Kevin Hollinrake – 2022 Speech on Economic Crime and Corporate Transparency Bill
The speech made by Kevin Hollinrake, the Conservative MP for Thirsk and Malton, in the House of Commons on 13 October 2022.
It is a pleasure to speak in this debate and a particular pleasure to speak after the right hon. Member for Barking (Dame Margaret Hodge). She has done incredible work in this area for many years, for which we should pay tribute to her, and I hope she will continue for many years to do the same. I know that she has talked once or twice about hanging up her political boots—if the accommodation Whip is listening, I would very much like to inherit her office if she ever does—but nevertheless I hope she continues in Parliament for many years to come.
On a more serious note, all hon. Members deal with tragic cases and I want to refer to a couple of mine. Leah Heyes was a 15-year-old girl whose life ended in a carpark in Northallerton in 2019. Andrew Bellerby took his own life aged 35 in 2015. The connection between those two tragic cases is, of course, drugs. Lia suffered an adverse reaction to her first experiment with ecstasy, and Andrew’s life had been devastated by drug dependency. We also try to help families in those tragic cases, who are trying to pick up the pieces and make the best of what has happened to them, by putting in place measures to stop such things happening again. Too often we look at ways to try to deal with suicide cases more effectively or clamping down on people who deal drugs, but that is treating the symptoms, not the causes.
The causes are linked to economic crime. Many people will have watched the television series “Narcos”. The big cartels make a huge amount of money distributing the drugs that result in those tragic cases. They make so much that they bury hundreds of millions of pounds, because it is difficult to legitimise the money. They are not supposed to be able to pay that dodgy money into a bank or buy a yacht or a house with it, because questions should be asked about where the money has come from. Without the ability to launder the money, it is pointless perpetrating those horrendous crimes and being the linchpins behind those tragic cases.
The reality, however, is that many of our large financial institutions facilitate the laundering of that money. In 2012, HSBC, which we regard as a trusted organisation, was fined £1.9 billion for laundering money for the Sinaloa cartel, which was run by El Chapo. It is incredible that that would happen, but the obvious reason it does is money. The banks can make huge amounts of money themselves. My friend the right hon. Member for Barking mentioned the Danske Bank case. Normally a regional branch of a bank would have a profit margin of about 20% on turnover. The Estonian branch of Danske Bank that dealt with the £200 billion of Russian kleptocrat money had a profit margin of 460%, and that huge amount of money was the incentive. It is inconceivable that the people at the top of HSBC and Danske Bank did not know what was going on. It is impossible to make such extraordinary profits without those at senior levels knowing what is going on. But time and again we simply fine the bank and do not hold the individuals to account.
Drugs are not the only issue. Some of them are problems that we are trying to solve, such as the small boats crisis. Traffickers are making huge amounts of money and they need to be able to move that money around. Paul Stanfield, the head of economic crime at Interpol, says that it is all about the money and
“If you want to tackle organised crime, you have to go after the money”.
But the reality is that the UK makes all this easier. Because of some of our lax regulations on shell companies, which allow money to be hidden behind the veils of different companies in different jurisdictions, and because of the expertise in London and our overseas territories, the UK is the destination of choice for money laundering. The money may go to different places but it is laundered through London.
That is why many of the measures in the Bill are welcome, including those on transparency and Companies House. This is a big job. It is not only new companies whose directors must be verified, but existing ones. That is millions of companies. The Minister has been excellent in engaging on these issues, as was the previous Security Minister, but I would like to understand how that will be achieved. We may be putting £63 million into Companies House, but verifying the identities of people who have significant control over organisations will be a big job.
The resources going to Companies House need to be beefed up, and it makes sense to increase the very low fee of £12 for setting up a company in the UK to £50 or £100. I have set up quite a lot of companies in my time, and a fee of £50 or £100 would not have deterred me. That could increase resources to make sure that the enforcement happens. Too often, we look at innovation and legislation but we do not look closely enough at implementation. Without that, it is pointless having this debate. Implementation is key, and resources are key to that.
We are bound to focus on measures that are not in the Bill—that is what Back Benchers do. I have said many times that the No. 1 measure we need is an extension of the failure to prevent provisions on bribery and tax evasion, which have been so effective. People say that we talk a lot and never get anything done, but the bribery provisions have been massive in holding corrupt companies to account. The Serious Fraud Office has deferred prosecution agreements for Rolls-Royce for Airbus, with almost £1 billion in fines going to the Treasury. The SFO also prosecuted the GPT Special Project Management Ltd case. The SFO does not get many successful convictions but GPT Special Project Management Ltd pleaded guilty in Southwark Crown court in 2020, and paid £28 million in financial forfeitures as a result, on the back of the Bribery Act 2010.
I pay tribute to my hon. Friend the Member for Cheadle (Mary Robinson) for her work on whistleblowers. It is an area that the Bill does not cover at the moment, but I hope that the Minister will introduce more provisions. My constituent Ian Foxley blew the whistle in 2011, resulting in a conviction 10 years later. He was well paid, operating in the middle east for GPT, but he has had 11 years without any remuneration. He was earning probably £200,000 a year, so he is millions of pounds down. We do not protect or compensate whistleblowers, and that is wrong. Those people do the right thing and come forward but—not to put too fine a point on it —we hang them out to dry.
Peter Grant (Glenrothes) (SNP)
Does the hon. Gentleman agree that there is a grave injustice when those who have done the right thing have a lifetime loss of earnings of millions of pounds, but when crooked accountants are called up before and disciplined by the Financial Reporting Council, their loss of earnings from being suspended for a short time, which could run into millions of pounds, is taken into account? The sentence is often more lenient if it will have a significant financial impact on an accountant who has given false information to the FRC. It appears that the crooks are better treated than the people who try to bring them to justice.
Kevin Hollinrake
The hon. Gentleman makes a very interesting point. We need to clamp down on enablers of all kinds, and we need to get tougher in lots of ways to crack down on this in the way that we would all like to see. I know that provisions on whistleblowers will not be part of this Bill—although there may be amendments in Committee to that effect—but we want those brought forward as quickly as possible.
The failure to prevent is so important. It has to include the ability to hold an individual director to account, which would start to reduce the incidence of money laundering and the facilitation of all kinds of offences, including the huge profits made from drug dealing. An illustration of this is what happened with health and safety legislation back in 1974, when directors were made individually responsible and could go to jail if they did not prevent or seek to prevent serious injuries on their building sites. It became a health and safety offence that could be pinned on the individual. After that happened, deaths and serious injuries dropped by 90%. Of all the measures we have talked about today, this would have the biggest effect in terms of cutting down on economic crime, because lots of our financial organisations are complicit when it suits their interests to be so.
There are many other things we should do. We should extend what we did with unexplained wealth orders in terms of cost protection to other elements of the Proceeds of Crime Act 2002 such as property freezing orders and recovery orders. Bill Browder, who is very outspoken in these cases, has come up with an interesting idea. If an individual is sanctioned, anyone who has dealt with that individual—whether it be an accountant, a solicitor or anyone else—should have to hand over their records in connection with that individual to the authorities, so that we can track down the money more effectively. I cannot see a good argument against that.
We have talked about freezing and seizing assets. That is difficult to do, because we have to prove that there was a crime, and we believe in property rights and the rule of law in the UK, so taking these assets off individual oligarchs is tough. One thing that seems like an open goal is the fact that we hold about £30 billion in Russian foreign currency reserves. It is clear that Russia is guilty of international crimes in its invasion of Ukraine. We could legislate to ensure that that money is not just frozen, as it is currently, but confiscated, seized and used to pay reparations to Ukraine.
There are many other things we could do, which I will talk about further during the later stages of the Bill. I may well table one or two amendments, which I know Ministers will continue to engage with and, I hope, will look kindly on, because all these measures will clamp down on economic crime, which is good for the UK and good for business. It is not bad for the economy—it is good for the economy—and it will drive out these heinous crimes all around the world, not just in the UK. We will then be able to point proudly at our record on tackling economic crime, and I hope the Minister will take credit for that as this legislation passes through the House.
