Economic Crime (Transparency and Enforcement) Bill

Lord Garnier Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Lord Garnier (Con)]

My Lords, I thank my noble friend the Minister for her clear opening to this debate on this very important piece of legislation. It is also a pleasure to follow the right reverend Prelate and to hear what he had to say.

I refer to my interests in the register and declare that, as a barrister in private practice, I have been instructed both by the Serious Fraud Office and by companies and individuals in whom the Serious Fraud Office has taken an interest.

Sadly, the context in which we debate this Bill this evening is the Russian invasion of Ukraine. We are reviewing a Bill that has been passed through the other place in a single day and which will, I am sure, go through your Lordships’ House, if not in a day, quite quickly. Not surprisingly, the criminal and, some may say, paranoid behaviour of Mr Putin in launching this savage attack on Ukraine has led us into thinking that something must be done—and done quickly—to curb the financial freedom of Putin’s benefactors, his nominees and his enablers. These are people who, over the past 25 years, have grown rich through the redistribution to them of what used to be Russian state assets, first by President Yeltsin and then by the current incumbent. They remain rich because Putin permits them to be so, and because they hold vast holdings of valuable property and money throughout the West on his behalf. Although they pretend to be independent operators, they are puppets controlled by a sick and dangerous man, and it is right that our laws do not allow villainy to hide in plain sight.

Two points, however, flow from this. First, although the policy behind the Bill is well understood and universally shared by right-thinking Members of both Houses, the Bill that contains many complicated provisions, which are being considered very speedily. Of course, the war in Ukraine has forced us to act quickly, but the problems caused by passing legislation in a hurry are well known. Although I entirely accept the need for speed, we must be careful that we do not pass bad law which fails to hit the targets that we have identified. As my noble friend the Minister said, another economic crime Bill will be introduced in the forthcoming Session. The Government must stand ready to correct any defects in the current Bill which, through lack of proper consideration, are left in it. I hope it may be used to reform the law of corporate criminal liability—a subject on which I know I must sound like a cracked record.

Secondly, I do not want to be misunderstood in what I am about to say, but we must be careful not to allow our understandable moral indignation to cloud our judgment about what we need to do through this Bill. If there is one thing worse than failing to scrutinise legislation because of haste, it is to pass legislation while caught in a moral spasm. Hard as it is, although I have no doubt that your Lordships’ House and the Government are both capable of doing this, and although it is correct to have a moral purpose behind the policy—here I wholly agree with the right reverend Prelate—we have to pass a Bill now that works effectively for all times and all circumstances against all money launderers, every corrupt actor and kleptocrat from across the globe, not just the Russian ones currently propping up Putin.

Now is not the time to drill too far into the detail of this Bill, nor to lament that, had legislation of this sort been introduced soon after David Cameron’s anti-corruption summit in 2016 or shortly after the work of the Joint Committee on the Draft Registration of Overseas Entities Bill was completed in 2019—I was a member of that committee under the chairmanship of my noble friend, Lord Faulks—we would have considered it in an altogether less fraught atmosphere. That committee made a number of recommendations, which are now in this Bill, but we have lost three years. So I find it a little strange that in the other place Ministers claim to be acting with all due speed. But now is better than next year or never.

Having got that off my chest, I want to pick out a few points from the Bill for later consideration. We need to make sure that, in preventing the criminal concealment of the ownership of property in this jurisdiction, we encompass not only relevant individuals and overseas companies but the owners of shares in those companies, be they individuals, other companies or trusts, and the legal and beneficial owners of the shares. It is not difficult to set up a shell company in an overseas jurisdiction through a nominee. Unless the Bill and those tasked with enforcing the law, once enacted, can get to the actual owner, as opposed to being blocked through a series of impenetrable veils, we will get nowhere.

If what the Government want, as suggested in some government statements, is to reveal the real identities of foreigners who own UK property, we need to ensure that the Bill will achieve precisely that. The legislation, as currently drafted, does not require the disclosure of the ultimate beneficial owner of the property, but rather the disclosure of the beneficial owner of the overseas entity which in turn owns the property. By Clause 33(1), the Secretary of State may by notice require an overseas entity to apply for registration in the prescribed manner within six months.

I agree with the concerns of the noble Lord, Lord Vaux, about the timing issues and the need to register entries on to the register, and I also agree with the noble Baroness, Lady Kramer, on the reduction of the 18-month period to six months. The Government should urgently take accountancy, legal and other professional advice about whether even six months is too long. Nowadays, money flows around the world at the press of a computer button. Should we not think of a far shorter period, with discretion for the Secretary of State or the High Court to extend that period on reasonable grounds in an individual case?

Unexplained wealth orders have not worked as well as they were expected to when they were introduced. Clause 53 allows for urgent designation of named individuals in certain circumstances. I hope the necessary work has already been done, because it may be that many such designations will need to be made immediately on Royal Assent. I have no doubt that the people we want to target will already have anticipated the Minister, and only the unwary minnows will end up being subject to these orders.

Finally, I need convincing that Companies House is the right body to enforce the provisions relating to the registration of overseas entities. It is essentially a recording organisation, a keeper of information provided to it by others. It is not, or not notably, an investigating or prosecuting body, but if it is to have this work, it will need a large injection of specialist staff from the Treasury, the sanctions sections of the FCDO, the National Crime Agency, the City of London police, which is the lead police force in relation to economic crime, and the Serious Fraud Office. It will also, I dare say, need to take additional advice from the security services, and all those agencies will need to be properly resourced to assist in this work.

The Bill must pass, but we must not think it answers all the questions that money launderers and other economic criminals will throw at us. If it assists us, even if indirectly, to get the Russian army out of Ukraine and persuade those supporting Putin to think again, it will most certainly have achieved some good.

United Kingdom Internal Market Bill

Lord Garnier Excerpts

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Wednesday 2nd December 2020 Lords Chamber

[Lord Garnier (Con)]

My Lords, to save time, I ask your Lordships’ House to read into my remarks the kind words of the noble Baroness, Lady Ritchie, about those behind this Bill. I think it is appropriate for me, a disagreeable Conservative Back-Bencher, to congratulate the Ministers, my noble friends Lord Callanan, Lord True and Lady Bloomfield, as well as my other friends on the Front Bench, for their conduct of the Bill, good spirit and sense of humour, as they have watched large parts of the Bill of which they had conduct, crumble during its passage. The Bill has had a bumpy ride; I do not think that is controversial. Today, we will return a somewhat different Bill to the other place compared to the one that it sent to us.

None the less, I urge that we do let it pass and go back to the other place. As I implied on Report, it has, on occasion, been tempting to think that, in relation to the progress and development of the Bill, Downing Street had

“learned nothing and forgotten nothing”.

Of course, Talleyrand was referring to the Bourbons after the abdication of Napoleon: they seemed determined endlessly to repeat the mistakes of their predecessors who had been swept away in the French Revolution. That is clearly not a fate I wish for the Government, although last night’s revolt in the Commons suggests that they need to have a care.

It may be said that all that needs to be said has already been said about the Bill. In the other place, that is often seen as a good reason to say it all over again. I will not say it all over again, but I will point out two themes that have emerged from our consideration of the Bill, which I hope the other place will not ignore when it considers the Bill we return to it.

The first relates to the rule of law. The Bill did not start well. It began with my right honourable friend the Secretary of State for Northern Ireland announcing that the Government would deliberately renege on their international treaty obligations, albeit, as he said, in a very specific and limited way. It was not a slip; it was a deliberate statement. But it was certainly a mistake, and it made the Government look ridiculous.

The Government sought to cure that error by passing the buck to the other place, and then sought to avoid the error by arguing that they were not breaking their rule of law obligations, or that there was a difference between our international law and domestic rule of law duties, or that it did not matter, or that they had to break their obligations because, in some unspecified manner, the EU was going to act in bad faith. I sincerely regret that the Lord Chancellor and the Attorney-General took part in this because, objectively observed, they did not assist. Few Britons who believe in the rule of law and in our respecting treaty obligations were convinced by any of that.

Part 5 of the Bill was unsupportable and it was rightly removed for the reasons set out by the noble and learned Lord, Lord Judge, and many other thoughtful contributors, from all parties and none. I therefore gently ask the Government and the thinking majority in the other place not to put Part 5 back into the Bill.

[Lord Cormack (Con)]

Hear, hear.

[Lord Garnier (Con)]

It is always a joy to have the support of my noble friend.

No British Government, and certainly no British Conservative Government, should be in the business of persuading the United Kingdom Parliament to enact a law that breaks a treaty that is barely a year old, the terms of which were put into domestic law earlier this year by the very same Government and Parliament. They cannot break the law, still less the law of their own making, and expect to engender respect at home or abroad.

My second theme relates to the maintenance of the United Kingdom—something already touched upon by the noble Baroness, Lady Finlay. I am a unionist, and I want to see the United Kingdom of Great Britain and Northern Ireland continue and thrive. Of course, I know that there are some people in Scotland, Wales and Northern Ireland who want to see a different constitutional arrangement, whether that be through greater devolution, a federal system or the separation of Wales and Scotland from the United Kingdom and the unification of Northern Ireland and the Republic. But there are, and there were, provisions in the Bill—no doubt sincere arguments were made in favour of them by the Government—that will encourage those against the continuance of the union to conclude that the United Kingdom Government do not care about their views and that they should therefore try even harder to leave. My noble friend Lord Callanan’s statement at about 2.20 pm exemplified that.

The law too often passed by Parliament is the law of unintended consequence. If we are not more aware of the effect of our words and deeds upon the minds of those who want to bring the union to an end, it is we unionists who will live to regret it. It was, after all, the leader of the Scottish Conservatives, my honourable friend Douglas Ross, who recently said that the case for separation was being won in London, not in Scotland.

I therefore ask the Government, in relation to this second theme—the maintenance of the United Kingdom —not to do anything that will give the separatists any excuse to say that the United Kingdom has had its day and that London knows nothing and cares less for the opinions and self-respect of the devolved Administrations. Of course separatists will find insult where none is intended and make good use of every slight, actual or perceived, so let us not give them any excuse to do so. Let us treat the devolved Administrations with respect and co-operate together as a functioning union, with more to gain from being one country than four separate ones.

I urge the other place to rest content with the Bill as we return it to them. It is in better shape now than it was and it will do less damage to the union and our country’s international reputation.

United Kingdom Internal Market Bill

Lord Garnier Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Wednesday 18th November 2020 Lords Chamber

[Lord Garnier (Con) [V]]

My Lords, without the new clause proposed by the noble and learned lord, Lord Hope of Craighead, the common framework system is redundant and, without a change of attitude by the Government, the union of Great Britain and Northern Ireland is gravely threatened. I agree with the new clause as proposed by the noble and learned Lord and his co-signatories for the reasons that they have given, and I will support them accordingly if a Division is called. That I am disagreeing with my noble friends, the hard-working and overworked Minister on the Front Bench and Lord Naseby, is a matter of avoidable sadness.

As will readily be appreciated, common frameworks are a mechanism for the UK and devolved Governments to agree among themselves some regulatory consistency for policy areas where powers returning from the EU are within devolved competence. As the noble and learned Lord, Lord Hope, told us, the principles for when a common framework is needed were agreed between the four Administrations in October 2017. It was then agreed that common frameworks would be established where they are necessary to enable the functioning of the UK internal market, while acknowledging policy divergence; to ensure compliance with international obligations; to ensure that the UK can negotiate, enter into and implement new trade agreements and international treaties; to enable the management of common resources; to administer and provide access to justice in cases with a cross-border element; and to safeguard the security of the United Kingdom. We expect common frameworks on a wide variety of topics, from the UK emissions trading system to food safety.

United Kingdom Internal Market Bill

Lord Garnier Excerpts

Committee stage & Committee: 5th sitting (Hansard) & Committee: 5th sitting (Hansard): House of Lords
Monday 9th November 2020 Lords Chamber

Noble Lords may be worried about the damage to the UK’s reputation abroad. I worry about the damage this House might inflict on the UK’s democratic reputation here at home if it insists on emasculating this Bill by amendments. To conclude, a nation that must adhere to treaties it cannot democratically change or reject is not a free nation. No national government anywhere should be bound in perpetuity by an international treaty. This runs entirely counter to the spirit and the principle of democracy, and so, as a democrat, I will support the Government in this Bill.

[Lord Garnier (Con) [V]]

My Lords, unlike the noble Baroness, Lady Fox of Buckley, whose vigorous reasoning I respectfully reject, I will be voting to remove Clauses 42 to 47 from the Bill. I am privileged to follow the noble and learned Lord, Lord Judge, my noble friend Lord Howard of Lympne and many other noble Lords from all parts of the House who have deprecated Part 5.

The noble and learned Lord, and those who have supported him so far, advanced compelling arguments that appeal both to my head and my heart. The arguments of the noble and learned Lord, Lord Judge, were precise, they were clear, they were right, they were devastating—and they left no room for contradiction. I agree with him.

At Second Reading I regretted the inclusion of Part 5 in the Bill. To repeat at length what I said then will not make any difference to the quality of my arguments, good, bad or indifferent, although I have subsequently discovered that my views were thought by some, although not all, close to the Government to be—let me say—extravagant. If that is what they think they are free to do so, although I have not usually found this Government’s closest advisers to be quite so delicate when they are offering their views. I hope I can tell the difference between a row and an argument—and I am advancing an argument.

At Second Reading, I did no more than advance some orthodox and widely accepted arguments against the inclusion of Part 5 in the Bill on rule of law grounds. I do so again. I also noted that the arguments put forward in and out of Parliament by the Government and their supporters for the inclusion of these clauses were risible and unconvincing. They still are. Like my noble and learned friend Lord Clarke of Nottingham, I am disappointed that nothing has changed. The proponents of Part 5 are beginning to look like post-revolution Bourbons.

Maintenance of the rule of law domestically and internationally by any United Kingdom Government, or breaking a treaty passed into British law, is no small thing and cannot lightly be tossed aside as though of no account or merely a matter of tactics in a negotiation. Moreover, denying the people access to the courts and independent judicial arbitration of disputes, or giving Ministers untrammelled executive power, cannot be acceptable. Part 5 does all these things. Eliding the sovereignty of Parliament with the international law obligations of the Government is both a confusion and a delusion. Passing the decision on when to break our legal obligations from the Executive to the legislature makes no difference and provides neither defence nor mitigation. I do not resile from a word I said at Second Reading.

No one in agreement with the noble and learned Lord, Lord Judge, is so naive as not to understand the political imperatives driving this Government in relation to Part 5, although they are imperatives of their own making, flowing directly from a treaty they freely entered into and passed into UK law within the last 12 months. This has no parallel with the European example cited by my noble friend Lord Lilley, as simply explained by the noble Lords, Lord Pannick and Lord Carlile.

I also know that the author of Part 5, our modern-day Thomas Cromwell, as I implied at Second Reading, is not on the Government Front Bench in your Lordships’ House. I entirely accept that my noble friends, as Ministers bound by collective responsibility, have no discretion or room for manoeuvre in government. I, on the other hand, am fortunately free to acknowledge some different responsibilities—to the rule of law principles that guide me as a member of the Conservative Party, as a legislator, as a lawyer and as a former law officer. I cannot in conscience support these clauses; they must come out of the Bill.

[Baroness Neville-Rolfe (Con)]

My Lords, I am glad to speak after my noble and learned friend Lord Garnier, although we come at the subject from slightly different directions. I have sat through much of the proceedings on this Bill. I have quite a few reservations, which I hope may be reflected in amendments or reassurances on Report. However, on Part 5 I have a great deal of sympathy with the Government and I thought my noble friend the Minister summed it all up very well in his statesmanlike speech at Second Reading.

The Government have come forward with safety net measures in domestic law that allow Ministers to protect the UK’s internal market, our union with Northern Ireland and the Northern Ireland peace process, but only if needed. There will be a vote in the other place before these are used, and any SI will be subject to affirmative resolution. To pick up on something the noble and gallant Lord, Lord Stirrup, said in a strong speech, it is now half way to that oven-ready Bill-in-waiting that he felt would have attracted much more sympathy across this House.

Of course, had everything worked smoothly in the exit negotiations, had the EU acted in those negotiations as though dealing with close friends and allies, had the previous Administration been more nimble in defending the UK interest, and could everything be guaranteed to continue to work smoothly, there would be no need to adopt the provisions in Part 5 to which many take exception. Unfortunately, none of those possibilities has yet proven to be the case. Accordingly, as my noble friend Lord Hunt of Wirral and the noble Lord, Lord Skidelsky, said at Second Reading, we should not tie the hands of the Government at this time. We should give them the elastic they need.

I am grateful for the work of the EU Committee, on which I have the pleasure to sit and support the noble Earl, Lord Kinnoull, and the work of its excellent staff on the complexities of the Northern Ireland situation and its special protocol which has helped to inform our debates. The problem—and the reason the Government are seeking the powers in Part 5—stems, I believe, from the unsatisfactory nature of the withdrawal agreement, but only if the EU were to take a disreputable and irresponsible stance. Unfortunately, that possibility cannot yet be entirely excluded. Such a development would make life very difficult for those businesses which operate in Northern Ireland and for goods and food coming in and out over either border. Indeed, today’s debate and the arresting contributions from the noble Baroness, Lady Hoey, and the noble Lord, Lord McCrea of Magherafelt and Cookstown, have heightened my concern about the risks to the Northern Ireland economy and the Belfast agreement.

The joint committee has wide powers to prepare for and sort out any mess but, regrettably, it has not done so. Perhaps it has no intention of doing so while vital and delicate discussions on an FTA continue. Perhaps my noble friend the Minister can report on discussions in that joint committee, where there are concerns or disagreements and whether there is any hope, even now, that the difficulty will be overcome so that the Part 5 provision will become unnecessary.

With the promoters of these amendments having demonstrated their nobility of mind in the earlier discussions at Second Reading, I was hoping for a full discussion in Committee of the wide-ranging powers being taken in Part 5 and not just a rerun of the debate of principle of 20 October. The noble Lord, Lord Pannick, touched on this in his speech and I am sure my noble friend the Minister, when he responds, will address some of our concerns about the breadth of the power. But, today, I think we should celebrate the fact that there was a startling breakthrough on a coronavirus vaccine. I have some hope that there will also be a breakthrough on the FTA with the EU and that Part 5 will not now be needed. In the meantime, I will be supporting the Government.

United Kingdom Internal Market Bill

Lord Garnier Excerpts

2nd reading & 2nd reading (Hansard): House of Lords
Monday 19th October 2020 Lords Chamber

[Lord Garnier (Con)]

My Lords, I begin by congratulating the noble Baroness, Lady Hayman of Ullock, on her excellent maiden speech and by saying how much I look forward to hearing from my noble friend Lord Sarfraz very shortly.

Because of Part 5, very few are prepared to give the Bill their wholehearted support. I am not one of them, and, in the event of a Division tomorrow, I will without hesitation support the regret Motion moved by the noble and learned Lord, Lord Judge. To do otherwise would be wrong as a matter of principle, but as a former law officer, like the noble and learned Lord, Lord Morris, and as a Member of the other place and of this House since 1992, it would also be a matter of personal shame to agree to such flagrant abuse of the rule of law and our international treaty obligations.

Set against last year’s unlawful Prorogation and the fact that Mr Dominic Cummings is the instigator of Part 5 and is the latest person to have been found in contempt of Parliament, I am not surprised, although I ought to be shocked, that, first, a Cabinet Minister could say that the Government intended to break international law, and, secondly, that the Attorney-General could apparently advise the Government that what was proposed was defensible as a matter of law. It plainly is not, even if some may think it has political advantages.

I have heard excuses for Part 5, which contains provisions that unquestionably breach international law or authorise such breaches, from Members of Parliament not previously noted for their interest in questions of international law and from government Ministers. They appear to confuse the sovereignty of Parliament with the Government’s treaty obligations. If sophistry is an unparliamentary description of what we have been asked to believe, let me say instead that the explanations for Part 5 are risible. They amount to bad law, poor diplomacy and inept politics.

Let us be clear: the European Union withdrawal agreement is not some ancient treaty entered into by two medieval monarchs when our customs and usages were very different, nor is it as difficult to understand as the Schleswig-Holstein question. It is only a year since the Prime Minister agreed to it—not just bits of it, but all of it, including the Northern Ireland protocol, the clauses referring to EU law, and the trading arrangements between Great Britain and Northern Ireland, and Northern Ireland and the Republic of Ireland. It is barely six months since Mr Johnson, in the triumphant afterglow of the general election, recommended it to Parliament for translation into United Kingdom law.

We have not heard publicly from the Attorney-General. It is entirely normal for the law officers to keep confidential their advice to the Government, albeit that the Attorney-General has published a digest of the opinion of the three lawyers she selected to advise her. Its conclusions are not convincing, save perhaps as a political manifesto. Certainly they did not impress the Treasury Solicitor, Sir Jonathan Jones, who resigned rather than be party to this unlawful policy. Nor did they impress my noble and learned friend Lord Keen of Elie, who, despite valiantly trying to bring the Government to a proper understanding of the rule of law and their obligations freely entered into as parties to international treaties, resigned as well.

However, it is not just a breach of international law; Part 5 also undermines our domestic law. Clause 47 is breath-taking. It will give Ministers the power to make regulations and renders those regulations unassailable, even if they break the law. Thomas Cromwell would be proud of this clause. It prevents legal challenge so that no court can rule against them. Government by ministerial decree is certainly not what we should see in a parliamentary democracy.

Under Section 25 of the Theft Act 1968, “Going equipped” is a crime. It is an offence, when not at home, to be in possession of an

“article made or adapted for use in committing a burglary or theft”.

Part 5 is the equivalent of the burglar’s jemmy. Government and law officers should not advocate their use and expect to retain the respect of Parliament or the legal profession.