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Mr. Foulkes: That is the whole point.
Mr. Letwin: As the Minister says—he is keeping up a running commentary from a sedentary position—that is the whole point of part 5 as it is currently constructed.
The hon. Member for Lewes (Norman Baker) asked the Minister a very acute question.
Mr. Bob Ainsworth: He got a straight answer.
Mr. Letwin: He did not get a straight answer; that was the problem.
When asked whether someone could be acquitted of an offence and then have his assets seized because, on a lesser test—the balance of probability test—the court had found in favour of the recovery agency, the Minister said, as I think the record will show, that someone could be acquitted of a specific offence and nevertheless be pursued on the lesser case. However, someone could be innocent of every offence. Someone could be wholly innocent according to the standards of proof required in
criminal law, yet be subject to pursuit on the balance of probabilities. That is a significant point. Thinking that someone is in possession of unlawfully gained property, the agency will have the power, and indeed the duty, to take that person, possibly after acquittal of any charge, to court and to recover their property on the balance of probability.
Ian Lucas (Wrexham): Does the hon. Gentleman accept that part 5 relates to civil proceedings, not criminal proceedings, and proceeds upon the civil standard of proof? Therefore, we are talking not about convictions and the criminal standard of proof, but about the civil standard of proof. In those circumstances, it may be entirely appropriate that someone be acquitted on the criminal standard, yet still be held responsible under a civil standard of proof, repaying money that was ill gotten—the proceeds of crime.
Mr. Letwin: I am grateful to the hon. Gentleman. I was about to say—in fact, I said the first two words of the sentence—that I accept it will be argued that it is a civil proceeding and that the balance of probabilities is therefore an appropriate test. That is the argument in favour of the clause. However, the state is not another person in any ordinary sense. The state is not in the position of someone who has been adversely affected in a commercial transaction, for example. The state is in a very special position in relation to the individual.
When civil proceedings are to be taken, there are huge inhibitions on individuals' pursuing one another through the courts. Some of us believe some of the time that those inhibitions may even be too great. They may prove insuperable in cases where people should have the right to pursue the matter through the civil courts.
It is the agency's sole duty to find this money. If I remember the figure correctly, the agency is being given £45 million a year by the Minister to pursue it. That should be sufficient for about 300 executives, assuming two thirds of the payments of the agency are on salaries and that the salary cost of an executive and associated staff is about £100,000—[Interruption.] If it is not 300, we need to look at the efficiency of the agency, but let us leave that aside. The agency should have about 300 staff.
Those 300 staff, or however many the Minister can squeeze out of the inefficiencies of the bureaucracy of this country, will be charged solely with pursuing people, will have all the money at their disposal and all the other law enforcement agencies on their side. Pursuing someone whom it thinks has unlawful property who has been acquitted of any offence, it can show on the balance of probabilities that that person's property should be forfeit. I do not say that this is a compelling argument by itself, but if the hon. Member for Wrexham (Ian Lucas) cannot see a difference between that and normal civil proceedings between two individuals, I do not share his view of the relationship between state and individual.
What we are doing is taking civil proceedings and moving them into a quasi-criminal context. That is a huge and important shift. We are not doing it on the basis of allowing the ordinary proceedings of the state to occur, or of allowing the Director of Public Prosecutions or the Inland Revenue to take on a special role. Given the experience with the Child Support Agency, we are creating an agency that has the sole purpose of making the provision effective.
I grant that what Ministers are trying to achieve is a noble thing. They are trying to enable the agency to pursue people who are evil. They are trying to get their profits. I accept entirely the Minister's opening remarks about altering the risk-reward balance of crime. Of course, that is common ground between us, but I beg Labour Members to attend to the question: have we not begun to alter the balance between individual and state to an extent that may give rise to serious concerns later?
Mr. Kidney: Will the hon. Gentleman allow me to correct his comments en passant about the agency? The £45 million is for its setting up and operational costs from now until 2004, so it will not pay for 300 staff. However, the estimate is that there will be 100 staff.
Mr. Letwin: I am grateful to the hon. Gentleman. If that is the case, I made a mistake—[Interruption.] It is undoubtedly the case that, like other human beings, I do make mistakes. If there are to be only 100 staff, there will be fewer people doing the pursuing. I am sure that the hon. Gentleman is right that if that is the figure up to 2004—that was not clear from the Minister's remarks—100 staff would be about right if one divides by three.
Ian Lucas: What does the hon. Gentleman believe will be the difference between the Assets Recovery Agency and the present position of the Inland Revenue or Customs and Excise when pursuing civil proceedings against individuals?
Mr. Letwin: I assume that there will be a difference because I cannot imagine that Ministers would have gone to the bother of creating an agency if there were not. Ministers have presumably created a separate agency because they believe that in using its powers, which they have established by taking the trouble to produce an enormous Bill, it will be more effective. We welcome that. It follows, however, that the danger to civil liberties will be greater. That which is more effective is more to be concerned about. I am simply arguing that we have to achieve an adequate balance between effectiveness and the protection of liberties.
Mr. Bob Ainsworth: I do not know whether the hon. Gentleman is making his case deliberately or whether he is genuinely confused, as he was over the money that the agency will have and the staff that it will be able to employ. Does he accept that the agency will not be pursuing criminal matters against individuals, but will be pursuing the proceeds of crime under civil litigation? It will not be obliged to act if it thinks that somebody has committed a criminal offence. It will have to take into account regulations under the European convention on human rights and will have to report to Parliament. Guidance will be issued about how it should conduct its business. It will pursue the proceeds of crime on behalf of the citizens of this country. Is the hon. Gentleman saying that that is wrong in principle?
Mr. Letwin: No, I am not saying that it is wrong in principle. It is not wrong in principle that the proceeds of crime should be pursued. It is right in principle. The question is how it will affect people's rights. When Maitland said that freedom lies at the interstices of the law, he was never more right than in a case like this.
The Minister said that the agency will not be obliged to act simply because it thinks that someone has committed a criminal offence. Clause 248(1) states:
- "Proceedings for a recovery order may be taken by the enforcement authority in the High Court against any person who the authority thinks holds recoverable property."
Part 5 of the Bill involves a series of issues, as does part 2, but this is probably more serious, and we need to consider them in detail in Committee. I am not arguing—[Interruption.] To respond to the Minister's further sedentary intervention, I have been speaking for 40 minutes because I have replied to about 15 interventions from Labour Members.
The Bill needs to be considered carefully in Committee, particularly parts 2 and 5. If we can cure the problems there, we will support the Bill. If we cannot, we will not support the Bill. I hope that in seeking to cure these problems we will have co-operation rather than adversarial banter from Ministers.
4.59 pm
Tony Worthington (Clydebank and Milngavie): I welcome the Bill. In fact, it is overdue because it seeks to increase the powers against money laundering, which is a great social evil. It was disappointing that the hon. Member for West Dorset (Mr. Letwin) spent no time at all speaking about the enemy that we all must overcome, but seemed instead to be concerned simply about the defence. Although the defence is an important issue, let us spell out what the Bill is seeking to tackle.
I have some reservations about the Bill, and I seek some reassurances from the Minister. One of my concerns is that we are told that the Treasury, perhaps in another Bill, is to take further action on money laundering and terrorism because of the events of 11 September, so we are not seeing the whole picture in our consideration of this Bill. Many of my comments and questions are related to the links between this Bill and what the Treasury may eventually do.
My first question is whether we have genuinely joined-up government. How are we to judge this important measure when other important activity is to follow it? I do not accept the argument that the financial and anti-crime measures required to combat terrorism are separate from the measures needed to combat other types of crime such as the drugs trade. For example, the income that bin Laden allegedly obtains from the drug trade will be tackled by this Bill.
The provisions of this brand-new Bill were judged to be necessary and adequate before the events of 11 September, but subsequently they have been judged by
some to be inadequate. Some people believe that extra provisions are necessary. I should like to have Ministers' thoughts on that issue. The events of 11 September were simply horrific, but the Bill should have sought before that date to achieve the objective of recovering money from criminals and terrorists.I should also like to know how the House feels about addressing money laundering. I am gratified by the large number of hon. Members present, because such issues do not usually attract so many. The Bill was mentioned in the Queen's Speech, but I do not remember it being mentioned by anyone, other than Ministers, in the debate on the Loyal Address. The House will react to the events of 11 September and to the need for money-laundering measures, and we shall consider the Bill tonight and in Committee, but that response is inadequate to deal with the complexities raised by this type of issue.
The House should consider establishing a body such as a Joint Select Committee, which may have to operate for years, to consider action on money-laundering issues and to ensure that our procedures are up to scratch. We have allowed our relevant procedures to become completely inadequate through lack of parliamentary scrutiny.
I am strengthened in that view by the statement of the incoming president of the Financial Action Task Force, which is seen as the key international body on the issue, who believes that that organisation will need a serious overhaul to tackle the financial flows from terrorism. I do not believe this, and perhaps the Minister will be able to convince me that it is true, but according to the Financial Times, the Financial Action Task Force—that key body—has a staff of five and an annual budget of just over £500,000. How is it possible for the body that is supposed to lead the world in tackling money laundering to operate with such resources?
I approach these issues from the viewpoint of the Select Committee on International Development, which in the previous Session produced a report on corruption that certainly changed my views on the issue. We conducted an inquiry on that because we had been convinced that it was a major obstacle to development in poorer countries. We believed that if there was corruption in those countries, the developed world would not invest in them. However, our focus increasingly shifted as we continued our inquiry, and we began to realise just how important it was for us to tighten up our own act if we were to help the developing world succeed in the fight against corruption.
Let us consider the most celebrated example. We invited the Nigerian Government to tell us what they had found when they came to office and needed to clear up the country. They, in turn, asked us what we were doing to help them get back the money that had been looted from the country. According to last year's Department for International Development report, we put about £15 million of bilateral aid into Nigeria. However, the Nigerian Government are trying to find £4 billion that the Abacha family took out of Nigeria and invested in the outside world. For every £1 that we put in to cure poverty, one Nigerian family took out £200. That is the scale of the problem.
There is not only a severe shortage of investment in Nigeria and other sub-Saharan countries but their own wealth is, albeit illicitly, invested in countries such as ours. We have to tackle money laundering for many reasons, and the problem of international development is
one of them. All the evidence, as the International Development Committee concluded, is that London is attractive to money launderers and is used by them.The current approach does not do enough to recognise the importance of tackling money laundering, and that makes the City of London extremely vulnerable. We must protect its good name. When the Nigerian Government asked us to freeze the Abacha assets, we could not do it. Governments famous for their transparency—Switzerland, Liechtenstein—managed to freeze Abacha accounts, but it was only this month, two or three years later, that the courts in London said that the accounts should be frozen. The British Government said that they could freeze only when charges had been laid, but the evidence could be obtained only when the assets had been frozen.
I want assurances from the Government that that problem has been seriously tackled and that we will be proactive. All my life, Nigerian regimes such as those of Abubakar, Babangida and Abacha have been famed for their corruption—Nigeria was in Transparency International's league table of corrupt regimes—but we could not be proactive. We did not have the means whereby we could step in. Will that now change?
To take a contemporary example, the Prime Minister told us that Afghanistan was the source of 90 per cent. of the heroin on Britain's streets. What proactive steps were taken? What investigations have been undertaken to deal with the situation? To take another example, it was announced a few weeks ago that there were to be new regulations for bureaux de change. Apparently, we are the only country in the European Union that has not regulated them, even though the newspapers inform us that 65 per cent. of their trade involves money that is being laundered. How long has this been going on? How long has it been known?
In 1996, the Financial Action Task Force, the key international body, of which we are a member, said that bureaux de change are an important link in the money-laundering chain, since it is difficult to trace the origin of the money once it has gone through them. It recommended that they should be dealt with in the same way as banks. Why are the Government responding only now? I seek an assurance that every one of the 40 recommendations made by the FATF in 1996 is now being acted on.
Other countries in Europe—countries not famed for being at the forefront of financial management—have acted. On 3 December 1998, the Government of Zimbabwe acted on the matter and, in December 2000, the Bank of Zambia did likewise. Many hon. Members will have received a newsletter from the Sri Lankan high commissioner pointing out that in the view of the Sri Lankan Government, bureaux de change in this country have been responsible for years for financing the activities of the Tamil Tigers. There has been knowledge about the activities of some bureaux de change. Why did we not act? This is an area of great concern upon which we must act seriously to protect the City of London.
The Select Committee was very critical of the lack of resources in the Home Office for dealing with cases such as Abacha, including the case in which the Government of Pakistan wanted inquiries about money to be brought back to that country. Jeremy Carver, a distinguished member of Clifford Chance—the largest legal firm in the
world—said that there was a real problem in the Home Office in that things went into it and did not appear to come out. In terms of action on money laundering, he described the Home Office as "a swamp". Will some of the extra resources go to the Home Office to make sure that the swamp is cleared, so that there will be prompt action on money laundering next time the Nigerian or Pakistani Government ask for it?This is a very important Bill because the resources involved are considerable. The most recent book on the subject was written by someone called Peter Lilley—not the right hon. Member for Hitchin and Harpenden (Mr. Lilley). He talked about the importance of the UK as a major laundering centre, stating that Russian and eastern European crime groups favoured London properties and were active in the vice trade, the London metal market, the art world and financial fraud. Hong Kong and Chinese triads and Turkish and Kurdish gangs were active, he said, adding that there was increasing evidence of Colombian groups using Heathrow airport as a gateway to mainland Europe; Nigerian criminal gangs were also active here.
The Bill is much needed and it will receive good scrutiny in Committee. However, I hope that we will not only deal with money laundering through this Bill, but take a continuing interest in it because, directly or indirectly, it is important to everybody in this country.
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