4 Enforcement
Introduction
78. In our Report last year we made recommendations
concerning the provision of information in annual reports on strategic
controls; specifically the number of seizures by HM Revenue and
Customs and the trend and type of misuses of open licences.[118]
The Government agreed to provide additional commentary on the
number of seizures and information on the misuse of open general
licences in its next Annual Report.[119]
79. Due to the late publication of the 2008 Annual
Report on United Kingdom Strategic Export Controls, after the
date our Report was finalised, we were unable to comment on whether
or not this information has been included.
Open General Licences
80. In our previous Report we raised the issue
of enforcement of Open General Licences. We recommended that where
breaches of the requirements to use open general licences are
persistent and an exporter shows no inclination to bring his or
her administrative arrangements up to the required level, the
Export Control Organisation (ECO) should automatically remove
the exporter's entitlement to use open general licences.[120]
The Government Response stated that where breaches of the terms
of the licences were found which appear to be systemic rather
than an isolated incident of human error, the company would receive
a warning letter from ECO setting out the issues, what must be
done about them, and the timescale for improvements to be made
with arrangements for a revisit. As of 19 August 2008, 13 such
letters had been sent in one year. If, at the time of the revisit,
the company has made little or no attempt to correct the faults
identified, ECO will consider suspending the company's use of
the open general licences where faults are still occurring.[121]
Civil penalties
81. In our last Report we considered suggestions
from Amnesty International UK, the Omega Research Foundation and
Saferworld that, rather than relying exclusively on the criminal
law to prosecute breaches of export control, the Government should
amend the primary legislation to be able to proceed through the
civil courts as well as the criminal courts.
82. We concluded that the use of civil penalties
for the breach of export controls appeared to offer a method of
strengthening the UK's export controls. We recommended that the
Government inform the Committees and the House of the outcome
of its deliberations at an early date. We agreed to consider this
matter further once the Government had completed its consideration
of the use of civil penalties for the breach of export controls.[122]
83. In February 2009, the Committees received
a joint memorandum from Rt Hon Stephen Timms MP, Financial Secretary
to HM Treasury, and Ian Pearson MP, the then Economic and Business
Minister. The memorandum said that BERR and HMRC had concluded
that "there is a clear case for introducing civil penalties
in the field of strategic export control […] not to replace
any existing measures, but to supplement them."[123]
84. The memorandum set out the cases in which
civil penalties would be of greatest value:
In particular, they could have value in cases
of non-compliance with individual rather than open licences; where
the frontier based seizure and restoration powers of HMRC cannot
be used, (such as trade control cases, electronic transfers and
situations where the goods have already left the UK); or for other
breaches for which they offer a quicker and less costly means
of sanction than full criminal prosecution of offenders. Key to
this is that they are less resource intensive to administer than
criminal penalties and require a lower level of proof.[124]
85. The memorandum stated that primary legislation
would be needed to introduce civil penalties and, after that,
an independent tribunal would have to be established to deal with
appeals. It was estimated that it would take approximately a year
after the introduction of primary legislation to establish the
tribunal. The memorandum promised a further update in 2009 with
details of potential implementation timescales.[125]
We conclude
that the Government's decision to introduce civil penalties for
strategic export control is a welcome one and we recommend that
the Government inform the Committees by the end of 2009 of the
timetable for primary legislation necessary to bring in civil
penalties.
118 HC (2007-08) 254, paras 50 and 57 Back
119
Cm 7485, p 10 Back
120
HC (2007-08) 254, para 58 Back
121
Cm 7485, p 11 Back
122 HC(2007-08)254,paras60-63 Back
123 Ev
66 Back
124
Ev 66 Back
125
Ev 66 Back
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