Economic Crime and Corporate Transparency Bill

Lord Young of Cookham Excerpts

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I hope to make the shortest speech in the debate so far and to complement the contributions from the noble Lords, Lord Vaux and Lord Browne, and the noble Baroness, Lady Bowles, who along with me spent an enjoyable and productive year under the benign chairmanship of my noble friend Lady Morgan on the fraud Select Committee.

I begin with a general point. Your Lordships’ House has two unique selling points: first, its ability to subject legislation to detailed expert, impartial and lengthy scrutiny, uninhibited by timetable Motions or a government majority; secondly, and less publicly recognised, the work of its Select Committees, whose reports do not command the credit or attention they deserve and are often debated months after publication. Where we can do better is by linking those two strengths and focusing, yet more relentlessly and insistently, the recommendations of the Select Committees on legislation as it comes before your Lordships’ House.

I know that is not as easy as it sounds. Select Committee reports are generated by Parliament while Bills are generated by the Executive. The agendas may be slightly different and all sorts of reasons are produced for not accepting amendments. I recently tried to get a manifesto commitment added to a government Bill but was told I could not because the Bill was time-critical. There was then several months’ delay before it had its remaining stages. Ministers get approval for Bills on the basis that they repel boarders; the usual channels do not like Christmas-tree Bills to which embellishments can be attached. Ministers have to give all sorts of commitments in order to get into the programme. They may promise to deal with an issue in their own time, and on reflection, I confess I have used some of those arguments myself.

With this Bill, however, there seems to be a common agenda: tackling economic crime. We have plenty of time and several Select Committee Reports, not just the one on fraud, which give us a real opportunity to press those recommendations home. I believe we have Ministers who have already indicated some flexibility, which I welcome, and may be persuaded to go yet further. I want to mention five points very briefly.

First, on SLAPPs, the Government have made a commitment to bring in stand-alone legislation but have not said when. My concern is that it will not happen in this Parliament unless we do it in this Bill, so journalists will not get the protection they need when they work in the public interest on economic crime. My noble friend Lady Stowell, who chairs the Communications and Digital Committee, has just made a powerful contribution. She is on the record as saying:

“The current level of activity to tackle SLAPPs is wholly inadequate”,


so we have a real opportunity to make progress there.

Secondly, on Companies House, the improvements were available to the committee when we considered this, but, while welcoming them, we went on to say:

“We remain concerned about how these reforms will be funded … It will be essential that alongside any such funding, adequate resources are given to upskilling the workforce at Companies House to support the growth in investigative capacity.”


My noble friend Lord Johnson, whom I welcome to the Front Bench, mentioned the powers that are going to go to Companies House in his opening speech but did not say anything about resources. Perhaps that could be rectified in the wind-ups.

Thirdly, the committee said:

“The Government should launch a review into the use of civil remedies to tackle fraud, including an examination of obstacles, for example, fees to commence civil proceedings, to the use of civil remedies such as asset recovery and injunctions.”


To this end, capping adverse costs in civil recovery could be a useful amendment.

Fourthly, there is the duty to prevent, which several speakers have mentioned. We said that we need a new corporate criminal offence of failure to prevent fraud, applicable across all sectors. But way back in 2019, the Lords Select Committee on the Bribery Act recommended that the Government should

“delay no more in analysing the evidence”.

Related to that, as the final of my five points, is the identification principle. I do not think that has been mentioned so far but it underpins how we hold our companies liable for economic crimes. At the moment, it is a rather antiquated Victorian concept which does not fit with modern and complex governance structures. The Law Commission found it

“an obstacle to holding large companies criminally responsible for offences committed in their interests by their employees.”

The commission clearly said that we need both failure to prevent offences and identification principle reform.

I end by making a suggestion related to my first point about raising the profile of Select Committee reports. When I was leader in another place, I introduced a reform whereby the chairman of a Select Committee could launch their report on the Floor of the House of Commons on the day it was published and then have a short question and answer session. It raised the profile of the report generally and focused the House’s attention on it. I leave that proposal hanging in the air, as it may be too radical for your Lordships’ House.

Economic Crime and Corporate Transparency Bill

Lord Young of Cookham Excerpts

Committee stage
Tuesday 9th May 2023 Grand Committee

[Lord Young of Cookham (Con)]

My Lords, I shall speak briefly to Amendments 93 and 95. Amendment 95, in the names of the noble Lord, Lord Faulks, and my noble and learned friend Lord Garnier—who, sadly, cannot be here—is closely related to Amendment 93 but has a key difference in that subsection (3) of the proposed new clause says that the annual report must detail how much money has been brought in and how much has been spent in securing it.

UWOs were introduced by the Criminal Finances Act 2017. At the time, I was Treasury spokesman in your Lordships’ House. I have no recollections of piloting this legislation through, but I have some memories of some of the statutory instruments that flowed from it. The background was that this had been tried in other countries with varying degrees of success. I do not think anyone can argue with the principle: an individual has at his or her disposal substantial sums of money for which there is no reasonable explanation—they may be an official working for, or who used to work for, some totalitarian Government, whose official salary in no way could support their standard of living. I see the case for UWOs but, as we just heard from the noble Lord, Lord Coaker, they have not been a stunning success.

When the Bill was going through, the noble Lord, Lord Faulks, tabled some amendments to give the SFO more powers but also to understand the ambition of the Home Office with that legislation. A Home Office assessment in 2017 predicted that there would be about 20 UWO applications per annum. We just heard from the noble Lord, Lord Coaker, that, to date, there have been nine applications against four individuals, with not a lot of money realised. In fact, in one case, the cost of failure against the Aliyev family was about £1.5 million. Since then, we have a cap on the costs that can be awarded against the SFO or the prosecuting authority, but I wonder whether that goes far enough and whether we should not provide that there should be no order for costs against the SFO unless the proceedings were brought maliciously or without any reasonable justification. That would place a burden on the person against whom the UWO was claimed to show, in effect, that the institution of proceedings was abusive.

Related to this, last year the register of overseas entities was introduced, following the invasion of Ukraine. A Joint Committee, chaired by the noble Lord, Lord Faulks, looked into the register of overseas entities and to what extent it could relate to the UWOs. Can my noble friend the Minister update us on that? The register should provide some valuable information in seeking an UWO, and a failure to provide relevant details, or the provision of inadequate details, would clearly be of immense value.

However, at the heart of the problem is something that the noble Lord, Lord Browne, referred to in a previous debate: the inequality of arms in the firepower available to each side. The targets, by definition, will be well resourced, and the SFO considerably less so. This is not the first time in our debates on this Bill that we have emphasised the importance of resources in the fight against economic crime.

My final point is this: we have had two Bills in quick succession on economic crime, and I think we can now expect a legislative silence in this area while Governments of whatever complexion concentrate on other issues. Hence the importance of a provision to keep the Government up to the mark in telling Parliament how they are using the valuable powers that Parliament gave them with the UWOs. That, in effect, is what these two amendments seek to do.

[Lord Trevethin and Oaksey (CB)]

My Lords, having spoken briefly to the noble and learned Lord, Lord Garnier, who regrets that he is not able to speak to his amendment, I think I know broadly what he would have said, and I agree with him. I shall try to articulate it briefly.

The point made by the noble Lord, Lord Cookham, about inequality of arms in this area, is critical. It is very strange and troubling that there have been so few applications of this nature since the jurisdiction came into existence, and the reason, unquestionably, is that the SFO, which is responsible for deciding whether to make these applications, is understandably very wary of the cost consequences of losing.

As the noble Lord, Lord Young, said, by definition, the respondents to these applications will be well resourced. They will retain City firms whose partners charge £600, £700 or £800 an hour or more—and, in responding to the applications, which will tend to raise quite tricky points of fact and complex issues of foreign law, they will swiftly run up legal bills that extend to hundreds of thousands, even millions, of pounds. If the principle that the loser pays applies to these applications without qualification, the cost consequences of losing, from the point of view of the regulator or prosecutor, will be a considerable deterrent to making applications, even when there is obviously a good reason to do so.

The points that I am considering in these short remarks may come into focus later on this afternoon when we discuss another amendment. The reason for me making them now is that it seems to me that the information that would be yielded by the amendment in the names of the noble Lord, Lord Faulks, and the noble and learned Lord, Lord Garnier, would be of great value both to Parliament and to those who make decisions in this area in deciding how the regime needs to be restructured so that applications are made when they should be made.