower in a case where there is the slightest US connection, "Go to the Americans, your information will be taken seriously, you and your family will be protected and you will not end up ruined". I cannot say the same thing to any potential whistleblower here in the UK and I think that has to change, and quickly.