“(1) The Secretary of State must as soon as reasonably practicable after the end of each reporting period lay before Parliament a report which—
(a) specifies the regulations under section 1, if any, that were made in that reporting period,
(b) identifies which, if any, of those regulations—
(i) stated a relevant human rights purpose, or
(ii) amended or revoked regulations stating such a purpose,
(c) specifies any recommendations which in that reporting period were made by a Parliamentary Committee in connection with a relevant independent review, and
(d) includes a copy of any response to those recommendations which was made by the government to that Committee in that reporting period.
(2) Nothing in subsection (1)(d) requires a report under this section to contain anything the disclosure of which may, in the opinion of the Secretary of State, damage national security or international relations.
(3) For the purposes of this section the following are reporting periods—
(a) the period of 12 months beginning with the day on which this Act is passed (“the first reporting period”), and
(b) each period of 12 months that ends with an anniversary of the date when the first reporting period ends.
(4) For the purposes of this section—
(a) regulations “state” a purpose if the purpose is stated under section 1(3) in the regulations;
(b) a purpose is a “relevant human rights purpose” if, in the opinion of the Secretary of State, carrying out that purpose would provide accountability for or be a deterrent to gross violations of human rights.
(5) In this section—
“the government” means the government of the United Kingdom;
“gross violation of human rights” has the meaning given by section 1(6A);
a “Parliamentary Committee” means a committee of the House of Commons or a committee of the House of Lords or a joint committee of both Houses;
a “relevant independent review”, in relation to a Parliamentary Committee, means a consideration by that Committee of whether the power to make regulations under section 1 should be exercised in connection with a gross violation of human rights.”—(Sir Alan Duncan.)
This new clause requires periodic reports to be made about the use of the power to make sanctions regulations. A report must identify regulations relating to gross human rights violations. It must also specify any recommendations made by a Parliamentary Committee for use of that power in relation to such violations, and include the government’s response.
Brought up, and read the First time.
With this it will be convenient to discuss the following:
New clause 1—Scottish Limited Partnerships: partner requirement—
“(1) For the purposes of preventing money laundering, where a limited partnership registered in Scotland has general partners at least one of those must be a British citizen.
(2) Where a limited partnership registered in Scotland has limited partners at least one of those must be a British citizen.
(3) In this section— a “limited partnership registered in Scotland” means a partnership registered under the Limited Partnerships Act 1907;
“British citizen” has the meaning given in part 1 of the British Nationality Act 1981.
“general partner” has the meaning given in section 4(2) of the Limited Partnership Act 1907;
“limited partner” has the meaning given in section 4(2A) of the Limited Partnership Act 1907”.
New clause 6—Public registers of beneficial ownership of companies registered in British Overseas Territories—
“(1) For the purposes of the detection, investigation or prevention of money laundering, the Secretary of State must provide all reasonable assistance to the governments of the British Overseas Territories to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in each government’s jurisdiction.
(2) The Secretary of State must, no later than
(3) The draft Order in Council under subsection (2) must set out the form that the register must take.
(4) If an Order in Council contains requirements of a kind mentioned in subsection (2)—
(a) it must be laid before Parliament after being made, and
(b) if not approved by a resolution of each House of Parliament before the end of 28 days beginning with the day on which it is made, it ceases to have effect at the end of that period (but without that affecting the power to make a new Order under this section).
(5) In calculating a period of 28 days for the purposes of subsection (4), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.
(6) For the purposes of this section, “British Overseas Territories” means a territory listed in Schedule 6 of the British Nationality Act 1981.
(7) For the purposes of this section, “a publicly accessible register of the beneficial ownership of companies” means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006.”
This new clause would require the Secretary of State to take steps to provide that British Overseas Territories establish publicly accessible registers of the beneficial ownership of companies.
New clause 14—Public registers of beneficial ownership of companies in the Crown Dependencies—
“(1) For the purpose of preventing money laundering, the Secretary of State must provide all reasonable assistance to the governments of the Crown Dependencies to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in that government’s jurisdiction.
(2) The Secretary of State must, by the deadline set for the implementation of the European Union’s 5th Anti-Money Laundering Directive, prepare a draft Order in Council requiring the government of any Crown Dependency that has not introduced a publicly accessible register of beneficial ownership of companies within their jurisdiction to do so.
(3) The draft Order in Council under subsection (2)—
(a) must be laid before Parliament after being made, and
(b) if not approved by a resolution of each House of Parliament before the end of the 28 days beginning with the day on which it is made, ceases to have effect at the end of that period (but without that affecting the power to make a new Order).
(4) In calculating a period of 28 days for the purposes of subsection (4), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
(5) For the purposes of this section, a “publicly accessible register of beneficial ownership of companies” means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006 (information about people with significant control).
(6) For the purposes of this section, “Crown Dependency” means—
(a) any of the Channel Islands;
(b) the Isle of Man.”
New clause 19—Scottish Limited Partnerships: UK bank account requirement—
“(1) For the purposes of preventing money laundering, where a limited partnership registered in Scotland has general partners at least one of those must have an active UK bank account.
(2) Where a limited partnership registered in Scotland has limited partners at least one of those must have an active UK bank account.
(3) In this section— a “limited partnership registered in Scotland” means a partnership registered under the Limited Partnerships Act 1907;
“general partner” has the meaning given in section 4(2) of the Limited Partnership Act 1907;
“limited partner” has the meaning given in section 4(2A) of the Limited Partnership Act 1907.”
Government amendments 10 to 12.
Amendment 32, in clause 1, page 2, line 17, at end insert—
“(i) further accountability for, or act as a deterrent to, the commission of a gross human rights abuse or violation.”
This amendment would enable sanctions to be made for the purpose of preventing, or in response to, a gross human rights abuse or violation.
Amendment 33, page 2, line 35, at end insert—
“(5A) In this section, conduct constitutes “the commission of a gross human rights abuse or violation” if each of the following three conditions is met.
(5B) The first condition is that—
(a) the conduct constitutes the torture of a person who has sought—
(i) to expose illegal activity carried out by a public official or a person acting in an official capacity, or
(ii) to obtain, exercise, defend or promote human rights and fundamental freedoms, or
(b) the conduct otherwise involves the cruel, inhuman or degrading treatment or punishment of such a person.
(5C) The second condition is that the conduct is carried out in consequence of that person having sought to do anything falling within subsection (2)(a)(i) or (ii).
(5D) The third condition is that the conduct is carried out—
(a) by a public official, or a person acting in an official capacity, in the performance or purported performance of his or her official duties, or
(b) by a person not falling within paragraph (a) at the instigation or with the consent or acquiescence—
(i) of a public official, or
(ii) of a person acting in an official capacity, who in instigating the conduct, or in consenting to or acquiescing in it, is acting in the performance or purported performance of his or her official duties.
(5E) Conduct that involves the intentional infliction of severe pain or suffering on another person is conduct that constitutes torture for the purposes of subsection (2)(a).
(5F) It is immaterial whether the pain or suffering is physical or mental and whether it is caused by an act or omission”.
This amendment, which is consequential on Amendment 32, would define what constitutes the commission of a gross human rights abuse or violation. The commission of a gross human rights abuse or violation would include the torture of a person who had sought to expose the illegal activity of a public official, or the torture of a person who had sought to defend human rights or fundamental freedoms, by a public official or a person acting in an official capacity.
Government amendments 13 to 17.
Amendment 20, in clause 56, page 43, line 7, after first “1”, insert
“, section (Public registers of beneficial ownership of companies registered in British Overseas Territories)”.
This amendment is consequential on NC6.
Government amendment 18.
Amendment 31, in title, line 5 after “objectives”, insert
“or to further accountability for, or act as a deterrent to, the commission of a gross human rights abuse or violation”.
This amendment to the long title would be consequential on Amendment 32.
This group contains new clauses and amendments regarding three related issues that I will discuss in turn: imposing sanctions for gross human rights violations, or what is now popularly known as the Magnitsky amendment; Scottish limited partnerships, which are of deep concern, particularly for the Scottish National party; and public registers of beneficial ownership in the overseas territories. In two of those areas, the Government are taking action to tackle abuses and tighten up standards: through Government amendments on Magnitsky and through a consultation document on Scottish limited partnerships.
The Minister mentions the consultation on SLPs. Does he not accept that there has already been a consultation on SLPs and that it closed over a year ago, so to have another consultation is just wasting time?
If I might say so ever so politely to the hon. Lady, she is jumping the gun slightly given that I am only at the end of my first paragraph, and as she knows there have been some detailed discussions through the usual channels. I will address the matter she has asked about in more detail later on; if I may, I will tackle the three issues to which I have referred in the order that I raised them, in order to satisfy the House that we are looking at all concerns in detail and genuinely.
First, sanctions for gross human rights violations have clearly been an issue of significant concern to Members on both sides of the House, as was made clear by many who spoke on Second Reading and in Committee. I fully recognise why Members and many people outside this House want to include gross human rights abuses in the Bill explicitly as a reason why sanctions can be applied, particularly in reference to the abhorrent case of Sergei Magnitsky in Russia.
In her speech to the House on
I am truly grateful for everything that the Minister and all those he has referred to have done in relation to the Sergei Magnitsky amendment. It is obviously important that he has captured the consensus of the House, but it is even more important that we capture all those, in particular those from Russia, who have come to this country and used it for money laundering purposes and for hiding their assets. Is he confident that we will be able to do that as a result of this legislation?
I am confident of that, as I will explain further in a moment.
As is traditional on Report, it is important that I explain what the amendments do, if ever so briefly. Amendment 10 relates specifically to putting gross human rights abuses on the face of the Bill as a basis on which sanctions may be imposed. Amendments 11, 12, 14, 15, 16 and 17 are consequential to that, introducing technical changes that will follow. Amendment 13 links the definition of a gross violation of human rights to the existing definition in the Proceeds of Crime Act 2002, so that it includes the torture of a person by a public official or a person in an official capacity, where the tortured person has sought to expose the illegal activity of a public official or to defend human rights or fundamental freedoms. That will ensure that all gross human rights abuses or violations are explicitly captured.
The Minister will not be surprised to know that I fully support the Government in bringing this change forward, as I am sure all Labour Members do given that we have been asking for it for some time. On the subject of sanctions, will the Government publish the names of those who have been sanctioned under the Bill, notwithstanding what subsection (2) of new clause 3 says about not risking damage to
“national security or international relations”?
There is an obligation to report, which I will come to in a minute. I would be happy to explain the exact details to the hon. Gentleman, although of course they are still being devised on the back of the obligations laid down in the Bill.
New clause 3 requires reports to be made—this relates to the question that the hon. Gentleman has just asked—about the use of the power to make sanctions regulations, including the specifying of any recommendations made by a parliamentary Committee on the use of that power and the Government’s response. It is right and proper that independent review of the powers should be carried out by Parliament. This is a strong set of measures to address the Government’s approach to imposing sanctions for human rights abuses, and I would like to put it on record again that the Government are committed to promoting and strengthening universal human rights and holding to account states and individuals who are responsible for the most serious violations.
Will the Minister outline how he envisages such parliamentary review operating? Will it be done through specific Committees, or on the Floor of the House? Will we be able to have confidence that that procedure is robust enough to ensure that the review is appropriate?
The hon. Lady hits on a point that illustrates the important distinction between the Executive and the legislature, even though the Executive are drawn from the legislature. We, as Ministers, are the Executive. The hon. Lady is a Member of the legislature. I will not say, “Long may that continue”, but it might. It is therefore inappropriate for us to determine in primary legislation exactly how the House should go about its business. That is for the House itself to decide. We believe that we have included in the Bill the proper impetus for the House to be able to structure itself as it wishes—through the Joint Committee on Human Rights or the Foreign Affairs Committee, for example—while saying in advance that we as the Executive will have an obligation to report back and respond to any such independent activity.
Along with other colleagues, I absolutely share the objectives of the Magnitsky provisions. I have been in touch with Bill Browder, for whom Sergei Magnitsky worked at the time of his brutal murder by the Russian authorities, and Mr Browder has made it absolutely clear to me that if this does not lead to the full publication the names of the people who are being sanctioned and to absolute clarity on the nature of the independent review that has just been mentioned, the Bill will have failed in its objectives. It is important that the Minister understands what Mr Bill Browder is saying on this matter.
I can say that any person sanctioned under this Bill will have their name published on an administrative list, which will be publicly available. I hope that that will reassure the hon. Gentleman, the House and all those interested in this issue.
I was about to ask the same question, and the answer that the Minister has just given will be enormously reassuring to many of us, particularly because the thing that many of these kleptocrats and organised criminals really fear is the glare of public disclosure.
I doubt that there is anyone in this House who does not want the overseas territories and Crown dependencies to have open, public registers of company interests. If my right hon. Friend the Member for Sutton Coldfield’s new clause 6 does not pass, how will the House be able to have confidence that the Executive will make sufficient progress as though we had compelled them to issue Orders in Council?
I will be saying more about the overseas territories in a moment. I fully recognise the interest that my hon. Friend has shown, over many years, in the importance of protecting the interests of the overseas territories, particularly in the Caribbean. I will be able to give him deeper reassurance on this in a moment, but if I may, I will continue with my points in the order that I was planning to make them, by addressing the Magnitsky issue first, then Scottish limited partnerships, before turning to that rather more vexed issue.
Looking at the Scottish National party Benches, I turn to the separate amendments on Magnitsky tabled by Alison Thewliss. While we agree with the driving principles behind the amendments, we are satisfied that the package of amendments that we have tabled—which have been signed by Members on both Front Benches—sufficiently cover the same objectives. I hope that the hon. Lady will feel that they do. As she knows from our discussions in Committee, we have approached this entire issue in a spirit of cross-party co-operation. Indeed, she has played an important part in that in her campaigning.
I should like to take this opportunity to say that, having heard what the Minister has said on this matter and others, I am content not to press my amendments relating to Magnitsky.
I am grateful to the hon. Lady. I am hoping for a similar response on other parts of the Bill as I proceed gingerly through the new clauses and amendments that we are discussing today. I hope that, when I proceed gingerly, no one can see that I am here at all.
Opposition amendments 31 and 32 would insert a purpose into the Bill to allow sanctions regulations to be made for the purpose of preventing, or ensuring accountability for, a gross human rights abuse or violation. As the hon. Lady has already suggested, however, our amendment 10 would add a similar purpose, so I sense that we have found common ground here. Also, just to make the record clear, Opposition amendment 33 would define what constitutes a gross human rights abuse or violation on the face of the Bill. Government amendment 13 provides a similar function through reference to a definition already existing in other legislation, as I have just explained, which is preferable for maintaining a tidy statute book. I therefore hope that our amendments meet the goals of the hon. Lady’s amendments. I sense that they do.
Setting aside a technical assessment of the Bill, I think that, on Magnitsky, we have got there. This is a very important moment for the House, and for the defence of human rights that the United Kingdom is always proud to show. All parties have come together to find consensus on ensuring that the proper legislative powers are in place to address gross violations of human rights. That is a matter of deep concern to Members on both side of the House, to many people outside and internationally. If the amendments are agreed to today, as I am sure they will be, we can truly say that we have spoken together, united in favour of human rights, and that the voice of the United Kingdom sits alongside other countries that have adopted such legislation, and we can score it as a great achievement of which we can all be proud. Once again, I pay tribute to those who have so relentlessly and persistently campaigned for it. It is not just a triumph for the House; it is a personal triumph for them. In saying that, I look once again to my right hon. Friend the Member for Newbury in particular.
Turning to Scottish limited partnerships, we recognise the concerns that have been raised, and I assure the House that the Government are committed to making further progress. SLPs and other forms of limited partnership play a vital role in the asset management sector for the funding of asset-based contribution pension schemes and for oil and gas exploration, which matters enormously to Scotland. That makes it all the more important not just that their legitimate use is supported, but that legitimate action is taken to prevent their misuse. As hon. Members will be aware, the past decade has seen a vast increase in the number of SLPs, with the growth rate far outstripping that of the number of limited partnerships established in the rest of the UK, and we recognise the concern that SLPs are being used inappropriately. Following clear evidence of certain SLPs being misused, the Government brought them within the scope of our register of beneficial ownership. Since then, the rate of new SLP registration has declined by approximately 80%, but we recognise that more needs to be done.
Yesterday, the Department for Business, Energy and Industrial Strategy published a consultation document on limited partnership reform following its call for evidence last year. The document sets out clear options for reform. The Government propose that all those registering a limited partnership would need to be registered with an anti-money laundering supervisor. They would need to carry out due diligence before establishment, with the possibility of supervisory action. That due diligence will necessarily include identifying the beneficial owners of the SLP, including its general and limited partners when they exercise control over the SLP. That addresses the substantial purpose behind new clause 19, which would require at least one of both the general and limited partners in an SLP to have an active UK bank account, and so require that they will have been subject to due diligence for anti-money laundering purposes.
Such measures would address the substantial purpose behind the new clauses on the subject. We are further consulting on how best to require limited partnerships to retain a physical presence in the UK to ensure that there is a UK link against which any necessary enforcement proceedings can be taken. Additionally, the Department for Business, Energy and Industrial Strategy is seeking views on whether all limited partnerships should be required to file an annual confirmation statement with Companies House. Taken together, the proposals would tighten the checks on SLPs, ensure that they retain a UK presence and expose more details about their workings to public scrutiny. They would not disproportionately burden limited partnerships that operate entirely lawfully, but they would go further in reducing their potential for illicit misuse.
New clause 1 would require that, where a Scottish limited partnership has general and limited partners, at least one of each must be a British citizen. That would have the unintended side effect of disrupting the legitimate uses of corporate partners within sectors, including the venture capital sector. The Government consider that the measures on which the Department for Business, Energy and Industrial Strategy is consulting will do more to bring transparency to limited partnerships and to prevent them from being misused, without damaging their legitimate usage. The Department’s consultation will be open until
The Minister mentioned increasing the regulation of SLPs, but a regulation from last year meant that SLPs had to register their beneficial ownership within 28 days or face a £500 daily fine. Only 43% of them have provided that information, meaning that £2.2 billion in backdated fines has accrued. When does the Minister intend to collect that money and enforce the regulations that already exist for SLPs?
It sounds as though the hon. Gentleman is going to make a robust submission to the consultation, and I urge him to do so, because I fully take the point that if something can be required but it does not work operationally, then obviously it will not be delivered. I urge him to record what he believes are the facts and submit them to the consultation.
I express my gratitude to Members who have tirelessly continued to raise their concerns on the issue of SLPs—I can spot one from where I am standing—and I hope that what I have said today, and the content of the consultation published yesterday, provides reassurance that the Government are genuinely committed to reform in this area.
Turning to beneficial ownership in the overseas territories, as the House will now appreciate, the Government’s plan for tackling the issue had been to table a new clause, which we did, that sought unity in the House, which I believe we had a good chance of securing. The new clause sought to enhance the measures on beneficial ownership in the overseas territories but stopped short of legislating for them, thus avoiding constitutional conflict. As Members will be aware, however, some amendments were not selected today, and we of course fully respect the procedural basis on which Mr Speaker chose not to select them.
New clause 6, tabled by my right hon. Friend Dame Margaret Hodge, would put a duty on the Government to work with the overseas territories to set up public registers of company beneficial ownership by
The UK has strongly supported co-ordinated international action to promote beneficial ownership transparency. The UK was the first G20 country to establish a public register of company beneficial ownership and has committed to creating a new beneficial ownership register for overseas companies. At EU level, the UK went beyond the requirements of the fourth anti-money laundering directive in establishing a public register and supported the inclusion in the fifth anti-money laundering directive of a provision that will require all EU member states to have legislation in place to support publicly accessible registers by the end of 2019.
We are also committed to seeing the overseas territories and Crown dependencies take further action, and they have already made significant progress through consensual joint action. We are grateful, and we respect all the work they have done in this area. All Crown dependencies have central registers in place. Of the seven overseas territories with significant financial centres, four already have central registers or similarly effective arrangements. They are able to provide UK law enforcement authorities, on request, with access to such information, even at very short notice—it can be within 24 hours, or even within one hour in urgent cases.
I thank the right hon. Gentleman for his generosity in giving way. Does he agree that, although this is progress, it will be effective only if we have the light of transparency and these registers are available publicly, and not just to law enforcement authorities?
I can answer with an unequivocal yes. That is a shared objective on both sides of the House. The only thing on which we have different opinions is the manner in which we get there. The objective is clear. The arguments are very finely balanced, and the hon. Lady may want to listen carefully to what I am about to say. We recognise the need to tackle illicit finances across the globe, including in the Crown dependencies and overseas territories. We are concerned, however, that the economic impact of imposing public registers on the overseas territories will be significant.
Furthermore, the overseas territories are separate jurisdictions, with their own democratically elected Governments. They are responsible for their own fiscal matters, and they are not represented in this Parliament. Legislating for them without their consent effectively disenfranchises their elected representatives. We would have preferred to work consensually with the overseas territories to make those registers publicly available, as we have done in agreeing the exchange of notes process.
No, not for the moment.
We do not want to legislate directly for the overseas territories, nor do we want to risk damaging our long-standing constitutional arrangements, which respect their autonomy. However, we have listened to the strength of feeling in the House on this issue and accept that it is, without a doubt, the majority view of this House that the overseas territories should have public registers ahead of their becoming the international standard, as set by the Financial Action Task Force.
We will accordingly respect the will of the House and not vote against new clause 6. Unless my right hon. Friend the Member for Sutton Coldfield chooses not to press the new clause, we accept that it will become part of the Bill. In the same spirit, I would appreciate it if the hon. Member for Bishop Auckland chose not to press new clause 14, which would add the Crown dependencies to that stipulation.
Her Majesty’s Government are acutely conscious of the sensitivities in the overseas territories and of the response that new clause 6 may provoke. I therefore give the overseas territories the fullest possible assurance that we will work very closely with them in shaping and implementing the Order in Council that the Bill may require. To that end, we will offer the fullest possible legal and logistical support that they might ask of us. Alongside that, we retain our fullest respect for the overseas territories and their constitutional rights, and we will work with them to protect their interests.
I am pleased to have the opportunity to take part in the debates on Report of this important Bill. I will follow the same order as the Minister in discussing the amendments.
I took the rather unusual step of signing the Government’s Magnitsky amendments, new clause 3 and amendments 10 to 13, so this House can present a united voice to the whole world in expressing our abhorrence for gross human rights abuses and our determination to tackle them together.
I thank Richard Benyon and my hon. Friends the Members for Rhondda (Chris Bryant) and for Dudley North (Ian Austin)—the latter is not in the Chamber at the moment—all of whom have campaigned on this issue for a long time. Her Majesty’s Opposition believe that human rights should be at the centre of foreign policy. The only way gross human rights abuses will stop is if those who perpetrate them, order them and facilitate them are brought personally to account. They must pay the price.
Sanctions against individuals for gross human rights abuses were originally conceived as a response to the terrible treatment of Sergei Magnitsky, but we believe there is a wider problem. We note, for example, that the United States has sanctioned Maung Maung Soe, one of the generals responsible for the ethnic cleansing of the Rohingya in Myanmar.
Last year, the Criminal Finances Act 2017 enabled the Government to freeze the assets of people responsible for such crimes, and this Bill will enable us to ban visas and prevent such people traveling here. The only question is why it took so long for the Government to come round to seeing the importance of this measure.
We introduced so-called Magnitsky amendments in Committee that would have given us the same ability as Canada and the United States to implement targeted sanctions. Unfortunately, the Government initially did all they could to reject our amendments. They rejected them in principle on Second Reading; they reordered the consideration of the Bill; they suspended the Committee; and then they downright voted against the amendments. After the Salisbury incident on
I am pleased to offer the support of Her Majesty’s Opposition to new clause 6, tabled by my right hon. Friend Dame Margaret Hodge. I congratulate her on her long campaign, which began when she was Chairman of the Public Accounts Committee. She has stuck with it over many years, and we see in the Minister’s announcement today that the campaign was well worth while. I also congratulate Mr Mitchell on putting together a fantastic coalition of support for this change.
We believe the time to act has come. In 2014, David Cameron wrote to the British overseas territories recommending that they introduce public registers—the UK introduced a public register in 2016—and new clause 6 sets out a timetable for them to do so by 2020. Money laundering through London is estimated by the National Crime Agency to total £90 billion, and it is facilitated by the secret ownership of companies allowed in tax havens. Unfortunately, the British overseas territories and Crown dependencies are major actors. They enable the corrupt to live in comfort on their ill-gotten gains and facilitate tax avoidance and evasion on a spectacular scale. The UK is estimated to lose £18.5 billion each year. I am only surprised that the Chancellor of the Exchequer did not also sign new clause 6.
The poorest countries in the world are estimated by the United Nations to lose £100 billion a year through these tax havens, which dwarfs any aid flows we supply. That is another reason why new clause 6 is very much to be welcomed.
The scope for hiding large funds facilitates serious international crimes: drug dealing, people trafficking, sanctions busting, illegal arms sales and terrorism. Over and again, the names of the British overseas territories and Crown dependencies come up when these crimes are finally uncovered.
Clearly, it is important to remember that this is not just an overseas territories issue but a global one. Is the hon. Lady worried that this legislation will just displace all the activity to states such as Delaware, which do not have this transparency, and we will not gain any of the real benefits?
Of course the hon. Gentleman raises a worry, which has been expressed. My right hon. Friend Emily Thornberry and I were in the United States a fortnight ago, when we met several members of the US Congress who are keen to crack down on Delaware, Nebraska and the other states there. Leading by example, which is what the last Administration did, is a way to make progress on this issue. I will come back to the international links later in my speech.
What does the hon. Lady say to the 50,000 or 60,000 inhabitants of the Cayman Islands, who were given a constitution in which the responsibility for the governance of their financial and economic affairs was solemnly conveyed to them by this Parliament? The measure she is supporting will require that constitution to be amended so that the section that conveys on them the power to make their own orders in these affairs will have to be removed. What does she say to them?
My understanding is that the position on the British overseas territories, as set out by a White Paper when Sir Henry Bellingham was a Foreign Office Minister, is that it is appropriate for this House to legislate for the Cayman Islands and the overseas territories if it is considered necessary. Given the long list of crimes, which I have just read out to the House, that are facilitated, it can be argued completely that when we are making changes in this respect, this is an international, foreign policy issue, as that is what we are talking about; we are talking about the financing of international crime and of terrorism. This is not like trying to intervene in street lighting or purely local matters. It simply has a completely different import for the world.
I understand the point the hon. Lady is making and, as a lawyer, I very much appreciate the importance of the international fight against crime and money laundering, but will she concede that at least some overseas territories take their obligations very seriously? For example, Gibraltar, which is part of the EU as well, has already publicly accepted that it will transpose the fifth anti-money laundering directive, which includes a public register of beneficial ownership, into place by December 2019? In a sense, such places do not need to be legislated for, because they are willing to do this. It is important to be proportionate in our approach, is it not?
Of course what the hon. Gentleman says about the fifth anti-money laundering directive is right, in so far as it does put obligations on Gibraltar. That was why I have linked new clause 14 to the fifth anti-money laundering directive, because clearly it is easier, in terms of international competitiveness, for many jurisdictions to move together.
The hon. Lady mentioned the 2012 White Paper on the overseas territories, in which we said that in extreme cases we would legislate on such matters but that we would always try to build consensus first, because of our great respect for the constitutions of those territories. I plan to make a few remarks about that, but given that the Government’s announcement today, will she confirm that she will not press new clause 14, which would extend new clause 6 to the Crown dependencies?
I will come on to that at the end of my speech.
I was explaining that these crimes are significant and that we see money being laundered in the UK, and I wanted to give the example of Mr Temerko, who was once a senior figure in Russia’s defence industry and who rose to become a key player in the Russian oil giant Yukos. His engineering company, Offshore Group Newcastle Ltd, had a large site up in Hadrian’s yard in Newcastle, where it was doing some energy work. The company won a grant from the Government’s regional growth fund in 2013, but it later went into administration and the work in the north-east was left unfinished. OGN Ltd is owned by a parent company based in the secrecy jurisdiction of the British Virgin Islands. Clearly, the effects of the lack of transparency are not felt solely in London; they are felt across the United Kingdom.
As I have said, I acknowledge that progress has been made, in so far as registers of beneficial ownership or “similarly effective systems” have been set up, but these are not transparent.
After the incident in Salisbury, I was led to understand that the Government were cracking down on money laundering in this country, particularly in respect of these Russian oligarchs. Does my hon. Friend not agree that the Government should pursue this a lot further than they have been doing?
I certainly agree with that. Obviously, the law enforcement agencies—the National Crime Agency, the police and the Serious Fraud Office—need more resources. They would then be in a better position to crack down on this money laundering.
The purpose of transparency is not for the entertainment and titillation of the curious; it is to facilitate the authorities’ ability to track down illicit flows, because they can see the connections and links. This effectiveness of transparency was demonstrated by the fact that the Panama and Paradise leaks enabled Her Majesty’s Revenue and Customs to open civil and criminal investigations into 66 people, to pursue arrests for a £125 million fraud, to tackle insider trading and to place dozens of high net worth individuals under review.
I am extremely pleased that the Minister said what he did about not opposing new clause 6, which stands in the name of my right hon. Friend the Member for Barking. I welcome his change of heart on that. He has, in the written ministerial statement he produced this morning, bigged up the role of the Financial Action Task Force, and I was a bit surprised by that, as the FATF is a rather unsatisfactory forum. It is an inter- governmental body with no legal personality or explicit formal authority under international law and no enforcement powers. It has 37 members, which include Russia, China and the Gulf Co-operation Council. Foreign Office Ministers have been eloquent in recent months in saying that the United Nations Security Council is ineffective in upholding international law because of the Russian veto, yet here, when we want to tackle the financing of major crimes and terrorism, they seem content to hand over their moral compass to the Russians. The FATF is also highly secretive; in answer to my questions, Ministers have refused to publish future agendas or papers for discussion. Even the UK does not always ensure its FATF representative has a thorough-going commitment to reform—for years it was a person who had his family money in a secret Bahamas trust. So I will be very pleased if the House can unite behind new clause 6 this afternoon.
I turn now to new clause 14, which would require public registers in the Crown dependencies. The case in principle for acting to improve transparency in the Crown dependencies—the Channel Islands and the Isle of Man—is substantively the same: their secret ownership arrangements facilitate both money laundering and tax evasion.
The hon. Lady will have heard what the Minister said in his speech about the response that the Isle of Man and other Crown dependencies are able to give within hours, whenever a request is made for information that falls within a terrorist category. Does she accept that the Crown dependencies forthrightly, earnestly and efficiently provide information to our law enforcement agencies within hours, when it is requested?
The hon. Gentleman makes the same point about the Crown dependencies as other Members have made about the British overseas territories. The current situation is as he describes it—if the law enforcement agencies want information and ask for it, the authorities in the relevant jurisdictions give it to them—but the problem is that, to crack down on serious and organised crime, it is really useful to see the whole picture, and we can see the whole picture only if we have all the information. That is the point of transparency and that is the lesson from the Panama and Paradise papers.
My hon. Friend is making a brilliant speech. Have we not learned that dark money will move to wherever the law is darkest? If we bring transparency to the overseas territories, most of the money is simply going to be relocated to the Crown dependencies, unless we change the law to cover them, too.
That point was made to me by the Minister and his officials when we discussed the Bill, and my right hon. Friend is absolutely right that, because we are making changes in respect of the overseas territories, we need to make changes in respect of the Crown dependencies.
My hon. Friend is making an extremely good speech. Does she agree that the time for secrecy in all these jurisdictions is now over? We need transparency so that we can minimise the abuse—whether tax evasion, tax avoidance, or the laundering of criminal money—that is becoming more and more of a feature in these jurisdictions. Does my hon. Friend agree that once we have our own house in order, we can then campaign internationally to close down all tax havens?
My hon. Friend has succinctly made my whole case for me. She is absolutely right. Those people who think that the situation in the Crown dependencies is not as serious as that in the British overseas territories need only to remember the 957 helicopters that were registered on the Isle of Man to avoid VAT.
I shall make a little more progress, because many Members want to speak.
I have linked new clause 14 to the fifth anti-money laundering directive, so that we would see a number of jurisdictions moving together. I am pleased that the Government have accepted the secrecy jurisdictions and that we have a role with respect to the overseas territories, but we need an effective path to bring change according to a timetable, within the current Parliament, and my right hon. Friend the Member for Barking’s new clause 6 would provide that. I will not press new clause 14 to a vote—I was not going to press it in any case—because I think we can reach an agreement on how to proceed on these matters.
Let me start by saying how grateful I am to all right hon. and hon. Members from all parties who support new clause 6. I am particularly grateful to Mr Mitchell, who has worked with me on this important issue and shown his particular skills and experience as a former Government Chief Whip.
The fact that the new clause commands such wide support throughout the House speaks volumes for what it says. Our proposal is right in principle and will be effective in practice. When it is passed—I am grateful to the Minister for conceding that the Government will not oppose it—this simple measure to require British overseas territories, our tax havens, to publish public registers of beneficial ownership will transform the landscape that allows tax avoiders, tax evaders, kleptocrats, criminals, gangs involved in organised crime, money launderers or those wanting to fund terrorism to operate. It will stop them exploiting our secret regime, hiding their toxic wealth and laundering money into the legitimate system, often for nefarious purposes.
Transparency is a powerful tool. With open registers, we will know who owns what and where and will be able to see where the money flows. We will thereby be better equipped to root out dirty money and deal with the related issues, and we will be better able to prevent others from using secretive jurisdictions to hide their ill-gotten gains.
Does the right hon. Lady accept that open registers are not the panacea that she is describing? Indeed, the UK currently has open registers, but the name and address of an 85-year-old was used fraudulently to register 25,800 companies, without anyone discovering that fraud.
Open registers are an essential tool. They are necessary, but they are not sufficient. We also need a strong regulatory framework for the establishment of companies and strong policing arrangements to ensure that the regulations are implemented.
My right hon. Friend is absolutely right to pay tribute to Members from all parties, including the Conservative Members who bravely supported her even when the Government attempted to buy them off. On behalf of many Members from different parties, may I say how grateful we are for the tenacity that she has shown and the excellence with which she has pursued this campaign? It shows Parliament in a good light, and the measures that the House is set to approve will do a great deal of good.
I thank my hon. Friend for his kind words, but it really has been a team effort, with people from throughout the House and across all the political tribes.
New clause 6 would simply put into legislation proposals that David Cameron first articulated in 2013, when he spoke about ripping aside the “cloak of secrecy” and repeated the well-known mantra, “sunlight is the best disinfectant”. It would do no more and no less than fulfil the commitment made by the then Prime Minister five years ago.
Britain sits at the hub of the world’s largest network of secretive jurisdictions, and British tax havens are central to the movement of illicit moneys around the world. The secrecy under which they currently operate facilitates wrongdoing on an industrial scale. We have a weak regulatory regime, some of which was enacted by the previous Labour Government and needs reform, and sadly we have lax policing of our system. Couple that with the secrecy that prevails, and Britain and our overseas territories have increasingly become the most attractive destination for crooks, kleptocrats and corrupt individuals who engage in financial skulduggery. If we do not accept new clause 6, we will be in danger of sacrificing our traditional reputation as a reliable jurisdiction by our failure to challenge the secrecy.
I very much echo the sentiments of my hon. Friend Toby Perkins. Does my right hon. Friend agree that it is impossible for us to get unexplained wealth orders to work unless we put in place registers not only for our countries and the overseas dependencies, but for the Crown dependencies, too?
I entirely concur with my right hon. Friend’s important point.
Let me take Members through the argument, because it is important that we understand what we are dealing with. First, on the scale of the problem we are tackling, the National Crime Agency reckons that around £90 billion a year is laundered through the UK. We know that developing countries lose three times as much in tax avoidance than they get in all the international aid that is available to them. Half the entities cited in the Panama papers were corporations registered in just one of our overseas territories: the British Virgin Islands. We know that, in the past 10 years, £68 billion has flowed out of Russia into our overseas territories. That is seven times more going to the overseas territories than has come to Britain. We know that there are 85,000 properties here in the UK that are owned by companies registered in our tax havens, half of which are in just two constituencies in London, and a sample survey done by Transparency International suggests that two out five of those properties have Russian owners.
Tax avoidance and financial crime are not trivial irritants. The problem is widespread and it is corrosive. If we fail to act, we are complicit in facilitating the very corruption that this Government and this Prime Minister have told us that they are determined to tackle. Let me say that
“if we want to break the business model of stealing money and hiding it in places where it can't be seen: transparency is the answer.”
I shall deal briefly with the arguments that have been put forward by some in opposition to our proposal. Some say that we should not legislate on these issues for our overseas territories. I agree that it would be far, far better for all of us if those overseas territories willingly enacted public registers, but we have now had five years, and it is clear that they will not act without real pressure from us. Our new clause gives them a further three years—until the end of 2020—to adjust to a transparent regime. Of course, we should provide all the support and assistance they require to modify their economies to the new environment.
The present practice is unsustainable. The fifth money laundering directive from the EU will bring in public registers across the EU by the end of 2019. As Robert Neill said earlier, that, will mean that Gibraltar will act before the implications of this Bill are felt in 2020. Countries across the world—from Nigeria to Afghanistan—are now beginning to commit to public registers, so this is flowing with the tide of practice across the world. We should be showing leadership on this, not trying to be the last man, or the last woman, standing against what is morally right.
So far, we have been talking about public registers of beneficial ownership of companies. Does my right hon. Friend accept that this should also apply to beneficial ownership of trusts? It seems incomprehensible to me that we in this country should keep the trusts quite separate and quite hidden.
I completely concur with the point made so forcefully by my hon. Friend. No doubt that will be subject to further campaigns for a change in legislation over the coming period.
May I just follow up on that last point? It is not just trusts that are an essential and major omission here. It is also other kinds of assets, including real estate, mineral rights, debt and bonds. Unless we have complete and comprehensive registers in due course, my worry, and the worry of others, is that we may be over-claiming the benefits of transparency. It may be a necessary step, but it certainly does not cover all those other areas, which, arguably, are more important.
I welcome the contribution from our anti-corruption champion—the hon. Gentleman was appointed by the Government to fulfil that role. Indeed, he is right, but I hope that he will work with me and others in ensuring that we get better coverage for the public registers. However, that should in no way limit what we are attempting to achieve today, which will be a remarkable, important and really world-changing measure in the fight against corruption.
Our overseas territories are an integral part of Britain and they should be guided by the same values as us. Clamping down on corruption and toxic wealth is morally right. We will never be a truly global Britain on the back of stolen principles. Other Members have mentioned the White Paper that was published by the Government in 2012 on our relationship with our overseas territories. I simply refer Members to one phrase in that document:
“As a matter of constitutional law, the UK Parliament has unlimited power to legislate for the territories.”
The Government put that phrase pretty high up in that White Paper, so they are jealously guarding their powers in relation to the overseas territories. These are powers that we should always be reluctant to use, but they are also powers that both sides of the House have employed in the past.
In 2009, we gave the people of the Cayman Islands a solemn pledge in this House. We said, “We will not legislate for you in these areas of public responsibility without your consent.” By this measure today, we are breaking that promise to them, and it is beneath the dignity of this Parliament to do away with that promise and that pledge of good faith.
I simply draw the attention of the hon. and learned Gentleman to what his Government stated in 2012 in the White Paper. In that White Paper, they set out the fact that they were jealously guarding their right to legislate as and when that became appropriate. That is what his Government said in 2012.
On a point of record, I believe that that was in our previous two manifestos, so I am not quite sure why we, on the Government Benches, are arguing on this point.
I thank the hon. Gentleman for his intervention.
For the sake of clarity, let me just say that, in the past, Conservatives have used this power when they legislated to ensure that capital punishment was abolished in all our overseas territories. A Labour Government used the power to ensure that we brought to an end discrimination on the grounds of sexuality in our overseas territories. One of us—I never remember which—used the power to intervene in the Turks and Caicos when there were problems with the administration of governance.
The right hon. Lady has conceded that we use with reluctance our undoubted power to exercise our jurisdiction in these territories and she has given the very important areas in which this House has already done that. Does she accept that, when such vast sums of dishonest money are being channelled through the territories, and when such obviously little progress is being made in many of them to deal with the matter, that is a situation that justifies our jurisdiction? As the Cayman Islands have a rather better record than some of the other British overseas territories—they do co-operate very closely with our law authorities, as the dependent territories do—it is open to their Government to consider the matter and act on their own accord given the steer that this House is giving to them.
I completely concur with the right hon. and learned Gentleman’s succinct remarks. People have said to me that the areas in which we have intervened—we do intervene with huge reluctance—are moral issues. I cannot think of another issue that is more moral than trying to intervene to prevent the traffic in corrupt money and illicit finance across the world.
I thank the right hon. Lady for giving way and I congratulate her on this excellent cross-party consensus. Is she not concerned that Mr Cox seems more concerned about a promise made to the Cayman Islands than about the people of his own constituency and of the UK who are suffering as a result of corruption and money laundering? Does that not seem odd?
The truth is that the traffic in illicit money has an impact not just on people here in the UK—for example, through the acquisition of properties here—but worldwide. We see that in the losses in tax revenues, particularly to the poorest developing countries.
I do not think that the hon. and learned Gentleman and I are going to agree. I am going to make some progress because I know that other Members wish to say certain things.
Openness and transparency do not stop the overseas territories from choosing to try to compete on tax. Although I would not approve, they can all set a corporation tax rate of zero. If they believe that that is a way of attracting financial services into their countries, they are free do so. We are asking for openness and not much more. I do agree with their argument that our registers need to be improved, but that is not an either/or; it is a both/and. We need both to improve our registers and ensure transparency in our overseas territories. To those who argue that the money will transfer to other tax havens, I say this: there may well be some leakage, but our tax havens play a disproportionately large role in the secret world that makes tax havens. If we lance that boil, it will be far easier for us to secure transparency elsewhere and much harder for other tax havens to sustain their business models.
Our campaign on transparency is not and has never been partisan. My party believes passionately that transparency is vital in the battle against financial crime and money laundering, but all Members of this House—from all the political tribes—share our determination to eliminate the wrongdoing that inevitably springs from the secrecy that pervades our tax havens. We cannot sit here and ignore the practices that allow Britain and our British overseas territories to provide safe havens for dirty money. If we can act to root out the corruption, we must do so. Our proposal is simple but powerful. It is easy to implement but lethal in its effectiveness. It is not just legally possible; it is morally vital. Britain and our overseas territories will not get rich on dirty money. We must act now and new clause 6 is an important move in doing so. I ask the House to support it.
I draw the attention of the House to my declaration in the Register of Members’ Financial Interests.
Before I speak about new clause 6, I would like to thank my right hon. Friend the Minister for Europe and the Americas on two other issues, the first of which is the Magnitsky amendment, for which many of us made the case on Second Reading, especially with regard to a degree of independent input from the House into the visa banning and sanctions regime. No doubt aided by the dreadful events in Salisbury, we have all now got to the same place, and I am grateful to him and his colleagues for ensuring that that is the case today.
The second issue—I know from our time together at the Department for International Development that my right hon. Friend understands this well—is about trying to ensure that no unnecessary restrictions will stop money flows for humanitarian charities and non-governmental organisations that often operate with great bravery in extremely difficult and contested areas. I understand that very good progress has been made on that, and I hope that he will keep an open mind if there are future difficulties in that regard.
I turn to new clause 6. It has been a tremendous pleasure to work with so many colleagues from both sides of the House, and I am grateful to many of my own colleagues for standing firm in the face of considerable pressure. It has been a very pleasurable experience to work closely with Dame Margaret Hodge over the past six months, and the House has clearly benefited hugely from her distinguished period as Chair of the Public Accounts Committee. I think that this is the fourth time that we have been around this track, so it is now time for the House to assert its authority and nudge the Government into the right place. I am therefore delighted that the Government have indicated that they will accept new clause 6. I cannot forbear to point out that this is evidence that, in a hung Parliament, power passes from the Cabinet room to the Floor of the House of Commons. I was going to urge the House to support new clause 6 and, with the deepest respect, reject the Government’s starred amendments, which were tabled at the last moment yesterday, but in fact you did not select them, Mr Speaker.
New clause 6 builds further on the coalition Government’s important work, including at the UK-led G8 summit, in bearing down on money laundering, corruption, tax evasion, terrorist financing and fraud. Much of the money, as the Paradise papers and the Panama papers make clear, passes through British overseas territories. Public registers help us to understand who owns what and how these ill-gotten gains are flowing. The House should be in no doubt that a huge amount of this money is filthy lucre. The National Crime Agency has calculated that £90 billion is laundered through the UK each year—that is truly startling. This laundering can only be done, by and large, through British overseas territories, which are central to this nefarious activity.
The House should focus on the figures mentioned by the right hon. Member for Barking: 85,000 properties in the UK are owned by companies incorporated in our tax havens, and half of those properties are in just two London boroughs. Some 40% are acquired with Russian money and bought through shell companies incorporated in our tax havens. Sunlight is the best disinfectant. Openness and transparency are the key to stamping this out. We are talking about the laundering of illicit money from modern day slavery and the sex trade; money from the proceeds of crime, terrorism and corruption; and money that is stolen from Africa and Africans by bent politicians, dictators and war lords.
Convincing research suggests that nearly £70 billion flowed out of Russia through our overseas territories between 2007 and 2016, as the right hon. Lady mentioned. This money belonged to kleptocrats, crooks, gangsters and terrorist gangs.
Of course, and that is exactly the sort of fact that would be displayed by an open register. My hon. Friend makes my point for me. That is the sort of openness that we seek. We seek to expose the sort of money that I have outlined and that the right hon. Member for Barking so eloquently described.
David Cameron’s Government understood this clearly. He showed real leadership by insisting that what he called the “shroud of secrecy” must be ripped away in this fight against money laundering and tax evasion. If the House had drawn back from agreeing to new clause 6 today, it would have sent a terrible signal against what has previously been a really strong strand of global Britain. It would have been a huge relief to thieves and money launderers around the world that our tax havens would have remained open for business.
I turn to the four matters of concern to the overseas territories in the hope of reassuring them that the House is putting in place a practical measure that is not as serious as some of them seem to believe. The first concern is the belief that the measure will damage the overseas territories’ economies and destroy their income. No doubt the same arguments were used against the abolition of the slave trade. It is true that there may be some immediate but modest effect, but consider the nature of much of the funding that the overseas territories are handling and that I and others have described. In fact, the economy of the British Virgin Islands, for example, may actually improve, because much of its business is professional, transparent and completely proper. In the past, I have myself invested in an international property fund in the BVI that was properly governed. In such cases, people from different jurisdictions can put funds in without a tax charge, but when they take funds out, they pay tax in the jurisdiction where they live. So it is perfectly possible, and in my view quite likely, that if open registers are fully implemented in a jurisdiction such as the BVI, some of the serious international financial organisations and banks will choose to go there although they do not do so today.
I declare an interest as chairman of the all-party group for the British Virgin Islands. I sympathise, in many ways, with much of what my right hon. Friend is saying, but if there is a temporary hit to the BVI economy because of real difficulties in transitioning to the new arrangements that he has outlined, what help should the Foreign Office try to give to the BVI?
I will come to that point in a moment, but I hope that my hon. Friend will extol to his friends in the BVI the fact that this is not something that they should regret and seek to avoid, but something that offers them real commercial and economic opportunities.
The second argument, as we have heard, is that the territories already have closed registers that are available to law enforcement authorities and HMRC which, in the case of terrorism, will react promptly—almost within an hour. That is of course true, but it completely misses the point. That point is made eloquently but passively by the Panama and Paradise papers: it is only by openness and scrutiny—by allowing charities, NGOs and the media to join up the dots—that we can expose this dirty money and the people standing behind it, and closed registers do not begin to allow us to do that.
I understand my right hon. Friend’s desire to achieve this measure and recognise the work that he has done on it, but I want to follow on from the point made by my hon. Friend Sir Henry Bellingham. The Government of Spain, for example, often use broad-brush terms such as “tax haven” against the law-abiding British territory of Gibraltar. Will my right hon. Friend extol the fact that Gibraltar has complied and continues to comply absolutely with all EU requirements? We do not help the overall cause by allowing British territories that comply with the rules to be tarred with the same brush as those that do not, as some people will use that against law-abiding British Gibraltarian citizens’ interests.
My hon. Friend makes an extremely good point about Gibraltar. I have heard him speak about that subject in the House previously, and what he says is absolutely right. Last night, I received a three-page letter from the Chief Minister of Gibraltar. I was at a loss to understand why he felt that new clause 6 negatively affected him, since he has already committed, through the EU directive, to implement the whole of the new clause one year earlier than is specified. I therefore feel that the Chief Minister and my hon. Friend should be content with new clause 6.
I entirely agree that the Government of Gibraltar achieve the standards described by my hon. Friend Robert Neill, and I agree with my right hon. Friend Mr Mitchell that as they are about to go further, the new clause does not affect them. I recall, however, that that was not always the case. Twenty or 30 years ago, persuading the then Government of Gibraltar that access to EU financial markets required an altogether higher standard of regulation and compliance was not an easy task, and we had to imply that we might take steps to exercise our powers unless something was done about it. That might be a useful precedent for the overseas territories in the Caribbean with regard to the step that the House is taking today.
My right hon. and learned Friend the Father of the House, given his longevity and distinguished ministerial experience over many years, will be familiar with the points that are being made about Gibraltar and, indeed, about the importance of clamping down on money laundering.
Thirdly, the overseas territories pray in aid the prayer of St Augustine—“Oh Lord, make me chaste, but not yet”—and argue that all the hot money will go to the Dutch Antilles. But it is a little bit like the battle against malaria. We seek to narrow the footprint of that disease—in this case, of illicit money—to diminish the areas affected, and then eradicate it. Through this measure, we will significantly narrow the footprint of tainted money. We should bring the same vigour and determination to the fight against poisoned money as we do to the fight against deadly insects.
I worked as a repackaging lawyer who used to set up these companies around the globe—[Interruption.] For European investors, I hasten to add. I gently point out that it is very easy to set up a Delaware business trust, and as more moneys flow into Delaware business trusts, it may be difficult to persuade the American authorities to take the same steps as these, laudable as they are, because otherwise the trusts will be worth even more money to Delaware and the United States. Will my right hon. Friend consider that?
We should bear in mind that the sanctions regime imposed by the United States of America ends up being far more aggressive, meaning it is far more difficult for Russian oligarchs to hide their money there. In fact, that has now had a significant impact on Oleg Deripaska’s holdings in this country.
The hon. Gentleman speaks good sense. He, like me, will have been very pleased to hear from the Minister how the Magnitsky provisions will apply.
I come to the fourth and final argument that the overseas territories submit: the use of an Order in Council is over the top in this day and age; and using the royal prerogative to legislate for the OTs by Order in Council is wrong. It is right that the House considers that argument, but our new clause does so by making an Order in Council a last resort to be used only if the overseas territories have not done what we have already done in the UK and introduced open registers by the end of 2020. Others have mentioned the precedents for using an Order in Council. This House and the Government are entirely entitled to use such a mechanism if necessary—they have done so, as the right hon. Member for Barking explained—but those signing and speaking to this new clause hope that it will not be necessary. In summary, the overseas territories share our Queen and travel under our flag, and they should also share our values.
In this new clause, the right hon. Lady and I have agreed to significant concessions that I hope the overseas territories and Crown dependencies will appreciate. First, there is the total exclusion of the Crown dependencies. The Lord Chancellor was most persuasive over the past week, and they do have a difference governance structure. However, I believe that Parliament will expect Her Majesty’s Government to make the point persuasively that we hope that the Crown dependencies will embrace the same ethical position and equal transparency, and accept that what is sauce for the goose is also sauce for the gander.
Secondly, while both the right hon. Lady and I believe that the overseas territories should take these steps now, the Foreign Secretary was eloquent in pleading the immense difficulties that have been caused to some of these economies by the hurricanes. That is why the right hon. Lady and I agreed that we would put the timescale back by some two and half years, to the end of 2020. I very much hope that the overseas territories will take note of that. We are trying to be helpful, within the confines of the principles that we have set out in the new clause.
Does the right hon. Gentleman agree that whatever the actual constitutional position, the British people regard the Isle of Man and the Channel Islands as part of this country and cannot understand why laws and regulations should be different in those places? Does he support my contention that the Government should work towards having the same levels of transparency and financial regulation in those Crown dependencies as are in place in England, Scotland, Wales and Northern Ireland?
The hon. Gentleman has elaborated the point I have just made about how the House will expect the Crown dependencies to move towards the provisions set out in new clause 6 for overseas territories.
I urge all Members to support new clause 6. We must remember that the highly respected Africa Progress Panel has shown that in the Democratic Republic of the Congo, for example, at least £1.5 billion has disappeared in stolen funds and illicit money flows. As the World Bank has made clear, much of that money stolen from the people of Africa ends up in British overseas territories. The money stolen in that way dwarfs all the international development aid, development finance and foreign direct investment that flows into Africa every year. We owe it to the poor of Africa every bit as much as we owe it to our own taxpayers to support new clause 6 today and bring an end to this scandal.
I rise to speak to the amendments in my name, on behalf of the Scottish National party. As I said earlier, I will formally withdraw amendments 31 to 33, which the cross-party amendments have dealt with adequately.
First, I would like to thank the Government and their advisers and civil servants for their time and expertise in the run-up to the Bill, as well as all those who sent me information and briefings, which have been incredibly helpful. I also want to particularly thank the experts at the Law Society, UK Finance, Roger Mullin, Richard Smith and David Leask for their thoughts on Scottish limited partnerships.
A lot has changed since the Bill began its process. Salisbury has focused minds and, I hope, will now result in some action. The UK Government went from trying to find a way to wriggle out of the Magnitsky amendment to the Prime Minister giving it her full support. Regardless of how the Government have come to that decision, I am grateful that they have finally come on board, and we can all be grateful that that move has been made.
I spent the weekend finishing Bill Browder’s disturbing book “Red Notice”, which details the lengths to which the rich and powerful in Russia are willing to go to preserve their ill-gotten gains. I recommend that all Members read it as an object lesson in Russian oligarchs’ power, which we need to be mindful of. It is a complex trail which finally led to the brave lawyer Sergei Magnitsky being wrongfully imprisoned, maltreated, tortured and eventually beaten to death in prison because he refused to perjure himself. He stood for the truth. He documented the human rights abuses against him, and, after his death, Bill Browder and his team campaigned steadfastly to bring some justice to the situation. That led to the Magnitsky Act in the US, which introduced Government sanctions prohibiting entry to the US and access to the US banking system for those involved in Sergei Magnitsky’s death. It has since been expanded in scope to become the Global Magnitsky Act, tackling more dirty money and dubious people.
The UK Government made moves on that with section 13 of the Criminal Finances Act 2017. The amendments today expand on that in a very welcome way, and I am glad to give my party’s support to them. It is crucial that the names go on the record, and I am glad that the Government have committed to an administrative list being publicly available. I could read out right now all the names that are currently on the American Magnitsky list, because they are in the public domain and everybody can see them. There is transparency and accountability, with nowhere to hide once someone is on that list. It is crucial that the list is used in the same way in the UK and that the webpage, or wherever the names are held, is available and updated regularly.
I appreciate that this is not an issue for the House, but I hope that Members will give further thought to how the process of parliamentary scrutiny will work. Will it be through a Committee? If so, which Committee? Will that Committee have powers to add names and conduct reviews? We must hold ourselves to the same standard as the existing Magnitsky list for this to be fully effective.
I want to speak about the issue of Scottish limited partnerships, which is dealt with in new clauses 1 and 19. We believe that linking an SLP with a human individual would go a considerable way to cracking down on the abuse of SLPs, so we suggest that a limited partner and a general partner must both be British citizens and that a general and a limited partner must have a UK bank account. That would, at a stroke, remove a great deal of illegitimate SLPs, while protecting those in agriculture and other areas who would be easily able to fulfil those simply requirements. The anti-money laundering requirements of our banks would act as a degree of deterrent to those seeking to abuse the system.
On new clause 1, until 2009 registrants of limited partnerships were required under the Limited Partnerships Act 1907 to provide the full name of the partners. However, the Legislative Reform (Limited Partnerships) Order 2009 confirmed that the legally required level of registration disclosure needed to be less expansive. The new clause would restore the basic information requested at the time of registration and introduce a requirement for one of the general partners to be a British citizen.
New clause 19, on the UK bank account requirement, would tie this a bit more tightly. Although SLPs’ name and country of incorporation may give them the veneer of a UK-regulated entity, at the moment their bank account and all their financial transactions can be run through overseas bank accounts that have few, if any, anti-money laundering checks on their account holders. We want to tighten that up significantly, because allowing that kind of abuse could severely damage the credibility of UK legal entities abroad.
I am most grateful to the hon. Lady for giving way. I took so many interventions on overseas territories that I forgot to comment on new clauses 1 and 19. We think that both are very sensible, given the explosion in SLPs in recent years and the complete failure to act on what has happened in the past year. New clause 19 is particularly powerful because it would mean that these people were within the ambit of the anti-money laundering legislation for the banking system.
I thank the hon. Lady for her support. I hope to at least press new clause 19 to a vote, because there needs to be some action on SLPs, and tying it to a bank account is a good way of doing that.
The SNP is extremely proud of Scotland’s reputation as a successful place to conduct business, but with SLPs continuing to generate new scandals, there is an ever-growing reputational risk to Scotland, and indeed the UK, if action is not taken. I would like to take this opportunity to dig the Government up for their shenanigans on SLPs.
Owing to the diligent campaigning by the former Member for Kirkcaldy and Cowdenbeath, Roger Mullin, the UK Government launched a consultation on SLPs on
That simply will not do. The UK Government are well aware of the problems with SLPs, which are well documented. The Secretary of State mentioned earlier the evidence that led to the bringing into scope of the person of significant control. We know that that was required, and there was evidence on it. We are waiting for fines to be levied on people who have not registered their persons of significant control.
Does my hon. Friend agree that the fundamental point in all this is that closing a consultation and then having a debate on Report shows a Government in complete chaos? How can they commit public money to a consultation process that has no influence on the legislation before us?
Absolutely. The Government have been told all the way through this process that this is the opportunity to act on the evidence that has been gathered and is out there in the newspapers—it is in The Herald on a weekly basis, for goodness’ sake—about abuses of SLPs. The Government could have done something about this. They could easily support the amendments we are proposing to the Bill. The press release that came out said that there is
“growing evidence SLPs have been exploited in complex money laundering schemes, including one which involved using over 100 SLPs to move up to $80 billion out of Russia. They have also been linked to international criminal networks in Eastern Europe and around the world, and have allegedly been used in arms deals.”
So why will the Government not act?
Proposals are far too vague. We are promised that the Government will legislate as soon as parliamentary time allows. The Secretary of State said that the consultation will close on
The Government’s move not to oppose new clause 6 is astonishing, but I am very glad they have made it. There has been some speculation by Conservative Members about the Scottish National party’s position on this issue, and I will deal with that, but I first want to pay tribute to the right hon. Members for Barking (Dame Margaret Hodge) and for Sutton Coldfield (Mr Mitchell) for their Herculean efforts in bringing this before the House today. For a long time, we did not know when or if the Bill was coming back, but they have steadfastly worked hard to garner cross-party support, and I absolutely pay tribute to them for doing so.
Earlier in the Bill’s progress, I made clear the reservations I had at first, and it should not be the case that the UK Government impose things on other territories. Again, I reiterate that I would not like this if it were about Scotland, but I should say to all Members who doubt the sincerity of the SNP’s position—[Interruption] I hear some of them chuckling—that we cannot envisage a situation in which a Scottish Government would deliberately act to damage the financial interests of the UK economy by allowing tax evasion and avoidance to take place on an industrial scale within our jurisdiction and to shield the flow of dodgy money. That is what we are talking about today, and that is the fundamental difference. In Scotland, the fundamental issue of landownership is also hidden behind the shield of overseas entities.
I am just about to finish. [Interruption.] Let me finish this point, and I will then give way.
Landownership is hidden behind such entities. Just a few weeks ago, The Sunday Post highlighted the very important point that Scottish property is held in 22 different tax havens by 776 companies. Just last year, overseas firms bought £200 million of Scottish land and buildings, ranging in size from council estates to country estates, and the total value of such property is estimated to be £2.9 billion. This costs taxpayers in Scotland and here in the form of the capital gains tax revenue that is missed because the property has gone somewhere else. It has left the country, and there is no transparency. If the hon. Gentleman really wants to justify it, I will happily take an intervention from him.
I actually wanted to praise SNP Members for standing up with others to support new clause 6 and back increased financial transparency. I also congratulate them on and thank them for recognising the sovereignty of Westminster in legislating for all parts of the United Kingdom and its overseas territories. I thank them for backing the constitution as it exists, and I appreciate such support at a time when we are looking for more investment in our constituencies, especially in relation to devolved matters.
I must say that the hon. Gentleman makes a very simplistic argument. Unsurprisingly, he entirely misses the point. However, I welcome his support, which is very good. I hope that we will be able to claim back more money for our constituencies when there has been a crackdown on tax evasion and tax avoidance.
Why do we need to act now? Because the Prime Minister has committed to ensuring that the torrent of Russian dirty money stops, and Global Witness has found that over the past 10 years, more than seven times more money—an estimated £68 billion—has gushed from Russia to the overseas territories than into the UK. This has primarily been discovered through leaks, such as the Panama papers and the Paradise papers, and by the painstaking work of researchers and campaigners, including organisations such as Transparency International. They have tried to put that together, because we cannot see this hidden picture for ourselves.
Some of the money hidden in the British Virgin Islands has been revealed to be connected to the Magnitsky case too, so we must bear in mind the severe human rights implications of money laundering—with money hiding behind closed doors, where we cannot see it. There is an incentive for people to do that because they know that, at the moment, they cannot be found out. As hon. Members have illustrated, there are many cases of public funds being stolen from some of the poorest countries in the world and hidden in the overseas territories, and we cannot in all conscience allow this to continue.
Progress has been made by the overseas territories over the years, but the pace has been slow and the work has been patchy. The EU is moving towards having a public register of beneficial owners as part of the anti-money laundering directive, and we must play our part—regardless of Brexit—to keep up the pace towards international transparency.
I am about to finish, and I want to allow other speakers in.
This should be about everybody moving forward together on a global basis and gathering momentum towards transparency. I acknowledge the concerns of the overseas territories, but the case for action on corruption and money laundering is absolutely and completely compelling. I very much hope that we will not need to get to the position of using Orders in Council, because with such support public registers are entirely achievable.
I will talk more about Companies House later, if I am able to, but I want to close now by saying that I am not satisfied by the Government’s actions on SLPs. This is a missed opportunity, and I urge them to take real concerted action to do something today and make a change where they can.
I declare an interest as the chairman of the all-party group on the British Virgin Islands and as a former Minister for the overseas territories. I had the pleasure of visiting all but two of them during my time in office.
It is a pleasure to follow Alison Thewliss. She said that not enough progress has been made, but I disagree. I think a lot of progress has been made, and I will come on to that in a moment. We are all of the same view, however, about the problem that exists, which was so eloquently outlined by Dame Margaret Hodge and my right hon. Friend Mr Mitchell. No one can disagree with what they said or about the scale of the problem; it is just a question of how we attack and deal with this problem.
When I was a Minister, I came across a number of examples of straightforward pilfering by different parties in African countries. One that my right hon. Friend and I dealt with, when he was the Secretary of State for International Development and I was the Minister for Africa, involved the Democratic Republic of the Congo, where a company called Tullow had its licence expropriated, completely unreasonably, by the DRC Government. It transpired that, after it was expropriated, it was handed over to a nephew, I think, of President Kabila and to a relative of President Zuma, while the company receiving the assets was registered in the BVI.
We know exactly what the problem is, but the question is how we should go about dealing with it. In many ways, I am disappointed with the Government. I feel that they should have tabled their new clause a bit earlier and made the arguments for it and that they should very much have stuck to their ground, but we must now move forward.
As far as the economies of those territories are concerned, unless people have had the chance to go there, it is difficult fully to understand the extent to which some of them have become dependent on international financial services—in the Caymans, it is obviously banking; in the BVI, it is international corporate registrations. They are extremely successful economies, with a very large number of professional service jobs clustering around their business model. I agree entirely with my right hon. Friend when he said that they can compete in other areas, such as tax and efficiency, as well as looking after the clients, and I hope that many parts of those professional and service businesses can expand, but there will be a disruption to their business model in the short term.
I am concerned that the Foreign and Commonwealth Office will be required to work incredibly closely with the Governments of those territories—particularly those of the BVI and the Cayman Islands, and to some extent those of the Turks and Caicos Islands and Bermuda—to make sure that, over the next few years, it puts in a huge amount of effort, knowledge sharing and capacity building.
My right hon. Friend will be more aware than anyone that, under the International Development Act 2002, the Department for International Development is the first port of call for financial assistance when something goes wrong in the territories. He and I obviously remember what happened in Montserrat, when DFID quite rightly came to the rescue, and when the Government of the Turks and Caicos Islands in effect went bust, DFID came up with a very large loan. That is why it is incredibly important that successful economies, such as that of the BVI, can transition to the new world in which they are going to have to live.
I would not have supported my right hon. Friend’s new clause 6. He asked me to support it, and I thought long and hard about it. In many ways, I would like to have done so, but I was very concerned about it for a few reasons, the first of which involves the constitution. As Helen Goodman pointed out, I was the Minister responsible for the overseas territories White Paper in 2012, into which DFID had a significant input, as indeed did the Department for Environment, Food and Rural Affairs.
My right hon. Friend Richard Benyon assisted in that part of the White Paper that looked at international obligations on biodiversity and so on. The White Paper said that the UK Government could and would legislate in extreme circumstances, and that was a given because the territories are our responsibility. The citizens of those territories are as British as we are, and we have the ultimate responsibility for them. In some circumstances, we would of course legislate, and we reserved the right to do so. But the White Paper, and all the discussions and promotion on it, made it clear that that would always be a last resort, and in every circumstance we would try to build consensus and work in partnership with the territories.
France has a different model, with some of its territories incorporated into La France and with representatives in the Assemblée Nationale. We have moved to a model of home rule that is different in every case. Every territory has a different constitution and a different type of home rule, and we must work now to try to build consensus. I sincerely hope that the nuclear option contained in new clause 6 of Orders in Council will not be needed. We will have to work hard to make sure that we make progress in terms of what is outlined in the new clause. If we do not, I foresee a serious stand-off with at least three of the territories. I also fear for the economies of the territories if change happens very quickly and they have a significant loss of income. How will they transition and build up tourism, for example, or agriculture, where the BVI is very far behind?
I am concerned also that those territories have nascent independence movements and they will look at what has been said in the House today and say, “Well, if Britain is not prepared to work with us on a consensual basis, why should we remain in the British family?” I will do all I can to dissuade them from that course of action. Over the next two or three years, I hope that Ministers will have many discussions and make a generous offer of assistance, so that we can make progress in the right way.
The hon. Gentleman says that we need consensus and to try to work with the overseas territories. I would gently point out that the UK has been showing leadership on this issue since the international summit in 2013. Why does he think the overseas territories have engaged so little on this agenda, and why is he optimistic of success without the type of measure that the House will agree today, given that the Government have been making the case for five years?
I understand the hon. Lady’s point, but I would point out that some of us worked extremely hard to build up to the exchange of notes in 2016, so that our law enforcement agencies can access key information from, for example, the BVI within a matter of hours and use it in various measures they take against serious organised crime, money laundering, international slavery and the expropriation of assets—[Interruption.] I hope that it is someone important. On 70 occasions, the law enforcement agencies have been able to move against unsavoury people and get results.
If we move too quickly and without a decent transition, many of the corporate registrations will not stay in the BVI, the Cayman Islands, the Turks and Caicos Islands, Anguilla and so on: they will move to places such as Delaware, Panama, Venezuela, Nebraska and Equatorial Guinea—which my right hon. Friend the Member for Sutton Coldfield and I know well, as we have both visited it. Unless we are incredibly careful, that displacement will take place and, as Liam Byrne pointed out, it will take place to the Crown dependencies.
My hon. Friend does not appear to accept the point that has been made repeatedly today that the territories may well allow access to law and order agencies, within an hour in the case of terrorism, through closed registers, but that does not allow civil society—charities, NGOs and the media—to expose them to the sort of scrutiny that the Paradise and Panama papers did. They allowed us to join up the dots. That is why I emphatically disagree with him on this point about closed registers. They work for law and order agencies, but they do not work to stop the dreadful money laundering.
I will not get into an argument with my right hon. Friend because I think we agree on so much of this. My concern is that it required a leak from Panama to expose those people, and there will be many other jurisdictions that may not have leaks in future and where much of the business will go, unless the whole world moves to the end goal of open registers—
I accept the point that my hon. Friend is making, but it is not the best point. Until we move, we have little chance of speeding up any response by Delaware, Panama and the other places he named. It is not an overwhelming argument to say, “Well, we should carry on having billions of pounds of criminal money flowing through our overseas territories while we wait for Panama to make a move.” That is not the strongest argument.
That is a fair point, and those of us who have been supporting the Government loyally on this and working with them accept that it is a weakness in the argument. If we set an example, we hope that other people will follow. I hope that when the Minister winds up he will say how we will try to influence other countries and jurisdictions to follow this example.
My hon. Friend has enormous experience of these territories and he will know, as I know, that the operation of surveillance and monitoring of flows of capital through the overseas territories is one of the best intelligence sources that we have on the movement of criminal moneys. To demand that the overseas territories all suddenly go public will give one hit—just like the WikiLeaks thing was a one-hit wonder—because no one will then trust those jurisdictions where the light of publicity has been shone. All it will mean is that the money goes to where it is darkest, as Liam Byrne said. The surveillance and intelligence operations that have been so effective will no longer be applicable. I know the jurisdictions well, and that is what will happen.
I very much hope that what my hon. and learned Friend says will not happen. Unfortunately, there will be a period of time when many corporate registrations will go elsewhere and we will then need the rest of the world to catch up.
Will the Minister, when he winds up, spell out very clearly how the Foreign and Commonwealth Office and Department for International Development will work with the territories to help them with the transition over the next few years? What specific efforts will be made to help them to diversify their economies away from financial services? What expert advice will be given to build up parts of businesses that we hope will attract international interest? Will he outline to the House what measures he thinks his Department can take in terms of representations we make to other jurisdictions? Having set an example, we need to make a virtue of it. We need to go out and ensure that we play our part even more fully in OECD and G20 initiatives across every single organisation involved, particularly the IMF and the World Bank. Will he spell out what we will do to work with them to ensure that we raise standards elsewhere in the world?
Finally, I would have supported the Government’s proposed amendment as I thought it was sensible and pragmatic. It would have helped to build a consensus with the overseas territories, rather than move in a direction that could lead to very serious constitutional problems and difficulties unless we are very careful indeed. The Minister needs to use all his diplomacy and experience to ensure that the transition is done properly and correctly.
I promise to be brief, as there are so many colleagues who wish to speak. As a mere callow youth in this House compared to so many who have campaigned on this issue for a number of years, I just want to put my views on record.
My right hon. Friend Dame Margaret Hodge, my predecessor as leader of Islington Council, has led the way on this matter. I commend her and others for the excellent cross-party nature of their work. Mr Mitchell argued that this measure will enhance not just our standing in international development, so that we can feel good about ourselves, but the work in developing nations to enrich everybody, not just a few who may benefit, often nefariously, from the tax havens that operate and provide cover for bad behaviour. I commend my hon. Friend Helen Goodman for all her work in Committee and all the tiny tit-bits she has let us have, as Members with an interest, as it has progressed. It has been like following a series on television. I am so pleased that we can welcome the Magnitsky clause and new clause 6.
As a London Member, I want to put on record how pleased I am that there are measures that may assist in relation to property. It may not be perfect, but those of us who are London Members have very affluent parts of our constituencies where properties are purchased, often at a very high price, but then sit empty as assets, while in other parts of our constituencies families live in overcrowded homes. We need to use such international approaches to try to achieve some sense of equality.
Given that across London almost 40,000 properties are owned by companies based in tax havens and given the scandal after Grenfell of trying to find people homes, does the hon. Lady agree that there is huge concern about these companies and organisations, and whether we are able to tackle the housing issue?
Indeed. And I hope that the challenge will be met to reduce inequality in housing in Scotland, because I know that a very small number of people own rather a lot of properties.
On the role of other facilitators of tax evasion and avoidance and the big four accountancy firms, many Members feel it is time that they were brought to book. My right hon. Friend the Member for Barking has done a lot of work on that. The next stage is to try to clean up the City of London more effectively and to see the closure of certain poor practices, such as Mossack Fonseca and others. Yes, it was a one hit wonder, but we did see the closure of a number of underperforming legal practices. The next step of this campaign is how to allow the pin-striped enforcers of tax evasion and avoidance to have a more honest and equal way of practising their profession.
That is all I want to say. It is so good to see consensus in the House today.
It is a privilege to follow Catherine West.
I believe that the fight to improve the integrity of our financial system and to do what we can to reduce money laundering is critical in the fight against not only corruption but the malign influence of authoritarian states. I very much welcome the work done by my right hon. Friend Mr Mitchell and Dame Margaret Hodge. I felt very proud to agree to rebel against the Government— I am quite glad I did not have to—but nevertheless, I thank them for that amendment.
On the point about corruption and the malign influence of others, Liam Byrne, Chris Bryant, Mr Bradshaw, my hon. Friend Adam Holloway and I have been shown documents that we believe relate to our national security and money laundering. They originate from Monaco’s Sûreté Publique, the police department that manages security and foreign residents in that area. They are based on the Sûreté Publique’s own information and on information provided by the French Direction de la Surveillance du Territoire—the DST—which at the time, was the French equivalent of MI5.
These documents are brief, terse, factual files, listing activities, associations and judicial actions. They have been authenticated by senior French intelligence sources and by British and American counterparts familiar with their contents. The documents link a noted individual in this country with Russian intelligence. These files are dated from 2005 and cover the period from the mid-1990s. The documents concern Christopher Chandler and his brother—Christopher Chandler is a public figure, owing to the Legatum Institute. In citing this evidence, I note the words of the right hon. Member for Exeter, who in November 2017, called for the House’s Intelligence and Security Committee to examine Mr Chandler.
According to the French security services, as recorded by their colleagues in Monaco—and clearly, I am confident that these documents are genuine—Mr Chandler is described as having been
“an object of interest to the DST since 2002 on suspicion of…working for the Russian intelligence services.”
“an object of interest to the DST since 2002 on suspicion of…working for the Russian intelligence services.”
As the hon. Gentleman rightly said, I first raised concerns about Legatum and Mr Chandler back in November. Does he agree that the information that he has just put in the public domain, combined with the growing concern about corruption, money laundering and the sale of passports in Malta, where Chandler has just acquired citizenship, demands urgent investigation by the UK authorities now?
I am most grateful for that intervention. I am aware that the right hon. Gentleman has seen these documents and that he shares my concerns. I believe that the right hon. Member for Birmingham, Hodge Hill, should he have the privilege of being called to speak, will talk further on that point and make reference to these files.
Christopher Chandler’s personal file is marked “File code S”, a DST marker indicating, if I understand correctly, a high or higher level of threat to France. In France now, the letter “S” is now used to designate radical Islam. In Monaco then, it was used to designate counter-espionage. As I have said, Mr Speaker, I believe that other Members, if you wish to call them, may cite further details—the right hon. Member for Birmingham, Hodge Hill, the hon. Member for Rhondda, the right hon. Member for Exeter or my hon. Friend the Member for Gravesham.
I wish to state explicitly that I make no criticism of the staff at Legatum, nor those people who have engaged with its charitable work, nor members of the public, nor, clearly, Members of this House who have dealt with this institution. I have thought long and hard before making this statement, but I have done so because I believe, and the five of us believe, that it is in the national interest to do so. If people like Mr Chandler are vulnerable to malign influence—maybe he is an innocent party in this, who knows?—especially if the information on them is covert, that matters to our democracy.
In November 2017, the Prime Minister highlighted the danger from Russia of subversion. I take my lead from her when she said that the Russian regime was trying to “undermine free societies”. I also read the excellent piece in The Sunday Times this weekend looking at how Russian bots may have manipulated elections. One of the problems in elections is that if they are manipulated successfully, the winning side does not want to know and the losers plead sour grapes, so the answer is to do what we can to strengthen our electoral system before it is too late.
I commend the hon. Gentleman for what he has said and fully concur with what he has argued—I have seen the papers as well and I have come to the same conclusion as him. Does he think that the Magnitsky clause will make a significant difference in our being able to tackle this kind of hidden pervasive influence in British society and British politics?
Anything that helps us is important because we need to keep our society free of covert and malign influence. I was in the States last week, as the hon. Gentleman knows, and I am working with Congressmen there and in Canada, Australia and New Zealand, so that we can combine best practice. That is important because a counter-propaganda Bill is going through the United States Congress—do we need that here, etc.?
If I see information of this kind, I have a choice: I can disregard it and become complicit or, if it is genuine, I can put it in the public domain. It might be that Committees will wish to have access to this information, and I suspect that those who have it will provide it to any of the six Committees investigating Russia, if they wish to do so. It might be that Mr Chandler can provide a satisfactory explanation or argue that these relationships, if they existed, are now historical or have been misrepresented in the documents. I do not use privilege lightly, Mr Speaker. He might wish to offer evidence, written or oral, to any of those six Committees, whose work I am supporting, in a modest way, as secretary to the Russia steering group. I look forward to his response— I am quite sure there will be one.
I will be writing to the Prime Minister in the coming weeks to suggest further measures to strengthen our democracy and electoral system. The struggle of our generation is how we deal with authoritarian states and their actors, official or proxy, who use free and open societies to damage those free and open societies. We need to do something about it. Increasingly, Members now see that covert malign influence from authoritarian states, most commonly our friends in the Kremlin but also elsewhere, is a real and present danger to our nation, to our financial system—hence this debate—and to the transparency of our democracy and electoral system, not to mention the Kremlin’s ability to conduct acts of violence and murder on our soil. We have a duty to speak up and to use this House for the public good. That is what I am doing now.
Order. I want to call several more colleagues and therefore there is a premium upon brevity.
Having listened to various hon. Members refer to the excellent briefing by Transparency International UK, I should declare an interest, as I am married to its director of policy—the briefings really are excellent.
Turning first to the Magnitsky amendments, I welcome Government amendments 10 and 13, which reflect the Prime Minister’s commitment of
The importance of human rights and the part that our country plays in upholding them internationally cannot be overstated—they are vital. Alison Thewliss set out the horrendous case of Sergei Magnitsky and the horrendous lengths to which oligarchs will go to protect their ill-gotten gains. I was reminded, on the wider issue of corruption, that we are talking about not just numbers on spreadsheets, but people’s lives—this is literally a life and death matter. I recall planning a visit to Russia to investigate human rights abuses in Chechnya. We had to postpone the visit because the individual we had been organising it with, Natalya Estemirova, who was from a human rights organisation, was assassinated.
That followed the murder of the journalist Anna Politkovskaya, and last October we were shocked by the murder in Malta of the investigative reporter Daphne Caruana Galizia. These people were murdered for investigating and exposing corruption and human rights abuses. I was particularly pleased to see the launch of the Daphne project in tribute to Daphne, with 45 reporters from 15 countries carrying on her work so that her stories will live on. One of the most powerful ways to send a message to anyone who would seek to silence those trying to uncover corruption is to make sure that what they were uncovering is finally exposed.
The Minister mentioned the consultation that was launched yesterday on Scottish limited partnerships. The very real problems that have arisen under those partnerships have been in the public domain for more than 18 months, and given that we as a country have been trying to lead on this in recent years, we need to be moving with much more alacrity. Mr Sweeney made an incredibly important point about enforcement. We need to ramp up Companies House’s ability to investigate, and that requires resources. Very good people there are trying to do a very good job, but given that 17,000 Scottish limited partnerships were registered to just 10 addresses, there are questions to be asked about how risk-based investigation and digital tools could be improved.
We know that when someone registers a company name that contains one of 135 sensitive words, it is automatically flagged up and examined in more detail. Those words range from “royal” and “Windsor” to “institute” and “midwife”. Perhaps it would be possible to expand the same facilities to create a risk profile of other suspicious activity that needs to be examined much greater detail, while not making it difficult for people to who want to set up companies entirely legitimately to do so. More could definitely be done in that regard.
We have discussed the key issues of beneficial ownership, public registers and the overseas territories, but again the Government have delayed, and that has been the hallmark of their approach. Although the issues were well aired in the House of Lords, and in this place on Second Reading and in Committee, the Government made a rather late attempt this morning in tabling their amendments. I must confess that that screamed out at me as a tell-tale sign of a Government who were afraid that they might lose a vote. None the less, I welcome their acceptance of new clause 6. I pay tribute to the work of Members on both sides of the House, including the right hon. Members for Barking (Dame Margaret Hodge) and for Sutton Coldfield (Mr Mitchell).
Does the hon. Lady agree that it is disappointing to hear Conservatives saying that the money will move elsewhere? If we do not make a start, how will we move forward? The gender pay gap reporting has done exactly that.
I concur absolutely. The fact that we cannot solve this problem in every single jurisdiction in the world does not mean we should not do what we can in those areas where we can have influence. We should certainly be using our diplomatic influence to try to expand the use of public registers in other countries, but we should also be setting our own house in order, because if we do so, we will have more legitimacy and credibility when we urge other countries to follow suit.
The United Kingdom is trying to take a leadership role on this issue, and that is important. That dates back to 2013, when the then Prime Minister, David Cameron, set out the Government’s plans at the G8 summit and was aiming to secure international agreement through the anti-corruption plan. I was delighted to play a role as a Minister in the introduction of measures on beneficial ownership and the public register in this country through the Small Business, Enterprise and Employment Act 2015. There was also an anti-corruption summit in 2016. However, there has been delay since then. At that time, the Government committed themselves to legislate to increase transparency in the housing market and to require overseas companies that owned property to declare their beneficial ownership publicly. That was supposed to be in place by April, but now it, too, has been delayed. We will not see even a draft Bill until the summer, and we will not get the actual legislation until next year.
The issue of the overseas territories really matters. More than three quarters of corruption cases involving property that were investigated by the Met’s proceeds of corruption unit involved anonymous companies based in secrecy jurisdictions, and nearly four fifths of those were registered in either the overseas territories or the Crown dependencies. As I have said, it is important that we get our house in order. Conservative Members have said we should try to do that through consensus but, as I pointed out in an intervention, the Government have been attempting to do that with various levels of enthusiasm over the last five years yet the registers have remained firmly private.
What we are talking about is an international crime. It is not victimless. We are talking about corruption that has a very serious impact on vulnerable people in countries throughout the world. Money is siphoned off through corrupt means and denied to the populations of those countries when it should be funding public services and enabling individuals to be looked after. That has an impact on the UK’s own reputation as well.
It is worth recognising the significant role of the overseas territories. In the Panama papers, the British Virgin Islands was the most popular tax haven mentioned, and Bermuda is No. 1 on Oxfam’s list of worst corporate tax havens. That is why it is important that we act. The right hon. Member for Sutton Coldfield rightly explained the challenges involved in including the Crown dependencies under new clause 6 and the specific relationship levers that we have as a country. Nevertheless, I hope that, having accepted the new clause, the Government will be enthusiastic about pursuing the same issues with the Crown dependencies to ensure that they follow suit. They should definitely be required to publish such a register so that the UK can show global leadership on this issue.
My experience of the House leads me to conclude that when somebody pays a Member a compliment, they should bank it and move on. However, although I am grateful to the Minister and Helen Goodman, it is important to say that a lot of people have worked on the Magnitsky amendment or law, as it has come to be known, many of whom sit on the opposite side of the House. Many of them have also been involved in this matter for a lot longer than I have, but I do stand to speak in support of new clause 3.
I welcome everything my right hon. Friend has done around the Magnitsky law and the fact that the Government have accepted it. Is he aware that the Government and Parliament of Gibraltar have already introduced a Magnitsky law, which indicates their willingness to be ahead of the game, rather than having to be dragged forward?
Then they should feel extremely virtuous. It is important that we recognise that we are today is putting in place something that already exists in a number of other legal jurisdictions—the Baltic states, the United States and Canada. A number of other countries are looking to do this, too.
“One of my regrets of my time in office was that we didn’t introduce the Magnitsky Act. The Foreign Office argument was that Britain’s existing approach was better, because we could sanction all the people on that list—and more besides. And I went along with it.
But I soon realised this ignored the advantages of working together—with other countries—under a common heading. It’s not PR, it’s a fact. You get extra clout from coming together across the world and saying with one voice to those who are responsible for unacceptable acts: ‘We are united in our action against you.’”
He then paid tribute to his successor as Prime Minister and to Parliament for passing the provisions in the recent Criminal Finances Act 2017, and also referred to a person who deserves mention in this House today. Bill Browder, along with others, has put himself at huge risk to make sure that those who murdered his lawyer and friend Sergei Magnitsky are not able to travel around the world, bank, buy property and operate in a manner that we rightly take for granted in this country but should be denied to people who have behaved in that way. If we remember anyone today, we should think of the piteous image of Sergei Magnitsky after months of imprisonment. He was extremely unwell and then beaten to death by thugs at the behest of people who have still not been held to account. Today we are saying to them, “Not in our country are you going to be able to do business,” and we should feel proud of that.
In an act of extreme serendipity, I found myself on the Bill’s Committee. I am extremely grateful to members of that Committee, to the Minister and his officials, and subsequently, in recent weeks after the Salisbury incident, to the Prime Minister for absolutely accepting that we need to have what will be known as the full Magnitsky. We went a considerable way towards that a year ago with the Criminal Finances Act, but are now in a position to say that we are in accordance with the Magnitsky provisions of other countries. It is important that we get the definitions right—I do not think that we got there in Committee—but to now have a definition of gross human rights abuse that is in accordance with the Proceeds of Crime Act 2002 is important.
My brief comments today will be about what Parliament does now, because the Bill is gratifyingly loose in its description of what kind of review mechanism Parliament will impose. This is crucial. In recent days, I have had useful discussions with Committee Clerks, the Chairmen of the Liaison and Procedure Committees and a number of others about what kind of structure we could create in accordance with the Bill to allow individuals—Members of this House, members of organisations such as Amnesty International or Bill Browder’s, or any individual—to say to the Government, “We have evidence that these people have done this and should be sanctioned.” The Government will produce a report to Parliament every 12 months setting out who has made representations to them. In an important response to Stephen Kinnock, the Minister made a clear assertion that the names on the sanctions list will be made public. That is important.
I have to say that the Minister did not go into very much detail in his excellent opening remarks about what would be in the report proposed under new clause 3. If my right hon. Friend has had discussions with him on that, it would be interesting to hear about them. If not, it would be interesting to hear more from the Minister later on.
We have it in our power to create something in Parliament that will hold future Governments as well as this Government to account. I am full of respect for what our security Ministers have been doing recently to freeze the bank accounts of certain individuals, and I absolutely believe that the Government have the will to ensure that we get our economy sorted out so that we cannot be a safe haven for these people. However, what we are talking about will be happening way into the future. It will affect future Governments as well, and we must hold them to account.
We could put this in the hands of an existing Committee —perhaps a Select Committee—but I suggest that that might not be the right framework. A Select Committee has the specific role of holding a Department of State to account and looking into certain details. I personally like the idea of a bespoke Committee that would draw together members of different Committees. The example that I would throw out there for others more important than me to grab is the Committees on Arms Export Controls—the CAEC. It has a specific remit, with members from various Select Committees, and I think it would be an effective model.
Well, I have. I just think the new clause 3 leaves it much more open for Parliament to make a decision, and I am quite content with that, although I am open to other suggestions. Some people say that the Joint Committee on Human Rights might be best placed to carry out this scrutiny, but I see, from delving into the Standing Orders, that
“matters relating to human rights in the United Kingdom”.
What we are talking about here is matters relating to human rights anywhere. We could be talking about someone who is evicting the Rohingya, for example, or actions taken in conflicts or situations as yet unknown and unforeseen. We need to ensure that we can look at human rights everywhere.
As a member of the CAEC, I urge the right hon. Gentleman to think again about using it as a model for a scrutiny Committee. I sit on it, and it struggles to function—it did not meet for two years—but one thing that it did recommend was a measure to allow the Government to shut down brass-plate companies, on which I have tabled an amendment in the next group.
I understand the point that the hon. Gentleman is making. I am not completely wedded to that idea. I simply say that this is in our grasp—this is now Parliament’s duty. Following the very good discussions that I have had with my hon. Friend Dr Wollaston, the Chairman of the Liaison Committee, and my hon. Friend Mr Walker, the Chairman of the Procedure Committee, as well as with other wise heads and people with much more experience than I have, I know that we need to design something that really works. The crucial thing that works in Congress and in other Parliaments is what is known in the United States as the “congressional trigger”, under which it is possible to really ask questions of the Executive. Through the measure that we are discussing today, the Executive are giving Parliament the power to get this right, and we must take that duty very seriously.
I want to make two points in support of new clause 6 and to encourage the Government to take on board the arguments made by my hon. Friend Helen Goodman. I also want to put on the record my tributes to my right hon. Friend Dame Margaret Hodge, Mr Mitchell —my constituency neighbour—and the others associated with this step forward.
I want to draw out the argument made by the right hon. Member for Sutton Coldfield, because I thought he would say a little more about the importance of new clause 6 to the development agenda that he and others have championed over many years. It is sometimes possible for Governments to will the ends, not the means, and I fear that this could be one of those cases. For all the economic gains of the past 30 years, the truth is that they have not been shared fairly. The top 1% now hold something like half of world wealth, and if that lucky, privileged few continue to amass wealth at the pace we have seen since the financial crisis, they will control two thirds of global wealth by 2030, so we are at a tipping point. If we do not make a change now, it will be difficult to restore a measure of equality over the course of this century.
Now, I do not think that Her Majesty’s Government want that outcome, which is why they signed up to the sustainable development goals in 2015 and why they agreed to the G20 communiqué at Hangzhou in 2016 that said the world should work together to develop measures for more inclusive growth. However, at the spring meetings in Washington a couple of weeks ago, the president of the World Bank made clear what it will take to deliver that, saying, “Look, once upon a time the World Bank would say, ‘We need to develop and invest in infrastructure and infrastructure alone, but that is no longer good enough. We have to invest in infrastructure and health and education.’” To do that, however, requires developing countries to mobilise something like 15% of GDP. Those countries have tax bases of just 5% of GDP, so if we are to finance the bridge—the missing 10%—we have to strip away the layers of protection around tax havens that allow corrupt companies and individuals to salt away, like an old pirate treasure, the money that is vital to closing the development gap and delivering the sustainable development goals by 2030.
My second point is about national security. We have heard several arguments this afternoon about why it is terribly important that we step super-cautiously around the constitutional privileges that we have granted to overseas territories and Crown dependencies. I respect that argument, but the reality is that money squirrelled away in those places is now being used to enable the undermining of our constitution. Therefore, if we want to drive forward the rules-based order that Her Majesty’s Government are keen to champion, we must act against the enablers of attacks on this country’s sovereignty and integrity.
It is perfectly within our power—the Government have committed to do this—to institute a public register that requires the beneficial owners of any overseas entity wishing to own property in this country to be declared in public. We can do that as it is part of our jurisdiction. However, does the right hon. Gentleman not see that the step that is now is being taken goes much further than that and requires the overseas territories to make things public even in relation to property that is not owned in the UK?
That is absolutely what I am proposing, and my reason is this country’s national security. Let me give the hon. and learned Gentleman a simple example. Back in November 2017, my right hon. Friend Mr Bradshaw raised the issue of some significant agents of influence in this country: the Chandler brothers, who happen to run an important think-tank that has enjoyed unrivalled access to Ministers during one of this country’s most important national debates. The risk—I put it no stronger than that—that we are running is that that support is financed from sources that derive from the Russian Federation, and it may therefore be part of the panoply of active measures that have been drawn together since the re-election of President Putin in 2012. He has made no secret of that. He set it out in a state of the union address to the Russian people in 2013. Some call it the Gerasimov doctrine, but, whatever it is called, we saw the sharp edge of that sword on the streets of Salisbury just a few weeks ago.
I want to give the House an example of how this influence can unfold in an innocent country like ours that has perhaps been a little inattentive to some of the risks that have been growing over the past few years. As the hon. Member for Isle of Man has mentioned—[Interruption.] As Mr Seely has mentioned—he would have a different kind of specialism if he were the hon. Member for Isle of Man—the individuals to whom he referred are men of influence who help to finance an important think-tank.
I note with interest that the think-tank is financed by the Legatum Institute, which is registered in the Cayman Islands—registration number FC028686, for those who take an interest in these things—but why should these brothers be of such interest to us? Well, we know that Christopher Chandler and his chief executive, Mark Stoleson, have both taken Maltese passports through the passport-selling operation Henley & Partners. They both publicly accept that they hold accounts at the Iranian-Maltese bank Pilatus, the assets of which were frozen and its chairman arrested at the behest of the FBI in March. Both Pilatus and Henley & Partners were the subject of investigations by the Maltese journalist Daphne Caruana Galizia, who was assassinated late last year.
The hon. Member for Isle of Wight has referred to more. Richard Chandler’s file contains the additional statement:
“Richard Chandler and his brother Christopher play an important role in the capital of the companies Lukoil and Gazprom (linked to longstanding…Russian figures who could be linked to organised crime).”
Furthermore, they maintain relations with an individual, a Chechen mafia figure, who was “expelled from Monaco”. They are connected with money laundering. These allegations are made in the file.
Is my right hon. Friend also aware of the relationship between Henley & Partners and the social media data companies that have been allegedly involved in helping with political campaigns, including that of the recently elected Government in Malta?
These are very real and very serious allegations, yet when I tabled questions to the Treasury about whether it was exploring the Maltese golden visa route, and the access to the European banking system and the Schengen area that it provides, it said no such conversations were under way.
The point is that I would like to know more about these brothers and whether they are beneficiaries of the money knocking around the overseas territories that derives from bad sources. I want to know whether that money is derived from Russian sources, and I want to know who the business partners were.
Global Witness has done this House an incredible service by highlighting how £68 billion of Russian money is now sloshing around the overseas territories. Given the national security situation that now confronts us, and given the update to the national security strategy that has just gone through, how can we be relaxed about our ignorance of where that £68 billion of Russian money, now buried safely and securely in the overseas territories and Crown dependencies, came from?
If there is innocence, it should be proved. It should be clear. That is why the disinfectant of sunlight is so important. What we cannot have is agents of influence peddling policies and proposals backed by dirty money from one of our country’s enemies. We cannot have that, and we in this House have a responsibility to ensure that we do not run that risk.
For far too long, good and bad money has been allowed to mix together in our overseas territories and Crown dependencies. There is good money there, but we need to be honest with ourselves that some of that money comes into too close contact with cash generated by economies of evil. It is our responsibility to take steps to shut down that regime, which is why new clause 6 and the arguments of my hon. Friend the shadow Minister are so important. I hope the Minister will listen.
First, let me join many hon. Members in congratulating the Government and, in particular, the Minister on building a consensus within the parties and among hon. Members on the Magnitsky provisions, which I wish to speak to today.
Time is short, so I will make only a few brief points. On whether these powers are actually going to be used and on the methods of use, I do not yet see any significant change of Government policy. However, if this debate is going to be the herald of a new-found dynamism to clear the UK of the £90 billion of black money flowing through our banks, real estate market, private schools, Bond Street and the rest, I would certainly very much welcome that. My question is: will action now follow the law? I will be interested to hear whether the Foreign Office has had words with the Attorney General, the Home Office or other Departments in that regard—is there a strategy?
On the Government amendments, I see that new clause 3 provides for a reporting system for human rights violation-related sanctions. That is welcome, but my reading of this provision is that it is a retrospective check on what the Government have done and not so much on what they intend to do—if I am wrong on that, I would be grateful if the Minister would clarify the position. The measure in itself is commendable, and I agree that if the report is a sparse one, it would imply and provide evidence to support claims that the Government should be doing more. However, I was very pleased to hear the Minister suggesting today that we are also to have a list system that will be updated on an ongoing basis for those subject to sanctions, as this approach has clearly been so effective elsewhere. Having said that, will the Minister confirm whether people to whom the relevant sanctions have been applied would also need to be listed in the Government new clause 3 report? I believe the answer is yes, but I would be grateful if he would clarify that. Even if there is to be a running administrative list, it would be helpful to have the names set out in the report, with reasons given and an assessment.
There is another related issue here: could the Minister confirm whether the visa bans attributed to section 1 -type sanctions would also be listed in the new proposed report? Again, maintaining the current system of secret visa bans is simply not as effective as people knowing that their lack of welcome here will be made public in a Magnitsky-list fashion. What these people fear, every bit as much as receiving a visa ban, is other people knowing about it.
My final point is that although this Bill creates a new post-Brexit framework for sanctions, it does not actually set out our policy for how sanctions will be considered or implemented on a multinational basis, which everyone agrees is the most effective approach, as has been said by my right hon. Friend Richard Benyon. So will the Minister explain how these sanctions provisions would be considered within the European Union after we have left it? For instance, is consideration being given to setting up a new co-ordinating committee within the EU? In various speeches I have read, it seems clear that the EU will continue to wish to work closely with the UK on external security matters, so there seems to be goodwill to that end. I would be interested to hear more on how we propose that decision making on sanctions will be put into an institutional context.
We have mainly discussed Russia today. It is worth mentioning that the US aluminium sanctions on Russia were put in place only a few weeks ago, and I have since heard of a degree of kickback from other countries such as Germany and other negatively affected parties. Clearly, if we are going to get tough on sanctions, it will be important to continue to present a united front. So we are seeing progress, but ultimately this will need to be proved by a better UK record of sanctions, visa bans, asset seizures and active prosecutions. Will the law be backed by action? The days of the UK being a dumping ground for illegal black money need to come to an end, and I hope that this Bill will act as a spark to get the process moving.
I shall be brief, Mr Speaker. Several hon. Members have spoken about the dangers of our legislation meaning that dodgy money will leave the overseas territories and go to some other kind of territory. First, that will probably be a good thing for each of those territories. Secondly, and far more importantly, all too often the way we have run our affairs in this country, and how our overseas territories have run theirs, has meant we have been a magnet for that money. For a series of different reasons, rich people who have stolen money from their own people like having it squirreled away here or in our overseas territories or, as is normally the case, in a mixture of the two. That is because they like to send their children to our expensive schools; because they like to go shopping in the UK; because, ironically enough, they like to enforce their contracts in law in British courts; and because they know that the whole system of financial and land registration in this country is relatively weak. That is why I warmly welcome the changes we are going to bring about.
In the end, money and assets are only ever hidden from public sight either because they have come from some illegal source in the first place, or because somebody is trying to prevent the legitimate authorities in other countries from taxing or taking them. Public registers are the only way to make sure that what is on a register is verifiably true and correct. The public are often a much better investigator than the investigating authorities, which simply do not have the time or the resources to do the job fully, as we have seen from the Paradise papers and in other ways recently.
Over the years, I have asked a Prime Minister—one or other of them—32 times for a Magnitsky provision. Perhaps, in the end, one has to get Conservatives on board. Perhaps it is good to have Conservative friends. Many Conservative Members, including some who are not present because they are Ministers, such as Dominic Raab, and particularly Mr Djanogly, who just spoke, have been adamant in their pursuit of this matter. They have been very clear and sometimes courageous in trying to tell their Government that we need to act. Ironically, on
Mr Seely referred to Richard and Christopher Chandler. I have seen the documents as well, and it is important to bear in mind that at the heart of them is an allegation of money laundering. It is about taking money that has come from decidedly dodgy sources—often stolen from the Russian people—and cleansing it, as it were, through the system so that it can be used for other illegitimate means. The fact that that has infected our country’s political system should be a matter of concern for us all.
In the end, I see this all in the context of our relationship with the Russian Federation. I have been concerned for some time that we tend to take two steps forward and one step back, or sometimes one step forward and two steps back. After the Salisbury incident, it was great that the Prime Minister managed to secure such a strong backing from so many countries around the world for the expulsion of so-called diplomats, but if we do not match that action with action on financial liberality and people’s ability to slosh their dirty money around other parts of the world, the Russians simply will not take it seriously. It is interesting that the American sanctions on Oleg Deripaska have for the first time made him start to retreat from various different markets, including with En+, a business that frankly should never have been registered in this country in the first place.
Does my hon. Friend agree that the next big international opportunity to make progress on this issue is the G20 in November? If we are to help to lead the argument, we must have the moral credibility of having taken action ourselves.
I completely agree, and that is also why I agree with the kind of approach that the hon. Member for Isle of Wight tried to enjoin on the whole House—not only on those from different political backgrounds, but also on all the different silos, including defence, foreign policy, work and pensions and the Treasury—to try to make sure that we have a united, coherent, consistent and, to use a valleys word, “tidy” approach towards the Russians. That was not “a valet’s word”, but a valleys word—[Laughter.]
Language is really important, and I know that the hon. Gentleman will agree that when we talk about Russia’s malign influence, we are talking about the Russian regime and the coterie of criminals that surrounds it, of which the Russian people are the victims. The Magnitsky amendment we will pass today is the most pro-Russian piece of legislation that we can pass.
I agree; I do not think that there is a single Member of this House who does not have profound respect for the people of Russia and for the country of Russia, and for what it has given to us culturally and in so many other ways over the centuries. But what a pain it is to us to see a country that was reaching out for liberty suddenly find itself crushed under the heel again. It is a country that should be one of the great advancing economies of today, but it is in stagnation, with barely 1% growth. That is why all of us, from all parts of this House, have campaigned to take a robust attitude to Russia.
Finally, the Russian ambassador tweeted the other day that he wants to meet the all-party group for Russia, which I chair. He is not answering his phone—I am not sure whether he is busy on something else—but we will have him next Wednesday afternoon at 2.30 pm if anyone wants to hear his view of things.
I was pleased to add my name to new clause 6, and I congratulate Dame Margaret Hodge and my right hon. Friend Mr Mitchell on bringing it forward. I will not repeat the powerful arguments that have been made for transparency today—they were also well made on Second Reading—other than to say that progress has been made in the overseas territories. Central registers have been introduced, but that is not sufficient for the reasons that have been given. We need that transparency to shine a light on what is happening. I suspect that there has been relatively little interrogation of the central registers by law enforcement authorities. There also needs to be a step up in law enforcement action as well as in these measures.
Two principal concerns were adduced to explain why we should at least hesitate before we compel the overseas territories to act. The first is the potential economic damage to the overseas territories. I argued strongly on Second Reading that that should not be an impediment to act. It can never be an argument that, where something wrong is being done, we fail to act simply because there might be some economic consequences. We do, however, have a duty to ensure that those economic consequences are addressed and that we help to mitigate them.
In accepting the new clause, there is a strong responsibility on this House, and now on the Government, to ensure that there is no damage to the economies of the overseas territories for taking action, especially as they may now be taking it more rapidly than they wished to, particularly when we consider, for instance, the impact of the hurricane damage on the British Virgin Islands. That concern should not prevent action, but it should be taken seriously.
The second concern is the constitutional objection: is it right for us to intervene? That is a serious argument. Again, on Second Reading, I argued that if the harm that is being done is so great that it can no longer be ignored, there is a justification to act, and there clearly is a power to do so. These are not just domestic matters for the overseas territories in which we have decided to intervene; they have a global impact. It is therefore very important for the Governments of the overseas territories to understand the reasons why this House has felt it so important to move. If they can act voluntarily, ahead of any action being taken legislatively, that would be very welcome.
I thank my right hon. Friend for giving way on that important point. Does he accept that it is for that reason, and that reason only, that the Chief Minister of Gibraltar wrote the letter in the way that he did—because it is the constitutional convention that we do not normally legislate without the territories’ consent? And it is for that reason, and that reason only, that the Crown dependencies, which have a good record of compliance, had concerns about this form of legislation undermining the long-established doctrine that we do not legislate for them without their consent. It is not the objective that anyone objects to in any of those jurisdictions, but this should be done through the normal constitutional process.
The wider point is this: I would have been minded to accept the Government’s compromise amendments and new clauses had the House had the opportunity to consider them. We should have avoided, if at all possible, dictating to the overseas territories what to do, but that option was not available. None the less I welcome the fact that action is being taken.
In agreeing to new clause 6, the key concession that the Government made was that it was no longer acceptable that the overseas territories should move only at the pace of the rest of the world. As my right hon. Friend the Minister for Europe and the Americas said, the key concession was that he accepted that the will of the House was that the overseas territories should move ahead of the pace of the rest of the world for reasons that have been very well made by Members on both sides of the House. That said, we should not lose sight of the objective here. The objective is not to force the overseas territories to take action, but to ensure that we tackle corruption where we find it, and that has to be done on a global basis.
The arguments that there will be displacement should not be an impediment to action, because we can never argue that we will not tackle a crime on one street corner in case it moves to the next. That can never be a moral argument or a reason not to take action. Nevertheless, it is a serious argument. What are we going to do to avoid displacement? The imperative is therefore on the Government and on this place, which has now forced this action, to support every effort possible to mobilise the global community behind transparency for everyone.
This House and the UK will be taking a lead, and we will be requiring our overseas territories to take a lead, but we now have to step up. That may mean taking initiatives such as having another global summit to encourage action, as the anti-corruption champion, my hon. Friend John Penrose, suggested. Whether it is through means such as the G20 or the G7, we must now drive action on a broader basis than simply the overseas territories or the Crown dependencies.
I completely back up what my right hon. Friend is saying. The time for global action must be now. We need to use the lead that we will create by imposing this measure to drive and exert a global leadership. It must be about not just the transparency of company disclosures, but the transparency of trust disclosures and other kinds of asset classes as well as company shares.
I agree. In taking this action and ultimately, if necessary, requiring the overseas territories to act, we will be taking a grave step—one that has only been used twice before, in relation to the decriminalisation of homosexuality and to capital punishment. It is a serious move. The justification must therefore be that we use this step to encourage action globally, and that is what I urge the Government to do.
On behalf of the Democratic Unionist party, may I welcome the changes that the Government have made regarding the Magnitsky amendment? It is likely to have an impact on those who think that they can get away with human rights abuses and hide behind and use their wealth in the United Kingdom. However, I am disappointed that we have not discussed on the Floor of the House the Government amendment and new clauses that were tabled as alternatives to new clause 6.
I have two main concerns. Coming from Northern Ireland, I know the impact on devolved Administrations of interference in devolved matters by the Government at Westminster, and I also know the impact that this can have on those with nationalist tendencies. New clause 6 presents a real danger in this regard. People have had to do constitutional somersaults in the House today. The Scottish National party, which has vigorously defended the rights and independence of the devolved Administration in Scotland, now suddenly has no difficulty supporting interference in the overseas territories.
Let me finish my argument. The point has been made that the SNP has done a constitutional somersault because this issue is of such importance. Well, during debates on the European Union (Withdrawal) Bill, the Scottish National party was quite happy to have things devolved to the Scottish Parliament that could have broken up the internal market of the United Kingdom and affected the economy of the whole country, yet they insisted that it was their right for those things to be devolved. This constitutional somersault indicates that a different attitude has been adopted towards the overseas territories on this issue, and it is an attitude that we will live to regret.
The Minister has said that he will hold the hand of the overseas territories, give them support, encourage them along and give them the opportunity to have a say in what goes into the Order in Council. Nevertheless, those who have already done a lot of what has been asked of them will feel that we have brought down a heavy hand on them.
This is the first time we have ever had a qualification put on the Scottish National party’s view that devolution is sacrosanct. All through the debates we have had in this House about the sacrosanct nature of devolved Administrations, there has never, ever been a qualification, but today we have the qualification added—
Debate interrupted (Programme Order, this day).
Question agreed to.
New clause 3 accordingly read a Second time, and added to the Bill.
The Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (
New Clause 6