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House of Lords Hansard
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Anti-corruption: Beneficial Ownership Registration
26 May 2016
Volume 773

Question

Asked by

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To ask Her Majesty’s Government what steps they have taken following the anti-corruption summit to address the estimated $1 trillion a year lost to poor countries through illicit capital flows and through tax avoidance and crime, and whether they have a timeline for creating registers of beneficial ownership in the Overseas Territories.

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My Lords, through our G8 presidency in 2013 and the Prime Minister’s recent anti-corruption summit, the UK has been at the forefront of international efforts to tackle corruption and tax evasion, and to help developing countries to do the same. All the UK’s Overseas Territories and Crown dependencies have agreed to provide UK law enforcement and tax agencies with full access to company beneficial-ownership information in their jurisdictions.

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I thank the noble Lord for that progress report, but of course transparency is the key to tackling corruption. How can we demonstrate our leadership in the battle against corruption when our territories are the biggest facilitators of it? Public registers are required. We have only to look down the river at the St George Wharf Tower; two-thirds of it is in foreign ownership and a quarter is held through offshore companies based in tax havens. Will the Minister outline the steps that we will be taking to get full transparency and what timetable is to be set by the Government so that the Overseas Territories will be required to have public registers? Failure to do so will result in even more monuments to this corruption on our riverfront.

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My Lords, there are two parts to the question: what are we doing about public registers of beneficial ownerships, particularly in our Overseas Territories? First, we should acknowledge that we made huge progress in getting them to have registers at all in some cases. All the Overseas Territories and Crown dependencies will share information with our tax and law enforcement agencies. As regards the tower mentioned by the noble Lord, the Prime Minister made a commitment at the anti-corruption summit that we will have the first public register of foreign-owned companies owning property in this country, and that will apply not only to new but to existing ownership by foreign-owned companies. It will also apply to a public register of public contracting. Lastly, I should say that, as a result of the anti-corruption summit, 12 countries have either agreed or are agreeing to have public registers.

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My Lords, can the Minister explain what sovereignty means in terms of our sovereignty over the Overseas Territories? The Prime Minister declared last year that we were pushing them to have public registers giving full transparency of beneficial ownership, and the Minister has now kindly said that we are making good progress towards accepting that our tax authorities can have access to them. That is half way there. If these areas are under British sovereignty and benefit from the recognition of UK law and UK accountancy, surely we have the right in certain instances to tell them what has to be done.

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The noble Lord is absolutely correct that in the last resort we could do so, but these are democracies and we think it is better that they agree to do things rather than we dictate to them, which is a rather 19th century attitude. At the same time, we acknowledge that we would like to have public registers and we are trying to persuade them on that. As I say, 12 countries have agreed so far, so we are making progress.

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My Lords, does my noble friend agree that it is slightly ungracious of the noble Lord opposite not to recognise the great progress that has been made under this Government by comparison with the complete lack of progress made under the previous Government? Does he also accept that while there is much that we can do, and no doubt more that we and other rich countries can do, there is a great burden of responsibility on poorer countries? If they would tighten up their regulations and clamp down more on corruption, this problem would be a great deal less great than it is.

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I agree with my noble friend. It is important to make the point that we would like to help developing countries to facilitate this, and we are spending money and resources doing that. DfID, for example, and the HMRC are capacity-building, and we are spending more money. We agreed to double our expenditure on that under the Addis tax initiative.

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My Lords, what proportion of the illicit capital flows that my noble friend asks about end up invested in the London property market? If the Government persist in their privatisation of the Land Registry, will they undertake that no bids will be entertained from business interests that have connections with secretive jurisdictions, such as the Cayman Islands, Jersey or Delaware? Will they also undertake that any organisation that is allowed to have charge of the Land Registry will be subject to freedom of information requests, with cast-iron guarantees of full transparency and public access?

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My Lords, about 100,000 properties in England and Wales out of 24 million titles are owned by foreign companies, and of those about 44,000 are in London. As I say, we will be the first country to insist on a public register of beneficial ownership by foreign companies for property and, as I said, that will apply to existing properties, not just new ones. We are leading the way in the world in opening this up to transparency.

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My Lords, my noble friend made a distinction between Overseas Territories and Crown dependencies. Is it not the case that jurisdictions such as Jersey have had a beneficial ownership register for many years that is accessible by anybody with a legitimate interest, and that we should be careful to maintain these distinctions? Can my noble friend give some indication of how its benchmark compares with many states of the United States, and indeed with the United Kingdom?

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I am not sure that I can answer my noble friend’s question on the distinction between Jersey and the other Crown dependencies. All Crown dependencies and all Overseas Territories will share information. It will be accessed, and most of them—not all—will also share it with an extra 40 countries outside the UK jurisdiction as well.