Economic Crime and Corporate Transparency Bill

Lord Cromwell Excerpts

Committee stage
Tuesday 25th April 2023 Grand Committee

I hope that the Minister will response constructively to the amendments in this group. As he knows, because I have already written to the Home Secretary, I hope very much to meet him between Committee and Report to discuss this further.

[Lord Cromwell (CB)]

My Lords, I, too, support all the amendments in this group, two of which are in my name. I am very grateful to noble Lords who have added their names to my amendments and I have added my name to their amendments, so we are all onside together, I hope.

There are many good actors in our financial and legal systems, and I hope we can take that as a given. However, the need for this Bill and the general welcome it has received from all sides reflects the need to address the dark areas where reform is essential to meet modern challenges. One such is Companies House, which we discussed at length on previous days. Today, we have had money laundering and another, which we have now reached, is the use of SLAPPs—the use of UK legal processes and law firms to harass those who seek to publish public interest information relating to economic crime.

The problem with legislating to prevent SLAPPs, other than the Government’s refusal to do so, has been definitional. Everyone has the right to defend themselves and their reputation, and lawyers have a role in seeing off scurrilous attacks. However, it is widely acknowledged that, increasingly, some actors weaponise the law not to seek redress for unfounded slurs by a legal remedy but to use UK law firms to bludgeon into silence those investigating economic crime and thereby ensure that economic crime remains concealed.

As a senior former Law Lord, who, sadly, is unable to be here today, said to me only yesterday, the legal profession cannot simply be asked to regulate itself. The Government have very limited resources to do so, so we must protect investigative journalists who fulfil the vital function of bringing economic crime into the light.

Acting against SLAPPs belongs in this Bill. In previous days of debate and again today there have been references to the “London laundromat” and similar terms. In some ways, you could argue that the UK has become a market leader in economic crime. It is possible to go on kleptocracy tours, where you drive around London and buildings are pointed out to you—breathtakingly expensive properties derived from unexplained wealth. In April 2022, the National Crime Agency reported that the scale of money laundering in the UK was in excess of £100 billion per year. SLAPPs are an inseparable part of this dark side of our financial industry.

In the same month as the National Crime Agency published its report on money laundering, the Foreign Policy Centre and ARTICLE 19 published the tellingly entitled, London Calling. They have made it clear to me—I do not want to up the ante on the noble Baroness, Lady Stowell—that at least 70% of the SLAPP cases reported to them have a direct connection to economic crime.

It is simply too easy for those with vast resources to deploy UK law firms to impede and suppress economic crime investigations. This is not some nicety or obscure point of technical legal finesse; it has embedded itself in our legal system. It intimidates the weak and it takes over victims’ lives, often for years. Those willing to provide SLAPP services do not just operate against UK targets. Daphne Galizia, a Maltese journalist investigating corruption, was hit with no fewer than 47 libel cases as part of a direct, grinding intimidation strategy led by a UK law firm. As a tragic footnote to her story, when she persisted in exposing corruption, someone decided the intimidation was not working and she was simply murdered.

I will not weary the Committee with further examples. The real point to note here is that, exactly because SLAPPs are so effective, most economic crime information of this sort never sees the light of day. Editors simply cannot take on the costs and risks of resisting such attacks, and newspapers are muzzled in reporting economic crime. In short, the Bill is a welcome opportunity to tackle the ills of economic crime, but one that comes along only very occasionally, as others said in the preceding days.

I have done my best to explain why this Bill is the correct legislation to put into law protection from SLAPPs and thereby remove the stain they place on the reputation of our legal profession, the damage they do to the UK’s rule of law and their use in distorting UK markets. But I should not need to labour these points, for the following two reasons. First, there has been vigorous and repeated cross-party support in both Houses for dealing with SLAPPs. Secondly, as the noble Lord, Lord Thomas, highlighted for us, the Government have repeatedly and specifically declared not only that they are very concerned about this issue but that they intend to legislate to deal with it. However, these declarations have always ended the same way: with promises to act “in due course” or “when parliamentary time allows”. I am sorry, but there is absolutely no sign of it on even the furthest horizon, and the electoral horizon is now getting very close. I hope the noble Minister will take a more engaged approach.

I thank noble Lords for their patience and I now turn to the amendments. The amendment of the noble Lord, Lord Thomas of Gresford, tackles the issue of SLAPPs head on, making it an offence to use threats in this way. The key point of this amendment is that it defines an offence to which the court can apply its judgment, and its existence should discourage the use of SLAPPs. The noble Lord, Lord Thomas, put this across brilliantly. Will the court get it right every time? As in any other area of law, perhaps not, but this amendment would be a great practical step forward.

I turn to the three amendments in the name of the noble Baroness, Lady Stowell of Beeston, which she again put across so well. The use of SLAPPs, as she highlighted, needs action on several fronts to reduce or remove the incentives and dismantle the enabling environment. These amendments would enable the regulatory authorities to act more effectively to punish and deter UK firms from engaging in SLAPPs, first by imposing more meaningful fines on those conniving in the suppression of information on economic crime, and secondly by closing a loophole whereby, almost incredibly, a publication seeking to expose economic crime can face a heavily resourced attack using UK lawyers paid with the proceeds of crime. This is an abhorrent oversight that needs to be ended.

I turn to the two amendments in my name, Amendments 105 and 106. I will take these together as I have already been speaking for some time. Amendment 105 enables a public interest defence for someone investigating economic crime and attacked with a SLAPP. The defence is that their disclosure is relevant to the investigation of economic crime and publication is in the public interest. It provides a basis for a defence but is not a carte blanche for journalists; the court will need to be convinced. I hope the Minister will recognise its value as a basic protection for those exposing economic crime.

Amendment 106 needs a bit more unpacking. It enables the court to strike out all or part of a case that is being used to prevent disclosure or publication of information relevant to the investigation of an economic crime. Now, some may challenge the need for such a provision, saying that the courts can already strike out abusive cases, but while in theory a lawsuit filed for an improper purpose can be considered an abuse of the court's process and therefore disposed of pre-trial, in practice the courts have been highly reluctant to make any such inference.

I hope that the Committee will allow me to summarise why this is the case. Under the Civil Procedure Rules, there are currently two ways to dispose of a claim pre-trial: by filing a motion to strike under CPR 3.4 or a motion for summary judgment under CPR 24.4. Of these two motions, only the motion to strike explicitly provides for disposal of claims that represent an abuse of the court’s process. The associated practice direction explains that an abuse of process includes claims that are

“vexatious, scurrilous or obviously ill-founded”,

but there is no established legal definition for vexatious or scurrilous.

There is some case law that suggests that the improper use of the court process could be considered vexatious and therefore abusive. Does this help? Sadly, not really, because it is very doubtful that CPR 3.4 ever could be used in this way, for two reasons. First, improper purpose has been interpreted by the courts in an extremely narrow way. For example, filing a lawsuit with the sole purpose of financially ruining the target, which is a typical SLAPP tactic, is not considered improper by the court. Secondly, and more broadly, courts are universally and perhaps understandably reluctant to infer an improper purpose on the part of the filer where doing so would lead to the dismissal of the case. The Committee will therefore not be surprised to learn that I am not aware of any SLAPP case which has been filtered out on this basis.

So where else can we turn? Frivolous cases—that is, those that are entirely meritless—can be disposed of pre-trial using the aforementioned Civil Procedure Rules. However, the hurdle for such motions is insurmountably high. A motion to strike requires that a claim discloses no reasonable ground for bringing a claim. A motion for summary judgment requires the defendant to show that the claimant has no real prospect of success. The burden lies on the defendant to meet that threshold. So given the ambiguities inherent in defamation and privacy law, it is therefore exceptionally rare for such motions to ever succeed. I apologise for trying noble Lords’ patience with this explanation, but I hope I have gone some way to outline why in practice existing mechanisms to deal with abusive lawsuits are inadequate to deal with SLAPPs.

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[Lord Garnier (Con)]

It is unprecedented and very rude of me, but there seems to be rather a lot going on at the moment.

[Lord Cromwell (CB)]

I will take 30 seconds to respond to a couple of the noble and learned Lord’s comments while the rest of the Committee decide whether they are happy. Apart from trying to remove from my mind the image that the noble and learned Lord planted earlier of him in his nappies and thanking him for his kind words, I say that he is exactly the kind of critical friend that we need to get this right. However, to suggest that it does not belong in this Bill, which is about economic crime and transparency, which SLAPPs directly impinge on, is disingenuously playing with words. SLAPPs are embedded in our system and directly relate to economic crime and transparency.

On his reference to there being very few cases, I made the point earlier that most cases never see the light of day because people are intimidated. That is exactly the point here. Our courts need defined tests to examine potential SLAPPs and sometimes say “That is not a SLAPP”, and sometimes say, “That is a SLAPP”. Some egregious cases will get that treatment. As my colleague to my left said, it is the threat of the sheer cost of getting to trial, along with all the other intimidatory tactics, such as of truckloads of documents turning up at your house on a Friday night, that we need to dissuade law firms pursuing.

[Lord Lipsey (Lab)]

My Lords, I hate to intrude on disputes between lawyers, even though the lawyers in this case seem to be on different sides. Like the noble Baroness, Lady Wheatcroft, I will intervene briefly as a journalist. At times, I was deputy editor and had charge of all the libel cases that came before us. In truth, there was an inequality of armaments. We had wonderful lawyers in-house, Mr Murdoch’s very deep pockets and an evidential base which would normally have been compiled by a journalist working to good standards. Many of the people wanting to sue us were not in that position at all; they took offence at something, whether it was right or wrong, but if the paper took a hard line, then they would go away.

We need to emphasise that the world has changed. Not only—and this is a perfectly valid point—are newspapers poor, but there are a number of extremely unscrupulous, very rich people, be they Russian oligarchs or any kind of oligarch, who are prepared to try anything they can to get a journalist or, even better, to stop the journalist publishing. I admire the courage of the FT in going ahead with the case the noble Baroness, Lady Wheatcroft, mentioned. I do not think many editors would have been so brave. This is the modern world. I am always disappointed when I find that legal firms are willing to go along with this kind of stuff.

There are not many laughs in the committee chaired by the noble Baroness, Lady Stowell—not because of her, as she is an admirable chair, but because the subjects of the committee do not lead to a lot of laughs. However, I laughed out loud when I found that the maximum fine that can be applied by the Solicitors Regulation Authority is £25,000; that does not buy you a coffee with a decent KC any more. It is a different world with the people who are operating in it now.

I shall conclude as the noble Lord did. We have heard that it will take years before anything happens. It will not be this year because we are in recession, nor next year because there is a general election coming up; so it will go on, and those who are against making the change will continue their lobbying. We now have an opportunity, by the ingenious use of this Bill by the noble Baroness, Lady Stowell, to force action now. We should seize it.

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[Lord Fox (LD)]

My Lords, this has been a fantastic debate and I will not add any pearls of wisdom and substance, but I would just like to just say something about process in response to the noble Lord, Lord Agnew. In the event that the Government are unable to satisfy what I think is the strong view of your Lordships that something needs to be done, I think we can pledge that the noble Lord, Lord Thomas, and I will work well within our own group to make sure that the comments of the noble Lord, Lord Agnew, about pushing this further on Report will certainly have some legs from our point of view.

[Lord Cromwell (CB)]

I will just add a word, first to the noble Baroness, Lady Stowell. The fact is that most SLAPPs are related to economic crime, and I think she was being a little modest perhaps in that area. This would certainly be a very good start—half a loaf is better than no loaf, and all those sorts of aphorisms. Colleagues who have spoken around the House have left me feeling quite optimistic, much more than I expected, I have to say, but then a pessimist says that things could not be any worse, and an optimist assures you that they can.

I am heartened in particular by the comments from some of the far heavier-weighted legal minds than mine—I am neither a journalist nor a lawyer—and by their willingness to grip this. There are definitional and other issues involved here, but if I may quote my colleague, they are difficult but doable. We ought to take that to heart.

My question is whether the Minister will rise to the challenge of working with us. This is not a question of us putting something up to be shot down; it is an offer to work together, drawing on the resources of this House, to put this right in the Bill, which, as we have exhaustively explained, is its natural home.

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[Lord Bellamy (Con)]

I can tell your Lordships that the Government have not been idle in preparing possible drafts to deal with this matter, and I am very happy to keep in close contact with noble Lords between now and Report on progress and to discuss as widely as we need to how we should approach this matter.

[Lord Cromwell (CB)]

What the Minister is saying is potentially helpful. His initial statement was almost verbatim what we got at Second Reading and in previous Bills. I could almost set it to music now, I have heard it so many times, but we seem to be getting somewhere. Will he clarify whether he is happy to continue discussions with us about these Bills, which, apparently, the non-idle Government have been working on or about a possible amendment to this Bill? Will he clarify which one we are addressing here?

[Lord Bellamy (Con)]

It is the former. The second point here is that the Government are not happy, for reasons that I shall now, I hope, go into a little detail about, about the actual amendments being proposed here. I preface that by saying that we should not overlook the fact that there is one enormous conceptual issue behind all this, which is the question of access to justice. This is probably the first time that anyone has ever legislated against someone bringing something to court, which is something that we need to stop and think about. Where is the balance? If I may say so, reference has been made to the rule of law, and it is somewhat ironic to say that we must uphold the rule of law by penalising someone who seeks access to justice. That is a very difficult area, and we need to find a balance. The Government would like to explore further how that balance is to be found because, in the Government’s respectful view, it is not yet found in the amendments before the Committee today.

[Lord Cromwell (CB)]

I think that we are actually in agreement on that, and I hope that I made it clear earlier that what we need to do is to work together to get this right with critical friends, including the noble and learned Lord, Lord Garnier, who will bring a forensic examination of whether the work is right, but I go back to an earlier comment that this is difficult. Yes it is, but it is not impossible.

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[Lord Bellamy (Con)]

I am afraid I cannot give the noble Lord a timetable. I cannot tell him how many people are working on it, but I can tell him that important work is being done. I am not in a position, and I very much regret that, to go further than that today, but I am prepared to keep in close touch with your Lordships between now and Report to share progress and thoughts on whether there is a legislative vehicle that can conveniently—and soon—be introduced.

[Lord Cromwell (CB)]

I am sorry. I will press the Minister a little more on that. When will we first hear from him on that update on progress?

[Lord Bellamy (Con)]

Can I write to the noble Lord, Lord Cromwell, on that point?

[Lord Cromwell (CB)]

I eagerly anticipate it.

[Baroness Blake of Leeds (Lab)]

Can I ask that we are all included in the correspondence?

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[Lord Bellamy (Con)]

I thank the noble Baroness. I am perfectly prepared to accept that there is an international aspect. The Solicitors Regulation Authority is on the case, it has issued its warning notice—fired its warning shot—and that is having an effect, so it is not as if the position is not being tackled. The question is about legislation, and the need to get it right from a rule of law and an access to justice point of view. There is a conflict here, as the noble Lord, Lord Vaux and the noble and learned Lord, Lord Garnier, pointed out. One has some misgivings about this because, as was also said earlier, journalists are not always right, and one must bear that in mind. If you have ever been on the receiving end of the tabloid press as a defendant, you will know that they still have not inconsiderable power if you have no money to defend yourself.

[Lord Cromwell (CB)]

If I may say so, one of the formative experiences of my childhood was being on the receiving end of tabloid journalism, and it is something I will never forget. That does not alter my commitment to getting this right.

I am encouraged by the Minister saying that my amendments do not quite cut the mustard—“do not quite” is a pretty good score in my book. I agree with him that early access will be a key feature of the right answer here, and cost protection, depending on what form it takes, is potentially helpful. He constantly prays in aid access to justice is a big issue, and I agree that the definitional issue of a SLAPP is very important. However, in the conversations he has promised to have, I would want him to make a distinction between harassment and denying the right to justice. Denying the right to justice, the ability to go to court if you wish, is not what I am about—I am about where people have no intention of going to court if they can possibly avoid it but are simply harassing people who want to bring economic crimes into the light. The Minister has given us a hint that there is a government Bill in draft here. I am taking that in good faith; I hope that faith will be well placed and that we will see it soon.

[Lord Bellamy (Con)]

Again, I thank the noble Lord for his remarks. The key problem is to distinguish access to justice from harassment. It is quite difficult, but it can be done. That is my answer to that question. On where the Government are, as I said before, we are working on drafts, but I cannot go any further than that until I know whether there is a legislative vehicle and which it can be. I am sorry not to be able to commit the Government at the Dispatch Box today any further than that but, as I said, I am hoping—and I can only express as a hope—that this is a short-grass and not a long-grass issue.