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

Part of the debate – in Westminster Hall at 10:16 am on 3rd May 2016.

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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.