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UK Anti-corruption Plan

Volume 589: debated on Thursday 18 December 2014

I am delighted to tell the House that we are today publishing the UK’s first anti-corruption plan. The Government are doing more than ever before to tackle the blight of corruption here and around the world and the new cross-government plan sets out 60 actions for Government and partners over the year ahead. I pay tribute to my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) and the Under-Secretary of State for the Home Department, my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), for their work on this issue.

The new anti-corruption plan sets out how we will build a better picture of how corruption affects society and the economy; strengthen our legal and operational tools and activity; enhance our law enforcement response; deny use of our financial system to those trying to abuse it; and step up efforts internationally. I will deal with those points briefly and in turn.

First, it is crucial that we know better the breadth of corruption and how it affects the economy. It is clear that corruption harms prosperity and undermines societies where it is rampant, so we are establishing a new intelligence capacity based in the National Crime Agency with a global reach to investigate and collate evidence in a single place and to make that information available to investigators, potentially worldwide. We will merge the resources currently split between the City of London police, the Met and the National Crime Agency into a new international corruption unit based in the NCA and we are considering what further funding can be directed to support and enhance this work.

We are strengthening our operational tools and the legal framework. We are currently legislating for a new offence of police corruption and operationally pooling investigators who have previously been split among difference forces and agencies. Through the Small Business, Enterprise and Employment Bill we are leading the way on establishing the first public central registry of beneficial ownership, recording who owns companies registered in the UK. That will help law enforcement agencies to remove the corporate veil that too often is used to cover up corrupt activities.

Britain will be the first country in the EU to provide transparency to payments made by multinational companies in the extractives sector and, finally, we will step up our efforts internationally. We are working with partners around the world to build on the G8 commitments at Lough Erne to drive this agenda internationally and strengthen the global system. Britain will lead the way in her historic role of providing the secure, transparent and fair basis of law to govern how we do business, to stamp out corruption at home and abroad so that all can prosper in a truly free economy where the legitimate hard-working business cannot be undercut by the dishonest and the corrupt. For centuries, Britain has played this role and we must do so again. I commend the anti-corruption plan to the House.

I thank the Minister for his statement. The plan is welcome and includes a number of welcome measures, such as action 47, which changes the legal test that applies to restraint orders. Will the Minister confirm that there are a number of notable omissions? For example, the plan does not address the introduction of unexplained wealth orders. Does he accept that 38 days to prove that a complex international transaction is corrupt is a pernicious time limit?

Does the Minister accept that the plan is silent on limited liability partnerships used as shell companies? Does it address the lack of judicial powers identified in the recent judgment from Lady Justice Gloster? The Minister mentioned resourcing, so will he confirm how many people have agreed to transfer to the new unit, given that the police do not have TUPE powers and that it has been suggested that only two of the 35 had agreed to that transfer?

Will the Minister address the fact that the plan refers to a review of the regime on suspicious activity reports, when the issue is what happens when SARs are reported? Out of the 316,000 reported, only 110 were subject to investigation by the proceeds of crime unit. Why does the plan appear silent on that issue? Will he also address issues such as beneficial ownership? The Prime Minister has given welcome leadership on beneficial ownership, but the plan seems to ignore the fact that about 45% of London property over £2 million is owned by offshore companies. It is silent about the time scale on the overseas territories, other than pushing it back to the end of 2016.

Finally, the Minister wrote a very good book—I am sure it is still available in all good bookshops—calling for much tougher sanctions against those in banks guilty of regulatory breaches. Why, when he proposed criminal sanctions in his book, does the plan stay silent on the fact that the biggest fine in the past decade, on a money laundering reporting officer, was £17,500? Was my hon. Friend’s plan not an opportunity to preach about what he wrote?

That is the second time in two days that somebody has referred to my book, which I thought was long forgotten. I am delighted not to have to promote it myself and that others are doing so for me.

My hon. Friend raises a series of important points. This is the first UK anti-corruption plan that brings together actions across government. It takes significant steps forward, but nobody would say that the job is complete. Everybody would say that there is further work to do, and I look forward to working with him and other right hon. and hon. Members to do that. Ultimately, we have to balance the need for transparent and non-corrupt contracts with the fact that Britain gains great advantage around the world from having the legal system on which many, many international contracts are based. So we need to draw up the plan carefully and sensibly, but at the same time firmly.

On overseas territories, I can confirm that conversations are under way with overseas territories to ensure that progress is made, and we are indeed making good progress. On the transfer of new units, the two units in the police that have the biggest impact on corruption are in the Met and the City of London police, and both of those units will be part of the National Crime Agency. We are undertaking an additional piece of work to review how much further we need to go in the institutional arrangements. For too long all the work on anti-corruption was split between a multitude of forces and agencies. I am sure my hon. Friend would agree, as he was previously an investigator of such activity. Instead, that work is being brought together in the NCA.

On the point about the number of alleged offences taken forward, the purpose is precisely to raise that number. I hope that further action will be taken. On beneficial ownership, following the Lough Erne agreement, the clauses being considered in the other place, which went through this House in the autumn, are among the most advanced in the world in making sure that corporate transparency is the order of the day—the standard practice. We will see how those clauses bed down. I have no doubt that in years to come we will want to review the effectiveness of those clauses to make sure that they are used appropriately and that the functioning of the register works. Crucially, we must make sure that we continue to drive forward the actions in the UK that have relevance around the world to make sure that we stamp out corruption wherever we find it.

If staff in my office are watching this exchange, may I say to the person assigned to give me a “secret Santa” gift that I would prefer not to receive the Minister’s book?

We know that corruption can do huge harm. The cost of corruption in Africa has been estimated at £100 billion and the EU estimates that the cost to Europe is £120 billion a year, much of it incubated here in the United Kingdom. That is why the UK must pledge to do its part in cracking down on corruption. We welcome the steps that the Government have taken so far and we welcome today’s plan, although the House has been waiting since June for it to be published. I pay tribute to the all-party parliamentary group on anti-corruption, which has done so much to push the agenda forward.

The Labour Government introduced the Corporate Manslaughter and Corporate Homicide Act 2007 and the Bribery Act 2010, which allows for the criminal prosecution of any organisation

“which is incorporated under the law of any part of the United Kingdom”

for the failure to prevent bribery. I have a number of questions for the Minister about the plan and his statement.

What resources will be available for enforcement of the new action plan beyond the pooling of existing resources? The plan states that a new central bribery and corruption unit will be created within the National Crime Agency by bringing together resources from the NCA and Department for International Development-funded units. In June 2014 it was reported that the budget of the Serious Fraud Office, the agency previously responsible for investigating and prosecuting the most serious cases of fraud and bribery, had fallen from £52 million to £32 million, so what resources will be in place?

When will the new inter-ministerial group meet, who will make up its membership, and, vitally, how will it report back to this House?

What impact will the action plan have on DFID and on UK aid recipients? Will the Government take steps to make aid recipient countries publish asset declarations for their publicly exposed persons—a matter that was raised by the APPG? What discussions has the Minister had with the British overseas territories, which are a huge component in this issue?

Given last month’s Financial Conduct Authority report which concluded that most small banks have significant problems with anti-money laundering provisions, what measures are in the plan to deliver a more focused money-laundering regime?

Finally, will the Minister join me in wishing everyone in the House a very merry Christmas?

I think the hon. Gentleman and members of his office would benefit from reading my book, because it is all about why the worst financial crash in the history of the world happened on Labour’s watch. Labour Members have a few lessons to learn.

The hon. Gentleman rather unhelpfully missed the tone of this discussion, but I will deal with the more constructive elements of his questions. The issue of resources is very important. First, it is about the effectiveness of the deployment of resources. Bringing together actors from different agencies will help to deliver a more effective response from any level of resources. Some of the funding currently comes from the DFID budget. We are exploring how international development funding can further support anti-corruption work at home and abroad. That is part of the plan, and announcements will be made on it in the coming months.

I am glad to report that the ministerial group has met. I chair it, alongside the Under-Secretary of State for the Home Department, my hon. Friend the Member for Staffordshire Moorlands, and it includes representatives from across Government and different agencies. We are accountable to Parliament, and I am indeed reporting back now. Discussions with the overseas territories are under way, as I said to my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay).

I welcome the cross-party support for an anti-corruption plan. The substance of the hon. Gentleman’s questions was relevant. I look forward to working with him, with the APPG and with others to strengthen the plan further, because we are a better and stronger United Kingdom if we work together to enact it.

Clearly, we all want to do everything we can to tackle corruption effectively, but I worry that the rules become so onerous that they catch an awful lot of legitimate small businesses and traders. Can the Minister assure me that the right balance will be struck so that rules will not be so onerous and officious that it is very difficult for law-abiding people to comply with them?

My hon. Friend makes an important point that was also made by the Opposition spokesman. We need to ensure that the money-laundering regulations, in particular, do their job of tackling money laundering without putting undue burdens on ordinary people and on other businesses. There is a vital balance to be struck. Many changes can be made in order to reduce burdens while ensuring that the rules are just as tight, if not tighter, on the perpetrators of corruption whom we really want to capture.

Will the Minister assure me that the anti-corruption laws will apply to arms deals and to British arms exports? Will they involve forensic examination of any supposed corruption that has gone on between arms sales and regimes in other parts of the world rather than suspending Serious Fraud Office inquiries, as in the case of an investigation into the Al-Yamamah arms contract with Saudi Arabia?

Of course, the principles in the anti-corruption plan apply across all sectors. The UK’s export control organisation is robust, as is our set of rules, which will continue to apply.

I welcome the Government’s anti-corruption plan and, indeed, the extractive industries transparency initiative, which performs a similar function. When will that initiative be extended to other industries?

The extractive industries transparency initiative is specific to those industries. The Small Business, Enterprise and Employment Bill will extend ownership transparency across all industries, so in a sense we are tackling the whole piece in one go. If my hon. Friend wants to suggest different industries that need a specific initiative targeted at them, I would be very happy to listen to him.

The Minister is not able to tell the House which resources will be deployed in the new bribery and corruption unit or who will sit on the intergovernmental committee that he will chair. It seems that the only thing he is able to tell the House this morning is that his book is still available in all good book shops.

I have said that the current resources will be deployed and we are working further on that. I have also announced that this is not a future inter-ministerial group, but an existing inter-ministerial group. With those two answers, I wish the hon. Gentleman a very happy Christmas.

The Minister has mentioned Britain’s leadership on extractive transparency and I certainly welcome the fact that we have belatedly signed up to the EITI. Does he accept that the previous Government made a huge mistake in launching the EITI on to the world but then not signing the UK up to it, because that created the impression that it was a product just for corrupt countries? Now that we have fully signed up to it—we are leading the way in Europe in that regard—will the Minister embrace the recommendation of the Business, Innovation and Skills Committee that we should be a champion of best practice in extractive transparency?

I pay tribute to the work of the BIS Committee, particularly that recommendation. My hon. Friend has made an eloquent criticism of the previous Government, but I think today is a day to bring all sides together.

Many Nigerians I meet are very positive about the steps the UK is taking to tackle corruption. The James Ibori conviction was hailed both by the diaspora and by many in Nigeria. Will the Minister explain how the plan will help more such cases come to court and tackle corruption with this important partner?

The first and most important element of the plan that will have an impact is that it will bring together the domestic resources used to tackle such issues—instead of having them splintered among different agencies and departments—and its transparency measures will make sure that we can better tackle corruption through transparency and also disincentivise it, because people will know that it will be harder to hide. I hope that those two things will help reduce corruption. If we ever manage to stamp out corruption as a society, that would be great, but this is about reducing it as much as possible.

Given that the UK maintains a responsibility to ensure good governance in the overseas territories, when will those countries actually be required to implement beneficial ownership rules themselves?

We are working very closely with the overseas territories. Progress has been made. There is recognition among them that they need to act and conversations with them are ongoing.

The Minister will know that when agencies are brought together to create one agency, that can sometimes create a form of rationalisation. Does he anticipate a reduction in the resources needed to make the new agency work?

As I have said, we are looking at how the budget of the Department for International Development, through its designated funding, can support this work, because we are very clear that there is further work to do both internationally and domestically.

When the hon. Member for York Central (Hugh Bayley) and I were in Dodoma last month with the International Development Committee, all Tanzanian eyes were transfixed on a parliamentary hearing, at which its Public Accounts Committee was looking into a substantial local corruption scandal. What work are the Government doing to liaise with Parliaments across the world—their public accounts committees, and indeed the Parliaments themselves, are taking these matters seriously—to ensure that we can co-operate with them?

This Parliament has a proud history of helping Parliaments around the world to strengthen their capability to take forward this sort of investigation. I hope that having a more focused, cross-government approach in the UK means that we can take it further from the point of view of the Government. If there is more that Parliament can do to help parliamentary scrutiny elsewhere, I am sure that that will be looked at.

May I press the Minister on his rather opaque answer on the question of property ownership? As has been said, it is estimated that about 45% of London property valued at more than £2 million is owned by offshore companies. Does he not think that it is in the public interest that we should know who the beneficial owners of those properties are? The plan does not require that to be made public. He mentioned laws going through the other place and said that they will need time to bed down, but does he not think that the time for action is now?

The time for action is indeed now. The clauses in the Small Business, Enterprise and Employment Bill, which have gone through this House and are now going through the other place, will put in place the central register for the first time. If we want to expand what is in the central register once it is set up, we should of course consider that.

On tackling corruption and working with our international partners, does the Minister agree that people in certain developing countries need to ensure that everyone at every level pays their taxes, including Members of Parliament and members of Governments around the world? Only when they start paying their taxes and leading from the front will we really be able to tackle corruption.

I thought that my hon. Friend was about to mention the Mayor of London.

My hon. Friend makes an important point. As he knows, this Government have taken a huge amount of action to ensure that taxes are low but are paid. We have raised about £5 billion more a year by tackling tax avoidance in the UK. We have brought in new techniques to do that. I am sure that other Governments around the world under financial pressures could benefit in the same way.

The Minister mentioned that discussions are taking place with Britain’s overseas territories and his belief that progress is being made, but he did not explain to the House precisely what progress he believes is being made. Will he set out precisely what progress he thinks is being made with Britain’s overseas territories, and perhaps a timetable for each of the overseas territories to implement the beneficial ownership rules?

There is progress in two areas: the first is fiscal and on tax, and the second is on transparency. The overseas territories are each in a slightly different position, so the answer is complicated, but I would be very happy to report in future on how that is progressing.

DFID and other Departments are doing world-class work in this area. Does the Minister have a view on how the UK anti-corruption plan stacks up against those of our international partners?

I would say that this plan is one of the most advanced anti-corruption plans, but I also pay tribute to the work of DFID. Corruption undermines prosperity and development as much as, if not more than, almost any other failing, so focusing DFID resources on measures to tackle corruption is a very powerful way to help development. We must make sure that we use the DFID budget in a way that promotes long-term prosperity, and tackling corruption is a very powerful way of doing so.

Last month, a report published by the Financial Conduct Authority concluded that most small banks have significant problems with anti-money laundering. Given that finding, will my right hon. Friend explain what measures in the plan will deliver a more focused money laundering regulatory regime?

Again, the question is how we can have strong money-laundering and anti-corruption rules that cause distress to those who try to break them, but do not place undue burdens on perfectly legitimate individuals and businesses. Getting the right balance between the two is very important and there is more work to do.