The shadow foreign secretary, David Lammy, has announced a series of measures with which a Labour government would combat corruption and kleptocracy around the world.
Lammy described this as a deeply personal mission, driven both by his career as a lawyer and by his family background.
“Fighting kleptocracy will be a focus of the next Labour Foreign Office”, Lammy told the New Statesman, “because money laundering and corruption fuels dictators while driving crime on British streets. It is an issue that demonstrates how the lines between foreign and domestic policy have broken down.”
“You can’t be both a London MP, and someone with ties like mine to the Caribbean and Africa, and not see how this laundromat worsens lives in the Global North and Global South at the same time”, he added.
This is the first major issue on which Lammy has campaigned after setting out his philosophy of “progressive realism”. It is part of a change of pace in which the Labour front bench has begun talking more specifically about the practicalities of forming the next government.
Labour’s plan will require international agreement. Lammy wants to create a live database of beneficial ownership of companies and trusts, to allow for faster investigation of financial crime, as well as an international anti-corruption court to prosecute serious financial crime.
Domestically, a Labour government would lead “a crackdown on enablers” using sanctions laws, offer significant financial rewards to whistleblowers, look for ways to “ban professional enablers from entering the UK”, and increase the registration requirements for trusts, which are widely used to disguise the ownership of assets such as property.
Announcing the policies today at a conference held by the Institute for Public Policy Research (IPPR), Lammy warned that “the rule of law is in peril”, around the world and in the UK. He cited the Conservative Party’s breaking of international law (in a “specific and limited way”, as it did with the Internal Market Bill in September 2020) and Rishi Sunak and Boris Johnson’s breaking of lockdown restrictions as examples of a country “whose statute books are routinely ignored”. The conference was addressed by the Ukrainian politician Oleksandr Merezhko, who said corruption formed part of Russia’s strategy of “hybrid war” Lammy will today also be meeting Yulia Navalnya, the widow of the murdered Russian politician Alexei Navalny.
Attendees at the IPPR’s conference expressed some reservations about deploying “shiny new things” in an area in which existing law enforcement urgently needs more funding. Oliver Bullough, author of Moneyland and Butler to the World, said his “heart sank” at the idea of a new court – “we have courts”, he added – which will only be effective if law enforcement has the means to bring cases to it.
However, it’s also true that the existing international structures such as the Financial Action Task Force (FATF) and the Eurasian Group on combating money laundering (EAG) are limited in their powers and restricted by their membership; Russia was until recently a member of both organisations.
This is also an area in which Britain is perceived as being able to make a real difference, not least because its involvement in enabling money laundering and corruption is so large.
Margaret Hodge, the MP and chair of the anti-corruption APPG, said the UK remains the “jurisdiction of choice” for kleptocrats, who use Britain’s property market to invest money made in other regimes. Hodge spoke to the New Statesman this morning in Kensington and Chelsea, where more than 7,000 properties are believed to be owned by foreign investors, around a quarter of whom disguise their ownership via the British Virgin Islands. More than £800m of London property is owned by Russians who are subject to sanctions, but so far no property has been seized for sanctions evasion and there has not been a conviction for sanctions evasion since 2009. Both Hodge and Lammy observed that the erosion of Britain’s status as a trusted jurisdiction is damaging to our financial services sector.
This makes a focus on kleptocracy a policy that ticks a lot of boxes: business-friendly, principled, it promises to increase tax revenue while also reminding voters that the Conservative Party has not only failed to enforce the law, but has accepted donations from a number of people with ties to autocratic regimes. If it works, it could be extremely effective – but previous decades have shown that achieving results against the offshore money industry takes a lot of hard work.
[See also: Labour’s Yuan Yang: “There is deep class anxiety in China”]
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