Thursday, 23 July 2020

The ISC's Russia Report ~ some notes

This previous post (17 July) looked at Parliament's Intelligence and Scrutiny Committee ('the ISC').

On 21 July the committee issued its long-awaited report on "Russia" - see the report and press release on the ISC website

The report has considerable redactions and an entire Annex is redacted but it is interesting, even if unsurprising, reading. After all,
every "side" indulges in espionage. During the "cold war", George Blake (aka George Behar) gave the KGB the names of several hundred British agents - The Express 12 March 2019. He was sentenced by the Lord Chief Justice (then Lord Parker of Waddington) to 14 years imprisonment on each of 3 counts under the Official Secrets Act 1911 - the terms to be consecutive. He was also sentenced to 14 years concurrently on each of two further counts. Total 42 years imprisonment.

But, the ISC report is only partly about espionage. What Russia wants and why is discussed as well as Cyber threats to the UK, disinformation and influence campaigns, and the activities of Russian expatriates - quite a few of whom we were welcomed to the UK "with open arms". The report also discusses the future approach to dealings with Russia.

The Russian elite:

The report states (para 49) -

"Whilst the Russian elite have developed ties with a number of countries in recent years, it would appear that the UK has been viewed as a particularly favourable destination for Russian oligarchs and their money. It is widely recognised that the key to London’s appeal was the exploitation of the UK’s investor visa scheme, introduced in 1994, followed by the promotion of a light and limited touch to regulation, with London’s strong capital and housing markets offering sound investment opportunities. The UK’s rule of law and judicial system were also seen as a draw. The UK welcomed Russian money, and few questions – if any – were asked about the provenance of this considerable wealth. It appears that the UK Government at the time held the belief (more perhaps in hope than expectation) that developing links with major Russian companies would promote good governance by encouraging ethical and transparent practices, and the adoption of a law-based commercial
environment."

"What is now clear is that it was in fact counter-productive, in that it offered ideal mechanisms by which illicit finance could be recycled through what has been referred to as the London ‘laundromat’. The money was also invested in extending patronage and building influence across a wide sphere of the British establishment – PR firms, charities, political interests, academia and cultural institutions were all willing beneficiaries of Russian money, contributing to a ‘reputation laundering’ process. In brief, Russian influence in the UK is ‘the new normal’, and there are a lot of Russians with very close links to Putin who are well integrated into the UK business and social scene, and accepted because of their wealth. This level of integration – in ‘Londongrad’ in particular – means that any measures now being taken by the Government are not preventative but rather constitute damage limitation."

Further comment in the report (at para 54) is that -

" ... It is notable that a number of Members of the House of Lords have business interests linked to Russia, or work directly for major Russian companies linked to the Russian state – these relationships should be carefully scrutinised, given the potential for the Russian state to exploit them. It is important that the Code of Conduct for Members of the House of Lords, and the Register of Lords’ interests, including financial interests, provide the necessary transparency and are enforced. In this respect, we note that the Code of Conduct for Members of Parliament requires that MPs register individual payments of more than £100 which they receive for any employment outside the House – this does not apply to the House of Lords, and consideration should be given to introducing such a
requirement. A ‘Foreign Agents Registration Act’ (an issue which is addressed in the section
on Legislation) would also be helpful in this respect."

The EU referendum 2016:

There have been widespread public allegations that Russia sought to influence the
2016 referendum on the UK’s membership of the EU. The report states (39) - "The impact of any such attempts would be difficult – if not impossible – to assess, and we have not sought to do so. However, it is important to establish whether a hostile state took deliberate action with the aim of
influencing a UK democratic process, irrespective of whether it was successful or not."

The committee then said that its request for written evidence resulted in just six lines of text from MI5. This brevity was indicative of  "of the extreme caution amongst the intelligence and security Agencies at the thought that they might have any role in relation to the UK’s democratic processes, and particularly one as contentious as the EU referendum. We repeat that this attitude is illogical;
this is about the protection of the process and mechanism from hostile state interference,
which should fall to our intelligence and security Agencies."

Scottish Independence Referendum 2014:

At paragraph 41 - "There has been credible open source commentary suggesting that Russia undertook influence campaigns in relation to the Scottish independence referendum in 2014."

Very little further information is supplied due to redaction which is indicated by ***. Thus we see -

"However, at the time ***. It appears that *** what some commentators have described as
potentially the first post-Soviet Russian interference in a Western democratic process. We
note that – almost five years on – ***."

One example of media commentary (not referred to in the published report) is How Russia is prodding Scotland toward independence (FP News 18 February 2020).

No doubt, Scottish Ministers will be seeking more information as to the report's hidden contents.

: Legislation :


Given the difficulties inherent in seeking to counter Russian Hostile State Activity, it is essential that the Intelligence Community have the legislative powers and tools they need. However, the Home Secretary was quite clear that “we don’t have all the powers yet”.

Counter-espionage:

Paras. 110-117

"The current legislation enabling action against foreign spies is acknowledged to be weak. In particular, the Official Secrets Acts are out of date – crucially, it is not illegal to be a foreign agent in this country."

"The Director-General of MI5 told us that: ... there are things that compellingly we must investigate, everybody would expect us to address, where there isn’t actually an obvious criminal offence because of the changing shape of the threat and that for me is fundamentally where this doesn’t make
sense."

"In 2017, the Law Commission ran a consultation which considered options for updating the Official Secrets Acts and replacing them with a new ‘Espionage Act’. The outcome of the consultation is still awaited. In the meantime, the Prime Minister, in March 2018, asked the Home Secretary to “consider whether there is a need for new counter-espionage powers to clamp down on the full spectrum of hostile activities of foreign agents in our country”.

"In evidence to us, the Home Secretary accepted that the Official Secrets Acts were “completely out of date”.

"The Director-General of MI5 echoed this, saying: The purpose of [a potential new Espionage Act] is to be able to tighten up on the powers that have become, you know, dusty and largely ineffective since the days of the Official Secrets Act, half of which was drafted for First World War days and was
about sketches of naval dockyards, etc., and then there was a 1989 ... addition to it, but we are left with something which makes it very hard these days to deal with some of the situations we are talking about today in the realm of the economic sphere, cyber, things that could be, you know, more to do with influence."

One specific issue that a new Espionage Act might address is individuals acting on behalf of a foreign power and seeking to obfuscate this link. The US, in 1938, introduced the US Foreign Agents Registration Act (FARA), which requires anyone other than accredited diplomats – including both US and non-US citizens – who represents the interests of foreign powers in a “political or quasi-political capacity” to register with the Department of Justice, disclosing their relationship with the foreign government and information about related activities and finances. Additionally, US legislation requires agents, other than diplomats, performing non-political activities under the control of foreign governments or foreign officials, to notify the Attorney General (registration under FARA serves as the requisite notification). The UK has no equivalent legislation to FARA.

There is still no sign of broader legislation being brought forward and the Home Secretary, in evidence to the ISC, said that the Law Commission's work was awaited - " ... it makes sense to take into account what they have got to say as well before we rush out some legislative proposal.

The Home Secretary continued - " ... the Official Secrets Act regime is not fit for purpose and the longer this goes unrectified, the longer the Intelligence Community’s hands are tied. It is essential that there is a clear commitment to bring forward new legislation to replace it (and a timetable within which it will be introduced) that can be used by MI5 to defend the UK against agents of a hostile
foreign power such as Russia."

Tackling crime:

Paras. 118-121

A further section of the report looks at "tackling the criminal activities of Russian expatriates and those who enable such activities."

Unexplained Wealth Orders came into force in January 2018 through the Criminal Finances Act 2017. These require an individual with unexplained wealth in assets over £50,000 to provide information as to the legitimacy of these assets. Failure to respond or comply with the order may lead to a presumption that the assets are recoverable property in any subsequent civil recovery proceedings before the High Court.

The National Crime Agency (NCA) can obtain an Unexplained Wealth Order in relation to anyone who is either a Politically Exposed Person from outside the European Economic Area (EEA), someone involved in serious crime, or an individual or entity connected to such people.

The Security Minister told the Committee that Unexplained Wealth Orders were acting as a deterrent:
We know from both intelligence and open source that people are approaching financial advisers about how to get their money out of Britain as a result of these Unexplained Wealth Orders, and I think you will see them being used more going forward.

However, the Director-General of the NCA cautioned that: ... unexplained wealth does have to be unexplained and, unfortunately ... Russians have been investing for a long period of time ... you can track back and you can see how they will make a case in court that their wealth is not unexplained, it is very clearly explained.

As a result, it appears that Unexplained Wealth Orders may not be that useful in relation to
the Russian elite. Moreover, there are practical issues around their use, as the NCA
explained: We are, bluntly, concerned about the impact on our budget, because these are wealthy
people with access to the best lawyers and the case that we have had a finding on ...
has been through every bit of court in the land, and I’ve got a very good legal team
based within the National Crime Agency but they had a lot of resource dedicated out
of my relatively small resource envelope on that work."

There appear to be similar concerns in relation to sanctions. The NCA told us that
sanctions have “a powerful impact” on members of the Russian elite and their professional
enablers, and “provide a significant primary disruption when imposed, and also open up a
range of effective secondary disruptions through sanctions evasion offences”. However,
the NCA also underlined that there are several ways in which the Sanctions and Anti-Money
Laundering Act 2018 is too restrictive. 

The NCA outlined changes that it would wish to see to the legislation:

• including serious and organised crime as grounds for introducing sanctions;

and

• providing for Closed Material Proceedings to protect sensitive intelligence in the granting of, and any appeal against, sanctions (the Special Immigration Appeals Commission procedures offer a useful model for this).

The ISC report also notes that the Computer Misuse Act 1990 should be updated to reflect modern use of personal electronic devices.

Protecting democracy:

Paras. 122 - 124

The Digital, Culture, Media and Sport (DCMS) Select Committee has already asked the Government “whether current legislation to protect the electoral process from malign interference is sufficient. Legislation should be in line with the latest technological developments”.

The ISC noted "that physical interference in the UK’s democratic processes is less likely given the use of a paper-based system" but it supported "the DCMS Select Committee’s calls for the Electoral Commission to be given power to “stop someone acting illegally in a campaign if they live outside the UK”.

Separately, there is the question of influence over our democratic processes. Questions have been raised over whether electoral law is sufficiently up to date, given “the move from physical billboards to online, micro-targeted political campaigning”.

The ISC saw the UK as " ... clearly vulnerable to covert digital influence campaigns”. In this respect, we have already questioned whether the Electoral Commission has sufficient powers to ensure the security of democratic processes where hostile state threats are involved; if it is to tackle foreign
interference, then it must be given the necessary legislative powers."

"We also emphasise the need to ensure that the focus is not solely on national events and bodies. It is important to include local authorities."

The ISC was "encouraged that this issue seems to have been recognised and that action is being taken."

Comment:

We will never see the full contents of this important report and government will inevitably claim "national security" over its detailed response.

One sign that the government is actually taking the report seriously will be if legislation is brought forward to address the points raised by the committee. The Law Commission's report on Protecting Official Data is expected this year - see Annual report 2019-20.

Regarding the concerns about possible interference in national elections and referendums, it will be crucial to see what action government takes to safeguard these core elements of democracy. It is not encouraging to note that the Prime Minister, in any early reaction to the report, rejected calls for an investigation into Russian intereference in the 2016 Brexit referendum - The Times 21 July.

Respect for Parliament itself will diminish unless the concerns relating to House of Lords members with "business interests linked to Russia" or who "work directly for major Russian companies linked to the Russian state" are addressed. Whilst the report calls for careful scrutiny of their activities this may prove to be inadequate.

Certainly members of the Lords should have to register individual payments and, on the face of it, this reform ought not to be too hard to achieve. But I wonder whether such peers ought to be even in Parliament. Let those with substantial interests in foreign powers be required to choose between continuing those interests or being a member of the British Parliament.

Hansard 22 July 2020 - Intelligence and Security Committee: Russia Report

Hansard 22 July 2020 - Prime Minister's Questions

23 July 2020

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