Developing Countries: Impact of Multinational Companies’ Financial Practices and UK Tax Policies

Lord Browne of Ladyton Excerpts

Tuesday 11th December 2012 Lords Chamber

[Lord Browne of Ladyton]

My Lords, I am delighted to follow the noble Lord, Lord Brooke of Sutton Mandeville, whom I have admired for almost two decades. I am impressed by his ability to use only two of the four minutes that he was allocated and yet to have made such piercing points. I join him and others in the debate in congratulating the right reverend Prelate on securing the debate, identifying exactly the right theme in his introduction and short contribution and on asking some very pertinent questions. The timeliness of this debate is set by the discussion which is taking place loudly outside about corporate citizenship in this country and the avoidance of taxation by a number of well identified companies. Disturbingly, it would appear to be a growing list as this debate ensues.

The debate is timely also because our Government have a conjunction of opportunities in 2013 to address these and related issues. In 2013 we take the chairmanship of the G8; we are the co-chair of the Open Government Partnership; and we are, as we have debated previously, the chair of the high-level panel on post-millennium development goals. So the conjunction of these, plus G20 opportunities, creates an opportunity for multinational action that has not previously been there.

We are encouraged by the Prime Minister’s approach to this. In the Wall Street Journal on 1 November, David Cameron published an article in which he identified combating corruption—which is the overarching issue here—as part of the golden thread of conditions that enable open economies and open societies to thrive. He has in the past repeatedly emphasised the role of transparency, while he aims to lead a Government that is the most transparent and open in the world. So we have a Prime Minister and a Government who ought to be focused on these issues.

I agree entirely with all the points that the right reverend Prelate has made and have been made before, and I am sure that I will agree with many of the points that are focused on tax transparency and accountability. In the next two minutes, I will give an expansive interpretation of the Motion before us to draw the House’s attention to opportunities that lie in improving corporate social responsibility by multinational companies in the areas both of the extractive industries and in relation to corruption to expand upon these challenges.

Some 3.5 billion people live in countries rich in minerals. Very few of them are enriched by the extraction of those minerals from their countries. In the All-Party Parliamentary Group on Anti-Corruption only last week, we were treated to an explanation of what has happened to the mineral wealth of the DRC. It has been traded for a fraction of its value to companies in our overseas territories, the beneficial ownership of which appears to be not very far away from senior politicians in those countries. There is a need for transparency in this direction and I congratulate the Government and the European Union on engaging in this and trying to bring our laws up to speed with the United States’ laws on transparency of payments to governments. I ask them to ensure that the return that we get for that investment is a proper directive which is influential all across Europe.

Again on transparency and enforcement, the Bribery Act 2010 offers an opportunity to try to interdict this sort of behaviour. If we are to do that, first, we need it to be applied to all legal persons incorporated in all of our overseas territories and crown independencies; I have already identified some of the reasons for that. The OEDC has asked us to do that; perhaps the Minister is able to indicate when we are able to do it. Secondly, we need adequate resources to enforce the Act. Thirdly, the Ministry of Justice guidance needs to be more focused on these issues. Fourthly, we need to appoint some champion in government for anti-corruption. All these things are necessary.

I want in one sentence to make one other point. None of this behaviour in the United Kingdom would be possible if it were not for the behaviour of people called “enablers”. Embarrassingly, as a lawyer in the United Kingdom, most of these people are professionals. They are lawyers, accountants, bankers and finance people. Our regulators in this area must be made accountable. When was the last time that a member of one of these professions was struck off for behaving in this way?