Proceeds of Crime Bill

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Mr. Dominic Grieve (Beaconsfield): It is difficult to understand how the hon. Gentleman can reach that conclusion. Although he was present in Committee in the flesh this morning, perhaps his spirit was elsewhere. He clearly has not been listening to what we were saying. First, we have not disagreed in Committee with the principle of the previous money laundering provisions. I can see the merit of them. Secondly, we have said to the Committee that the intention behind the provisions is not one with which we disagree.

The specific matter on which we have disagreed is the test to be applied when determining whether there has been criminality in respect of a breach of the provisions. If the hon. Gentleman cared to focus on that, he might find that it would be a better matter for him to discuss than wider issues about which he makes assertions that are not backed by the evidence or the facts.

Mr. Davidson: I listened with considerable care to most of the points made by Conservative Members this morning. I confess that I was out of the Room a couple of times and that, on a few occasions, I found myself losing the will to live after hearing the constant repetition. In general, however, I clearly established the opinion that, while Conservative Members were paying lip service to the issues under the Bill, virtually everything that they proposed would water it down. They are not tough on crime and they are not tough on the causes of crime. They demonstrate all the rigidity of a blancmange. They should stand up a little more firmly in favour of taking action in such matters.

I remember listening with amazement to Conservative Members earlier when they told us that the rules should not be as tight as proposed under the Bill on the basis that, if they were too tight, it would be too difficult to carry out such provisions and that would make it easier for drug dealers and others to launder money. I have never supported such an argument when I have heard it applied to burglary,

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assault or theft, when the number of cases and the imposition of law cause difficulty in catching the criminal and processing the cases. It is certainly no reason for not taking seriously the burden of proof for the crime of assault.

Mr. Hawkins: I appreciate that the hon. Gentleman and I will never agree about his interpretation of where we are coming from. I shall not repeat what was said by my hon. Friend the Member for Beaconsfield, but we may be right—expert practitioners have advised us that we are right—that much of what is proposed by the Government is likely to be so cumbersome that it will be unworkable and enormously damaging to the City of London. Will the hon. Gentleman understand that his Government have made a huge effort over the years to cultivate—and to praise—the City? Surely, it would undermine the Chancellor of the Exchequer's strategy if the City of London were so damaged by the Bill that all the business on which the economy, including that in the hon. Gentleman's constituency, so deeply depends was shifted away to places such as Frankfurt.

Mr. Davidson: Is the case being advanced that we should be lenient with money launderers, crooks and rascals so as not to place the City of London at a competitive disadvantage vis-a-vis other jurisdictions? British legislation is being introduced in parallel with legislation elsewhere and with action being taken by intergovernmental taskforces to deal with misbehaviour in tax havens and other locations in which financial arrangements are of dubious provenance.

With regard to the legislation and international forums, the Government's intention is to ensure that there are equally toughly enforced level playing fields across all jurisdictions. I would welcome it if we could employ a lighter touch because we were confident that the City of London—and elsewhere—could self-police. I regret that we have to go down this road, as it is more bureaucratic than I would wish, but we are going down it only because the City of London cannot be trusted to police itself—neither can lawyers and accountants, but bankers are perhaps the worst, because they deal with larger sums.

John Robertson (Glasgow, Anniesland): Does my hon. Friend agree that the City of London lost its good name a long while ago, and that it is time the Government tried to get it back for it, because it is incapable of doing it for itself?

Mr. Davidson: That is a helpful point. In view of what has been happening recently, the good name of the City of London has been tarnished. Opposition spokesmen have mentioned the Maxwell case, and other Committee members mentioned Barings and Enron. London firms are involved in the Enron case: the firm of accountants that recently shredded documents for Enron has branches in the United Kingdom.

A recent visit that I and others made to Nigeria has a bearing on our discussion of the City of London. During our trip we discussed the present financial

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difficulties in Nigeria. There are reports in today's press of riots in Nigeria that have been caused, in no small part, by its financial difficulties.

The country's previous leadership siphoned off huge sums of money. It is alleged that General Abacha siphoned $1.3 billion into foreign banks. The Financial Services Authority investigated the handling of bank accounts linked to the good—I mean bad—general. Its report of March 2001 revealed serious weaknesses in anti-money-laundering procedures at several banks in the United Kingdom: 42 accounts at 23 banks were investigated, and it was estimated that the turnover of those accounts in the four years to 2000 had been $1.3 billion; 15 of the banks were judged to have significant ''control weaknesses''—which is a revealing euphemism—and 98 per cent. of the funds passed through those banks.

The banks that handled this money were not the bank of Toytown, South and similar institutions. They were very respectable organisations with substantial reputations in the United Kingdom. The Nigerians would be justified in taking the view that the United Kingdom has been a recipient of stolen money from Nigeria, and that we have been slow in co-operating with the Nigerian authorities to return any of it. Our banking authorities have been less helpful to them than have those of Switzerland, France, Luxembourg and Liechtenstein. Authorities in those countries co-operated with the Swiss lawyers who have been representing Nigeria, whereas the British system did not.

I wish to draw attention to some of the banks, and some of the sums that they handled, lest we think that they simply made a few slips. Banque Paribas handled $36 million: the funds were moved in 10 payments from London to a Swiss bank, and the money was alleged to be bribes extorted from a French construction company. There was also a sum of $17.2 million—the funds were moved in two payments from London to a Swiss bank, and the money was alleged to be bribes extorted from Nigerian business men.

The Banque National de Paris—all the branches to which I am referring are in London, and presumably some of the staff involved were British—handled $7 million: two payments were moved to the bank's Geneva branch. The Credit Agricole Indosuez handled $92 million. Its funds were moved to London from Switzerland, the French bank's Swiss branch has been reprimanded, and a frozen account in London of Abacha's fixer, Bagudu, still contains $9 million, and so on. The Nigerian Government paid $225 million to Mecosta in a fraud, when they paid double price to buy back debt certificates. Barclays bank, a British bank, moved $172 million from London to Swiss banks, and there were alleged bribes and transfers from Abacha-linked accounts. Cash was also moved by Barclays to New York, and four payments were made to Zurich Credit Suisse, totalling $52.8 million. Six payments were made to banks in Geneva from Barclays accounts, totalling $36.8 million. Four payments were

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made from Nigeria to Barclays in New York, totalling $83 million. Controls have not been tightened since then.

First Bank of Nigeria, which is based in London, also moved money around, although I shall not go into the details. Abacha's sons also control an account in the Berkeley square branch of Citibank. Movements to London included $13 million from money paid by Nigeria for vaccines. Movements out included the transfer of $10 million of vaccine money to New York, and the transfer of $39 million to Switzerland and elsewhere when investigations began after General Abacha's death. Interestingly, Citibank was described in United States Senate hearings as having a ''rogues' gallery'' of lucrative private banking clients. Citibank is increasingly active in London.

Midland bank—now part of HSBC—was also involved in relation to payments totalling $6 million. Payments under investigation include $2.1 million moved from the central Bank of Nigeria to the Cross Roads branch of Midland bank in Golders Green, north London. The equivalent of nearly $600,000 belonging to one of the Abachas' colleagues was found in another north London Midland branch. Other payments made by Addax, a Switzerland-based oil company, and $1.5 million moved to a Banque National de Paris account in Switzerland, were also via Midland.

The Union Bank of Nigeria, based in London, was similarly involved in the Abacha cash. ANZ Grindlays was involved to the tune of $72.2 million coming through London. NatWest, which is now part of the Royal Bank of Scotland, was involved in relation to the movement of $1.5 million from Luxembourg to an Abacha-linked account in the St. John's Wood high street branch. From there, it was moved into the hands of David Jones, of Smith and Tyers, in 1999. Merrill Lynch was involved in relation to $3 million transferred from Nigeria to London. The only people to come out of this with credit are those at Merrill Lynch's branch in Switzerland, who refused to accept one Nigerian deposit, and were praised by the Swiss authorities for conducting themselves correctly. Commerzbank AG was involved to the tune of $3.5 million.

That adds up to a substantial sum, all of which has flowed through London and been subject to fees and charges imposed by banks in London. I must confess that I was distressed, as someone who has generally supported human rights legislation, to find that Matrix, the human rights barristers, appeared on behalf of the Abacha family on the grounds of their human rights being neglected when the British Government were attempting to provide information to the Swiss and Nigerian authorities.

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Prepared 17 January 2002