My Lords, I will say a few words about Amendment 212G, which is in my name and that of the noble Lord, Lord Butler of Brockwell. It concerns risk assessment and due diligence policies, controls and procedures by political parties. This would be a major change for political parties, and is very strongly suggested by the Committee on Standards in Public Life, particularly in chapter 4 of its report published in July last year. This contains several recommendations and is a very powerful case for anti-money laundering style checks. Like others, it specifically cites the Intelligence and Security Committee’s Russia report at paragraph 4.24. I shall give some examples later.
Dirty money in UK political finance leaves parties exposed to malign influence, fosters dependence on the proceeds of crime and other dubious sources as a source of party finance, and, as my noble friend said, risks undermining the integrity of the electoral system. Under PPERA 2000, political parties are not required to run anti-money laundering checks on donors. There is no indication that UK political parties do robust checks on the source of donations, nor that parties ever reject donations after such checks have been made. I would very much welcome being contradicted on this.
As the UK’s anti-money laundering framework has progressively tightened over the last decade—I applaud the Government for the changes they have made—the checks that political parties should undertake have stayed largely unchanged since 2001. Examples from the media suggest that if parties check the source of donations at all they are woefully inadequate and fail to prevent the flow of tainted money into UK politics, with damaging effects on the health of our democracy.
The Electoral Commission, which the Government clearly do not like, has argued since 2018 that risk management principles from anti-money laundering checks by business could apply to election finance.
This would greatly increase transparency for voters. The Committee on Standards in Public Life has also recommended that.
As I was listening to a CD in the car the other week, the present system reminded me of the song “Money, Money, Money”. I will misquote Tim Rice’s lyrics from “Evita”; I have changed only one word, and I will not try to sing it: “When the money keeps rolling in, you don’t keep books. You can tell you’ve done well by the happy, grateful looks. Accountants only slow things down, figures get in the way”. That is the reality of our political parties at present: they do not do the checks.
So how does this amendment address the problem? It would update PPERA to require political parties to develop and publish a reasonable and proportionate risk-based policy for identifying the true source of donations above the figure of £7,500. Parties would need to have reasonable and proportionate risk assessment and due diligence controls and procedures in respect of those policies; the framework of the policies could be set out in statutory instruments.
For any donation or aggregated amount within a year exceeding that figure, parties would need to
“undertake enhanced risk assessment and due diligence checks”
to identify
“the donor’s principal place of business if different from its registered office … the nature of the donor’s business … the people with significant control of the donor’s business, and … the names of the donor’s directors or senior persons responsible for its operations.”
Donors giving more than £7,500 would need to give a written declaration as to whether their business is in a high-risk sector—these are listed in proposed new Section 54C(13) of PPERA—and whether they have been
“under formal investigation by a regulator or law enforcement body for, or convicted of,”
a range of offences; these offences broadly reflect the mandatory grounds of exclusion in the Public Contracts Regulations. Further, a political party would need to
“include a statement of risk management in its annual accounts that identifies how risks relating to the true source of funds have been managed.”
All major UK political parties have accepted potentially suspect donations, including from individuals and companies that have later been found to be involved in economic crimes.
I want be fair and clear on this; I will give one example from the Labour Party. However, as the party in government since 2010—although it constantly forgets this—the Conservative Party has accepted the majority of such donations in recent years. Russia’s brutal invasion of Ukraine has increased scrutiny on the large sums that the Conservative Party has received from donors with links to the Russian state. I will deal not just with links to the Russian state but with those who have been involved in criminal activity and economic crime, and I will use media and official sources to do so.
My noble friend referred to the £1.9 million from Lubov Chernukhin so I will not go into detail on that, but my source for the following example is the Guardian. Between May 2018 and May 2021, the Conservative
Party accepted £366,765 from Aquind. It was first reported in January 2021 that Aquind’s major shareholder, Viktor Fedotov—a Russian-born oil tycoon—was alleged to have been involved in a major fraud in Russia during the 2000s involving the siphoning of funds from the Russian state pipeline monopoly Transneft.
My source for this example is the Financial Times. Between September 2018 and January 2021, the Conservative Party accepted £484,570 from Mohammed Amersi; he figures in a lot of examples but this one is worth going over, even though my noble friend alluded to it. In 2006—well before that time—a Swiss tribunal found that Amersi was closely involved in a business deal involving one of Russia’s largest telecommunications companies, which was later revealed to have been controlled via Cyprus by Leonid Reiman, then Vladimir Putin’s telecoms Minister. Reports in the press claim that Amersi acted as an adviser for a Swedish telecoms company on a transaction that was later accepted by the company as a bribe to the first daughter of Uzbekistan’s ruler, Islam Karimov. Despite the existence of an internal Conservative Party memo circulating in late 2020 warning of Amersi’s business dealings circulating, the party accepted an additional £50,000 in January 2021. Naturally, Mr Amersi has denied any wrongdoing.
My sources for this example are the Daily Mail, the Financial Times, the Independent and the Guardian. The Conservative Party accepted £202,540 from New Century Media Ltd, which represents
“an extensive list of state-connected Russian clients.”
Whichever way you check, it is basically a Russian front organisation. These clients include the Firtash Foundation, which is run by Dmitri Firtash,
“a Ukrainian gas and chemicals oligarch wanted by the US for bribery”.
He still is wanted; I think he is locked away in Austria. Of course, as I said in a recent speech, Ministers at the Ministry of Defence did business with him regarding the selling of a property to him while he hides from the United States.
New Century Media’s £900,000 a year contract with Firtash includes reputational management, personal introductions to individuals within politics, and support for his passport application. The firm has other notable—or should we say, in its terms, successful—dealings, introducing figures close to the Putin regime to Conservative politicians via donations. This included the introduction of Russian MP Vasily Shestakov and billionaire oligarch Andrei Klyamko, both close friends of Putin, to then Prime Minister David Cameron at a donors’ ball in 2014. New Century’s owner had already arranged for Shestakov to meet Prime Minister Cameron at the previous year’s ball in 2013. New Century also arranged for Sergey Nalobin, a senior diplomat at the Russian embassy, to meet Prime Minister Cameron at a Tory donor dinner in 2012. Nalobin, the son of a senior FSB spy, was expelled from the UK by the Home Office in 2015.
These Russian meetings with Cameron when he was Prime Minister take on a really new shape after the astonishing letter in the Financial Times last Wednesday, 23 March, from Carl Scott, a retired air commodore. He was the UK defence attaché in Moscow between 2011 and 2016, sending back regular reports,
pointing out Putin’s long march to war in report after report to the Government. At exactly the same time, Cameron was Prime Minister and being nobbled and cossetted by these Russian interests.
The Independent noted in 2014 that:
“Unlike the vast majority of lobbying firms, New Century fails to provide details of its clients to the industry’s voluntary register of interests.”
While New Century Media did subsequently register with the Registrar of Consultant Lobbyists in November 2019, it has still never declared a single client.
As I was preparing to speak when I thought this might come up last Thursday, I was casting around with respect to my own party. All I had to do was open the Times last Wednesday, 23 March, to see pages 20 and 21 devoted to the “king of bling”, one Peter Virdee. The opening paragraph stated that:
“One of Europe’s most wanted men was welcomed as a donor by the Conservatives and Labour despite being under investigation for bribery and fraud.”
Even after his arrest by the NCA, both parties continued to take his money. It does appear from the figures given in the Times that he favoured Labour somewhat less than the Conservatives, but we still took the money. He lied about his membership of charity trusts, the ENO and NSPCC. It is not a good story for Labour, and even less so for the Conservatives.
There are other dubious donations from sources not connected necessarily to the Russian state. I will just give one, because of time: £726,300 from Javad Marandi, an Iranian businessman with close links to the kleptocratic Azeri regime. Marandi’s business relationship with individuals reportedly connected to the Azerbaijani laundromat was first identified in 2017, after which the Conservative Party accepted the majority of his total donations of £520,000. The source there was the Guardian and the OCCRP, the Organized Crime and Corruption Reporting Project.
These are just a few examples. There are more I am not going to use, and other Members of the Committee will have their own. It is a simple process: political parties and other voluntary organisations—I fully accept that they are voluntary, but they are not charities—are more regulated now than they used to be, and it is just as well. Given the importance of the money, I cannot see any reason why the approach of anti-money laundering regulations that the Government have used over the last decade for other companies cannot be used for political parties. I would be interested in due course to know the views of the Government.
9.30 pm