Economic Crime and Corporate Transparency Bill

Debate between Stephen Kinnock and John Penrose

Report stage
Wednesday 25th January 2023 Commons Chamber

[Stephen Kinnock]

I thank the hon. Lady for her intervention. The new clause on golden visas that she mentioned is spot-on, and we are very happy to support it. I am afraid there are a number of examples of the role Russian money is playing in the Conservative party, including the one she mentioned. I do think that that has acted as a constraint on the kind of action the Government could and should have been taking for many years now, and I really hope Ministers will start to wake up to that reality.

The public need to know that the Government and parliamentarians are taking this issue very seriously indeed, and I am proud of the way that Labour Front Benchers—including my hon. Friend the Member for Feltham and Heston (Seema Malhotra), who is alongside me on the Front Bench—and others have sought to work constructively with the Government to improve this legislation. Members of the Bill Committee considered the Government’s proposals in great detail during 19 sittings, covering hundreds of pages of legislation and amendments. Both the quality and the tone of the debates were of the highest standard, reflecting not just the widespread interest in these issues across the House, but the depth of knowledge and expertise in a wide range of areas. In that regard, I must pay tribute to my right hon. Friends the Members for Barking (Dame Margaret Hodge) and for Birmingham, Hodge Hill (Liam Byrne). The Committee benefited greatly from their thoughtful and well-informed contributions, which I have no doubt will be shared more widely in this debate.

It is therefore profoundly disappointing that, in Committee, there was little in the way of movement from the Government, even in areas where they struggled to find fault with our amendments and new clauses. While I welcome the constructive tone that both Ministers brought to our debates in Committee, the disappointing fact remains that every single effort by Opposition parties to strengthen the Bill met with resistance from Ministers, and every Opposition amendment pressed to a vote was defeated. As a result, the Committee stage amounted to little more than a litany of missed opportunities, forcing us to return to these arguments once again in this debate, and no doubt we will have to do so during the Bill’s remaining stages.

That point is illustrated by the first amendment on today’s selection list, Government new clause 14 on information-sharing powers. The new clause seeks to expand access to information relevant to economic crime enforcement efforts, but focuses only on the Law Society and

“any other approved regulators specified by the Lord Chancellor”.

Put simply, local authorities need these powers, too. Tackling economic crime is a huge challenge for councils due to the lack of licence they have to act on their own intelligence about crime in their local areas.

Councils want to play their part in cracking down on illicit wealth as it manifests itself in their areas. For instance, I have heard at first hand from Westminster City Council how it is battling a growing number of shop fronts—so-called American candy stores—on Oxford Street in particular, that are being used to channel illicit finance, but the process for taking meaningful action against these illegal practices is simply too slow, and as a result it is a gift to the criminals. Disappointingly, following opposition from Ministers to amendments we tabled in Committee that sought to expand powers for local authorities to enforce economic crime laws, there are still no specific provisions to enhance the ability of councils to act.

Moving on to the many important amendments tabled by Front and Back Benchers on both sides of the House, my right hon. Friend the Member for Birmingham, Hodge Hill again raises the issue of strategic lawsuits against public participation—or, as they are commonly known, SLAPPs. This has, of course, been a deeply troubling issue for a very long time. SLAPPs are defined as

“a recognisable and pernicious form of litigation which seeks to silence, intimidate, and harass opponents”,

and they

“are designed to silence criticism and investigation conducted in the public interest.”

Those are not my words, but the Government’s own definition. Others refer to this practice as lawfare.

We have in the past seen this practice used by the lawyers of Russian oligarchs against investigative journalists seeking to uncover corruption, but we now know that these tactics have also been used by not one, but two Conservative party chairmen in recent years. In March 2019, I wrote to the right hon. Member for Great Yarmouth (Brandon Lewis) when he was chair of the Conservative party with my concerns regarding the origins of a £1.8 million donation from Ehud Sheleg, who was then the treasurer of the Conservative party, to the Conservative party. I was sent a reply by the right hon. Member threatening to sue me for libel. He might even have got away with it had one of Mr Sheleg’s donations not later been flagged by Barclays bank to the National Crime Agency because, in its view, it originated not from Mr Sheleg’s bank account, but from the bank account of his father-in-law, a former pro-Putin Russian politician. That is lawfare in action.

But there is more—this time from representatives of the current Conservative chair. Members may have heard his name, as he has been in the news quite a bit recently. In July 2022, Dan Neidle, a former head of tax at Clifford Chance who now runs Tax Policy Associates, accused the then Chancellor of the Exchequer of providing unsatisfactory answers about his tax affairs. What happened next? Mr Neidle received a letter from the law firm Osborne Clarke, representing the right hon. Member for Stratford-on-Avon (Nadhim Zahawi), demanding that he withdraw his claims. That was a truly audacious approach and move, one might say, given what we now know about the former Chancellor’s tax returns. The bottom line is that we have a Government who claim to be committed to tackling SLAPPs, while Ministers are actively using the practice to their own benefit. It is little wonder that legislative progress has been somewhat sluggish, and that the speed of action on the part of the Government does not reflect the urgency and gravity of the issue.

New clauses 1 and 2, in the name of my right hon. Friend the Member for Birmingham, Hodge Hill, would provide a much-needed shot in the arm to efforts to resolve the endemic use of SLAPPs in British courtrooms. New clause 21, tabled by my right hon. Friend the Member for Barking with cross-party support, addresses the related issue of costs orders, which clearly form part of the legal architecture that is all too easily exploited by criminals to exert a chilling effect on critics and journalists reporting in the public interest. New clause 7, tabled by the hon. Member for Cheadle (Mary Robinson), would incorporate much-needed protections for whistleblowers into the Bill. All of those Back-Bench amendments have the wholehearted 100% support of the Opposition.

After months of consultation on SLAPPs, the Ministry of Justice published a response, which confirmed that

“the Government intends to pursue legislative reform at the earliest opportunity.”

That was back in July last year. If there has been any meaningful progress since that time, it has not been apparent to me, to my right hon. and hon. Friends or to any other Members who have signed these new clauses, so I ask the Minister: how much longer will it take for the Government to act decisively on this issue?

In new clause 3, as has been mentioned, the hon. Member for Oxford West and Abingdon (Layla Moran) raises the important issue of the tier 1 investor—or golden visa—scheme, which was closed down last year amid much ignominy arising from its extensive use by Russian oligarchs and other kleptocrats. In April last year, I wrote to the then Home Secretary to call for the publication of the Government’s internal review of the scheme without delay. In that letter I said:

“It is simply not enough that the scheme is now closed and a small number of oligarchs sanctioned; politicians and the public alike must be able to understand the findings of the report and learn the lessons.”

Here we are more than nine months later, and that argument still holds true. It is deeply regrettable that the Home Secretary is refusing to publish the report in full.

New clauses 4, 5 and 6 on corporate criminal liability point to another of the Government’s missed opportunities. There is a well-established and proud tradition of groundbreaking UK law on holding company executives to account for misdeeds committed in their names, or in the names of corporations they are responsible for running. A precedent was set by the Bribery Act 2010, which was passed by the last Labour Government. The Government built on that example in the Criminal Finances Act 2017 by introducing new corporate criminal offences related to failures to prevent the facilitation of tax evasion both in the UK and overseas. Extending those “failure to prevent” offences to a wider range of economic crimes is the logical and natural next step. New clause 40 provides a starting point for reforming the law in that area, and would require the Secretary of State to publish a report, setting out the various options by which a new offence might be introduced. New clauses 4 to 6 would go further still, by taking forward specific proposals within the Bill. The Opposition are more than happy to support those measures, and I pay tribute to the right hon. and learned Member for South Swindon (Sir Robert Buckland) and the hon. Member for Bromley and Chislehurst (Sir Robert Neill) for their leadership on this important issue.

Even as we support these reforms, it is important to remind ourselves that new laws will not necessarily be game changers in themselves. These laws, like any others, will be only as useful as the willingness and ability of this or any future Government to enforce them. Legislation without implementation is not worth the paper it is written on—[Interruption.] The Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Thirsk and Malton (Kevin Hollinrake) is nodding, because we heard that from him frequently in Committee.

[John Penrose (Weston-super-Mare) (Con)]

I thank the shadow Minister for giving way—I have an enormous amount of time for an awful lot of what he does and says. I want to challenge him a little on whether these potential changes about the duty to prevent might be more effective and game changing than he is describing, because not only should they reduce the burden of criminality, which is reducing our economic performance and our productivity as a nation, but they could be quite deregulatory. They sweep away a raft of largely ineffective and deeply costly measures, and replace them with something that is simpler and easier to comply with, but more effective at the same time.

[Stephen Kinnock]

The hon. Gentleman speaks with great knowledge on this issue, and he is right that we need a streamlined, simple approach that clearly places responsibility and liability where they need to be. That is smart regulation. Over-complicating regulation is precisely where the lawyers, fixers and those who so often facilitate this illicit activity find their niche, and how they exploit it is their leverage. Let us make this a game-changing Bill, along the lines that he suggests, and let us hope that the Government’s scale of ambition matches his and that of other hon. Members across the Chamber.

As far as the record of this Government goes, the evidence is hardly encouraging, with just 168 prosecutions and five convictions brought against companies by the Serious Fraud Office between 2016 and 2021, and increasing reliance on US-style deferred prosecution agreements that fall well short of providing full accountability for corporate criminal behaviour. I pay tribute to the work of my right hon. Friend the Member for Islington South and Finsbury (Emily Thornberry), who has set out detailed plans to reverse the SFO’s loss of senior staff and expertise, transform the agency’s approach to prosecutions, and allow more of the proceeds of successful cases to be retained by the SFO, as part of a renewed crackdown on corporate malfeasance under the next Labour Government. Labour’s blueprint is there, and Labour Members would be delighted to see the Government adopt it when addressing this issue.

Other new clauses tabled by Back-Bench Members address additional areas that the Government could and should address, but that unfortunately they have not addressed in the Bill. New clause 23, tabled by the hon. Member for Huntingdon (Mr Djanogly) is one example. Its call for a review of the need for further regulations

“to prevent the circulation in the UK economy of the proceeds of economic crime controlled by individuals or entities subject to sanctions”

is welcome, as is new clause 25, tabled by the right hon. Member for Stevenage (Stephen McPartland). If I were to raise any slight criticism, it would be that the new clauses fall a little short of what is needed, but Labour supports them nevertheless. Specifically, both new clauses fail to mention the enormous and central role that is played not just by the UK, but by individual Crown dependencies and overseas territories in enabling—and all too often actively facilitating—global flows of illicit finance, and the ill-gotten assets of kleptocrats and crooks.