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Global Anti-Corruption Sanctions Regulations 2021

Debated on Tuesday 25 May 2021

The Committee consisted of the following Members:

Chair: Yvonne Fovargue

Begum, Apsana (Poplar and Limehouse) (Lab)

Caulfield, Maria (Lewes) (Con)

Cummins, Judith (Bradford South) (Lab)

† Duddridge, James (Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs)

† Harris, Rebecca (Lord Commissioner of Her Majesty's Treasury)

McKinnell, Catherine (Newcastle upon Tyne North) (Lab)

Mak, Alan (Lord Commissioner of Her Majesty's Treasury)

Mann, Scott (Lord Commissioner of Her Majesty's Treasury)

Morris, James (Lord Commissioner of Her Majesty's Treasury)

† Morrissey, Joy (Beaconsfield) (Con)

† Rimmer, Ms Marie (St Helens South and Whiston) (Lab)

† Rutley, David (Lord Commissioner of Her Majesty's Treasury)

Smith, Nick (Blaenau Gwent) (Lab)

Thomson, Richard (Gordon) (SNP)

Throup, Maggie (Lord Commissioner of Her Majesty's Treasury)

Tomlinson, Michael (Lord Commissioner of Her Majesty's Treasury)

† West, Catherine (Hornsey and Wood Green) (Lab)

Sarah Ioannou, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

Tuesday 25 May 2021

[Yvonne Fovargue in the Chair]

Global Anti-Corruption Sanctions Regulations 2021

Before we begin, I would like to remind Members to observe social distancing and only sit in places that are clearly marked. I should also remind Members that Mr Speaker has stated that masks should be worn in Committee. Hansard colleagues would be most grateful if Members sent their speaking notes to

I beg to move,

That the Committee has considered the Global Anti-Corruption Sanctions Regulations 2021 (S.I. 2021, No. 488).

It is a pleasure to serve under your chairmanship, Ms Fovargue. On 26 April, the Government laid the Global Anti-Corruption Sanctions Regulations 2021, under the powers in the Sanctions and Anti-Money Laundering Act 2018. Corruption is one of the key drivers in undermining human rights, democracy, development and the rule of law around the world. It also undermines global prosperity, which reduces taxation that could have gone to fund public services. Corruption also undermines our national security and fuels conflict, and serious and organised crime.

The new sanctions regime is a significant step forward in the UK’s leadership in combatting corruption. It will enable us to impose asset freezes and travel bans on individuals and organisations involved in corruption around the world, and will help to prevent people from using the United Kingdom as a haven for dirty money. It covers all forms of corruption, bribery and misappropriation across the globe. The regulations also enable us to target those who facilitate, profit from, conceal, transfer or launder the proceeds of serious corruption. These sanctions will not only affect those named but should send a clear message to those around the world that corruption is unacceptable. The UK will not tolerate it and we will not receive the proceeds of corruption coming into our country.

As with all UK sanctions, we adhere to rigorous due process to ensure that the rights of individuals are respected. This means that those designated under the sanctions regime will be able to request that a Minister review the decision, and if they are still in disagreement, they will also be able to apply to challenge the decision in a court of law here in the United Kingdom.

The Government have made immediate use of this tool, and on 26 April we sanctioned 22 individuals from six countries for their involvement in serious corruption. All the names are published online in the UK’s sanction list for these regulations, and each designation is underpinned by evidence, as required by the 2018 Act. They include 14 individuals who were involved in the diversion of $230 million of Russian state property through a fraudulent tax refund scheme uncovered by the auditor Sergei Magnitsky, which was one of the largest frauds in Russian history. We will also impose sanctions on Ajay Gupta, Atul Gupta and Rajesh Gupta, along with Salim Essa, who were involved in long-standing corruption cases in the South African economy. We have also designated a Sudanese businessman and individuals across Latin America, in particular those involved in misappropriation of funds and soliciting bribes to fund major trafficking organisations.

The steps that we have taken to expand our sanctions framework will cover corruption as well as human rights and will give the UK powers similar to those in the so-called Magnitsky framework in the US and Canada. They will enable us to work even more closely in a co-ordinated way with likeminded partners. I therefore commend the regulations to the Committee.

It is a pleasure to serve under your chairmanship, Ms Fovargue.

On behalf of the Labour Benches, I strongly welcome the new sanctions regime. It has been clear for many years that corruption needs to be relentlessly tackled as part of our wider foreign policy armoury. In fact, we have had a number of questions for the Foreign Secretary about when anti-corruption would be introduced as a heading in the sanctions regulations, so it is very pleasing that it is now there. I appreciate all the hard work that officers in the Foreign, Commonwealth and Development Office have done to focus on the fraudulent activity of global operators. It is really good to see that we are tackling this.

Obviously when the Minister wrote his speech he probably did not realise that there would be an example of air piracy over the weekend, but I thought I would reflect on the terrible situation in Belarus, because it behoves us to respond in a way that reflects our concerns about a corrupt, Kremlin-backed financial system based mainly around energy. We know, for example, that Belarusian companies such as a subsidiary of the state oil company are active in the UK. Indeed, my hon. Friend the Member for Wigan (Lisa Nandy) wrote to the Foreign Secretary overnight about the subsidiary BNK UK, which is the UK arm of the Belarusian state oil company. We would like to know how the UK Government will stop the Belarusian Government using the London stock exchange to raise finance and sustain Lukashenko’s grip on power.

We would also like the FCDO to examine the evidence for further sanctions against individuals. One whom we have named is Mikhail Gutseriev, who is known to have acted fraudulently and has stolen from his own people. We would like to see him specifically looked at. I know that the Minister will probably not be able to give an answer today, because that is not how developing sanctions works—there is an element of stealth and evidence gathering to it—but we must eliminate any possibility of those linked to the Lukashenko making money in the UK. We know that there are fewer Belarusian entities sanctioned now than in 2012. Only seven entities are currently designated, compared with 32 under EU sanctions in 2012. In the space of 12 months this dangerous regime has stolen an election, employed brutal repression against its own people and hijacked a civilian airliner, so I would very much welcome a response to that point from the Minister when he winds up.

I also want to put on record my thanks to the late Sergei Magnitsky, the lawyer who questioned fraudulent activity in Russia and lost his life in prison due to violence, and to his friend Bill Browder for his ongoing work. He has worked across European nations, the USA and the UK, but is based here in the UK and is constantly putting forward suggestions for what the Government can do better—which is always a positive when it is in one’s policy area as an Opposition spokesperson.

One of the things that Bill Browder has suggested needs to looked at is whether our crime fighting organisations are fully resourced. For example, I know from a Foreign Affairs Committee trip to Colombia—where we have concerns about corruption relating to the drug trade and about its impact here in the UK—that at that point the National Crime Agency was facing cuts to its service. I also know that the Serious Fraud Office needs more resource and more legal powers to bring more successful cases—it has not had a good record of late. All those bits of the puzzle need to be in place to bring these crooks to justice.

Without the tireless work of people on the ground and our very effective non-governmental organisations—which understand corruption and the way it plagues rogue states such as Belarus, robbing people of opportunities and fuelling crime and illicit practices across the globe—the individuals maintaining those practices would remain in the dark, which we must not allow. The work of NGOs, like that of many whistleblowers, has uncovered appalling wrongdoing, so it is vital that their work is recognised.

I am also pleased that the regulations contain provisions for the sharing of information and the creation of criminal offences. Corruption is undoubtedly a crime and should be treated as such, but the most effective way to tackle it is the free sharing of information where required. We cannot and should not treat this as a siloed issue. There should be a Government-wide commitment to tackling the corruption that washes up on our shores and pollutes our financial institutions.

The Minister has been an MP for longer than me and will remember Mr Cameron’s commitment to tackling corruption over five years ago. What is his view of the status of the anti-corruption tsar in the Houses of Parliament? I remember that individual having much more of a profile, so perhaps the Minister could update me on who it is, the work he is carrying out, where he reports to, and so on, because it is important that we keep up this questioning and important that the individual tasked with looking at anti-corruption has a sightline into the work we are discussing today, so that it can be as joined-up as possible.

When the Intelligence and Security Committee met last year, it described London’s economy and financial centres as the London laundromat. I hope that today, and through the work of the anti-corruption tsar, we can do away with that epithet, which as a London MP I object to. Sadly, however, because of the way that corruption presents itself in a place such as London, the people at the top seem to have all this money—and can even, I hear, purchase expensive properties with a suitcase full of cash. This kind of thing has to stop. We must seek greater equality; there is nothing worse than that feeling. The rich list that came out this week showed 23 new billionaires, yet we have 4.3 million children living in poverty in this country. We must do much more at the very top level to get rid of this problem.

Before I wrap up, I want to press the Minister on a few questions for clarity and reassurance, starting first with a quick update on the work of the anti-corruption tsar in the Houses of Parliament and the transparency of the formation and operation of our sanctions regime. What does he envisage for the quarterly reporting, to ensure that MPs, civil society and the private sector can play a role in designating individuals? Do the Government intend to open a formal channel for Parliament or other NGO actors to put forward information, or will he commit to regularly reporting to Parliament? Or does he believe that that is a function of the anti-corruption lead, who is not a member of the Government? Or, does he believe there is a role for the Foreign Affairs Committee?

As I have indicated, these sanctions are welcome and have our support, but they are still not as expansive as those of some of our closest allies. I personally appreciate the fact that the US regime is very linked with the work of both the Department of the Treasury and parliamentarians there. In any given year, Congressmen and women can bring cases against specific individuals and the US Government have to respond, which is quite a good, grassroots-up way of doing these sorts of things.

Will the Minister confirm that the sanctions will be reviewed to bring us in line with the US? Will he also say what work has been done on the ground? This money is like a stream of water—when we close one door, it will just go somewhere else—so obviously we want to work closely with the US, which has a large economy where money could also be laundered. What diplomatic efforts will be brought to bear across the European economies? We need a solid commitment to ensure that law enforcement agencies and those tasked with investigating corruption and human rights have the resources and backing to do so.

As a champion of the overseas territories, the Minister will be aware that the open register process will finally complete in, I believe, 2023. However, I hope he can give me his assurance of that now. This has been a very long process—Mr Cameron announced it at least six years ago—so will the Minister update me on that?

Finally, as my Labour colleagues and I have said repeatedly, if the Government are really serious about confronting corruption, their tough words must be backed up with actions. We know that the bulk of the money coming out of Russia, Belarus, Ukraine and those parts of the world is still laundered through the UK. These sanctions are welcome and should mark the start of cleaning up this mess, but we must ask again: will the Government look again at the recommendations of the Russia report, a number of which remain outstanding?

The Russia report was delivered on the last sitting day of Parliament at the end of July last year and covered things such as golden visas, an arrangement whereby wealthy individuals can apply for a specific visa to give them entry and UK citizenship, which then allows them to donate to political parties. For example, Mr Temerko, who has donated £1 million to the Conservative party over the years, is a UK citizen but still has his business interests over there. We need an assurance that there is not still some kind of remote control arrangement between that part of the world and our economy. The Russia report recommended that golden visas be brought to an end or reviewed, so I hope the Minister can update me on that.

Ms Fovargue, I have gone rather around the globe in this debate, but we do not get many chances to ask such questions in a free-ranging way, and I am sure that the Minister will write back to me and the Committee about whatever he cannot answer today. I thank the Committee for its patience and look forward very much to monitoring the progress of these sanctions.

I thank the hon. Lady for her support for the regulations and her detailed querying. I do not think there will be any need for me to write back: while her questions are probing, they will be relatively simple for me to deal with today.

The hon. Lady started by thanking the FCDO officials working on sanctions. I will pass on those thanks when I head back to the office; this is a very complex arena. However, I must disagree with her on some of the underlying themes. Global transparency has got better in the UK, not worse. To put a number on that, in 2010 we were 20th out of 108 countries on Transparency International’s corruption perceptions index. The 2020 figure, the one most recently available, puts us at 11th.

The idea that anyone can turn up and buy a house with a suitcase of cash is just not true. If the hon. Lady has any evidence for that whatsoever, she should bring it forward. If anyone were to do that, estate agents would be bound by money-laundering and KYC—know your customer—regulations to declare it. In fact, I think they would even have to declare if that was offered, without it actually happening.

I welcome the hon. Lady’s praise of the late Magnitsky and of Bill Browder, who holds our feet to the fire. I note her points about the NCA, the Home Office and resource. I will certainly pass those on to the Home Secretary when I meet tomorrow, but I see that work very clearly in the African continent. I have not had the privilege to travel to Colombia to see the NCA’s work, but it is internationally as well renowned.

We will work closely with our US and Canadian colleagues. In fact, the legislation was drafted to enable us to do that, and some of the announcements on 26 April were made in co-ordination with our US counterparts. We will also be able to complement the EU’s sanctions, so that we can move at the same pace as another nation, or collection of nations, on our own, or in any other form of consortium we so chose.

On the anti-corruption tsar, I was indeed a Minister under David Cameron, and I work closely with my hon. Friend the Member for Weston-super-Mare (John Penrose) and speak to him frequently about these issues, so we are very joined up at both ministerial and non-ministerial level.

Does the Minister agree that the anti-corruption tsar is not as high profile as before and that there is no formal reporting mechanism? Perhaps that is something the Minister could take back to think through. If we are to have an anti-corruption tsar, surely that individual should have a reporting function, an opportunity for parliamentary debate or some kind of profile within Parliament.

I totally disagree with the hon. Lady in one part and agree with her in another. The anti-corruption tsar has immense influence and an immense voice. He is very loudly heard, and in many ways is uncomfortably loudly heard for a Government with other priorities. She makes a broader point about the role within Parliament. As a member of the Executive primarily, rather than as a parliamentarian principally, I will not comment on that, but she can no doubt raise the issue with him.

The hon. Lady referred to the Foreign Affairs Committee—or the equivalent in the US. We want to engage more with Parliament. There will be regular reporting on people who have been designated. In my experience, Parliament does not tend to have a problem with anyone we designate; the issue is with additional people. The mechanism for that is not fully formalised. It could be via the Foreign Affairs Committee—the Chair and his Committee have never been shy in coming forward with ideas—but it could equally be done more privately, because as she also alluded to, sometimes these things are best done privately. We do not want to give people notice that they might be sanctioned, because then they can move assets overseas.

The hon. Lady asserted that I perhaps wrote my speech before the situation in Belarus applied. She is absolutely right, but I can assure her that we are used to sanctioning Belarus. Following the rigged elections, 99 people were sanctioned. When we left the European Union we carried forward sanctions related to Belarus, and we already have an arms embargo in place on Belarus for anything that could be used to suppress the people of Belarus.

The hon. Lady mentioned the hon. Member for Wigan, who wrote to the Foreign Secretary this morning. Very rudely, he did not copy me in, so I am not aware of the details of that letter, but I note that the hon. Lady referenced an individual. She will appreciate why, even if I was fully aware of that individual, I would not be able to comment, because of the issue of assets moving elsewhere out of the country.

I thank the hon. Lady for this debate. I think I have answered all questions; I therefore commend the regulations to the Committee.

Question put and agreed to.

Committee rose.