Financial Restrictions (Iran) Order 2009

My Lords, I thank the Minister for introducing the order. I should state at the outset that we support the Government in their endeavour to impair the ability of Iran to pursue its dangerous nuclear and ballistic missile programmes. I start with some of the background to the order. My honourable friend Mark Hoban asked the Minister in another place when the Government first became aware that IRISL vessels had transported goods for Iran’s ballistic weapons and nuclear programmes. He reminded the Minister that my right honourable friend William Hague wrote to the Foreign Secretary in September 2008 asking him to take action against IRISL. I fear that the Minister did not give a straight answer last week, so I am hoping that the Minister today will take the opportunity of our Grand Committee to set the record straight. When were the Government first aware that IRISL was involved in transporting goods for Iran’s nuclear and ballistic weapons programmes? When were the Government first aware that Bank Mellat had provided banking services to UN-listed organisations connected to Iran’s proliferation-sensitive activities and involved in transactions related to the financing of Iran’s nuclear and ballistic missile programmes? The Written Ministerial Statement made on 12 October made categorical statements that these activities had taken place. The Minister was similarly clear today. When did those transactions take place and when were the Government aware of them? What, if any, delay was there between the Government’s knowledge of the transactions and their action by way of the order before us this afternoon? To put that another way, how can the Minister reassure this Committee that the Government have acted in the most expeditious way? I ask these questions because my right honourable friend William Hague raised questions with the Government about IRISL more than a year before this order. Furthermore, the US acted in relation to IRISL last year. The Minister in another place tried to avoid answering these questions on security grounds, but I am asking not about the source or nature of the intelligence but about the timing and timeliness of action by the Government, given that the involvement of IRISL was clearly not a secret. As to the impact of this order, the Explanatory Memorandum states that no specific information was available on the exposure of the UK’s financial sector to IRISL and Bank Mellat. That may well have been the case prior to the making of the order—and I imply no criticism by raising this today—but it is now over three weeks since the order was made and the Treasury must by now have gained some understanding of the transactions that are prohibited by the order and their impact on our financial services sector. The Minister in another place did not answer this question straightforwardly and I hope that our Minister will be more forthcoming. For example, can he tell us the volume and value of transactions with the two organisations that are now prohibited? Last week, the Minister in another place said that the Treasury had received 17 applications for licences and that two had been granted on a temporary basis. Is that still the position? What is the value of transactions covered by the applications for licence? What sorts of transactions are now being conducted under temporary licence and what is their value? Are these for transactions with IRISL or with Bank Mellat? I hope that the Minister can give more information. I wish to probe another area that the Minister did not answer very illuminatingly last week. My honourable friend Mark Hoban asked whether any subsidiaries or affiliates of IRISL or Bank Mellat should have been covered by the order and noted that the US Government included IRISL affiliates when they acted against IRISL last year. The Minister in another place said that there was no evidence in respect of other companies in the IRISL or Bank Mellat groups—I use that term colloquially. However, that seems to beg the question: what is the effectiveness of an order against one company if UK financial services firms can carry on similar transactions with affiliates or subsidiaries? It seems to me that that places the Government in a position of for ever playing catch-up. Is that indeed the effect of the powers created by the Counter-Terrorism Act 2008? Can the Minister explain the rationale of the approach to subsidiaries and similar bodies? Alternatively, he might wish to explain to the Committee if the Government’s powers to deal with threats to the UK are in some ways deficient. I would be surprised if that were the case given the zeal with which the Government have used the time of Parliament over the past decade to pass counterterrorism and similar legislation. I would also like to ask the Minister about supervision and enforcement. The Explanatory Memorandum states that the impact on the FSA’s work is expected to be minimal. Does that imply that the FSA will do no more than ask questions? Will it take no specific action to assure itself that the transactions prohibited by this order are not taking place? On the other hand, HMRC estimates that it will spend upfront costs of £20,000 and ongoing costs of two officers costing around £65,000 in total. If we assume that that cost includes the full employment cost of those two individuals, we are probably not talking about very senior staff. What are these officers intended to do in relation to the programme? Will they carry out individual inspections? How and when will they do this? In what ways are they qualified to do such work? The order will last for only one year and it is clearly important that Parliament should be given an opportunity to assess its impact, especially if the Government seek to extend it for a further period. The impact assessment notes that a report is made annually to Parliament on the use of the Counter-Terrorism Act powers generally. Will the Minister explain the way in which such a report will deal with this order? Will it be confined to the impact on UK financial services organisations or will it go more widely and assess its impact on Iran’s proliferation activities? I am aware that the order is but one in a series of actions taken globally in relation to Iran, which may make the ultimate impact difficult to identify. However, I hope that it will have the effect of prohibiting specific transactions and that the Minister will share with the Committee how Parliament can expect to receive information on what the order has stopped and the costs imposed in achieving that. We do not oppose the aims of the order—far from it. If anything, our instincts are that action could and should have been taken earlier. However, while we stand shoulder to shoulder with the Government on the fight against Iran’s nuclear and missile ambitions, the Minister will not expect us to accept explanations of the Government’s actions and the impact of the order that are less than forthcoming. In that light, I hope that he can enlighten us further.