Anti-corruption Summit — [Sir Edward Leigh in the Chair]

– in Westminster Hall at 9:30 am on 3rd May 2016.

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Photo of Nigel Mills Nigel Mills Conservative, Amber Valley 9:30 am, 3rd May 2016

I beg to move,

That this House
has considered the Anti-Corruption Summit.

Hon. Members, members of the public and people watching this debate will not be surprised to learn that tackling corruption is one of the biggest items on the agenda this year. Barely a day goes by without it hitting the news. As co-chair of the all-party group on anti-corruption, I was keen to hold this debate so we can air the issues that the Government hope to tackle in the important summit next week and subject the summit to parliamentary scrutiny.

I thank the Backbench Business Committee for awarding me this debate. Unusually for a Back-Bench debate, we are not here to criticise the Government. We may have some suggestions about how they can be a bit stronger, but we are here to congratulate the Prime Minister and the Government for holding the summit, for placing this issue at the top of the agenda and for consistently championing transparency and accountability as enablers of good governance. We want real actions and agreements from the summit next week, so that those important things can be taken forward and enforced. I will set the scene and explain how I see the agenda, and then I will ask the Minister some questions about how the summit will work, who will be there, what the key Government aims are and how we can enforce the actions that are agreed.

In next Thursday’s summit, international partners will, we hope, agree a package of practical steps to expose corruption, punish the perpetrators, support the victims and drive out the culture of corruption. That is clearly timely, given what we have seen in recent weeks and months. It is difficult to measure the impact of corruption, but the scale has never been more obvious: the FIFA scandal, the Unaoil leaks and the recent Panama papers gave us a glimpse of the far-reaching and egregious damage that bribery, fraud, grand corruption and tax evasion can cause. As the Prime Minister said last July,

“Corruption is one of the greatest enemies of progress in our time.”

Bribes, tax evasion and grand corruption destabilise development, keep the vulnerable in poverty, add significantly to the cost of doing business and fund terrorism. We all agree that we need to find a way of fixing those things.

Next week’s extraordinary summit is outside the usual gamut of United Nations, G20, G7 or even OECD processes. It is a one-off, stand-alone, unique summit, and we are all keen to understand how any actions that are agreed can be enforced. We do not want just warm words next week; real action must result from them.

It is right that the UK takes the lead on this issue, because we are uniquely exposed to corruption. Our status as a pre-eminent global financial centre and the unfortunate financial secrecy touted by our overseas territories and Crown dependencies make the UK seem a safe haven for the proceeds of corruption and the individuals and organisations that facilitate and benefit from financial crime and tax evasion. We ought to recognise that.

When MPs go around the world and look at the issues that developing countries face, we often think, “Isn’t it great that we’re not suffering from that level of day-to-day corruption? We don’t have to bribe public officials to get the service we want. We are not at risk of being stopped by the police and being asked for a charge to keep driving.” But the UK is not completely corruption-free. As a big financial centre, we are very exposed to corruption, and we are used as a way to launder money and hide the proceeds of corruption and crime elsewhere in the world.

It is right that we praise what the Government have done in that regard. We will soon be one of the first countries in the world, and the first in the European Union, to have a public register of beneficial ownership. That is a real step forward, which will allow us all to see who owns the companies that operate in the UK. I am sure that it will give us some extremely useful and interesting information. We all welcome the recent consultation on extending that transparency to property ownership. We also welcome the new anti-money laundering action plan, which, if fully implemented, will bolster the regulators’ enforcement powers and their ability to identify and freeze suspicious transactions.

Of course, we have issues with our overseas territories, and if we cannot convince them to get on board with this agenda, our reputation for being a truly anti-corruption jurisdiction will not be intact. As the Panama papers show, secret company ownership makes most cases of large-scale corruption, money laundering and terrorist financing possible. Without secrecy, much of that could not be done.

A World Bank review of more than 200 of the biggest corruption cases between 1980 and 2010 found that more than 70% relied on shadow entities that hide ownership. Sadly, company service providers in the UK and the Crown dependencies are second on the list of providing the shell entities that facilitate those awful crimes. This summit and our international reputation will prevail only if we secure commitments from all our overseas territories and dependencies to introduce public registers of beneficial ownership and strip companies of the secrecy that allows them to hide the proceeds of crime, corruption and tax evasion.

Success will depend on whether we tackle the risks that are somewhat closer to home. Trillions of pounds flow through the UK’s financial system every year, and sadly some of those transactions are less than clean. The National Crime Agency recently estimated that tens to hundreds of billions of pounds-worth of corrupt and illicit funds are laundered through the UK each year. Last week, the acting chief executive of the Financial Conduct Authority appeared before the Treasury Committee, and when asked whether the UK system is suitably hostile to money launderers, she could only reply, “We could do better.” Clearly, we could and must do better. The laundered funds that are used to buy property here get into the system through the secrecy that our overseas territories allow. It is harder to spot and stop such funds once they are in the system, so we need to prevent them from getting there in the first place.

We must tackle money laundering in the UK. We welcome the action plan, but having 27 different institutions to supervise the anti-money laundering rules in the bodies that they regulate is far too many. They cannot have a real picture of what is going on, what action is needed, the trends and who is not complying. Will the Minister say whether the Government plan to find a way to reduce the number of supervisors, so that we can be confident that the new rules and those that are already in place will be enforced?

Law enforcement authorities identify three sectors that do not adequately report suspicious activity: the legal sector, accountancy and estate agency. Property ownership is a topical issue, and the fact that only 0.05% of all suspicious activity reports came from estate agents in 2013-14 suggests that action is needed to make that sector transparent. Recent research from Transparency International and investigations from Global Witness show how London’s property market is used for corrupt ends. More than 36,000 properties in London are owned by companies registered in offshore jurisdictions, and almost 10% of the properties in Westminster are owned by anonymous companies. We clearly cannot allow that situation to continue.

Anonymity has a clear link to corruption. More than 75% of corruption cases involving property investigated by the Metropolitan police’s proceeds of corruption unit involved anonymous companies registered in secrecy jurisdictions, 78% of which were registered in the UK’s overseas territories or Crown dependencies. This huge problem is sadly centred in territories over which we have some influence, so it is imperative that we produce some action from them.

Senior figures at the National Crime Agency have reported that corrupt investment in London’s most expensive properties is driving up house prices across the board. So money laundering not only is a problem for the rich and powerful, but has an impact on everyday life here in London. The longer we allow London to be a kleptocrats’ playground, the worse off we are making ordinary people.

We have all those statistics to recount, and an APG inquiry is ongoing at which we have heard many anecdotes about how British firms working overseas are losing out on contracts to unscrupulous firms based in countries that do not have the same regulations and rules, and do not play fair, as we do. We are losing jobs and income here, because other countries around the world are not following the rules that they ought to be. It is right for us to make a stand. We do not want businesses bribing their way into contracts around the world. Where we find that happening, businesses and their executives will be punished, and serious action will be taken. We will not turn a blind eye to it. Recently, Ernst and Young’s 2016 global fraud survey of senior executives found that 98% of UK respondents believed that it was important to know who ultimately owns and controls the entities with which they do business. So this is not a minority interest; the business world agrees that we should all know about such things.

Turning to the summit next week, will the Minister confirm exactly which countries are attending and the level of their representation? How many of the overseas territories and Crown dependencies will be present? Perhaps he will list which ones will not be. According to the recent statement, the two territories that had not agreed to have even a closed register of official ownership were Guernsey, which had some excuse to do with having elections and so could not agree—has any progress been made?—and Anguilla. Has some sense prevailed in that small part of the world? Has it seen the light?

Photo of John Penrose John Penrose The Lord Commissioner of Her Majesty's Treasury, The Parliamentary Secretary, Cabinet Office

I will try to answer the broader questions at the end, but I can confirm that Anguilla has signed up. Guernsey’s election was last week, so we expect discussions to begin in earnest very promptly.

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

At least we have all the territories over that first hurdle.

Next week, the important thing will be to get real commitments on beneficial ownership and a timeframe for the register to be transparent and public, so everyone can see who owns every company established in a jurisdiction. For law-enforcement providers to be able to find such information in a timely way may be of some use, but we also want everyone to be able to search the register—for example, campaign groups could trace right through the system and see who owns properties. I suspect that law enforcement does not have the resources, sadly, to do that proactively, whereas sunlight and transparency will give us far more progress than a closed register ever could.

Will the Minister confirm whether the summit agenda includes discussion of a certain time by which all those territories will have a publicly accessible register of who owns companies and, preferably, of trusts in the jurisdiction? I accept that trusts are more complicated, but we need to see some progress on them as well.

Last autumn, I attended a meeting at which the Government’s anti-corruption champion, my right hon. Friend Sir Eric Pickles—sadly, he cannot be present today—confirmed that the Prime Minister was pretty determined to get overseas territories on board with a public register. The words the anti-corruption champion used were

“through legislation, guidance or naked pressure”.

I am not sure whether the summit counts as guidance or naked pressure, but if those do not work, what other options do the Government have? My right hon. Friend said “legislation”—his word—so will the Government put that on the table? At some point, will they take action if the territories will not go as far as we want them to, or is that completely off the table?

What other major countries are turning up? Are the Americans sending anyone next week, because they clearly have an important role to play in sorting out the world financial system? Those of us who would like to see greater action on global tax avoidance realise that the Americans have a real and vital role in that situation, so are they turning up next week?

If some actions are agreed next week and, as we hope, they are specific and have a real timeframe, how will they be enforced? Presumably, there will be no binding global agreement, but are the Government conscious of that? We do not want to hear warm words and promises that have been made before, followed by years of drift; we want real, concrete actions that are reviewed, with a timescale and ways to enforce progress.

If there is an agreement next week and some territories subsequently resile from it, what actions will the Government propose taking to convince the territories otherwise? It is not encouraging to see the Government announce that everyone has agreed to a closed register, and then senior people from some of our overseas territories glory in being able to say, “We’ve won. We’ve got everything we wanted out of this,” implying that it will be business as usual—presumably, not what we were aiming for. We want any agreement next week to be meaningful and strong, not just hot air.

With those thoughts, I wish the Government and the Minister well at the summit next week. We hope that they will come out with a strong and binding agreement, which can take the agenda forward towards finding ways of materially reducing the amount of corrupt money that flows around the world, especially into the UK. Nations around the world should, rightly, keep the money that they earn and have the tax revenues necessary to grow their economies. Everyone throughout the world should be able to see our financial system moving in the direction of being open, transparent and honest, rather than corrupt.

Photo of Margaret Hodge Margaret Hodge Labour, Barking 9:46 am, 3rd May 2016

I congratulate Nigel Mills and my hon. Friend Catherine McKinnell on securing today’s debate.

I welcome the Government’s commitment to tackling corruption and the leadership shown by the Prime Minister, but for this to end up as more than a public relations stunt, the Government need to take serious action. I want to focus on three issues: tax havens and the proposals on beneficial ownership registers; properties that are owned in the UK through shell companies that have been established in tax havens; and Britain’s own record in stamping out corruption at home.

First, on tax havens, transparency about who owns assets—whether in companies, trusts or other entities—is absolutely vital if we are serious about stamping out corruption. Most tax havens are UK Crown dependencies and overseas territories, which are countries that carry the Union Jack on their flags and whose citizens are given British passports. Yet the secrecy that surrounds tax havens, which is at the heart of how they operate, results in massive corruption and money laundering throughout the world. I agree with what the Prime Minister said during his recent trip to the Caribbean in the autumn of 2015 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 have looked at a whole range of data, research and evidence. The World Bank review, to which the hon. Member for Amber Valley referred, looked at 213 cases of corruption over a 30-year period, from 1980 to 2010: 70% of the cases relied on anonymous shell entities, and the UK, the Crown dependencies and the overseas territories were second on that list. In the Mossack Fonseca papers, we find that of the 214,000 corporate identities exposed, half were registered in the British Virgin Islands. Of the world’s top 200 global companies, 90% have a presence in the tax havens. Tax havens are being used to hide money and to enable money laundering and corruption, yet the Prime Minister has failed to secure what I thought he was setting out to do: to ensure that the Crown dependencies and the overseas territories have registers of beneficial ownership that are open to the public. The commitment that he gave when he came to the House to give a statement arising out of his own position on the Mossack Fonseca papers failed to give us that assurance.

We only have to look at the words of one of the leaders of the overseas territories, the Premier of the Cayman Islands, to see that they saw the Prime Minister’s statement as a victory. Premier McLaughlin said that the UK had caved in:

“As previously indicated this is not a central registry as beneficial ownership details will remain with the service providers managing them, but rather information will be accessed via a central technical platform. And it certainly will not be available publically or available directly by any UK or non-Cayman Islands agency.”

I am sure that the Minister is familiar with these words. The Premier went on to say:

“This is what we wanted, this is what we have been pushing for three years for, a disaggregated system which leaves the beneficial ownership information intact with the service providers but accessible by the general registry and accessible by the law enforcement agents in Cayman.”

This is what they wanted. Indeed, what is almost worse is that in that interview, which was published in the Cayman press on the day following the Prime Minister’s announcement here in the House of Commons, the Premier said that having reached the agreement gave the Cayman Islands a greater sense of confidence about the UK’s endorsement of the business that is transacted there.

By agreeing to what is not really a register but a secret gathering of information, we have ended up giving a veil of legitimacy to the bad practices in overseas territories that allow money laundering and corruption. I say to the Minister that that is simply unacceptable. It is vital that such registers are properly compiled and public. Only then will we know who owns the assets that are at present in companies in the tax havens. Practically, until we know that, any idea that the odd collection of information in the tax havens will benefit us is false. Our own enforcement agencies are far too poorly resourced to be able to come up with evidence to justify why a tax haven should tell them who owns a company, and there will be unequal access to the data required to tackle corruption, because developing countries have even fewer resources and are less capable of seeing whether they can access such information.

I say to the Minister that it is perfectly possible for us to insist that the overseas territories and Crown dependencies compile public registers of beneficial ownership. We have intervened on other issues, and if we are serious about tackling corruption, we should intervene on this issue. In a previous time, the Conservatives intervened through an Order in Council to ban capital punishment, and Labour, when it was in office, intervened through an Order in Council to outlaw discrimination on the grounds of sexuality. The UK public will believe that the Government mean what they say about tackling corruption only if they choose to use the powers available to them through the Privy Council to enforce transparency. The first issue I ask the Minister to comment on is whether he will do that—and if not, why not?

The second issue is the scandal at our own doorstep of the way money is laundered into the UK property market. Again, the data and research here are substantial. In a 2015 paper, Transparency International found that £180 million of property that is thought to have been bought with laundered money since 2004 is currently being investigated. It claims that that is the tip of the iceberg and, to go back to the first point, says that in three out of four of those cases, an offshore structure was used to hide the owner’s identity.

Transparency International also found in March 2015 that more than 40,000 properties in London alone were held by foreign companies and that 89% of them were held in secret tax havens such as the British Virgin Islands, Jersey, the Isle of Man and Guernsey. In 2014 the Evening Standard found 700 “ghost mansions” as it called them, worth about £3 billion, uninhabited in London. The Guardian looked at one street in Hampstead and found £350 million of vacant properties all owned by shell companies in tax havens and the brilliant investigations carried out by both Private Eye and Tax Justice Network found not only massive properties held in tax havens but that 120 former Crown Estate properties had ended up being owned in 14 tax havens. They established that one in six homes sold in Westminster and in Kensington and Chelsea in the three years before their 2015 report had been bought by offshore companies.

That is a scandal, which hikes up property prices here in London and distorts the housing market. Because that is at the top of the market, I am not sure whether that is taking away from many people in real housing need, but we therefore become the centre and focus of money laundering and bringing money into the London property market through shell companies in tax havens. The Minister and the Government are consulting on this issue, but we should insist on a publicly open register of ownership of all properties in London.

In the Minister’s proposals, he talks about potential fines and imprisonment provisions for those who do not provide information, but of course that is no good if the owner is sitting in the Cayman Islands or the British Virgin Islands. He therefore needs powers to confiscate property and bring it back on to the British housing market. That would be a much stronger power. In those proposals, is the Minister talking about properties acquired in the future? If so, what does he intend to do about the many current properties?

My third and final point is about our seriousness in fighting corruption, which must start with fighting corruption at home. It is interesting—I am sure the Minister noticed this—that the first three prosecutions brought under the Bribery Act 2010 were all against UK officials: one in the courts; one a taxi driver bribing a local government official to get a licence; and one an overseas student bribing a lecturer. Whenever I talk to people in other countries, I always feel nervous about the patronising, complacent attitude we show that we have got it all right at home. We have not. If we are to be serious about fighting corruption, we should start by establishing our own anti-corruption strategy in Britain.

I am particularly concerned about the role of the financial institutions in the UK. Banks, advisers and all those people are focused here because of the strength of our financial sector, and they are the very institutions that are facilitating money laundering and helping the corruption that takes place internationally. We saw in the Panama papers that the UK was the second most popular place with which Mossack Fonseca did business. We saw that nearly 2,000 of the so-called enablers—the lawyers or advisers—were located here. We also saw that HSBC was one of the biggest banks involved in the transactions revealed in those papers and that Coutts was second to it. HSBC was used 2,000 times and Coutts was used 500 times. I have argued before, and will argue again, that if the Government are serious about fighting corruption and limiting the role of all those advisers and banks in facilitating it, they ought to introduce a new offence on the advisers and banks and not just look at the culprits. It is the advisers who devise the schemes, and if we could cut that off at the root, we would not have problems later.

The rumoured proposal for the Serious Fraud Office to come under political control via the National Crime Agency at the Home Office is another concern. If we are serious about setting an example in the fight against corruption, we should not allow the Home Secretary to direct SFO investigations. Of course, proper resourcing—whether of the SFO or HMRC—is vital.

I was disturbed at the recent accusation from David Normington about the politicisation of public appointments. Corruption may be too strong a word, but this example, which comes from the Minister’s Department, shows how much we need to do at home to get our own house in order. David Normington accused Ministers of seeking to dismantle the existing system for making senior appointments to public bodies. He specifically accused the Secretary of State for Culture, Media and Sport of trying to fill a prominent position in the National Portrait Gallery with a Conservative. None of the five applicants deemed suitable by Ministers for the job had been put through for interview, although four of the five had substantial connections with the Conservative party, and the Secretary of State therefore refused to accept officials’ recommendations.

It is very disturbing to see the ConservativeHome website actively encouraging Conservative supporters to apply for key public appointments. That may be a little thing, but it is symbolic. If the Government are going to lead the fight against corruption in the world, they have to start by putting their own house in order. The summit next week is an opportunity for action. I hope that it does not turn into an exercise in public relations. The decision on which way we go is in the Government’s hands.

Photo of Damian Collins Damian Collins Conservative, Folkestone and Hythe 10:02 am, 3rd May 2016

This is a massive topic that will provoke a huge amount of interest today and in Parliament next week. I want to confine my remarks to corruption in global sport, which has been one of the major global corruption issues that we have debated and confronted over the past few years. I have been involved in this area through my work on the Select Committee on Culture, Media and Sport and as co-founder of the New FIFA Now group, which has campaigned alongside excellent organisations that care about the integrity of sport, such as Transparency International UK, for greater openness and transparency in the way global sports bodies are run, and in particular for reform of major organisations such as FIFA.

On the FIFA corruption scandal, I recall the exact words issued by the US Department of Justice in its indictment against FIFA, published last year. It said that corruption at FIFA was

“rampant, systemic, and deep-rooted”.

The scale of the investigation so far and the number of arrests and indictments against senior officials in FIFA underline the breadth, and what will come in time to be seen as the depth, of corruption within that global sporting body.

As with other areas of corporate corruption, the causes of corruption within sports organisations are reasonably clear and simple to understand. Corruption in sport is an important issue, and it is not only a question of the integrity of sporting competitions and the people who take part in them. That is important in its own right, but we have to recognise that serious criminal elements have used the opportunities that sport presents to move money all around the world, be it through laundering money through the football transfer system or people acquiring stakes and interests in clubs before seeking to hide their identity behind shell companies held overseas. That has been a major problem for a number of years, and the major corruption scandal at FIFA and in other sports has brought it to the forefront.

The reasons why corruption occurs are relatively easy to understand when there are organisations with poor internal governance, led by a group of people who are not really accountable to anyone else and who base themselves in hard-to-reach places, with little scrutiny of the way they use their money and power. If we look at the breadth of allegations of corruption against FIFA officials, they have largely been about people using the organisation’s resources to enrich themselves by taking a cut of contracts, broadcasting rights and marketing rights, or by using their power and wealth to buy the votes of other people in order to secure positions of prominence for themselves and their friends and even to determine where the World cup final is played.

There is not only a lack of transparency within FIFA and how it uses its resources; there is also a lack of any real opportunity for people within the organisation who have a concern to blow the whistle. There is nowhere for them to go, because they are largely making their complaints to the people who control the organisation and who, on the whole, are not that interested in those complaints.

During the FIFA scandal in 2011, David Triesman, a former Foreign Office Minister and the former chairman of the Football Association, who had been intimately involved in leading England’s bid to host the World cup championships in the process leading up to the voting for where the tournament should be played in 2010, used parliamentary privilege to lay before the Culture, Media and Sport Committee allegations of corruption against senior football officials such as Jack Warner, Ricardo Teixeira and Nicolas Leoz, suggesting that they had solicited bribes. Lord Triesman claimed that Jack Warner had asked the FA to pay him a sum of money to secure the rights to show World cup football matches in major stadiums in Haiti to people who had been affected by a recent earthquake. It transpired that Jack Warner was asking for payments from the FA for rights he already owned in an attempt to solicit money for himself personally, with the understanding that if he received that money, he might vote for England to win the right to host the World cup.

That is an example of information we have received. In the case of Lord Triesman’s allegations, which were dismissed at the time by FIFA and not taken seriously enough, the people he alleged were guilty of being involved in corrupt practices have subsequently been indicted by the FBI as part of its investigation. That poses the question: why did the Serious Fraud Office not do more at the time to investigate thoroughly the allegations that Lord Triesman put into the public domain? Are the resources available to ensure that such investigations can take place? Could more be done to reach out to other law enforcement agencies around the world in order to share intelligence and information where a suggestion of wrongdoing is put before the offices in this country?

Sharing of information and international co-operation is important. While it may well be more appropriate for a different international or national authority to take the lead in an investigation, we can still play a very important role in following up on it. I am concerned that there have been occasions in the past when whistleblowers have come forward with information but there has not been follow-through or action on it, and years have been lost that could have been spent going after the wrongdoers and taking a stand against them.

I want to use this opportunity to raise an example that relates to an allegation that was made in the course of the recent FIFA presidential elections but could not be discussed in public because of the action of the lawyers representing Sheikh Salman of Bahrain, who was a candidate for the FIFA presidency. This is an important illustration of the sort of case that needs to be discussed publicly and examined carefully by people who care about issues of corruption. There was a suggestion that Sheikh Salman had colluded with Sheikh Ahmad, who is head of the Olympic Council of Asia and a member of the FIFA executive committee and the International Olympic Committee, so that Sheikh Ahmad could use his financial position as head of the OCA to channel money to football associations in Asia in order to persuade them to vote for Sheikh Salman in the 2013 elections for the presidency of the Asian Football Confederation.

I would like to run through an exchange of emails between the various parties involved, to give an example of the sort of case that should be followed through and examined more closely. In this case, the Football Federation of the Kyrgyz Republic was in email contact with the Olympic Council of Asia. Sheikh Ahmad, the Kuwaiti head of the OCA since 1991, is a sporting kingmaker and a key powerbroker in Asia who is a close friend and associate of Sheikh Salman. The FFKR voted for Sheikh Salman in the AFC election on 2 May 2013, which he won by a landslide. On 26 April 2013, the FFKR’s executive director, Dastan Konokbaev, wrote to the private email address of the OCA’s IT manager, Amer Elalami, with details of flights that the FFKR’s delegation would be taking to and from Kuala Lumpur for the AFC vote. Addressing him as “Brother”, he listed the flights he would be taking with the president, Semetei Sultanov, and the vice-president of the organisation. On the previous day, he had sent an email with his security mobile number, saying,

“it is available any time”, and wrote,

“this is my private email”.

Mr Elalami replied from his personal account with the signature,

“IT Manager, Olympic Council of Asia”, and his own phone number. He wrote:

“Noted brother, will keep in touch, just let me know if required any assistance from our side”.

On 29 April 2013, three days before the vote, Mr Konokbaev emailed Mr Elalami at his private email address listing 53 projects and requesting the OCA’s financial support. The subject heading of the email was “About support for Kyrgyzstan football”. These projects included training camps, friendly matches, more than 300 air fares and the construction of a sports centre. The total value of the projects amounted to millions of pounds.

There seems to be no legitimate reason for the FFKR, which is part of FIFA, to seek funding from the OCA. The OCA’s IT manager had no grant-giving role and was using his private email address rather than his official one. Despite this, Mr Konokbaev wrote:

“Brother, I hope you are well! I would like to acquaint you with our plans for 2013 (here included preparatory cycle Kyrgyzstan’s National Team) and indicate” where you need support. He continued:

“We have previously discussed, and even decide[d] many issues”.

Mr Elalami forwarded the email on to the OCA’s director general, a former pilot he referred to as “captain”. Mr Al-Musallam is Sheikh Ahmad’s right-hand man and the pair work closely together. Mr Elalami appears to have believed that Mr Al-Musallam was already aware of this request for funds, writing:

“Did you receive this email from Dastan?”, and seeking advice on how to respond. He continued:

“They send a financial support till March next year, what I should reply. Please advise”.

The emails also show that Sheikh Ahmad, Mr Al-Musallam and Mr Elalami were among a 19-strong OCA delegation in Kuala Lumpur for the vote. Bizarrely, the OCA did not have accreditation from the AFC. Instead, it was accredited to football associations.

In a document headed “list of delegates—KL”, which was circulated among OCA officials, Mr Elalami’s name appeared alongside “KYR”, which is believed to mean Kyrgyzstan, in the “accreditation” column. Mr Elalami is a Kuwaiti who had no formal association with the FFKR. In 2009, the OCA had requested accreditation for the AFC Congress but, after being refused this, set up offices nearby and hosted a reception for 30 or so football associations on the day before a vote in which Sheikh Salman unsuccessfully stood for a position on FIFA’s executive committee. On 6 May, the day after flying back from the 2013 vote, the FFKR’s executive director sent a further email to Mr Elalami reminding him of the projects that needed funding. He said:

“Earlier, I sent you” an email

“describing our needs and as you can see, there are issues that need to be addressed in the next few days [now] that all went according to plan”.

Beneath the projects he wrote:

“Which way you help? How much? Period of time?”

In some cases, he asked how the FFKR would be paid—“by bank transfer” or “in Kuwait”.

These issues warrant further investigation. In this case there is no direct proof that money changed hands between the OCA and this particular football association, but it is curious and suggests that there could be people who abuse their position in global sport to support each other, reward each other and share money between each other as a currency to secure political support. But where does anyone go with such allegations? Where can a whistleblower turn to ensure the proper investigation of such allegations? This has been at the heart of many corruption issues in sport.

Looking to the anti-corruption summit particularly, how can we ensure a gold standard for organisations operating in the sporting world to ensure they comply with high standards in auditing the way their money is used? There are questions for big global accountancy firms such as KPMG, which has audited FIFA’s accounts for many years. Despite its auditing of those accounts, it was possible for Sepp Blatter to pay Michel Platini 2 million Swiss francs, although that money was not accounted for in FIFA’s accounts. How can that be possible? How can major companies that work with global organisations sign off accounts if there concerns about them? What sort of faith can we have in that auditing process?

What sort of auditing is there? What sort of transparency is there in the way money and resources are used, and what sort of enforcement can be taken when there is a problem? Should there be a green light system for global organisations to say there are concerns about the lack of transparency in the organisation? Other commercial partners, whether sponsors or broadcasters that work with those organisations, should be mindful of those concerns when transacting with that organisation or seeking to do business with them.

Do we need some form of specialist unit in the National Crime Agency to look at sports corruption? There is a real problem with a lack of investigators working in this area. The Select Committee recently took evidence from the Tennis Integrity Unit, which has just two investigators looking at problems, largely involving gambling, and allegations of match fixing in tennis. I believe that FIFA had four people in its investigation unit. The UK’s Anti-Doping Agency has one person in its investigation unit.

Do we need greater resources for work across different sports and based in the NCA that can look at allegations of corruption in sport and act on them? Perhaps we need a unit of four or five officers working in the NCA and dedicated to looking at sports corruption, working with global sports governing bodies, having a direct relationship with their own internal integrity units and seeking to co-operate with the FBI and other investigatory bodies around the world. That additional resource would be welcome—

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

Order. I am becoming a bit worried about time. Given that we had long speeches by Back Benchers, it is only fair not to restrict Front Benchers. Perhaps the hon. Gentleman will start to bring his speech to a close and perhaps the next speaker will please keep an eye on the clock.

Photo of Damian Collins Damian Collins Conservative, Folkestone and Hythe

I will wrap up.

Can we look at the way the NCA works and at its resources? Working with overseas territories has been an important question in the FIFA corruption scandal. Jeff Webb is one of the people indicted by the FBA and is based in the Cayman Islands. How easy is it for us here to request information from the Cayman Islands about people we are concerned about and who may have links with sports corruption scandals? I welcome what the Government have said about access to a register and I am interested to hear how the Minister believes that will change our ability to pursue such cases.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North 10:16 am, 3rd May 2016

As chair and co-founder of the all-party corruption group, chair of the parliamentary friends of CAFOD group, and a long-standing advocate for anti-corruption efforts, may I say that it is a pleasure to speak in today’s debate? I congratulate Nigel Mills on securing it. It is important and timely. Hon. Members have made important speeches and I look forward to the Minister’s response to the questions that have been raised.

As we have heard, the forthcoming anti-corruption summit presents a unique opportunity for world leaders, business and civil society to come together and advance the international transparency and the anti-corruption agenda in a way that we have not seen for years. I agree with the hon. Gentleman that we are not here to criticise the Government, because we welcome the summit and the efforts made in that regard. However, as my right hon. Friend Dame Margaret Hodge powerfully made clear, if we are going to call on the rest of the world to take action, we must get our own house in order.

Last summer, the Prime Minister said in Singapore:

“I’m determined that the UK must not become a safe haven for corrupt money from around the world...there is no place for dirty money in Britain”.

However, Transparency International said in its report, “Corruption on Your Doorstep”, that there is still a place for dirty money in the UK. Since 2004, over £180 million of property in the UK has been brought under criminal investigation as the suspected proceeds of corruption; over 36,000 properties are held by offshore companies based in tax havens—a point made by my right hon. Friend—and in 2011 alone, £3.8 billion of UK property was bought by companies registered in the British Virgin Islands. If we hope to see progress at an international level, we must lead by example. The Prime Minister has rightly given a commitment on public registers of beneficial ownership, and I hope we see that come to full fruition. It is critical that the Prime Minister turns this leadership into action and that we ensure the British overseas territories and Crown dependencies come on board with their own public registers—a point made by the hon. Member for Amber Valley.

The UK can lead by example in other areas, but what more can we do here at home on enforcement? Damian Collins asked whether our enforcement agencies do enough. My key question is: do they have the right resources and legislative framework to do all they can to stamp down on corruption?

One of the first issues I want to raise is how we hold companies criminally liable for actions of their employees that facilitate corruption, tax evasion, money laundering and fraud. I have spoken about that previously. I have pressed various Ministers and the Prime Minister on the issue because, astonishingly, the UK remains one of the most popular places for the facilitation of all forms of corruption. The Panamanian firm Mossack Fonseca, of recent Panama papers fame, worked with almost 2,000 professional enablers in the UK—accountants, estate agents and lawyers—to set up companies, foundations and trusts, all or some of which could potentially have been used to launder money or facilitate illicit financial flows. The UK was the second most popular place for Mossack Fonseca to operate in. I do not think that is an achievement of which the Prime Minister is particularly proud.

Many factors are involved, but one key issue in the UK is the law on corporate criminal liability. Under UK law, it is extremely difficult to hold a company criminally liable for the actions of its employees in terms of corrupt acts or any similar offence. To do so, prosecutors have to prove who is the “controlling mind” of the company, with direct knowledge of those acts. Our law enforcement agencies, including the Serious Fraud Office, have raised the issue time and again. The SFO director, David Green, has said:

“That is difficult because inevitably the email trail tends to dry up at middle management and evidentially it is hard to prove.”

There is a potential solution. The Bribery Act 2010, introduced by the last Labour Government, sets a more reasonable evidential threshold for prosecuting companies where their employees have been involved in acts of bribery. It requires companies to prove that they have taken “adequate” steps within their organisation to prevent employees from committing such acts. The SFO secured its first prosecution and conviction for that new “failure to prevent” offence last December, and we understand that more prosecutions are on the way.

The Government recognise the effectiveness of the offence, because the Prime Minister recently announced, in the wake of the Panama papers revelations, that he would legislate to create a similar offence in respect of tax evasion, but he needs to go further and apply the new law to all forms of economic crime. I strongly urge the Minister, as I did a Treasury Minister two weeks ago, to look closely at part 2 of schedule 17 to the Crime and Courts Act 2013, because it contains an exhaustive list of offences, all of which cause immense harm both abroad and at home—they range from false accounting and forgery to fraudulent trading, bribery and money laundering—to which the Government could easily apply the new offence. That would send a clear message to the rest of the world that criminal corporate behaviour will not be tolerated in the UK and that the full force of our criminal justice system will bear down on corporate wrongdoing wherever it is found. I am sure that the Minister would like to send that message. The Prime Minister recently committed to “consider carefully” that proposal when I put it to him during his statement on the Panama papers. It would be helpful if the Minister updated us on whether the Prime Minister has been able to do that as of yet.

Ahead of next week’s summit, the Government could also commit to ensuring that our law enforcement agencies across the board have the tools they need to properly tackle the facilitators and enablers of corruption in this country. I have mentioned the SFO. Under the Roskill model, it is charged with investigating and prosecuting the most serious and complex crimes, much of which falls under the umbrella of corruption. That unique model of investigating and prosecuting crime, all under one roof, has proved to be highly effective, yet doubts still linger about the SFO’s future. I hope the Minister will today give a reassurance that the SFO will be provided with the support and resources it needs over the long term. There is always a question mark hanging over its future and whether it will be absorbed into the NCA. It is important that the SFO is able to concentrate on these very important matters, not the least of which are the issues that the hon. Member for Folkestone and Hythe raised.

Another great weakness in the armoury of our law enforcement agencies is their ability to recover stolen assets or the proceeds of crime. As Transparency International has highlighted, the UK’s asset recovery regime has not been up to the job. It is estimated that £23 billion to £57 billion of dirty money is laundered in the UK each year, given London’s role as a global financial centre, second only to the US. Against that, the National Audit Office estimates that only 25p out of every £100 is confiscated from organised criminals; a significant proportion of that sum is likely to be the proceeds of corruption. It is therefore extremely welcome that the Government say in their “Action Plan for anti-money laundering and counter-terrorist finance” that they are considering new legal powers

“to enable the quick and effective forfeiture of money held in bank accounts in cases where...there is suspicion that the funds are the proceeds of crime.”

Such powers are long overdue. In the light of that new impetus, can the Minister say whether asset recovery regimes will feature highly on the agenda of the Government’s summit next week? What aims do the Government have for increasing co-operation and joint working across national borders to ensure that those words on asset recovery are translated into action? At the end of the day, it is only through global co-operation and by demonstrating that there is nowhere to hide from law enforcement agencies that we will be able to disrupt and ultimately recover stolen assets and, hopefully, prevent this sort of crime.

I want to finish by reiterating a key point made by the hon. Member for Amber Valley and my right hon. Friend the Member for Barking: the central importance of public registers of beneficial ownership to the Government’s anti-corruption efforts. The Prime Minister himself said last September:

“If we’re to beat corruption, we need transparency.”

That means transparency over who owns properties, transparency over which companies own other companies and transparency over which individuals own those companies. It is simply not good enough for Ministers to accept assertions from overseas territories and Crown dependencies that providing access to beneficial ownership registers to law enforcement agencies alone is sufficient.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

Order. Will the hon. Lady please conclude?

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

Okay. The Government need to do more and ensure that the public have access to the registers. We saw the power of public light falling on the Panama papers and we need to ensure that the public have the same right of access to the ownership registers. The summit is an extraordinary opportunity for the UK to press ahead with the anti-corruption agenda. There is much to do, including here at home, and we do not want this to be a missed opportunity, so I hope the Minister will provide reassurance this morning that it will not be.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

I know that the next Member will be brief and to the point and will on no account speak beyond 10.35 am.

Photo of Patrick Grady Patrick Grady Shadow SNP Spokesperson (International Development) 10:27 am, 3rd May 2016

It is a pleasure to serve under the chairmanship of a fellow member of the Procedure Committee, Sir Edward. Indeed, 10.35 is incredibly generous—I hope that is not an act of patronage or corruption because we are on the same Committee. I will endeavour to be as brief as I can. Many of the points that I wanted to make have already been very well made in the debate.

I want to consider the impact of corruption overseas, in developing countries, some of the steps that can be taken to address that issue and the leadership role that the UK Government have in that, but I will briefly reflect on the speech by Damian Collins about FIFA. I do not know whether this is strictly within the limits or purview of the forthcoming summit, but in advance of the recent FIFA presidential election, I called for the Scottish Football Association to take an indicative vote of the members of its travel club, the Tartan army, on which of the candidates for the presidency they would prefer to see elected; perhaps it could inform the choice of its delegates. I do not think that necessarily happened, but it would be interesting to look at that kind of democratisation and shedding a bit of light on some of the processes of these great global bodies that control so much money and so much public interest but have so little accountability.

Let me move on to the specifics of the impact of tax dodging and corruption overseas. There is a tax gap in the UK between what it is estimated could be collected and what is actually collected. How much is lost through tax dodging and corruption? At least, however, we have a tax base to begin with. In developing countries, corruption and tax dodging can hit economies very badly indeed. Some estimates suggest that about $1 trillion flows out of developing countries via illicit financial flows every year. As a result, the continent of Africa is actually a net creditor to the world economy; that is not something that is generally understood.

The OECD has estimated that tax havens may be costing developing countries a sum that is up to three times the size of the global aid budget. In a few weeks, we are expected to debate the aid budget here in Westminster Hall. If people really want a reduction in global aid budgets, the money for resources to take people out of poverty in developing countries has to come from somewhere, and it has to come from developing countries being allowed to develop their own tax base. At the moment, the impact is there for all to see. A lack of infrastructure, development being held back, and weak health and education systems compound all the other development challenges that we so often hear about in Westminster Hall.

There is a particular challenge in the extractive industries. Addressing corruption in those industries must be a priority because a huge amount of resources and revenues for development is lost through bribery and corruption. In a sense, we are robbing some of the poorest countries in the world twice through a lack of accountability within the extractive industries: once when materials are extracted in poor labour conditions or in the shadow of conflict; and again when we allow tax to be dodged or profits to be siphoned off. Look at the Democratic Republic of the Congo. It should be one of the richest countries in the entire world—we all carry a little piece of the DRC around in our pockets in our mobile phones—yet it is one of the poorest. Tackling those financial flaws is crucial and ought to be a key priority for the summit.

Probably the most repeated phrase today is that we must get our own house in order. It is correct that we are not immune here in the UK, and we have heard about money laundering in the property market. People have suggested—I will not make any specific accusations, as that would be completely out of order—that there is a correlation between donations to political parties and seats in the House of Lords, right at the very heart of our so-called democratic system. The examples that we set to the rest of the world, including soft power and systems of patronage in the UK, must be looked at.

Alternatives do exist. Look at how the Scottish Government have taken forward the tax powers that they have been given. They have also introduced general anti-avoidance rules, described by various commentators as one of the strongest measures in the European Union. The convener of the Tax Law Sub-Committee of the Law Society of Scotland, Isobel d’Inverno, said:

“The general anti-avoidance rule that we have got in the Scottish legislation is much fiercer than the UK one. It’s a very much firmer ‘Keep off the grass’
sign than the UK one is. Revenue Scotland also appears very determined to collect all the tax that is due.”

It would be interesting to hear what discussions the Minister has had with his Scottish Government counterparts on that matter.

As we approach the EU referendum, it is worth reflecting on the benefits of EU membership to global anti-corruption efforts. The EU anti-money laundering directive launched in June 2015 has been a huge boost to international efforts and is one factor that has helped to drive the UK Government’s process of setting up beneficial ownership registers.

It falls to the UK Government to take action now and to show leadership through the summit. We have heard calls demanding action from the overseas territories in publishing beneficial ownership registers. We have also heard that there are precedents to do so, as the Government have previously required progress from the overseas territories. It would be useful to hear what the Government’s intentions are and whether they intend to set any kind of date for taking such steps.

The Government are in the process of reviewing the tax treaties they have with a number of developing countries. Scottish National party Members have spoken several times about the tax treaty with Malawi. It would be interesting to know how other tax treaties will be reviewed to ensure a fight against poverty and a fight against the flight of tax in an open and transparent way, and that extends to how we empower communities in developing countries to hold their own Governments to account.

It is important that the Department for International Development continues to support governance and civil society organisations to hold Governments to account and to ensure that they collect the tax they are due. It would be interesting to hear about that and about any other steps the Government will take, including on country-by-country reporting—requiring companies to publish the tax that they are paying in developing countries—especially regarding the extractive industries. Tax can be a key to unlocking resources in developing countries and a route out of poverty, and the summit is a chance for the Government to show leadership.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Cabinet Office) 10:34 am, 3rd May 2016

On behalf of the third party, I congratulate the people whose efforts have secured this timely debate. I also look forward to having debates in the main Chamber next week as we prepare for the summit.

Many people are mesmerised and bewildered when they consider the scale of what is happening and what we are talking about. It is estimated that $2 trillion of tax goes unpaid in the world economy. To put that in perspective, £1 in every £20 in circulation in the world is subject to some form of dubious practice and somebody trying not to do what they should do with it.

As my hon. Friend Patrick Grady stated, in developing countries, the amount of money that goes uncollected and is therefore unavailable to Governments in Africa is greater than the amount of international aid that that continent receives. Here in our own country, the amount of tax that is evaded or avoided by those who should be paying it is estimated to be in excess of £7 billion. If the Government were so minded and were able to collect that money, it would be enough to do away with all the proposed cuts to welfare and social security that we have spent many hours debating over the past couple of years. We really need to get a grip on this.

Something that has concerned me over the past few months is that there are those who will try not to justify what is happening, but to provide a smokescreen for some of it. They suggest that an awful lot of what is going on is perfectly legal, saying, “Ah, well, this is tax avoidance, which is lawful. This is not tax evasion.” A lot of members of the public get very confused about that, so we need to be clear about what is happening. For instance, people might decide to donate to a charity and to use the gift aid regulations to maximise their donations, or they might save for an ISA and get tax benefits out of that. That is not tax avoidance. That is using a legislative procedure for what it was meant to be used for. Tax avoidance is when companies use procedures for things that they were not designed to be used for in order to avoid their liabilities—something that most people in this country never even get the chance to contemplate.

With regard to doing something about the problem, I echo the comments of others. The most important thing is that we need to be able to follow the money and see where it is, so transparency is vital. I welcome the fact that, from next month, we will have a public register of beneficial interests in this country. We will be able to see what companies in this country own in this country. However, large parts of the land in the Scottish highlands are owned by companies that are registered in the Bahamas and elsewhere, so the register will not assist me or anyone else in understanding the transparency of property and land ownership in the areas we represent.

The most important thing in this whole debate is that our dependent territories and overseas areas be compelled in some way to be transparent. After all, as Dame Margaret Hodge observed, the people that live in those areas are British citizens who also enjoy the protection and all the benefits of the Crown. Therefore, it is inconceivable that a situation can exist whereby the overseas territories and Crown dependencies are allowed to deprive Her Majesty’s Revenue and Customs of monies that it should, rightfully, hope to get. It is vital that action be taken. My question for the Minister, above all others, is: what leverage or sanction will be applied to the Administrations in those areas to ensure that they do not frustrate the objectives that this Parliament has set itself? There have been times in the past when we have not been shy about taking action to compel, and we need to know that those areas will be discussed at the summit.

Many people have talked about this country getting its house in order. I agree that we should not be too complacent about the situation here. There are some aspects that have not yet been mentioned and that we might want to revisit, including HMRC’s arrangements with large multinational companies regarding their tax liability—for example, the deal that was done with Google. If we are talking about transparency, we still need to know the details of that. In the absence of the facts and figures, we have to assume that a deal has been done to allow a very rich multinational company to pay an effective corporation tax rate of 3%. Many people who run businesses in this country will look at that and wonder how it can be that one of the world’s richest companies is charged 3% on its profits in the UK when they are paying many times that rate.

My hon. Friend also observed that we need to consider the general anti-avoidance rules. He is right that the Scottish GAAR has been lauded by many independent commentators as a stricter and more effective set of regulations than exist in the UK as a whole. The irony is that the Scotland Act 2016 will still cover only a minority of taxation and regulation in that country, but the UK Government could learn much from Scotland’s GAAR about toughening up the regulations.

Perhaps the Brexit debate is the elephant in the room. Much has been achieved in recent years at European level, through the EU, on anti-laundering legislation. I accept that, in theory, if we were to leave the EU, it would be possible to make bilateral or multilateral arrangements with other countries to try to do something about tax avoidance, but in the short term, and for an undefined period, the holes in the regulatory net would be widened if Brexit were achieved, so we need to consider the implications. Finally on putting our own house in order, there is still much more to be done on deploying resources and specialists to investigate malpractice, so I would like the Minister to talk about beefing up our capacity.

My final point is on leadership. As others have said, the Prime Minister has done a lot, but there is still more to do. For example, I would like a little more transparency on whether he has had any benefit from his father-in-law’s company that owns large parts of Jura, where the Prime Minister decided to holiday in 2015. More information on that would be welcome.

There has been a distraction in recent months. We debated this subject a couple of months ago, when everyone was having a feeding frenzy to get Ministers and MPs to publish their tax returns. Of course, it became apparent that, if anyone was up to no good, the last place we would find evidence of it is on a tax return. What we really need to know is the information that does not appear on tax returns. As Members of Parliament, we are in a position of trust as legislators. We are the custodians of the arrangements that our citizens have to follow, and we need to be beyond reproach. We need to register our interests in the Register of Members’ Financial Interests, and we need to consider whether Members should register any interests in offshore countries where they may be benefiting from the loopholes that we are trying to close.

The anti-corruption summit offers an opportunity for the Government to demonstrate global leadership. There are many decent people in this country who pay their taxes and who have never thought about doing anything else, and they are looking to the Government to do something about this massive international problem.

Photo of Jon Ashworth Jon Ashworth Shadow Minister without Portfolio (Cabinet Office) 10:43 am, 3rd May 2016

I am delighted to serve under your chairmanship, Sir Edward. This issue is of such importance to me that I was determined to be here despite the ongoing celebrations in Leicester, the city I represent. I reassure you, Sir Edward, that I will be celebrating Leicester’s remarkable victory tonight.

I congratulate Nigel Mills and my hon. Friend Catherine McKinnell, both of whom have worked so hard on the all-party parliamentary group on anti-corruption, on being instrumental in securing this excellent debate. The hon. Gentleman, in particular, made a fine, well-considered speech that raised many key questions, and we look forward to hearing the answers from the Minister. Equally, my hon. Friend made a serious, heavyweight contribution with many good, practical suggestions, and I look forward to the Minister’s assessment of her points.

Obviously, my right hon. Friend Dame Margaret Hodge made a typically forensic speech, and I pay tribute to all her work, both in her role on the Public Accounts Committee in the previous Parliament and in the role she continues to play in this Parliament on pushing these issues. Parliament is so much the better for her being here and for her work, and we are all grateful to her.

Damian Collins made an interesting contribution, and he has shown great tenacity in pursuing corruption in sport. I hope that he continues to pursue those issues, and I look forward to seeing where his inquiries take him. There was much in his speech that is of concern to us all, and I hope that, if not this Minister, Ministers in the Department for Culture, Media and Sport will respond to him adequately. Patrick Grady mentioned some of the issues that I will particularly address in my brief contribution, especially on the developing world.

There is consensus on both sides of the House on the importance of addressing corruption, and we would all agree with the Prime Minister and his strategy when he reminds us that corruption harms societies, undermines economic development and threatens democracy. In the past, he talked about the golden thread of conditions that allow countries to thrive, and the absence of corruption is one of those conditions. The Opposition welcome the summit because, as has been said many times in this debate, some campaigners estimate that illegal tax evasion, corrupt deals for natural resources and money laundering cause between $100 billion and $2 trillion-worth of money to flow out of developing countries every year. Estimates suggest that corruption equates to more than 5% of global GDP. The World Economic Forum’s analysis shows that corruption increases the cost of doing business by up to 10%, and it suggests that cutting corruption by just 10% could benefit the global economy by nearly $400 billion a year.

We welcome the summit, which is an opportunity for the Government to show leadership, as many Members have said. The summit meets against the backdrop of the Panama papers. Indeed, the full details of the papers will be released just three days before the summit. Surely, the test for the summit in the eyes of the public will now be how it responds to the issues raised by the Panama papers. There has been widespread revulsion at the revelations, which is understandable, and many people are interested in the impact of the Panama papers on our domestic scene and in the political fallout from the Prime Minister’s tax returns and the way that he had to come to Parliament and from the number of Tory party donors caught up in the Panama papers.

Interesting though that is, and we all accept that the Government probably still have more to answer, for me the biggest issue raised by the Panama papers was the revelation of chronic corruption that has helped people to siphon billions of pounds from Africa, stealing from some of the globe’s very poorest people. Africa is a continent rich in natural resources, yet its people are poor because, too often, foreign investment has been channelled through offshore centres such as the British Virgin Islands. Fortunes are being made and siphoned from Africa, rather than being spent on the schools, hospitals and infrastructure needed across the continent. Surely, it is obscene that, for example, a Jersey-based oil company can instruct Mossack Fonseca to shift its registration from the Bahamas to Mauritius, to avoid more than £280 million in tax on the sale of an oilfield in Uganda—£280 million is more than the Ugandan Government will spend this year on health services. Surely, it is a disgrace when major mining concessions in the Democratic Republic of the Congo are acquired at seemingly below market rates and sold on for $1.4 billion, which is almost double the combined annual budgets for health and education in a country with one of the world’s highest child mortality rates, by taking advantage of such offshore accounts.

Surely, the test for the summit now is how the UK deals with its overseas territories and Crown dependencies. As has been said throughout the debate, the Prime Minister has previously pledged to introduce a fully public register, and he has previously written to the overseas territories demanding such a register. I will not run through all the quotations because of time, but last year in Singapore he said

“when you have companies whose ownership isn’t known you allow a shroud of secrecy behind which people can do bad things, sometimes terrible things, with no accountability.”

On the overseas territories and Crown dependencies, he went on to boast that he would

“take concrete steps to force the pace.”

Sadly, those concrete steps have been smashed up. Just two months ago, the Financial Secretary to the Treasury said that the overseas territories and Crown dependencies are “not committed” to a public register of beneficial ownership:

The United Kingdom is leading the way in respect of a public register of beneficial ownership, but other countries, including the overseas territories, are not committed to that.”—[Official Report, 1 March 2016;
Vol. 606, c. 815.]

As many Members have said, is now not the time for the Government to insist that the overseas territories and Crown dependencies take the action necessary? To what extent will that be on the agenda for the summit, and will the summit agree a timetable to force those jurisdictions to publish central public registers of beneficial ownership? Not to do so would surely mean that the summit fails the test set for it by reasonable people. As the hon. Member for Amber Valley asked, which overseas territories and Crown dependencies will attend the summit?

Very quickly—I appreciate that the Minister will want time to sum up—as well as action on beneficial ownership, which is vital, we want action on tax reporting. It has been disappointing, given the summit’s aims and the Chancellor’s stated support, that past proposals in the European Parliament calling for published country-by-country reporting by companies of the details of where they earn their money and pay taxes have been defeated by Conservative MEPs. Does he not agree that it is now time for the Government to deliver on their promise to introduce country-by-country reporting for multinational companies, and can he tell us what progress will be made on that at the summit? My right hon. Friend the Member for Barking discussed money laundering. I will not go over that because of time, but again, will the Minister respond to those issues and detail what response we can expect at the summit?

The Minister has been asked a number of questions that I hope he can answer. As I said, we welcome the summit. We want concrete action on registers with respect to overseas territories and Crown dependencies. The Government can force action. There is a degree of consensus across the House, but when Governments tolerate large-scale tax avoidance by big corporations and the wealthy and fail to address legitimate concerns about tax havens, it is our constituents, public services and some of the poorest people in the world who suffer. If we refuse to act, we create the conditions for the inaction of others. The Government have an opportunity to show leadership at the summit; they must not squander it.

Photo of John Penrose John Penrose The Lord Commissioner of Her Majesty's Treasury, The Parliamentary Secretary, Cabinet Office 10:52 am, 3rd May 2016

Sir Edward, it is always a pleasure to have you in charge, ensuring that we behave ourselves during our debates. I join the chorus of plaudits for my hon. Friend Nigel Mills and Catherine McKinnell, who have done so much to raise the issue as co-chairs of the all-party group on anti-corruption. I particularly thank my hon. Friend the Member for Amber Valley for organising this debate.

We have had a series of extremely carefully considered and very wide-ranging speeches, not only from a former Chair of the Select Committee on Public Accounts—you are one yourself, Sir Edward—but from members of the Select Committee on Culture, Media and Sport and many others. The debate shows the breadth of concern and the issues into which the tentacles of corruption can spread—everything from sport to international aid to public contracts and property ownership in Baker Street, among other places in this country and elsewhere.

I think that there is cross-party agreement that it is important for us all to remember—although I am pleased by and welcome everybody’s recognition that the Prime Minister and others have been instrumental in taking forward the agenda—that there is a great deal more to do. The effects of corruption are not felt only in other countries. My hon. Friend the Member for Amber Valley was right to say that, although we may be blessedly free of some of the more commonplace and in-your-face forms of petty corruption, such as people demanding bribes for everyday public services, that does not mean that any society, ours included, is safe.

The effects are widespread and pernicious. Corruption raises the costs of doing business, through bribes and friction costs. That is true not only in the UK but for our exporters trying to get contracts and trying to win jobs for our workers in exporting overseas, and consumers must put up with poorer-quality goods, because if goods are purchased through a corrupt process, the chances are that they will be second best, either in quality or in value for money. Again, everybody suffers. Corruption drives up prices, not just in the UK—we heard the example of property prices here—but around the world as well. Most importantly, it is a fundamentally unjust way to run not only a country but global society in general. People cannot be sure that what they see on their TV screens and hear from their leaders or, indeed, their bosses is correct or fair. We are talking about a piece of social justice, so there is a huge amount to do.

In the limited time left, I will try to respond to some of the points raised, although I want to leave a couple of moments for my hon. Friend the Member for Amber Valley to sum up. He asked specifically what would be on the agenda for the summit and precisely who would be there. I can give him some guidance on that, but obviously, these matters are still under discussion, so I cannot give him a running commentary. He rightly pointed out that the summit’s overall aims are to expose corruption, punish those who perpetrate it and drive out the culture of corruption.

We have had a number of submissions from Members about how, for example, asset recovery could be improved; Dame Margaret Hodge suggested confiscation, but other suggestions were made for other kinds of asset recovery as well. Suggestions were also made about better opportunities for whistleblowing and better governance in sport, which has been a potential channel for distributing ill-gotten gains around the world. All those things need to be discussed and will, I am sure, be on the agenda, but its precise details will be released nearer the time.

I can give my hon. Friend the Member for Amber Valley a little detail about who is invited. Again, the final guest list will be released nearer the time, but I can confirm that we have invited the G20 countries, leading international organisations in the field, including the UN, the World Bank, the OECD and the International Monetary Fund, and a wide range of other countries—I think this is where he was going; we will have more details, I am sure, as we get closer to the day—that are leading the fight against global corruption or have a pivotal role to play. I understand that John Kerry from the US will be there as well.

I should mention that there will be an event the day before with a broader invitation list, which we will run by the Department for Business, Innovation and Skills, for example. We will invite a number of companies and other non-governmental organisations, because there are many NGOs, companies and sectoral organisations that understand the reputational damage that corruption can cause. We must harness those who are willing to take a lead on the issue to set the right tone and take part in the three aims that I spoke of, particularly driving out corruption. Their co-operation and help will be essential in setting a tone for others to follow, not just in political leadership but in commercial and, potentially, third sector leadership as well. I hope that I have given my hon. Friend some extra detail. I am sure that more will come, and that he will want to hear more about it.

The right hon. Member for Barking asked whether we would be willing to use last resort powers. To summarise, they are a last resort. We do not want to have to use them; we want to ensure that people come as far as possible without any need for them. However, it is clear from all the submissions, suggestions and speeches that we have heard that there is a huge thirst and desire for the agenda to be taken further. We in this country are not unique in wanting to do so. We have taken some important leading steps, but we are far from the only ones who need to be involved, and far from the only ones who are. The issue needs to be taken forward on an international scale. The UK absolutely needs to play its part, and we have heard the reasons why we, particularly given our overseas and dependent territories, need to be a leading member of that international coalition.

This is clearly a developing agenda. The proposals and the progress made in the wake of the FIFA scandal, for example, show how much further international opinion has moved and still needs to move. The revelations in the wake of the Panama papers show how much further we can go and how much further public opinion, although it has moved, still needs to move. I am sure that this topic will continue to develop and that the rules and regulations and, most importantly, the ethos and culture of international business, investment and ownership, will continue to change and tighten. I am sure that everybody in this room and more broadly will welcome that on a cross-party basis, with open arms. I will leave a few seconds for my hon. Friend to respond to the debate.

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley 10:59 am, 3rd May 2016

I thank everyone who has taken part in this debate for their excellent speeches. I think it is clear to anyone watching that there is a strong consensus among all the parties here that we want the summit next week to be a success. We want strong action to be taken. We want real agreements to take the issue forward, and we want to ensure that things happen on a timely basis, so that we do not just drift along and forget about the issue in a few years. I wish the Minister and the Government well with the summit, and we look forward to seeing what actions are taken next week.

Motion lapsed (Standing Order No. 10(6)).