Economic Crime and Corporate Transparency

Lord Browne of Ladyton Excerpts

Committee stage
Thursday 27th April 2023 Grand Committee

That is enough from me. I apologise for going on so long, but I promise that I shall remain for the remainder of the sitting of the Committee, unlike on Tuesday. I urge my noble friend the Minister to take a deep breath and to accept that if he agrees with me, my noble friends Lady Morgan, Lord Sandhurst and Lord Agnew, the noble Lord, Lord Fox, and, no doubt, other noble and noble and learned Lords, he will never find a friendlier group of collaborators. I urge him—perhaps while nobody is looking—to grasp this opportunity and move corporate criminal law somewhere close to the 20th century, even if he will not come as far as the 21st.

[Lord Browne of Ladyton (Lab)]

My Lords, I associate myself entirely with the remarks of appreciation and thanks made by the noble and learned Lord, Lord Garnier, to the Minister and his team for their engagement on all aspects on the Bill—to the extent that I have been engaged in them, but I think I speak for everyone when I say that.

To summarise in a blunter way what the noble and learned Lord, Lord Garnier, was saying, I suspect that if we in this Committee voted on this issue, and indeed on all the amendments tabled by members of the Committee, the Minister would find himself in a minority of two. My sense—to the degree to which I can be relied upon to have the ear of Parliament—is that, when this comes back on Report, it will not be difficult to persuade a substantial majority in your Lordships’ House to vote for these. There is also a strong echo of support coming from the other House; anyone who has read the Commons Report stage from 25 January will know that there is overwhelming support there for this trend, if not the specifics.

I intend to restrict my remarks to the two halves of the loaf described by the noble and learned Lord, Lord Garnier, but I support all the other amendments. I do not need to go through them, although I may have something to say before I sit down about the amendments from the Select Committee that I had the pleasure to serve on, since for personal reasons I may need to leave the Committee earlier than I would have hoped.

As we have heard, the new clauses are welcome in so far as they impose a duty to prevent fraud in large organisations. Helpfully, the main amendment and consequential amendments from the noble Lord, Lord Fox, would invert the Government’s approach whereby we can amend to remove the applicability to large organisations. I have to say that the existence of that provision suggests that the Government think they may need to do that. Instead, the amendments would extend the Government’s failure to prevent offences to all relevant organisations regardless of size.

If the Bill is to fashion the real cultural change that has been promised, that approach is surely better calculated to achieve a sweeping change, analogous to that achieved by the Health and Safety at Work etc. Act, which has been referred to in debates. It is not just about imposing these measures on the companies and associates themselves, but ensuring that this becomes part of public, business and, in particular, corporate consciousness, empowering individuals to identify and report crime—particularly fraud and money laundering, which are the main crimes being committed in the economic crime environment—they feel is taking place.

In support of the remarks of the noble Lord, Lord Fox, about the vulnerability of SMEs to crime, I shall refer to a couple of headline statistics that could be useful for context. For example, the US-based Association of Certified Fraud Examiners found that private companies and small businesses have the most fraud simply because of the lack of internal controls, which we see as a regulatory burden, but they do not need to be as they would help these businesses to protect themselves from fraud. Fraud was proportionally significantly greater in these businesses than it was in larger companies.

On 25 January, on the second day of Report in the other place, John Penrose’s argument in his intervention on Stephen Kinnock is an interesting one, in that it fundamentally challenges the Government’s assumption about a duty to prevent imposing an unreasonable and unbearable burden upon small businesses. It suggests instead that a simple duty to prevent could not only reduce the burden of criminality but

“sweep away a raft of largely ineffective and deeply costly measures, and replace them with something that is simpler”

and “more effective” for small businesses.

In a statement on 11 April, Spotlight on Corruption stated:

“The carve out for SMEs is … desperately short-sighted and entirely unnecessary … By including this exemption, the government has deprived the corporate sector as a whole of the full benefit of this offence. SMEs are known to be at a high risk of fraud, and encouraging them to have appropriate anti-fraud procedures would not only help prevent fraud, but also better protect them from becoming victims of fraud”.


As Robert Buckland reminded the Minister on 25 January, the 2015 Conservative manifesto

“rightly committed the Government to make it illegal for companies to fail to put in place measures to prevent economic crime”.—[Official Report, Commons, Economic Crime and Corporate Transparency Public Bill Committee, 25/1/23; cols. 1057-61.]

In what respect does that commitment not find an echo in calls to ensure that this failure to prevent is in operation throughout the economy, rather than just in companies that sit above what appears to be an arbitrarily drawn threshold?

The Government’s attempt to draw a false dichotomy between corporates and smaller companies fails to appreciate that all these sectors are inextricably linked. There is no Chinese wall between corporates and small businesses. In terms of fraud and money laundering, money is directed to where its origins and purpose will get the smallest amount of scrutiny. It would be extremely easy for companies to restructure themselves to ensure that they could limbo under the bar of meeting the test of being a large organisation and ensure that they avoid being subject to this duty to prevent. There is certainly no shortage of people out there who seem willing to enable them to restructure their businesses in ways that achieve this objective, directing them to where the origins and purposes will receive the smallest amount of scrutiny.

--- Later in debate ---

I thank my noble and learned friend Lord Garnier for tabling Amendment 100, which would reform the mechanism for corporate attribution—the “identification doctrine”.

[Lord Browne of Ladyton (Lab)]

I apologise to the Minister; I should have intervened slightly earlier. If the Minister has data on the likely cost of the extension of the provisions in the Government’s amendment to small and medium-sized enterprises, I think that all Members of the Committee would like to see it, including how it could be disaggregated. To make a proportionate decision, surely it would need to be accompanied by the Government’s estimate of the loss to small and medium-sized enterprises caused by fraud. Given the scale of fraud in this country, it must be significant. Personally, I would like to have the opportunity to compare what this is likely to cost against what fraud already costs small and medium-sized enterprises.

[Lord Sharpe of Epsom (Con)]

The noble Lord makes a good point. As I have said, I will endeavour to find some more figures and share them more broadly. I do not know whether it will take into account the precise analysis that the noble Lord seeks, but the fraud strategy is imminent and it would be strange to publish a strategy without saying what the strategy is there to address. Once again, I am piling all my faith into the fraud strategy—possibly misplaced faith, who knows?

Hate Crime

Lord Browne of Ladyton Excerpts

Monday 24th April 2023 Lords Chamber

[Lord Sharpe of Epsom (Con)]

On the noble Baroness’s latter point, she is right: in the year ending March 2022, there was a 26% increase compared to the previous year. Although the latest data does indicate that increase, the most recent Crime Survey for England and Wales figures, which were published in 2020, indicate a downward trend in overall hate crime incidents over the past decade. It is felt that the biggest driver for the increase in police-reported crime is likely to be general improvements in the recording of the crime. The police are also better at identifying whether a crime is a hate crime, along with increased victim willingness to come forward. As regards the publication of the data that we are collecting as of 1 April, I cannot say for sure yet. It is for 2023/24. It is voluntary at the moment, but it will be part of the annual data requirement. The Home Office statisticians will make an independent judgment as to whether it is fit for publication or not.

[Lord Browne of Ladyton (Lab)]

My Lords, hate crimes have developed incrementally. First, they were targeted at racially motivated offences, before broadening into the five strands to which the noble Baroness’s Question alludes. So this should remind us that their current state is a snapshot in time. We must always review these things to extend further protections where they are necessary; that is how we got to where we presently are. So surely the routine disaggregation of annual data by sex would enable us to review whether there is a necessity of extended protections offered by hate crime laws to women and girls, in a way that is better informed than it apparently is at present?

[Lord Sharpe of Epsom (Con)]

The noble Lord raises a good point. Of course, the Law Commission did look into this—a subject to which I am sure I will return. But the recording for hate crimes in terms of the sex of the perpetrator is actually very complex. The Ministry of Justice holds court criminal data; the sex of perpetrators is published for all crimes prosecuted that are specified in legislation, including hate crime offences such as racially and religiously aggravated assault, as the noble Lord has suggested. But where a sentence uplift is used because there is evidence of a hate element in the offence, it will be recorded under the offence legislation, not the uplift. Therefore, the sex of the perpetrator, while published, is not always linked to hate crime. Consequently, the data is not a complete representation of all hate crime and will not provide an accurate picture of the sex of the perpetrators.

Asylum Seekers

Lord Browne of Ladyton Excerpts

Tuesday 17th January 2023 Lords Chamber

[Lord Murray of Blidworth (Con)]

Yes. Any such revised guidance will take into account input from a whole range of stakeholders, no doubt including those of the type mentioned by the noble Baroness.

[Lord Browne of Ladyton (Lab)]

My Lords, I know from my own experience when I was Minister for Immigration that when backlogs are large it is imperative to look after the most vulnerable people in custody. Why then did the Home Secretary end the system of annual investigations into the treatment of vulnerable adult detainees? Is the detention system working so well now that these investigations are no longer necessary, or are there some other protections for those people to ensure that the welfare of vulnerable adult detainees has not been compromised?

[Lord Murray of Blidworth (Con)]

Certainly the inspection of detention facilities will continue. I am not aware of any change in policy in relation to the particular category of detainees that the noble Lord mentioned, but I will make inquiries in the department and write to him on that.

Police: Employment and Discipline

Lord Browne of Ladyton Excerpts

Monday 9th January 2023 Lords Chamber

[Lord Sharpe of Epsom (Con)]

From memory, there is a face-to-face aspect to the vetting and interviewing process—if I am wrong on that, I will come back and correct myself. On the report to which the noble Lord referred, he will be aware that there is a requirement for policing bodies to provide a response to the recommendations in that report within 56 days of its publication. Those responses will be imminent, in that case.

[Lord Browne of Ladyton (Lab)]

My Lords, the Met’s own figures show that the number of officers suspended from duties on full pay has risen by almost 600% over the last three years. This excludes a growing number of others subject to management or restricted duties owing to concerns about their performance or conduct. This is not a statistical quirk but a consequence of systemic issues with the disciplinary procedures. This needs to be addressed urgently, because it affects forces across the country and compromises the safety of the people whom these police officers serve. We do not have time to wait for a review; it needs to be dealt with now.

UK Asylum and Refugee Policy

Lord Browne of Ladyton Excerpts

Friday 9th December 2022 Lords Chamber

[Lord Browne of Ladyton (Lab)]

It is a privilege to follow the noble Baroness, Lady Nicholson. We have heard three excellent maiden speeches: I thank my noble friends Lady Twycross and Lord Sahota and the right reverend Prelate the Bishop of Leicester for their excellent contributions. I thank the most reverend Primate for the opportunity to debate this important question today. It is timely for many reasons: in addition to the seasonal context offered to us by the noble Lord, Lord Cormack, my noble friend Lady Chakrabarti reminded us that tomorrow is Human Rights Day.

Only two weeks ago, the Home Secretary admitted that we have “lost control” of our borders. In that loss of control, we have a gridlocked asylum system: 144,000 people are awaiting an initial decision on their asylum applications. For six months or more, 70% have been unable to work, to access key services or accommodation and, most importantly for a significant proportion of these people, to live without the fear and torment of being sent back at the risk of persecution and torture. Over a third are from five countries with grant rates of 80%, meaning they will likely have a legitimate claim to asylum.

As the noble Lord, Lord Carlile, emphasised, within this appalling chaos, there are children at risk. In the year to September, of those who applied, over 14,000 were children, including 5,152 who were unaccompanied, and far too many have gone missing and disappeared, including 39 child refugees in Kent. The Home Office has a legal duty to safeguard the welfare of those children, which it is failing to do. Not only have children gone missing but there was a 212% rise in age disputes this past year. It is worth emphasising that the Home Office policy on this was revised so that those who look “significantly over 18” are treated as adults, a policy which has resulted in children as young as 14 being placed in immigration detention or alone in adult accommodation facing significant risk of harm. That is a breach of our duty of care and of the provisions of the UN Convention on the Rights of the Child and our own consequent legislation.

I will now ask the Minister a question that he must have anticipated. I will quote Tim Loughton’s question before the Home Affairs Select Committee on 23 November. He role-played as follows:

“I am a 16-year-old orphan from an east African country escaping a warzone and religious persecution, and I have a sibling who is legally in the United Kingdom … What is a safe and legal route for me to come to the United Kingdom?”


If he is unable to better the Home Secretary’s floundering and seeming inability to provide a coherent answer and her Permanent Secretary’s offer that they should engage with the UNHCR—while, at the same time, admitting that there are many countries in Africa and, indeed, elsewhere where it is not possible to apply for asylum via the UNHCR—should we infer that the principles informing contemporary UK asylum and refugee policy are not in compliance with the refugee convention and that that is by design?

My final point is about the Government’s now-notorious Rwanda policy: an immoral policy that shames Britain. On the release of government documents about the process by which Rwanda was selected for the offshoring of asylum seekers, we saw the degree to which the then Prime Minister and the Home Secretary overrode the concerns of senior officials, their own equality impact assessment, the UNHCR, the British high commissioner in Rwanda and the UK’s Global Ambassador for Human Rights. So we have spent £140 million, but what have we received in return? The answer is: the prospect of years of ongoing litigation, disquiet among many of our key allies and partners, the disapproval of the UNHCR and other supranational agencies, and a further erosion of our reputation for compassion and adherence to international law.

In its latest country report, the US State Department said that among the things that characterise Rwanda are arbitrary detention, ill treatment, torture in official and unofficial detention and the fact that fair trial standards are routinely flouted. Last Sunday, the US Secretary of State called President Kagame. He reported having

“discussed credible reports indicating that Rwanda continues to support the M23 rebel group and has its armed forces inside the DRC”.

In an Oral Question yesterday in your Lordships’ House, the noble Lord, Lord Goldsmith, twice reminded us that this egregious behaviour in sponsoring conflict in a neighbouring country undermines peace efforts and is causing insecurity and significant human suffering there, so much so that the FCDO has raised its concerns at the highest levels with Rwanda. How do our assessments of the robustness of judicial systems, the likelihood of arbitrary arrest and the propensity for agents of the state to use torture in Rwanda differ from that of the US State Department? I am interested to know whether we have a superior methodological practice that might explain this disparity in outlook.

Of course, the Government are right to emphasise the importance of breaking the grip of people smugglers, but there is no evidence at all that the Rwanda policy will accomplish that. Since it was announced, the number of arrivals has gone up, not down. Cynics may be forgiven for thinking that the Government are happy to invest money in a policy that is purely symbolic. Small boat arrivals continue at record levels, due in part, at least, to a lack of safe and legal routes for asylum. We face significant systemic challenges to our immigration and asylum systems, and it is time we confronted them constructively and not just symbolically. I welcome this debate as a step towards doing exactly that, and I commend the most reverend Primate’s proposals as a good starting point, particularly when they are read in the context of the detailed interviews with my right honourable friend Yvette Cooper.

Metropolitan Police: Crime and Misconduct

Lord Browne of Ladyton Excerpts

Thursday 1st December 2022 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Gold, and I thank him for sharing his experience with us. Like others, I want to take the opportunity to thank the noble Lord, Lord Lexden, for securing this important debate. These issues affect millions of people’s lives every day. I commend him also for in a short time—10 minutes—making a compelling case for action now. In a sense, the rest of us are just corroborating witnesses to his introduction.

The thread that links together the concerns we have heard is accountability and it takes many forms: the accountability of those guilty of misconduct, of senior officers, including the Commissioner, to the Mayor of London and to the Home Secretary, and of all police officers to the public they serve. Surveys reveal that public confidence in the police has been in a downward trend from 2017.

Today, I want like others to focus on the accountability that the Government face for political decisions that may have exacerbated, and in some cases have exacerbated, the difficulties faced in holding to account officers guilty of misconduct and, much more importantly, ensuring that those likely to commit offences are debarred from joining the police force in the first place.

A key principle of good government is consistency. The last decade of Conservative Government—first in coalition and then straightforwardly—has seen an approach wildly at variance with that principle. Police numbers have been slashed: 23,500 police were cut because of the political decision to pursue austerity-related measures, only to be followed immediately by two years of equally grave announcements of the urgent necessity to increase police numbers back to the level at which they existed in 2010.

In the year to March 2022, we saw the hurried recruitment of over 12,000 new police staff, on top of a record increase the previous year. That extraordinary staff churn not only compromised the institutional memory of police forces up and down the country but exacerbated already weak vetting and disciplinary processes, as well as appalling and systemic levels of misconduct and crime among serving officers.

This is not just a problem for the Met. The Conservative PCC for Bedfordshire described the vetting process as being “massively overwhelmed”. The chair of the National Police Chiefs’ Council said that the process is overwhelmingly manual and that it must become automated for it to be appropriate for modern procedures. The HMIC recommended that the system be made more coherent, with mandatory procedures put in place in all forces.

On 2 November, reporting on his investigation into vetting, Matt Parr revealed that, of the 725 files examined, in 131 the decision to grant clearance was at least “questionable”. He found successful applicants who had criminal records, had been suspected of serious crime and had family links to organised crime or substantial debt. He found serving officers who had attracted allegations of serious misconduct who had transferred to the Met from other police forces across the country. His report also revealed significant faults with misconduct investigations into serving officers, some of whom had gone through these inadequate vetting procedures. In a fifth of cases he examined, in a masterpiece of understatement, he described himself as “unimpressed” by their decision-making. In previous statements, the inspector criticised the promotions system in the police as “inconsistent”, “ineffective” and “unfair”.

Clearly, there are structural weaknesses throughout policing: a vetting system that is weak and inconsistent; a defective complaints system allowing a minority of serving officers, with impunity, to create a toxic work culture riddled with corruption, casual racism, homophobia, misogyny, prejudice and a lack of care and sensitivity towards victims of violence against women and girls; and a promotions system which is far from meritocratic.

There are many hard-working and principled officers who remain within the system—including Sir Mark Rowley, the focus of this debate, and others—and I hope the Government will give serious thought to how they can best aid them in improving the institutional resilience and culture of our police service nationwide.

Scammers

Lord Browne of Ladyton Excerpts

Tuesday 15th November 2022 Lords Chamber

[Lord Sharpe of Epsom (Con)]

I absolutely agree. I also point out that banks are heavily involved with the awareness campaigns. Many noble Lords will no doubt have seen a recent advert put out by Santander to stop scammers which features Ant and Dec, when they are not busy in the jungle. Also, the Scams Prevention and Support Programme, delivered by Age UK and funded by Lloyds Bank, is aimed at older people and helps them to spot and understand scams, and to take action to protect themselves from becoming a scam victim. Of course, I also agree that it is emotionally devastating to be a victim of these crimes.

[Lord Browne of Ladyton (Lab)]

My Lords, today the National Audit Office published a report on fraud, which says in terms that the Government do not have the data they need to understand the full scale of the problem and are unable accurately to measure the impact of their own policies on this growing area of crime, which is 41% of crime in this country. A spokesperson for the Government said, as we can expect:

“This government is absolutely committed to cracking down on fraud and economic crime”


and that the NAO’s recommendations will be “reflected” in the “upcoming fraud strategy”. What on earth use is a fraud strategy based on data that is now six years old?

[Lord Sharpe of Epsom (Con)]

My Lords, the noble Lord is quite right: the Home Office is leading work on a fraud strategy. The Prime Minister referred to it in the other place as recently as 2 November. We intend to publish on that shortly. It will consider all the possible tools required to go after fraudsters and to protect those who are most vulnerable. The strategy’s other aims will be to stop and block frauds being carried out, and to improve law enforcement. Considerable money is being invested in improving data collection, as well as law enforcement capability.

National Security

Lord Browne of Ladyton Excerpts

Wednesday 2nd November 2022 Lords Chamber

[Lord Sharpe of Epsom (Con)]

I thank the right reverend Prelate for that suggestion; I will read that speech, which to date I have not. He invites me to stray into areas where I would prefer not to go. There are differences of opinion when it comes to these laws; I will leave it there.

[Lord Browne of Ladyton (Lab)]

My Lords, the daily and repeated Russian missile attacks on Ukraine’s critical national infrastructure are evidence of the importance of this to our national security. Is the Minister aware of the two week-old report of the Joint Committee on the National Security Strategy about critical national infrastructure, which is scathing about the Government’s ability to protect it? It specifically identifies a lack of leadership, an absence of co-ordination among government departments and the disbanding of the Civil Contingencies Secretariat. In short, it calls on the Prime Minister to

“get a much better grip on … national security”.

When will we see the long-awaited national resilience strategy?

[Lord Sharpe of Epsom (Con)]

My Lords, I cannot answer that specifically. I have seen that report and have read a variety of newspaper reports with mounting alarm, as I am sure the noble Lord has. I think the task force will address a good deal of the noble Lord’s concerns, and I look forward to hearing what it has to say.

Police: Vetting, Misconduct and Misogyny

Lord Browne of Ladyton Excerpts

Wednesday 2nd November 2022 Lords Chamber

[Lord Sharpe of Epsom (Con)]

Not as far as I am aware, but I defer to the noble Lord’s specialist knowledge on this subject and I will take the question back to the Home Office.

[Lord Browne of Ladyton (Lab)]

My Lords, in his first Prime Minister’s Questions last week, Rishi Sunak chose to close the session by bragging and baiting the leader of the Opposition—to braying from the Tory Benches—saying that there are 15,000 new police officers on our streets. When he did so, how much did he know about the scale and nature of this—that hundreds, perhaps thousands of those people may have passed through flawed vetting processes?

[Lord Sharpe of Epsom (Con)]

I have no idea what the Prime Minister knew or did not know.

Police and Crime Commissioners: Budget

Lord Browne of Ladyton Excerpts

Monday 28th March 2022 Lords Chamber

[Baroness Williams of Trafford (Con)]

My noble friend is absolutely right: local circumstances will dictate different needs in different places. He is absolutely correct to say that cyber and other types of crime—county lines, for example—may necessitate different solutions in different areas.

[Lord Browne of Ladyton (Lab)]

My Lords, following that specific question and the implication that somehow this money was being spent on cybercrime, the principal cybercrime in this country is fraud. Some 42% of reported crime is fraud—despite the fact that the Government regularly drop off this figure when they talk about crime. Some 1% of police resources are used in policing fraud—so it clearly cannot be the case that these resources are being used for other policing purposes; they must be being used for something else.

[Baroness Williams of Trafford (Con)]

I return to the point made by my noble friend: it is down to local elected PCCs to decide. Also, cyber is not just about fraud; it can be about all sorts of things, such as disruption et cetera. There are other bodies that deal with fraud as well, but, frankly, we deal with fraud and other types of crime across several agencies.