Export Control (Amendment) (No. 2) Order 2011

My Lords, the order was laid before Parliament and came into force on 2 March. It was made using powers under Section 6 of the Export Control Act 2002. It imposed export controls on unissued Libyan bank notes and unissued Libyan coins. As a result, the export to any destination of such notes and coins is prohibited unless a licence has first been obtained from the Secretary of State for Business, Innovation and Skills. The order revoked and replaced the Export Control (Amendment) Order 2011 which, for reasons of urgency, was made and came into force on Sunday 27 February and was laid before Parliament at the earliest opportunity on Monday 28 February. This order had imposed controls on the export of unissued Libyan bank notes. I will explain the background to the 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 asked for urgent delivery of the entire stock of outstanding notes, valued at nearly £900 million. Given the worsening situation in Libya and the imminent imposition of United Nations sanctions against that country and its regime, the Government judged that there was a risk that regime members would attempt to move state assets with the intention of keeping them for their own benefit if the regime failed, against the interests of the Libyan people. There was also a risk that the assets might be misdirected through corruption. In both cases, we assessed that the movement of these funds would constitute money laundering. There was an urgent need to prevent the supply of the bank notes in order, first, to mitigate the risk that the money would be used by Colonel Gadaffi and his associates to support further violent repression of the civilian population; secondly, to prevent Colonel Gadaffi and his associates misappropriating the money for personal use if and when forced from office; and thirdly, to ensure that the money was kept safe for future legitimate use by Libya when the risks I referred to no longer exist. We needed to act quickly. The printer had told us that contractually it had no grounds for delaying the shipment. We considered a number of ways in which we could prevent the supply of the notes. We were working hard at the UN for a Security Council resolution that would impose, among other things, an asset freeze. We did not know at the time whether this would include the Central Bank of Libya, or how long it would take. We also considered whether it would be possible to take action under the Proceeds of Crime Act 2002. However, 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 circulation and therefore did not constitute legal tender, but because they were paper notes they were ““goods”” that could be controlled under the powers of the Export Control Act. We decided that the use of these powers offered the quickest and most robust method of preventing the supply of the notes. Officials in my department worked closely with HM Treasury and others to draft the legislation. Work continued on this on the Friday night and into the weekend. Because the notes could be shipped at any time, it was essential that the order came into force as soon as possible. This meant bringing it into force on Sunday 27 February, before it could be laid before Parliament. In compliance with the requirements of Section 4 of the Statutory Instruments Act 1946, my department wrote to the Speakers of both Houses setting out the reasons. The Export Control (Amendment) Order 2011 was laid before Parliament at the earliest opportunity, on Monday 28 February. Soon after this, the Government became aware that a further contract existed with another supplier, in this case for the supply of unissued Libyan coins. Although the value of the coins was much lower, we judged that the same risks of money laundering and of the misappropriation of state assets existed. We therefore made the Export Control (Amendment) (No. 2) Order which imposed export controls on unissued Libyan coins as well as bank notes. This order was made, laid and came into force on 2 March. At the same time, the original order was replaced and revoked by the new order. The order was laid before Parliament pursuant to the procedure in Section 13 of the 2002 Act and, unless approved by a resolution of each House within 40 days, it will cease to have effect. Orders made under Section 6 last for a maximum of 12 months. The situation in Libya and the international response to it is and has been changing rapidly. We are keeping the need for this order under review. If it becomes clear that it is no longer required, it will be withdrawn. On the basis of the facts that I have outlined, I commend the order.