Victims and Prisoners Bill

Committee (4th Day) (Continued)

Amendment 112

112: After Clause 27, insert the following new Clause— “Compensation for victims of fraud and other economic crimes(1) The Secretary of State must, within one year of the passing of this Act, lay before Parliament a review of victims of fraud, bribery and money laundering offences.(2) The purpose of the review under subsection (1) is to identify how victims of such economic crimes could be better compensated without such victims needing to pursue civil action.(3) The Secretary of State must provide for a public consultation on the review.(4) In this section “victims of economic crime” includes United Kingdom and overseas victims of complex corruption cases where the harm caused by the offending is not easily quantifiable.”Member’s explanatory statement This new Clause requires a review to explore how domestic and overseas victims of fraud, bribery and money laundering offences could be better compensated without the need for civil proceedings to recover their losses or compensation.

My Lords, this amendment is grouped with an amendment proposed by the noble Baroness, Lady Brinton, and is supported by the noble Baroness, Lady Bennett of Manor Castle. Unfortunately, she cannot be here, so noble Lords will have to deal with me, and I hope I will not detain the Committee very long. I should declare an interest in that I am a barrister in private practice and some of the work that I do involves fraud, bribery and money laundering offences; at least, some of the clients I represent sometimes become involved in that sort of thing. Sometimes, I act for the Serious Fraud Office in prosecuting and dealing with those accused or thought to have been guilty of such things.

The new clause set out in Amendment 112 is designed to require a review to explore how domestic and overseas victims of fraud, bribery and money laundering offences could be better compensated without the need for civil proceedings to recover their losses or compensation. The terms of the new clause are set out on the amendment paper, so I shall not read it out: it is there for those interested to see.

Just before Christmas last year, in December 2023, a company called Entain entered into a deferred prosecution agreement with the Crown Prosecution Service in response to allegations, which it admitted, that part of Entain had failed to prevent bribery in, most often, Turkey, over a seven-year period. The deferred prosecution agreement that Entain, formerly Ladbrokes, agreed to contained terms which included that it should pay a penalty and a disgorgement of profits of £585 million, plus a charitable donation of £20 million. Prior to that, in the decade or so before the Entain case, multinational companies were fined more than £1.5 billion after investigations by the Serious Fraud Office into corruption abroad, but only 1.4% of those fines, about £20 million, was used to compensate victim countries, according to research by the law firm Reynolds Porter Chamberlain and, in particular, due to the hard work of Mr Sam Tate, a partner of that firm, who, with others in the firm, has made a particular study of this matter. It seems to me that companies that are convicted in this country of offences which have an effect overseas should be required to compensate their victims overseas—we need to change that.

The second example is the Airbus deferred prosecution agreement case, which tells a similar story. The company was required to pay €991 million to the United Kingdom in fines, but compensation to the numerous Asian companies where the corruption took place formed no part of the deferred prosecution agreement.

The process for compensating overseas state victims, I suggest, needs urgent simplification, so that real money can be returned to them. An answer lies in incentivising the corporations that commit the crimes to pay compensation voluntarily, on the understanding that it would not increase the total amount, including penalties and costs, that they would have to pay. The company could be given further incentive by receiving a discount on the fine that would still be required to the United Kingdom Treasury or an increase to the fine if it refuses or fails to make redress.

The required changes are straightforward and ought to cost the taxpayer nothing. It would create a standard measure of compensation, which would ensure consistency and transparency, as well as avoiding the difficulty of calculating a specific amount of loss or damage in each case. The compensation figure could equal whichever is the higher of the profit made by the company from its corrupt conduct or the amount of the bribes it paid to obtain the profits. This already happens where companies are sentenced, so that the money goes to the Treasury. The defendant company would pay nothing more, but at least some of the money would benefit the victim state.

It would, of course, be naive to think that compensation paid to a foreign state could never lead to further corruption, and it has been suggested that some foreign states might encourage corruption in order to receive the compensation under the scheme that I have advocated, so that the compensation should go into a Swiss bank account or a corrupt overseas Minister’s bank account. That is clearly a risk. To address this, I suggest that defendant companies should be encouraged, or required, to enter into an agreement with the relevant state, which would include obligations to comply with United Nations guidance on the treatment of compensation funds, and to identify projects for which the funds would be used, possibly with the involvement of a local non-governmental organisation. To encourage states to enter into these types of agreements, corporations would be permitted to donate the compensation fund to the World Bank or the International Monetary Fund for projects in the region instead, or to pay down a country’s debt if an agreement cannot otherwise be reached. The benefit of this approach is that, unlike at present, where there is no disadvantage in doing nothing, it puts the onus on the corporation to take restorative action. It also addresses the difficulties in quantifying loss by creating a simple approach that gives companies early sight of the amount that they will have to pay.

These reforms may not need legislation, albeit I know that the Sentencing Act 2020 precludes victims from having legal standing at the end of a criminal case of this nature. This proposed new clause, and this debate, provide, I hope, an opportunity to probe the Government’s thinking. Indeed, what we require is the political will to amend the sentencing guidelines on corporate corruption. If we do this, and if the Government can come forward with their own well-thought-through and well-drafted amendment to the sentencing regime in relation to overseas corruption dealt with in our criminal courts, it seems to me that we can then hold our heads high and enhance our national reputation in the fight against international corruption.

I repeat that this is a probing amendment. I am not expecting an answer of any detailed nature from the Front Bench this evening, albeit my noble friend on the Front Bench is immensely capable of doing such a thing. I urge the Government, through my noble friends on the Front Bench, to give this matter active consideration. It is not a party-political point; it is a point of justice and morality. The time has come for those convicted in our courts here of offences of money laundering and so forth in overseas jurisdictions to pay their victims their due compensation.

My Lords, it is a pleasure to follow the noble and learned Lord, Lord Garnier. I have the second amendment in this group, Amendment 116. The amendments are connected by the word “compensation”, but they are actually about very different issues. Mine is a probing amendment to discuss how the current court-ordered compensation scheme could be improved. I thank the London Victims’ Commissioner and Victim Support for their very helpful briefings.

We know that crime can have a significant emotional and financial impact on victims, and research shows that many victims value compensation as a tangible form of redress. Court-ordered compensation is financial compensation that a judge or a magistrate orders must be paid to a victim by a convicted offender, and the money owed is retrieved by the Courts Service on behalf of the victim. The worries are that the system of payment and enforcement of court-ordered compensation is causing unnecessary distress and frustration, because too often the compensation is paid in very small instalments, over a long period, or, even worse, not at all.

The Ministry of Justice’s paper, Punishment and Reform: Effective Community Sentences, which was published in 2012, sets out that:

“Compensation orders are an essential mechanism for offenders to put right at least some of the harm they have caused. They require offenders to make financial reparation directly to their victims, to compensate for the loss, damage or injury they have caused”.

The problem is the slow payments and poor enforcement. The system of payment and enforcement is adding unnecessary distress and frustration to victims’ experience of the criminal justice system. The piecemeal nature of payments also acts as a constant reminder to the victim of the crime. This point was recognised by the Ministry of Justice, in a 2014 publication, which stated that

“the current scheme of receiving compensation can be distressing for victims because it prolongs their relationship with the offender and can prevent them from moving on from the experience”.

My Lords, I will speak briefly to Amendment 112. My noble and learned friend’s proposal is an excellent one and I urge the Government to address it promptly and seriously.

Companies and persons convicted of matters affecting those overseas, particularly overseas companies and the countries themselves, should be liable to compensation. It is important that it does not just feed more corruption, but the concept is plainly right. It will put this country in a good place in the world and show leadership on a really important topic, because there is far too much corruption around the world and too many countries turn a blind eye to it.

I urge the Government to take this amendment very seriously. I hope they will have come up with a concrete proposal to endorse it by Report. I commend it to the Committee.

My Lords, I support the probing amendment from the noble Baroness, Lady Brinton, which is an opportunity for the Government to look at court order compensation.

The compensation for victims when they leave a court is not the amount they receive and it takes many years. I will not repeat what the noble Baroness has said—it is on my sheet as well—but, for the victims I meet, compensation causes further problems and trauma. It gets worse if victims apply for criminal injuries compensation, because the court order compensation is deducted from any award that is made. This is fine where the court order compensation is paid, but, if not, the victim is left worse off as a result. I agree that we should look at how the Netherlands pays up front.

I know that there is no money tree but, to make it smooth for victims, instead of being for the offender to hide once again and use as a tool in financial cases for coercive control, I hope the Government will review this court order compensation scheme. I know from speaking to judges that they know that, when they award this, the offender will pay it in dribs and drabs. Now is the time for a good review of this.

My Lords, I will briefly address both amendments.

On the amendment from the noble and learned Lord, Lord Garnier, supported by the noble Lord, Lord Sandhurst, I completely agree with the need for a review and the points made by the noble and learned Lord. His speech dealt largely with corruption, but the amendment deals with bribery and money laundering, which gives rise to significant hardship in countries where it can bite. The weakness of our system is that there is no real provision for proper compensation or properly assessing compensation—even in domestic cases, let alone international ones—where there is a conviction but the degree of loss has not been properly investigated. Noble Lords will no doubt have a great deal of sympathy with the noble and learned Lord, who was allowed to address the judge out of consideration and kindness but had his submissions rejected because there was no legal standing.