I beg to move,
That this House has considered sanctions policy and implementation.
It is a pleasure to see you in the Chair, Mr Davies. Sadly, I will not be following your example with a 12-hour peroration; I will limit myself to merely five.
I am very pleased to move this motion on a subject about which the Select Committee on Foreign Affairs, which I am privileged to chair, has felt strongly for several years, because sanctions are one of the tools that defend the commercial frontline of the United Kingdom. This debate is an opportunity for me, and I hope others, to speak about the country’s sanctions policy. In June, the Committee published our first report on sanctions, and last month we received the Government’s response. On behalf of my colleagues, I thank everyone who submitted evidence, particularly those who appeared in person.
We focused on sanctions policy because it increasingly matters. Two thirds of the UK’s sanctions are currently agreed and implemented at European Union level, so we need a coherent and robust sanctions policy ready for when we leave the organisation. However, Brexit is far from being the only reason for urgency. An effective sanctions policy is an important part of something much more fundamental to communities across our country. It is not just a crucial part of UK foreign policy and national security and the rules-based international system, although of course it is part of all of those; it is a rampart that defends public confidence in open and honest markets. It is, in many ways, a defence of the capitalist system on which we have built our prosperity and economy for so many years. That matters because confidence in that system is key to our future prosperity, but that confidence is in short supply.
Two years ago, Matthew Elliott and James Kanagasooriam wrote an excellent report, “Public opinion in the post-Brexit era”, based on polling by Populus. They found a growing tendency among people of all ages—not just the young—to label capitalism as greedy or corrupt. We all know about the problems in some markets that explain why people think of the word “greedy”, but I am interested in why they think capitalism is corrupt. The answer, I think, lies in people’s growing awareness of how a tiny number of people have made staggeringly large sums of money, and of how those oligarchs use bankers, lawyers, accountants and company
formation agents in this country to protect their ill-gotten wealth. Last year, the compelling BBC series “McMafia”, based on a book that Misha Glenny wrote a decade ago, did a superb job of dramatising how they have done so.
If there was any residual complacency about this country’s role in international corruption, Oliver Bullough’s book “Moneyland”, which was published only a few months later, dispelled it. His extraordinary tome is an essential read for anyone who wishes to understand how international finance can corrupt even us—even here, in one of the most law-abiding societies in the world. Oliver Bullough set out the three-step cycle that oligarchs follow—steal, hide, spend—and described the role that middlemen in this country play in parts two and three of that process. It is nothing to be proud of, but it means that our sanctions policy can have real bite.
Our sanctions policy can be a real tool of foreign influence. The reliance of many oligarchs on London as a place to launder and spend the money that they have stolen creates an opportunity for us to carve out a role as the champion of a more moral capitalism. From arts, to education, to property, we all know that this country has sometimes been too tolerant of those who would do us harm using our schools, our galleries and our buildings that house them. Well-aimed sanctions will help us to tackle the dangerous, corrosive perception that all capitalism is corrupt by making less easy the lives of those whose wealth derives from theft and violence.
Evidence that we took during our “Moscow’s Gold” inquiry last year reinforced that point. We heard how the En+ Group was listed on the London stock exchange at a time when the sanctions regime in the UK was not equipped to prevent that, even though the company was linked to sanctioned organisations in Russia. As part of that inquiry, we invited Linklaters to give evidence. It is a highly reputable law firm that conducts half of the deals in Russia—or so it says—and acted for En+ during the listing. We invited it to give evidence not on any specific client, which of course it could not do, but on the nature of doing business in the legal wild west that is modern Moscow. It declined to do so. I will leave others to judge what that says about its willingness to offer evidence to the British people. I welcome the Government’s confirmation that they will explore ways to block listings on the London stock exchange on national security grounds.
In “Moscow’s Gold”, we advocated a Magnitsky Act, which many in the House will have heard of. It is named after Sergei Magnitsky, a tax adviser who was tortured to death in Russia. The law would enable the Government to impose sanctions on human rights abusers around the world. The measures were all included in the Sanctions and Anti-Money Laundering Bill, which has now become law, but there was uncertainty as to whether sanctions could be implemented before Brexit and the end of any transition period. I am pleased to see that the Government have established that there is no obstacle to doing so, and I very much welcome the Minister’s acknowledgement of that.
Many of our allies have already implemented the measure. It is not just targeted at Russia, despite the name; it is targeted at human rights abusers around the world. A Magnitsky Act would enable us to join our allies and send a powerful signal that we support the victims of human rights abuse around the world and will not profit from their abusers’ theft and murder.
As our latest report on sanctions shows, there is much else still to be done. Witnesses repeatedly told us that the Government’s approach to sanctions is fragmented and incoherent. The Foreign and Commonwealth Office makes the policy, which a variety of other Departments then implement. Departments interpret sanctions policy inconsistently and, sadly, too often with very little guidance. It does not help that sanctions and anti-money laundering policies are separate. As the then Minister of State, my right hon. Friend the Member for Rutland and Melton (Sir Alan Duncan), put it when giving evidence to our Committee, financial crime
“is not quite our patch.”
To bring more coherence to the sanctions policy of the United Kingdom, we recommended that the Government establish a senior responsible officer for policy and its delivery. While multiple senior responsible officers overseeing sanctions policy exist within the Foreign Office, Brexit offers a perfect opportunity, as the Government note, to create one who can span the whole of Whitehall. We also recommended that this person should be accountable to the National Security Council, which should in turn designate sanctions strategy as an urgent priority. We have therefore called for a review this year by the National Security Council to ensure that the resources that it needs to make sanctions a priority are in place. To be effective, the review should explore how the UK can explore its heft in financial services and address exactly how we should engage with our international partners and influence their decision making in the years ahead.
This report was the second one we have published in this Parliament on the connection between finance and foreign policy. In “Moscow’s Gold”, we showed how Russia is using our financial markets to subvert the international rules-based system. What is more, the cynicism that that generates undermines our own faith in the order that has kept us safe.
We are looking at more work, however. One area that we are beginning to investigate is the nature of autocratic engagement with democracies such as ours. Although the focus, so far, has been on Russia, we could list many other countries. We could certainly look at some of the ways in which China uses its state assets to influence markets around the world. The United States is also considering that, so we will be working on it together.
Our new report shows that the Government have much to do if they are to make sanctions an effective weapon and not cede the initiative to others in the field. In a world where financiers have become foot soldiers in foreign policy, we need to wake up and recognise that our international financial markets are the frontline. They can be used against us, but they also give us a home advantage. In a world where the rule of law is threatened, the pursuit of dirty money is now a vital part of foreign policy.
That fight starts on our doorstep. There is no room for complacency; we need to hurry. The UK is on the frontline of financial crime. Our people deserve a better defence and they deserve to have the weapons to achieve it. We need to make sure that our commercial fortifications are as strong as our physical ones. We need a Royal Navy for the financial markets.
1.41 pm