The writer, MP, chairs the all-party parliamentary group on the fight against corruption and responsible taxation
For too long the UK has been a ‘laundry’ for corrupt wealth. The ongoing Ukrainian tragedy highlights our complicity in allowing dirty money to spread. But it shouldn’t have taken a horrible war.
These deep rooted issues became clear to me when I chaired the parliamentary public accounts committee. Hearings with tech giants have shown multinationals using complex financial structures to avoid tax. Then a plethora of leaks, from the Panama Papers to the Pandora Papers, revealed that the same structures were being used by criminals to launder money. The latest estimates suggest that economic crime costs our economy £290billion a year.
The Russian oligarchs are not the only players. Worldwide kleptocrats, drug dealers, smugglers, arms dealers and other criminals are ‘cleaning up’ illicit cash in the UK too. And our defenses are overwhelmed.
Decades of lax regulation under Conservative and Labor governments, pathetically weak policing and an unacceptable lack of transparency have made it possible. The UK’s relationship with offshore tax havens and an army of facilitators – accountants, lawyers, bankers, advisers – have helped make us the jurisdiction of choice.
The Economic Crimes Bill announced in the Queen’s Speech gives us a unique opportunity to hunt dirty money. Clean finance is not only morally right, it is good for business. We will never enjoy lasting prosperity on the back of corrupt wealth.
There are a host of needed fixes: greater transparency about who owns companies, trusts, land and assets; tougher agencies for consistent enforcement; strong protections for the press, judges, whistleblowers and civil society to hold wrongdoers to account; effective regulation for professionals carrying out anti-money laundering checks. But real reform cannot stop there.
Financial embezzlement now contaminates our public sphere. There have always been unacceptable behaviors in politics, but the cases were occasional and they were punished. Recently, this has moved from the fringes to the mainstream. “Partygate” has rightly provoked public outrage, but other serious wrongdoings that threaten our democracy are accepted. We lose our moral compass.
Dirty money given to buy political influence. Soft power purchased through institutions such as football clubs. Citizenship purchased through golden visas. Peerages awarded for donations. Public appointments become political appointments. Too often the government treats taxpayers’ money as if it were its own, awarding contracts to cronies.
The checks and balances of our democracy are systematically weakened. Under the shock of Covid, the protections gave way and the wrongdoings peaked. Take the government’s VIP fast track for awarding contracts. Or blatant lobbying exemplified by Owen Paterson. And the abuse of “pantouflage”, like the Lex Greensill case. Politics has become too transactional – in the UK it is particularly dangerous because access and influence are cheap.
We can begin to stop this slide, as I set out in a report for the Policy Institute at King’s College London chronicling the growth of economic crime in Britain, linking such wrongdoing to the falling standards of our politics . A climate where tax evasion is considered “cool” and financial flows are barely controlled has produced a culture that allows bad behavior to thrive. And when financial malfeasance thrives, it infects the public sphere; turn a blind eye to the dirty money in our economy and this results in corrupt influences in our democracy.
It doesn’t have to be like that. A comprehensive reform program could restore integrity and put the UK back on the path to confidence. The choice is ours.