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Criminal Finance Bill debate

21st February 2017

Jonathan Djanogly backs the Government’s ‘Magnitsky Amendment’ to the Criminal Finances Bill which will allow the Government to freeze the assets of individuals who have directly or indirectly committed gross human rights abuses overseas against whistleblowers or defenders of human rights.

Mr Djanogly

I am pleased to be given the opportunity to speak to this significant legislation, which will certainly help the overall objective of stopping the UK being used as a safe harbour for illegal proceeds, as it currently is all too frequently.

1.30 pm

Like Sergei Magnitsky, I practised as a corporate lawyer, and I have asked myself whether, in his situation in Russia, uncovering the largest tax fraud, I would have risked reporting it to the authorities. Would I then have refused to withdraw my statement, while being imprisoned, beaten and denied medical help—and, indeed, while being abused by the very perpetrators of the crime I had blown the whistle on? All this was happening with the backing and connivance of politicians, judges, tax authorities, prosecutors and police—all the people who are meant to be there to keep us, the honest citizens, safe. I would like to think that I would stand up for what is right, but I appreciate that it is easier for me to say that living here in the UK under the rule of law, rather than in the vicious, pernicious kleptocracy that modern Russia has become and that did for Sergei Magnitsky.

New clause 1, to which I have added my name, and Government new clause 7 deal with individuals who have directly or indirectly committed gross human rights abuses overseas against whistleblowers or defenders of human rights. Of course, these provisions do not stop with Magnitsky, or, indeed, Russia, and not all Russians are bad people, but Russia is as good an example as any to show how the new clauses, in different ways, address a glaring omission in our laws—an omission that has, for too long, allowed the perpetrators of vicious crimes against humanity to then happily base themselves and ​their ill-gotten gains in the UK as though nothing had happened, under the unwritten law that they do nothing illegal while in the UK.

While the new clauses deal with individuals’ actions, these people will almost invariably come from countries where the crimes of the person are mixed up with crimes of the state. Russia operates a repressive, nasty society where human rights are often ignored, where the media are suppressed and journalists are killed, where democratic opposition is ruthlessly suppressed and where even businessmen have a glass ceiling beyond which they are told who to pay and how to toe the line. Russia has an undiversified, oil-reliant, poor economy and a political system controlled by a dictator, who, like most dictators, looks to address his failures at home with wins through threats and wars abroad. Georgia and Ukraine are therefore partially occupied, and the west faces espionage, cyber-attacks and so on—and all this from a country with an economy smaller than that of Italy.

How do Putin and his gang get away with it? At least with communism there was belief, an ideology and a raison d’être, however misguided. Now, there is no belief in anything, except one thing: money. Modern Russia is a kleptocracy, with small numbers of very rich people making the decisions and bound together through their thieves’ honour. However, I have heard many experts say that if the thieves collectively thought that President Putin was not going to let them keep their money overseas, he would not last very long. That is one good reason to follow the black money through to the UK and to seize it. In other words, by not acting against the thieves and torturers in the UK, we are indirectly bolstering many of the worst regimes in the world.

The other point is that thieves rarely steal for the sake of it; they steal because they wish to enjoy the benefits of their ill-gotten gains. But where should they spend it, and how should they keep it safe until they do? That is the challenge. The best place, obviously, is somewhere like the UK, where the rule of law and property rights are sacrosanct. That is why, as the Home Affairs Committee pointed out, £100 billion of black money is being laundered in the UK every year. It is why Russian and other human rights abusers’ black money has been pouring into London property, Bond Street shops, country estates and prized British education.

I recently went on a parliamentary trip to Hong Kong and heard—I have to say, unofficially—that after the recent Beijing corruption crackdown, the takings of the Hong Kong couture and jewellery shops were reduced by up to 60%. As a result, Hong Kong commercial and residential property prices have also stopped rocketing.

Likewise, many criminals coming to London will be happy to pay top property prices if they feel their money is, say, 80% less likely to be confiscated in London than in their home countries, should they fall out of favour with the powers that be. Even with higher stamp duty and the annual company overseas tax—the annual residential property tax—the security of anonymously owning property in London in an offshore company can be worth paying the taxes for.

But the question is: do we want that kind of money here? In other words, we as a country have a decision to make: do we value the tax revenue and work coming via black money more than dealing with the human rights abuses and/or illegality it is connected with? I would ​suggest not. As we prepare to leave the EU, this issue will only become more relevant, as we necessarily attempt to negotiate free trade agreements and cosy up to all sorts of regimes around the world.

We need to set a marker, and new clause 1 provides the mechanics for action. Moreover, it makes a statement against the rotten values of torturers and other criminals who might see us as an easy drop-off point for their assets. That this new clause has been initiated by my hon. Friend the Member for Esher and Walton (Mr Raab), and that the Home Secretary’s new clause 7 recognises that it raises an important issue—albeit one to be addressed in a more narrow way—is highly commendable, and I do want to put on record my congratulations to the Security Minister and his Department for listening to the case and coming forward with a meaningful compromise, but further questions arise.

Government new clause 7, of course, falls way short of the US Magnitsky Act, which has a specific list of undesirables attached. Furthermore, the Government clearly wish to keep for themselves the choice of whom to prosecute and asset-seize. I am minded to go along with that, given that many, if not most, seizures would have political implications, and I doubt such things should be left to non-governmental organisations, for instance, to prosecute. However, I would be happy with the proposed powers only if I were given comfort that the Government intend actually to use them once the Bill is passed.

On the question of a list, we are missing a trick here. One of the strongest aspects of the US Magnitsky list is that hundreds of thousands of people have seen exactly who is blamed and for what. Indeed, I note that the US Treasury’s Office of Foreign Assets Control updated the list only last month. If we search-engine the US Magnitsky Act, we see each of the sanctioned individuals and their job titles. Naming and shaming is a huge negative issue for human rights abusers who wish to live in the security of criminal darkness. It is also a strong deterrent to others who might consider such abuse. Has the Minister considered publishing lists of those who will be prosecuted under these provisions? I am not sure whether that would be included in the stats he said he would be publishing, so a bit of clarification would be helpful.

My reading of new clause 1 is that it is more like the US Magnitsky Act, and that it looks not only to seize assets but to stop the undesirables travelling to the UK, trading in the UK, using UK banks and buying UK property. Could the Minister say whether such issues would be dealt with through new clause 7 or perhaps through other legislation that could be used at the same time?

Mr Wallace

Perhaps I can inform my hon. Friend and the rest of the House on the visa issue. We can refuse a visa to a person who does not meet the immigration rules. Evidence that a person has been involved in organised crime or in human rights abuses or violations would be taken into account when considering a visa application. We can already do that; the power is there with the Government, and we have exercised it in the past.

Mr Djanogly

I am grateful for the Minister’s clarification. It would be helpful if he could say that it is the Government’s position that, when a prosecution is taken under these new provisions, the court should consider a visa exclusion automatically and not as a possible add-on.​
Clearly, if the sanctioned person had his or her assets confiscated but could then go on to buy more assets or to conduct business in the UK, new clause 7 may lack the required teeth.

New clause 7(5) refers to proceedings needing to be brought within 20 years, which seems like a short period in any event. Furthermore, it looks to be 20 years from the commission of the gross human rights abuse. Why is it not from the end of the abuse? In other words, if someone has been abused for 20 years plus one day, would the right to prosecute the abuser fail?

Would the court be required to connect the human rights abuse to the assets being seized? For instance, where the individual is accused of organising the torture of three people but steals from only one of the three and then moves the stolen goods into the UK, would the seizure have to be tied to the one incidence of torture that relates to the stolen goods?

My final question is this: after the legislation is put in place, do the Government actually intend to act? Many foreign nationals—not least Russians—really want to live here, rather than in, say, the US, so we have significant influence in setting the standards of civilised behaviour we expect from people who live or stay here. I ask the Minister, as I think my hon. Friend the Member for Esher and Walton did, whether we are now going to say to those who have been merciless in their own countries and who then look to store their ill-gotten gains in the UK, “We do not want you here. We do not want your money here” and, importantly, “If you do come here, we will act.” If that is the Minister’s position—I think he said it was, but perhaps he could clarify that—I am minded to support Government new clause 7 rather than new clause 1.

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