PARLIAMENTARY DEBATE
Global Anti-Corruption Sanctions - 26 April 2021 (Commons/Commons Chamber)

With permission, Madam Deputy Speaker, I should like to make a statement on our new global anti-corruption sanctions regulations.

Corruption has an immensely corrosive effect on the rule of law and trust in institutions. It slows development, drains the wealth of poorer nations and keeps their people trapped in poverty. It poisons the well of democracy around the world. Whistleblowers and those who seek to expose corruption are targeted, and some have paid the ultimate price with their lives, including, of course, Sergei Magnitsky himself, the inspiration for our human rights sanctions regime. But his courage was not in vain. The framework of sanctions that we are launching today, shared by some of our partners around the world, flows directly from his decision to take a brave stance against injustice, and that will not be forgotten.

This country has an important role to play in the fight against corruption. Our status as a global financial centre makes us an attractive location for investment, and we are proud of that and welcome it. But it also makes us a honey pot—a lightning rod—for corrupt actors who seek to launder their dirty money through British banks or British businesses. That is why we have already taken steps to become a global leader in tackling corruption and illicit finance. Our law enforcement agencies are recognised as some of the most effective in the world. The National Crime Agency’s international corruption unit and its predecessors have restrained, confiscated or returned well over £1 billion of assets stolen from developing countries since 2006. My Department continues to provide funding for this vital work.

The Bribery Act 2010 criminalises bribery and the failure of businesses to prevent bribery from happening in the first place. In April 2016, the UK was the first in the G20 to establish a public register of the beneficial owners of companies and similar legal entities. That was an important first step in tackling the use of anonymous shell companies to move corrupt money around the world. I can tell the House that more than 4.5 million companies are now listed on that register.

In 2017, we adopted the ambitious five-year anti-corruption strategy, bringing in measures such as unexplained wealth orders, account freezing orders and the like, and that year, we also established the International Anti-Corruption Co-ordination Centre in London, which has helped to freeze more than £300 million of suspected corrupt assets worldwide and led to dozens of arrests. According to Transparency International’s corruption perceptions index, those actions—our commitment to tackling corruption—have seen the UK rise from a global ranking of 20th in 2010 to 11th place in 2020, out of a total of 180 countries.

Against that backdrop, the new sanctions regime that I am announcing today will give us an additional powerful tool to hold the corrupt to account. It will prevent corrupt actors from using the UK as a haven for dirty money while combating corruption around the world. As hon. Members across the House will recall, this follows the launch of our global human rights sanctions regime, which I introduced to the House in July 2020. Since then, the UK has imposed human rights sanctions on 78 individuals and entities involved in serious human rights violations, including in Russia, Saudi Arabia, Venezuela, Pakistan, Myanmar, North Korea, Belarus, the Gambia, Ukraine and, most recently, in relation to Xinjiang in China. Now, we have an equally powerful weapon in the fight against corruption.

As with our global human rights sanctions approach, the anti-corruption sanctions are intended not to target whole countries or peoples but, rather, the individuals who are responsible, and should be held responsible, for graft, and the cronies who support or benefit from their corrupt actions. These regulations will enable us to impose asset freezes and travel bans on individuals and organisations who are involved in serious corruption. Our approach is grounded in and based on the UN convention against corruption and related instruments. It has a clear focus on bribery and misappropriation of property, and that includes embezzlement.

Bribery is well understood. It is defined in the regulations. It includes both giving a financial or other kind of advantage to a foreign public official, and a foreign public official receiving a financial or other advantage. Misappropriation of property occurs when a foreign public official improperly diverts property entrusted to them in their official role, and that may be intended to benefit them or a third party. For example, it could be, or include, siphoning off state funds to private bank accounts. It could include the improper granting of licences for the exploitation of natural resources, but whatever the particular circumstances, at the heart of this lies the same debilitating cycle of behaviour: corrupt officials ripping off their own people.

These powers will also enable us to target those who are either facilitating or profiting from such corrupt acts—those who conceal, those who transfer the proceeds of serious corruption and those who obstruct justice relating to serious corruption, and that will not be limited to state officials. For additional clarity in all this, we have published a policy note today that sets out how we will consider designations under these regulations. I know that, across the House, there is always interest in the legal criteria as well as the evidence base that we have to accumulate. It is right to say that we will also ensure due process and the rule of law, so that the rights of others are respected. Those designated will be able to request that a Minister reviews the decision, and they can also apply to challenge the decision in court, which is an important check in the system.

As well as introducing the legal basis for this regime, today, I can tell the House that we are also making the first designations under these new regulations, which include some of the most notorious cases of corruption in recent history. Each designation is underpinned by evidence and meets the test set out in the Sanctions and Anti-Money Laundering Act 2018 and the regulations. So today, I can tell the House that we are imposing sanctions on individuals who have been involved in serious corruption from six particular countries. First, we are imposing sanctions on 14 individuals involved in the $230 million tax fraud in Russia perpetrated by an organised crime group and uncovered by Sergei Magnitsky. Next, we are imposing sanctions on Ajay, Atul and Rajesh Gupta and their associate Salim Essa for their roles in serious corruption. Those individuals were at the heart of a persistent pattern of corruption in South Africa that caused significant damage to its economy and directly harmed the South African people.

We are also designating three individuals involved in serious corruption in Honduras, Nicaragua and Guatemala, including facilitating bribes to support a drug trafficking cartel. Finally, we are imposing sanctions on the Sudanese businessman Ashraf Seed Ahmed Hussein Ali, also known as Al-Cardinal, for the misappropriation of significant amounts of state assets in one of the very poorest countries in the world. That diversion of resources, in collusion with South Sudanese elites, caused serious damage to public finances in South Sudan and has also contributed to the ongoing instability and conflict there.

Let us be clear about this: corruption is not a victimless crime—far from it. By enriching themselves, these people have caused untold damage and hardship to their countries and communities, which they exploited for their own predatory greed. So today we send a clear message: those sanctioned today are not welcome in the UK. They will not be able to use British bank accounts or businesses to give their illicit action some veneer of respectability, because their assets will be frozen. I can tell the House that more designations will follow in due course, based on the policy note as well as on the legal criteria that we have set out, and assessed against the evidence.

As with all targeted sanctions, they are most effective when they are backed up by co-ordinated international action, and of course that is particularly important when it comes to corruption, given the fluid, complex and global nature of modern illegal corruption schemes. We will continue to work with our friends and partners, including the US and Canada, who are equipped with the legal framework to take similar action. Today, I hope that the whole House will unite and join me in standing up for the values of democracy, good governance and the rule of law as Britain sends out the clearest message to all those involved in serious corruption around the world: you cannot come here, and you cannot hide your money here. I commend this statement to the House.

Let me start by welcoming the hon. Lady’s support for both the legal regime and the designations we have made today. I agree with much of her analysis on the damage wrought by corruption around the world, and I think we are at one on that. She raised the issue of the international corruption prosecutions, on which she made an interesting point. Of course, criminal prosecutions are done on the criminal standard of proof, whereas sanctions are done on the civil standard —[Interruption.] Well, she is shaking her head, but that is just a fact. One challenge we have with international corruption is with gleaning the evidence in relation to it, and one advantage we have with the sanctions regime is that it gives us more flexibility and agility to address to the hole, to which she rightly refers, that we are plugging.

The hon. Lady also asked about Parliament feeding in its views, and I think there is a role for not only hon. Members in this Chamber, but relevant Select Committees. As with the human rights regime, we are entirely open to views and evidence. Indeed, we will have to rely on that evidence in order to look at further designations in the future. She mentioned Saudi, but I am afraid that she rather confused herself, because the sanctions relating to Khashoggi were imposed by this Government and remain in place under this Government. That roundly rebuts and repudiates the point she tried to make, which was that somehow the Saudi Government were seeking to undermine the robust approach we take by political influence. [Interruption.] She makes some good points about corruption, but I am afraid she tarnished her statement with a range of political mudslinging.

I do, however, wish to address this issue relating to the Government’s response to the Intelligence and Security Committee’s Russia report, which was published back in July 2020. It sets out multiple actions we have taken and are taking against the Russia threat, some of which I mentioned in the House today. We take action on cyber activity. We have introduced a new power to stop individuals at UK ports and the Northern Ireland border area to determine whether they have been or are involved in hostile state activity. We are introducing new legislation to provide the security services with additional tools to tackle the evolving threat. That Bill will help to modernise the existing offences. We have already implemented the National Security Council-endorsed Russia strategy and have established the cross-Government Russia unit, which brings together all of our intelligence, diplomatic and military capabilities to have maximum effect. This sanctions regime that we are introducing today on corruption is an additional tool, and we will be—[Interruption.]

Order. I have already told the hon. Member for Wigan (Lisa Nandy) to stop talking from the Dispatch Box while the Secretary of State is speaking.

Thank you, Madam Deputy Speaker. The fact is that the hon. Lady, who agrees with us on this policy point, resorts to the mudslinging because she does not have too much more to say on the substance.

First, may I congratulate my right hon. Friend? He knows how passionately many of us have supported his quest to make corruption part of the sanctions regime. Indeed, it was the Foreign Affairs Committee with its “Moscow’s Gold” report in May 2018 that called for action not only on those abroad who are corrupt, but on those who are enablers in the UK. Indeed, I hope that he will highlight to the House exactly where those agencies and individuals in the UK who are assisting with corruption could be held to account as well.

I welcome very much the identification that the Secretary of State has given us today of Russian, South African, Honduran, Nicaraguan, Guatemalan and Sudanese elements. Perhaps, for his second tranche, I could ask him to look a little bit wider. We know that corruption is undermining the people of China. We know that the red princes are robbing the people and enriching themselves already. We also know that the Maduro regime in Venezuela has stolen off the Venezuelan people now for the best part of a decade, and, before then, the Chávez regime did the same. The Iranian Revolutionary Guard Corps has been stealing off the Iranian people for decades and continues to enrich itself off the back of a proud and independent people. Perhaps he could address some of those countries when he responds.

The last point I wish to make is that, while the Foreign Secretary has mentioned Russia, it would be good to hear him talk about those who are close to the Putin regime—those who directly assist President Vladimir Putin in hiding hundreds of billions of pounds overseas. We know that there are many around the world who, sadly, have used our own markets and other territories that are dependent on us to hide wealth. Will he assist in exposing where that money is hidden and using these powers to hold them to account?

I pay tribute to my hon. Friend and his Committee. He has not only campaigned passionately for this but provided, bit by bit, some of the evidence both for the regime and for the focus. I take his point about further tranches and further designations. Of course, we will consider all evidence that we have, whether it is open source or provided by Committees—he should feel free to provide it. He will forgive me if I do not accept the temptation at this point to speculate on future designations, but we remain open to seeing all the evidence to which he refers.

I thank the Foreign Secretary for advance sight of his statement and welcome any effort that is made to tackle corruption that robs societies of both money and resources needed to develop and deliver for their citizens. Targeted sanctions towards individuals and organisations involved in serious corruption are a welcome step; the UK should never be a safe haven for those engaged in those corrosive practices. However, this is all happening against a backdrop of the Foreign, Commonwealth and Development Office confirming that it is cutting its own world-leading anti-corruption, open societies, media freedom and human rights work by more than 50% this year. This is an abdication of responsibility that will allow corruption and criminality to flourish in developing countries. Dr Sue Hawley, executive director of Spotlight on Corruption, said that the cuts

“could undermine not just the UK’s stated aim to act as a force for good globally, but also seriously curtail the UK's ability to stem and seize corrupt money laundered through the UK’s financial system”.

This Government have used the covid pandemic as an excuse to cut aid. In many parts of the world, including close to home, the pandemic has been exploited by Government officials as a smokescreen to conduct business dishonestly by fraudulent means and at the expense of human rights. Can the Foreign Secretary explain why he thinks cutting aid to combat corruption helps rather than hinders the sanctions regime that he is introducing today, and what impact assessment has been made of these cuts to the UK’s anti-corruption work?

Finally, given the debate that took place last Thursday and the unanimous support for the motion calling the UK Government to fulfil their obligations under the convention on the prevention and punishment of genocide in relation to the persecution of Uyghurs in Xinjiang, when will the Foreign secretary return to the House to give a statement imposing global human rights sanctions on the perpetrators of this crime against humanity, not least the Chinese Communist Party Committee Secretary, Chen Quanguo?

I thank the hon. Gentleman for his support for this initiative. He makes a range of points. It is a fair question as to how our aid and development policy is used to reinforce our law enforcement action. He will know that we have safeguarded £10 billion this year, which means we remain one of the global leaders in aid. When we set the seven priorities to safeguard and for allocating in a strategic way, notwithstanding the temporary shift from 0.7% to 0.5% of GNI, one of those priorities was open societies, and that includes our media freedom campaign, which goes from strength to strength. We do this very much in partnership with the Canadians, but the numbers joining that campaign have risen. That gives us an increasingly broad basis on which to support precisely those journalist and media groups that hold the corrupt to account.

I do not know whether it was just a mistake, but the hon. Gentleman referred to sanctions relating to Xinjiang. We have already imposed Magnitsky sanctions, under our human rights regime, on those responsible for the systemic human rights abuses there. I will not speculate on further designations, but we always consider them based on the evidence.

I welcome these important extensions to the sanctions regime and the sanctions announced today. They are a fitting tribute to Sergei Magnitsky and the work of Bill Browder, but they also hit Putin where it hurts: the corrupt cronies who hold up his kleptocracy. However, Alexei Navalny is being tortured to death before our eyes, so if these sanctions do not result in his release for medical treatment abroad, ending Putin’s second attempt to kill him, will my right hon. Friend continue to escalate sanctions against dirty-money oligarchs, before Navalny dies in plain view of the world?

I join my hon. Friend in paying tribute to Bill Browder, who was Sergei Magnitsky’s employer, because he has campaigned for this not just on the human rights front but on the corruption front for many years. I am pleased that yet again we have taken a further step towards instituting some measure of justice. Like my hon. Friend, we are very concerned about Alexei Navalny. His situation has remarkable parallels and bears comparison with what happened to Sergei Magnitsky, whose health was allowed to deteriorate in prison before he was then tortured and ultimately killed. I can reassure my hon. Friend, however, that we have already sanctioned six individuals in the state scientific research institute in relation to the poisoning of Alexei Navalny, and 14 Russians are named under the new corruption regime that we are discussing today.

It is about time the Government took further action to stop big money from figures close to the Kremlin influencing our politics—the Russia report made that need abundantly clear—but there are other ways of gaining influence in this country, such as owning football clubs, for example. The review of football governance following the European super league debacle may yet provide an opportunity in this regard, because the owner of one of the six English clubs, Roman Abramovich, has been described by Alexei Navalny’s team as one of the key enablers of Putin’s corrupt regime. Will the Secretary of State speak to the Culture Secretary about ensuring that any future football regulator is tasked with investigating and acting on money in the sport with ties to corruption and human rights abuses?

Like many across the House, I share the hon. Lady’s concern about what we saw with the recent football episode. Given the strong lead taken by the Prime Minister and the Culture Secretary, we also saw a swift rowing back from the earlier planned initiative. The hon. Lady makes an interesting point about reform, and of course we take those on board.

The measures announced by the Foreign Secretary are extremely welcome, underlining the Government’s commitment to tackling corruption and its toxic impact on some of the poorest people in the world. Can he reassure me that these new sanctions will work in conjunction with other measures that the Government are taking to tackle global corruption, including spending more to support open societies and to help resolve overseas conflicts?

My hon. Friend is absolutely right. We have prioritised, amid a difficult settlement this year, the open societies agenda, and there is £419 million going into it. I cannot tell him the precise allocation country by country, because we are quite careful not to do that—it often gives such regimes and countries a tool or influence, and it exposes charities, non-governmental organisations and journalists to greater vulnerability.

May I, too, welcome these designations and this initiative today? Last year, the Foreign Secretary promised that he would extend the existing human rights sanctions to include corruption, and indeed he has done so today. That is a triumph not just for him, but for other campaigners such as Bill Browder, whom he has just mentioned. May I therefore press him to say whether he will be able to go even further, not just by designating more people, which I think he has said he already has in mind, but—he rightly pointed out that this is the trick—by following the money? There is a series of measures, for example relating to reforms to Companies House, that are being considered for potential inclusion in the upcoming Queen’s Speech, which would make it dramatically easier for this country to follow the money and for him to make more designations underpinned by proof. Will we be able to get those into the Queen’s Speech?

My hon. Friend is demonstrating yet again what a tenacious campaigner he is. He is lavish in praising others, but actually he has been one of the most thoughtful, ardent and tenacious campaigners for this reform. I will certainly take on board his comments about further measures that we can take in order to really reinforce the global sanctions regime. As he knows, I wanted to make sure that we got this right legally, in practical terms, so that we do not give those corrupt cronies the PR gift of a weak regime that could be challenged in the courts. We want to learn from the practice, but I will certainly continue to listen carefully to everything my hon. Friend says on this subject.

I join my hon. Friend the shadow Foreign Secretary in welcoming the broad thrust of today’s announcement, but it goes after individuals, not after the structures and tax havens that enable this—tax havens such as the Cayman Islands, for example, which is on the EU blacklist. Does the Foreign Secretary agree that the Cayman Islands enables tax abuse, and if so, what is he going to do about it?

The hon. Gentleman makes an important point. As I set out in my opening statement, we have taken a range of measures, including to address the kinds of concerns that he has raised. Obviously, we are mindful of the constitutional powers of the relevant overseas territories, but nothing will stop us taking further measures and further action if we deem it necessary.

I congratulate my right hon. Friend on his welcome statement on upgrading the Magnitsky sanctions to include corruption, and we must not forget the tremendous work of Bill Browder. Can I ask my right hon. Friend whether these new sanctions will apply equally to all individuals who fall short of the law? For example, will they apply not only to junior but to senior officials in the Chinese Communist party who are implicitly involved in the abuse of the Uyghur and are living off the finances of Uyghur slave labour?

My hon. Friend is another ardent, tenacious and eloquent campaigner on this issue. She makes a really important point. We obviously want to be able to apply all the tools we have at the most senior level. We are more likely to have an effect that way. The challenge, of course, is that the higher up the chain we go, the more indirect—I think that was the word she used—the links are, and the challenge is to make sure we have the evidence. However, we will look at this based on the seriousness of the activity and according to the policy note, which I am sure, when she gets a chance to look at it, will give her the reassurance she needs.

The Secretary of State mentioned Transparency International in his statement. Last year, it said that it had identified more than £5 billion of property in the UK bought with suspicious money, one fifth of which came from Russia, and half of all the money laundered out of Russia is laundered through the United Kingdom. So does he not agree that any action taken by the UK to tackle global corruption will lack credibility until the United Kingdom Government have put their own house in order by implementing in full the recommendations of last year’s Intelligence and Security Committee report, including the tightening of rules on all political donations from Russia?

I think I have already addressed the second part of the hon. Gentleman’s question. On the first part, in relation to Transparency International, the United Kingdom is of course an open, outward-looking country. We want to attract direct investment, which is why, as I said in my statement, we need to be on the lookout and be eternally vigilant to make sure that dirty money or blood money does not drift into this country. We are taking these actions today precisely because we are serious about this issue. If he looks at this fairly, he will see that when we came into office in 2010, the UK was ranked 20th in the world on the corruption perceptions index. We have now risen to 11th, and we will keep taking action until we are even higher up the rankings.

I welcome the statement and the extension of sanctions. Corruption really eats away at the prospects of people in the developing world and gives them less confidence in the future and in their elected officials. Will my right hon. Friend meet me to see whether there are ways in which we can innovate to ensure that, for example, development aid money goes to people more directly, to provide the social development opportunities that can otherwise be diverted by corrupt officials?

My hon. Friend is absolutely right. We give an increasing proportion of our aid to operate in countries via third parties, whether they are NGOs or other partners, rather than direct to Governments. There is a case for both, for all the reasons that my hon. Friend suggested, and I totally agree with him that the approach to official development assistance should complement and supplement what we are doing in the law enforcement space, including through these sanctions. I would be interested to hear any ideas he has for fusing the two and making them even stronger, and Ministers would be keen to meet him.

I congratulate the Foreign Secretary on the statement, which is an important step forward. In respect of Belarus, where the President is propped up by senior people in the military and the police complex, will the Foreign Secretary work with other interested countries—not only Belarus’s neighbours but those throughout Europe—so that we are prepared to look at the evidential trail more broadly than just what our own investigatory authorities can determine? That could make a material difference in challenging the Lukashenko regime.

The hon. Gentleman is absolutely right. We very much led the way in relation to Belarus and the human rights sanctions regime—the Magnitsky sanctions—and instituted human rights sanctions before the EU, but we were in constant dialogue with the EU about the names, evidence and individuals. It is important to have that systematic approach, partly to have more effect but also to be on surer ground when sanctions are imposed. Belarus is also a good example, raised by Members from all parties, of where, at the same time as we have imposed sanctions, we have provided extra support for civil society, including opposition groups, not directly but through NGOs, journalists and the support for the media and the open society agenda that we have been talking about as part of the integrated review.

I warmly welcome the statement and the measures announced. Does the Foreign Secretary agree that there is a need to update the international rules and action to ensure that all the progress we have made on tackling money laundering and the hiding of stolen money is not undermined by the use of crypto-assets such as crypto-currencies, which are much harder to track as they move around the world?

My hon. Friend is right: we need some international co-ordination. It works better as co-ordination rather than supranational institutions, because we want to retain some flexibility, and that has often been quite effective. On the corruption sanctions regime, we already co-operate with the US and Canada, as we did on the list of names we have designated today, and Australia is in the midst of considering a Magnitsky regime on human rights that may, in due course, extend to corruption. The EU followed the UK lead in enacting a global human rights sanctions regime, but it has not yet introduced powers for an equivalent corruptions regime, so we are ahead of the pack on all this. My hon. Friend raises the important point that this is about not just what we do individually, but our convening power and our ability to be a force for good, working with others including the EU, the US, Canada and Australia.

May I, too, thank the Foreign Secretary for his commitment and personal determination? Having seen the effect of Libyan sanctions for those Americans and Germans affected by terrorism, in comparison to what has been secured for victims of IRA terrorism working hand in hand with Gaddafi, I believe it is past time that these sanctions are in place. What assurance will the Foreign Secretary give to the British people that the Government are now in a position to impose sanctions and that the people affected can be beneficiaries? What consideration has been given to the widespread use of these sanctions in areas such as those involved in atrocities against the Uyghurs, the Christians, the Falun Gong and the Tibetan Buddhists in China to ensure that businesses as well as Governments will feel the brunt, the pain and the impact of these sanctions?

I thank the hon. Gentleman. I share his determination to tackle this in relation to some of the groups he refers to. He will know that we have taken action, in particular in relation to the persecution of the Uyghur Muslims and the use of forced labour. In relation to others—he mentions Libya and others—I cannot speculate in advance. What I can tell him is that we have the legal framework now. We have also set out a policy note—he will be able to look at that and feel free to come back and ask me further questions—which will give him a sense of how we will determine the criteria. It is evidence-driven. That is often the hardest part, but again it comes back to the point about the importance of co-ordinating with our international partners, sharing evidence and sharing our assessment of individuals and countries where we can act.

I will now briefly suspend the House for three minutes in order to allow arrangements for the next item of business to be made.