Wagner Group: Sanctions Regime

Thursday 26th January 2023 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Wednesday 25 January.

“The war in Ukraine, as we all agree, is a barbaric, illegal incursion into a sovereign nation by another. It has resulted in tens of thousands of deaths, mass displacement and an ongoing humanitarian catastrophe.

We will always stand up for our friends and allies, and we are proud to have led the world’s response, in partnership with our allies, in supporting Ukraine in its fight against Putin’s aggression. We will deliver tanks to roll back any Russian advance, we continue providing aid to help Ukrainians as they defend their homeland, and we have unveiled the most stringent sanctions on any country at any time in our history. We want to use economic sanctions to starve Putin’s war machine and put direct pressure on every individual involved in the decision to go to war and continue to make war on Ukraine.

In response to the Question that has been asked today, I should say that it is a long-standing custom that the Government do not comment publicly on individual cases. It would not be appropriate to break that custom, even in a case as serious as this one, in which there is obviously public interest. However, I want to outline the general approach taken to date by the Treasury’s Office of Financial Sanctions Implementation in cases in which persons designated under sanctions seek licences for legal fees, and how that has been followed, and the strong constitutional reasons for that.

Within the sanctions regime broadly, because everyone has a right to legal representation, it is possible for frozen assets to be used to pay for that legal representation. OFSI grants licences to allow sanctioned people to cover their own legal fees, provided that the costs are reasonable. To be absolutely clear, decisions on the issuance of licences for legal fees are largely taken by OFSI officials in line with standard practice. The principles and guidance for assessing these applications are long-standing and have been published for a number of years. Applications are assessed solely on a costs basis.

As the UK is a country with checks and balances, it is right that the relevant court, rather than the Government, should decide the outcome of a case on the substantive merits. However, I can confirm that in the light of recent cases, and related to this Question, the Treasury is now considering whether this approach is the right one and whether changes can be made without the Treasury assuming unacceptable legal risk, while ensuring that we adhere to the rule of law. In advance of that, I know that the entire House shares the same goal: to support Ukraine and see all those behind the invasion punished for their complicity. The Government will continue to take a hard line on all those responsible.”

11:55

[Lord Tunnicliffe (Lab)]

My Lords, I will not refer to the particular case in the Question because it is clear that I would get the unhelpful answers tendered in the other place. However, we have two evils and a question of process. First, while it may be right for sanctioned individuals to use frozen funds to defend themselves, it cannot be right to use such funds to attack the free speech of others. Secondly, it cannot be right that if you have enough money you can, through the courts, suppress the free speech of others. What are the Government doing urgently to address these issues? Finally, in the other place the Minister said that decisions on legal fees are “largely taken by … officials”. Largely but not wholly means that there must have been others. Who are they?

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, to try to take the noble Lord’s questions on directly, the Government condemn the use of strategic lawsuits against public participation, commonly known as SLAPPs. The Prigozhin case can be characterised as a SLAPP, which is an abuse of the UK legal system. We are committed to introducing targeted anti-SLAPP legislation to stop Russian oligarchs corrupting our legal system. The reforms will include a statutory definition of SLAPPs, an early dismissal mechanism and costs protection for SLAPPs cases.

When it comes to the sanctions and licensing regimes, where there are derogations set out in the sanctions regime and the conditions of those derogations have been met, licences may be authorised. There is a specific derogation for legal expenses which is judged on the cost of those expenses, not the merits of any legal case. None the less, I agree with the point that the noble Lord has made: we need to take action in these cases, and the Government are committed to doing so.

On other licences for legal fees, this is a derogation that applies across the sanctions regime so there will be multiple licences issued. There is a general licence available for legal fees and that decision is, on the whole, taken by officials rather than Ministers.

[Lord Purvis of Tweed (LD)]

My Lords, I have seen Wagner operatives with my own eyes in Sudan. I was the first in Parliament to call for that group’s proscription. I did so to Ministers in this Chamber on 25 April; I did so again on 23 May, 9 June, 7 July, 15 November and, most recently, 21 December. It is an outrage that a licence from the Treasury has allowed this group to launder money through the English legal system on palpably malicious legal activities. As the Minister has just said, it is an abuse of the system. Why are the Government procrastinating on national security grounds? This group is a threat to our security and our safety, to British nationals abroad and to our allies. Why is this group not being proscribed?

[Baroness Penn (Con)]

My Lords, it is worth clarifying a number of points. In this case, we are talking about a designated person and the derogations under the sanctions regime allow for legal fees. That is clearly provided for within the sanctions regime. I understand that the Wagner Group is subject to sanctions under the Russia sanctions. On the question of proscription, I will have to write to the noble Lord.

[Lord Stirrup (CB)]

My Lords, Russia’s war in Ukraine is being spearheaded by a mercenary organisation which has terror, torture, murder, rape and all other forms of brutality at the heart of its activities. Does the Minister agree that, quite aside from the illegality of Russia’s actions in Ukraine, we should be doing all we can to ensure that such a group is unable to operate anywhere in what we would refer to as our civilised world and that we have made a less than glorious start in this regard?

[Baroness Penn (Con)]

I join the noble and gallant Lord in completely condemning the actions of this group. I know we have had the basis to sanction the group under the Russian sanction regime. I am sure we are looking at all the tools we have available to us to take further action. Proscription was one avenue raised by the noble Lord, Lord Purvis, and I will write to noble Lords to set out the Government’s position on that.

[Lord Cormack (Con)]

My Lords, having heard these powerful pleas from our two colleagues, proscription is the only answer. The noble Lord, Lord Purvis, pointed out that he raised this subject for the first time months ago. The noble and gallant Lord, Lord Stirrup, has given a graphic brief description of the evil that is being perpetrated. We should not be dilly-dallying. We should get on with it and proscribe the wretched organisation.

[Baroness Penn (Con)]

My Lords, I am not sure I can add to that at this time. What I would say to my noble friend is that when it comes to the illegal invasion of Ukraine by Russia, the steps that this Government have taken are unprecedented in terms of sanctioning individuals and entities. Nothing is off the table when it comes to further action we are looking to take. For example, we introduced the oil price cap at the end of last year as a new way to try to squeeze the revenues Russia can get from oil to fund this illegal war.

[Lord Alton of Liverpool (CB)]

My Lords, when the Minister responds to the points made by the noble Lord, Lord Purvis, and my noble and gallant friend Lord Stirrup about proscription, which was also touched on by the noble Lord, Lord Cormack, will she particularly take into account the views of the former Africa Minister Vicky Ford? In another place, she has called for this organisation to be designated as a terrorist organisation. Given her experience—she is now chair of the All-Party Parliamentary Group on Sudan and South Sudan—will the Minister particularly look at what Vicky Ford has said about the use of diamonds and gold from mines in Sudan and neighbouring countries such as CAR which are used to circumvent the currency problems? This enables the breaking of sanctions by the kleptocrats, oligarchs and militias which commit such appalling, outrageous crimes in places such as Ukraine.

[Baroness Penn (Con)]

The Government of course listen carefully to the views of all parliamentarians on this matter. Any decisions on these cases are taken within the legal framework that they need to be taken within.

[Lord Howell of Guildford (Con)]

My Lords, I am sure that my noble friend will appreciate the strength of feeling she has heard from the interventions so far. I think we are coming across our old friend non-joined-up government. It seems incredible that the departments concerned were not able to co-ordinate against a clearly identified enemy—the Wagner Group. Would the Minister accept that we are, in a sense, on a sort of war footing? It is a modern kind of war, a different kind of war, but in the past this would never have been allowed. Can she take back that message and make sure we do not do anything further to succour our enemies?

[Baroness Penn (Con)]

I absolutely agree with my noble friend on the need for co-ordination across government. Obviously different regimes, such as the sanction regime and the proscription regime, have different legal frameworks. I am sure that across government we are working to look at all the tools we have available to ensure that groups supporting the atrocities we see in Ukraine are stopped and that we use the powers we have to intervene on their actions.

[Lord Rooker (Lab)]

What was the specific rank of the civil servants who took this decision?

[Baroness Penn (Con)]

I do not have that information and I would not comment on that. It is important to understand that this decision was clearly taken within the legal framework for sanctions that we have, which has been approved by this Parliament.

[Earl Attlee (Con)]

My Lords, will my noble friend take the views of this House directly to her right honourable friend the Chancellor of the Exchequer?

[Baroness Penn (Con)]

I can undertake to do that and to include the strength of feeling around the question of other tools that we have at our disposal. As my noble friend noted, this would also need to be drawn to the attention of other government Ministers.

[Lord Scriven (LD)]

My Lords, my noble friend Lord Purvis said that he raised this organisation months ago. Once it was raised, did any government department do an assessment on this organisation? What was the outcome of that particular assessment, which stopped the organisation to date being banned?

[Baroness Penn (Con)]

As I said, the Government have taken action against the organisation. For example, it is subject to sanctions under the Russian sanctions regime. I have said I will need to write to noble Lords on wider matters. I undertake to do that.

[Lord Bellingham (Con)]

My Lords, the Minister will be aware that some of the West’s sanctions are being undermined by a key NATO ally, Turkey, where a number of oligarch’s yachts have been diverted to and a number of trust funds set up for their assets. Are the Government going to tackle this problem with our NATO counterparts?

[Baroness Penn (Con)]

One of the key aims of the Government’s sanctions policy is to co-ordinate with our allies to ensure that sanctions are as effective as possible and are not circumvented. We will continue to take action to do so.