The
Committee consisted of the following
Members:
Chair:
†Mr
David Crausby
†
Aldous,
Peter (Waveney)
(Con)
†
Banks,
Gordon (Ochil and South Perthshire)
(Lab)
†
Bingham,
Andrew (High Peak)
(Con)
†
Birtwistle,
Gordon (Burnley)
(LD)
†
Cooper,
Rosie (West Lancashire)
(Lab)
†
Donohoe,
Mr Brian H. (Central Ayrshire)
(Lab)
†
Hepburn,
Mr Stephen (Jarrow)
(Lab)
†
Heyes,
David (Ashton-under-Lyne)
(Lab)
†
Jones,
Andrew (Harrogate and Knaresborough)
(Con)
†
Maynard,
Paul (Blackpool North and Cleveleys)
(Con)
†
Newmark,
Mr Brooks (Lord Commissioner of Her Majesty's
Treasury)
†
Prisk,
Mr Mark (Minister of State, Department for Business, Innovation and
Skills)
†
Reid,
Mr Alan (Argyll and Bute)
(LD)
†
Roy,
Lindsay (Glenrothes)
(Lab)
†
Simpson,
David (Upper Bann)
(DUP)
†
Stewart,
Iain (Milton Keynes South)
(Con)
Wollaston,
Dr Sarah (Totnes)
(Con)
†
Wright,
David (Telford) (Lab)
Ben
Williams, Committee Clerk
†
attended the Committee
Sixth
Delegated Legislation
Committee
Tuesday 29
March
2011
[Mr
David Crausby
in the
Chair]
Export
Control (Amendment) (No. 2) Order
2011
4.30
pm
The
Minister of State, Department for Business, Innovation and Skills (Mr
Mark Prisk):
I beg to move,
That the
Committee has considered the Export Control (Amendment) (No. 2) Order
2011 (S. I., 2011, No.
580).
It
is a pleasure to serve under you today, Mr Crausby. The Export Control
(Amendment) (No. 2) Order 2011 was made, laid before Parliament and
came into force on 2 March. The order was made using powers under
section 6 of the Export Control Act 2002.
The order
imposes export controls on unissued Libyan bank notes and on unissued
Libyan coins. As a result, the export to any destination of such notes
and coins is prohibited unless a licence has been first obtained from
the Secretary of State for Business, Innovation and Skills.
The order
revokes and replaces the Export Control (Amendment) Order 2011, which
was made and came into force on 27 February but which, for reasons of
urgency, was not laid before Parliament until 28 February. Perhaps it
would help hon. Members if I explained the background to the respective
orders.
On Friday 25
February, the Government became aware that a commercial printer in the
UK had a contract with the Central Bank of Libya to print Libyan bank
notes. The Libyans had then asked for an urgent delivery of the entire
stock of outstanding notes, valued, we think, at nearly £900
million. Given the worsening situation in Libya, and the imminent
imposition of the United Nations sanctions against the country and its
regime, the Government judged that there was a very real risk that the
regime would attempt to move state assets with the intention of keeping
them for its own benefit if the regime failed, which was clearly
against the interests of the Libyan people.
There was
also a risk that the assets may have been obtained by corruption. In
both cases, we assessed that the movement of these funds could
constitute money laundering. Therefore, we felt that there was an
urgent need to prevent the supply of the bank notes, in order, first,
to mitigate the risk that the money could be used by Colonel Gaddafi
and his associates to support further violent repression of the
population; secondly, to prevent Colonel Gaddafi and his associates
from misappropriating the money for personal use, if and when he were
forced from office; thirdly, to ensure that the money is kept safe for
future legitimate use by Libya when those risks no longer
exist.
Clearly, we
needed to act quickly. The printer had told us that, contractually, it
had no grounds for delaying the payment. We considered a
number of ways in which we could prevent the supply of the notes. As
hon. Members know, we were working hard at the UN for a Security Council
resolution that would impose, among other things, an asset freeze. What
we did not know at the time was whether that would specifically include
the Central Bank of Libya or how long the discussion would take. We
also considered whether it would be possible to take action under the
Proceeds of Crime Act 2002. On consideration, we found that the Export
Control Act 2002 allows the Secretary of State to make provision by
order for or in connection with the imposition of export controls in
relation to goods of any description. The Libyan bank notes were not in
fact in circulation and therefore did not constitute legal tender, but
in so far as they consist of paper notes, they are
“goods” that can be controlled under the Export Control
Act powers. We therefore decided that the use of those powers offered
us the quickest and most robust method of preventing the supply of the
notes.
Officials in
my Department therefore worked closely with Her Majesty’s
Treasury and others to draft the legislation. Work on that continued on
the Friday night and into the weekend. Because of the very real risk
that the notes could be shipped at any time, it was essential that the
order came into force as soon as possible. That meant bringing it into
force on Sunday 27 February before it could laid before Parliament. In
compliance with the requirements of the Statutory Instruments Act 1946,
my Department wrote to the Speakers of both Houses setting out our
reasons. The Export Control (Amendment) Order 2011 was laid before
Parliament on Monday, the following day.
Soon after
that, the Government became aware that a further contract existed with
another supplier, but in this case for supply of unissued Libyan coins.
Although the value of the coins was significantly lower, we
judged that the same risks of money laundering and misappropriation of
state assets applied. We therefore made a new order, the Export Control
(Amendment) (No. 2) Order 2011, which imposes export controls on
unissued Libyan coins as well as the notes. The order was made, laid
and came into force on 2 March. At the same time, the original order
was revoked and replaced by the measure before us.
The order was
laid before Parliament pursuant to the procedure of the 2002 Act and
unless approved by a resolution of each House within 40 days, it will
cease to have effect. As hon. Members know, an order under section 6
can last for a maximum of six months.
The situation
in Libya, and the international response to it, is and has been
changing rapidly, as we have seen only today. We are keeping the need
for this order under review and if in due course it becomes clear that
it is no longer required, it will, naturally, be withdrawn. I hope that
the facts that I have set out will help the Committee, and I commend
the order.
4.36
pm
Gordon
Banks (Ochil and South Perthshire) (Lab):
I am grateful
for the opportunity to contribute, under your guidance, Mr Crausby. I
do not intend to delay the Committee long, but I have a few questions
and points of clarification with which I hope the Minister can assist.
The last time I was on a Statutory Instrument Committee, with a
Minister with responsibility for consumer
affairs, I was accused of rattling off questions like a Gatling gun, so
I will try to be more lenient with the speed of my delivery
today.
The
Opposition welcome any action that seeks to protect the national
interest or, as in this case, the lives and resources of the people of
Libya, which are at stake here. The Minister said that the order covers
bank notes and coins. Is there any reason why the original order did
not cover coins, or was it an oversight?
The Minister
mentioned the number of producers, but the explanatory notes state that
the number of UK companies with contractual orders and, dare I say, the
ability to produce Libyan currency in the UK is very limited. Does he
know the exact number that have the ability to produce such contracts
apart from the ones that were so contracted for Libya? Has he spoken to
the businesses involved to see how the order affects them? I understand
that the impact assessment is still being drawn up.
As the
Minister suggested, there are people in Libya who may use its current
troubles as a smokescreen to hide their own illicit activities. We
support the Government in their actions to address the seizing of the
assets of Gaddafi and his henchmen, but the producing firms are under
some kind of legal obligation to their customer, even though it happens
to be Libya. Are the firms involved in the production of these
contracts sufficiently legally insulated to prevent any repercussions
for UK businesses as a result of the order?
The Minister
referred to reports of the amount of currency that was ready to be
delivered to Libya. I believe that a shipment of about £100
million of Libyan bank notes was seized relatively recently. Although
he touched on the matter, may I press him on what the Government intend
to do with the currency seized, either from the shipping company or the
producers? Is it our intention to withhold it in safekeeping until the
Libyan dispute resolves itself so that we disburse it back to its
rightful
owners?
I
have a general question. I understand that about £2
billion of Libyan assets have been seized in the UK. Can the Minister
say whether that is a clear understanding of the numbers involved? The
currency aspect of the order relates to UN sanctions. I presume that
the order is wholly compatible with those, because I see no reference
to that in the explanatory notes.
The Minister
said that the order creates a new category for compliance in respect of
the Export Control Order 2008. Is this the first time that such
non-strategic assets have been accommodated under that measure? On
the
UN sanctions, I presume that the Minister took domestic legal advice
before proceeding with this. I would be grateful if he could clarify
that for the
Committee.
4.40
pm
Mr
Prisk:
We greatly appreciate the Opposition’s
support for what we are trying to do. It is a practical measure that I
think all hon. Members understand and support, which is welcome. The
original order did not cover coins because on the Friday we were
responding to the specific and imminent challenge of a £900
million shipment. The intention was not to try to make something all
encompassing but to deal with that specific risk. Are we working with
the businesses directly affected? Yes, absolutely. That is an important
principle. In terms of the businesses being covered, it is important to
remember that this a freezing of assets, not a change of ownership. The
point at which those notes, which are still in the ownership of the
Central Bank of Libya, would be in a position to be returned will be as
and when matters settle, and the UN and the EU deem that the asset
freezes can be relaxed. We will wait to see that and we want to work on
an international basis.
The shipment
was not actually seized, though I know there were some press reports
about that. The matter was first brought to the Government’s
attention on, I think, 1 March. The manifest was logged with the port
of Harwich and the assets there are being held securely but again,
there is no question of a change of ownership but only of freezing
notes and coins so that they cannot be used inappropriately. In due
course, when there is a settlement and a legitimate Government and a
legitimate arrangement, we will be in a position to resolve that. On
the value of the assets, the precise number is moving. The £2
billion figure is in the public domain, but to be absolutely certain, I
will double check with my colleagues and come back to the hon.
Gentleman.
The hon.
Gentleman asked whether we were working in compatibility with the UN.
The answer I think is yes. To return to the earlier point, I am
advised, if I am reading this correctly, that the latest figure on
assets is £12 billion. On the UN resolution, we very much wanted
to ensure that we work with the UN, and the Government are taking a
leading role in that approach. We want to ensure that, as the issue is
resolved in due course, we will similarly be able to work on an
international basis. The reason for the order was the need to deal with
a very specific and substantial risk. We felt it was necessary to make
sure that we had this legal certainty. I commend the order to the
Committee.
Question
put and agreed
to.
4.44
pm
Committee
rose.