Corruption

Lord Davidson of Glen Clova Excerpts

Thursday 18th June 2015 Grand Committee

[Lord Davidson of Glen Clova (Lab)]

My Lords, this is a timely and useful debate, prompted by my noble friend Lord Rooker, on the very useful work of Transparency International.

The impact on housing of houses being treated as a store of value—as my noble friend Lord Graham identified—is an important effect. The noble Baroness, Lady Stern, significantly refers to the source of corrupt funds, and how it can come down to individual lives, often in places far from the UK such as Kyrgyzstan. My noble friend Lord Watson of Invergowrie spoke eloquently on the scale of global corruption and its impact on the UK’s reputation. We on this side welcome the Prime Minister’s desire to,

“put fighting corruption at the heart of our international dialogue”,

and,

“do more to … support the investigators and prosecutors who can help bring the perpetrators to justice”.

He is correct to build on the Bribery Act 2010, introduced by the previous Labour Government, which brought issues of bribery and corruption to the fore in the boardrooms of UK plc, and set a global standard in the fight against economic crime. Corruption, by its nature, is insidious, frequently leaving its victims unclear why they have suffered its consequences. Since the perpetrators have a direct interest in secrecy, society can be unaware of the extent of corruption in its midst. In the UK we tend to congratulate ourselves on being relatively free of domestic corruption, but we should recognise that this belief is not always justified.

The various reports of Transparency International identify a range of concerns about UK practices in areas such as prisons, politics and the arms trade. These are matters for concern. Over the last few years, a number of major UK companies have come under investigation by the US and Chinese authorities for practices that are—on any view—plainly corrupt. Corruption knows no borders and the international approach that the Prime Minister commends is correct. He doubtless embraces the anti-money laundering regime introduced by the EU directive. The Government’s intention to strengthen, not gold-plate, our regime with a beneficial ownership register for UK companies is welcome.

Our money-laundering regime is subject to review by the Financial Action Task Force next year. The Transparency International report identifies real vulnerabilities in this regime, as I am sure that the Minister must agree. The UK’s own current review has, one trusts, already identified this and no doubt other areas of concern in our system—perhaps the widespread use of companies incorporated in British Overseas Territories. It would be encouraging if the Minister would share with the House what the review has exposed thus far and what action is being considered. I ask him to please do so. Plainly, the review is not yet complete but some indications of where it is going will be welcome. Anti-money laundering law is a central tool in the fight against corruption.

While no society is safe from corruption, no society finds the reduction, let alone the removal, of corruption an easy task. In the past, the UK rooted out corruption in areas such as the Royal Navy, the judiciary and the Civil Service, but only after years of consistent effort. The task, however, is never finished. The principal tools for the task are political will and resources. There is, of course, no government leader who does not speak out against corruption, whether they are the embodiment of corruption themselves or its most stalwart opponent. Words alone do not suppress corruption. Therefore, action backed up by resources is the test of any Government’s resolve.

Some positive indicators are available. The coalition Government’s anti-corruption plan, which was published in December 2014, ambitiously set out 66 action points. Is the Committee to take it that Her Majesty’s Government remain committed to executing this plan? Is, for example, the proposed offence of corporate failure to prevent economic crime to be implemented? Transparency International’s innovative recommendation of unexplained wealth orders, as referred to by my noble friends Lord Rooker and Lord Watson, has many attractions. Does Her Majesty’s Government agree on the utility of such orders and will they introduce them?

Other questions are: will offshore companies be required to register the acquisition of at least some types of UK assets and their beneficial ownership? Will persons in the regulated sector conduct due diligence on customers? Will they require transactions to be reported to a central body? A reply in the affirmative to these proposals would encourage one to believe that political will is present. If that will is present, there could be no better signal than a commitment to increase substantially the resources for those investigators and prosecutors identified by the Prime Minister as bringing perpetrators to justice.

The Serious Fraud Office, a central agency in the fight against corruption, has seen a dramatic improvement in its effectiveness under David Green as director-general. But its budget in 2008 was £52 million; in 2015, its budget is £35.2 million, with the necessity of having to obtain ad hoc so-called “blockbuster funding” from Her Majesty’s Treasury. Strong management and direction are to be applauded, but is this the best method of funding a principal agency? The National Crime Agency is also said to be lacking resources. Her Majesty’s Treasury may have a view that contradicts this; perhaps the House may hear what it is. Has the notion of combining the Serious Fraud Office with the National Crime Agency been put to sleep or will the uncertainty of reorganisation, with its concomitant and inevitable disruption, continue to hang over these organisations?

In his international dialogue, it is significant that the Prime Minister can put the UK in the vanguard in the fight against corruption. While the UK’s record is by no means spotless, its stance on the rule of law, both historically and to date, has international resonance. Leaving aside the Government’s somewhat illogical antipathy to the Human Rights Act, the UK can be recognised as a real force for good in combating corrupt practices. Talk is cheap. To achieve this goal and to be taken seriously internationally, a well-resourced system of enforcement is essential. May the House have the undertaking from the Minister that his Government are truly committed to providing the necessary resources?

I would also welcome a response to inquiries that have been made by my noble friends Lady Smith and Lord Bach, as shadow Attorney-General, as to whether there is any UK investigation into British involvement in the allegations relating to FIFA. Is any response available, perhaps less gnomic than that provided hitherto, claiming awareness of the issue? I look forward to the responses.