Andrey Lugovoy and Dmitri Kovtun Freezing Order 2018

Lord Young of Cookham Excerpts

Tuesday 20th February 2018 Lords Chamber

Moved by

[Lord Young of Cookham]

That the Order laid before the House on 19 January be approved.

[Lord Young of Cookham (Con)]

My Lords, the 2018 order was laid before both Houses on 19 January of this year and came into force on 22 January. This was to ensure that there was no gap in the freezing measures enforced against Andrey Lugovoy and Dmitri Kovtun the day after the publication of the Litvinenko inquiry report on 21 January 2016. The order was debated and approved in the other place on 8 February.

Noble Lords will not need to be reminded that the independent inquiry, chaired by Sir Robert Owen, concluded that Alexander Litvinenko was deliberately poisoned in 2006 by Lugovoy and Kovtun through the use of polonium-210, a radioactive isotope. The inquiry also concluded that there was a “strong probability” that Litvinenko, an ex-KGB and ex-FSB officer and a critic of the Russian Government, was murdered on the order of the FSB, the Russian domestic security service. Furthermore, the killing was “probably approved” by the then head of the FSB, Nikolai Patrushev, and the Russian President, Vladimir Putin.

In response to the seriousness of the report’s conclusions, the Treasury imposed an asset freeze on Lugovoy and Kovtun on 22 January 2016 by making a freezing order under the Anti-terrorism, Crime and Security Act 2001. The 2016 freezing order had the effect of freezing any funds or assets that these two individuals held in the UK or with any UK-incorporated entities, denying them access to the UK financial system and prohibiting UK persons from making funds available to them. The Treasury routinely monitors information provided on financial sanctions on all designated persons. During the two-year period, no relevant information was received in respect of Lugovoy and Kovtun.

Under Section 8 of the Act, the duration of a freezing order is limited to two years. During that two years, the Treasury is required, by Section 7 of the Act, to keep the order under review. In order to maintain the asset freeze, the Treasury was required to review the case and to decide whether to make a new order. The Treasury has conducted such a review and has decided to make a new freezing order.

The Treasury believes that making a new order remains an appropriate and proportionate measure to take. It will ensure that any assets discovered in the UK that belong to the two individuals are immediately frozen, and it will prevent the men trying to access the UK financial sector. The relevant conditions required to be met, in accordance with Section 4 of the Act, are still being met today—the Treasury reasonably believes that action constituting a threat to the life or property of one or more nationals of the UK or residents of the UK has been or is likely to be taken by a person or persons resident in a country or territory outside the UK.

The freezing order is one of a limited number of measures available to the UK authorities as a means of acting directly against Lugovoy and Kovtun. The other actions include Interpol red notices and European arrest warrants, which also remain in place. The Russian authorities’ refusal to accede to extradition requests following the murder of Mr Litvinenko and their lack of co-operation with the inquiry have blocked progress being made by the Metropolitan Police investigation into Lugovoy and Kovtun. There is therefore little prospect of bringing them to trial in a British court.

However, we continue to believe that the freezing order acts as a deterrent and as a clear signal that this Government will not tolerate such acts on British soil and will take firm steps to defend our national security and rule of law. Failure to renew the asset freezes against Lugovoy and Kovtun would, I believe, risk reinforcing a damaging signal that the consequences of murder carried out in the UK are few and time-limited, and that it is possible to evade the UK justice system by fleeing overseas.

Noble Lords will be aware that the UK’s relationship with the Russian Government remains strictly limited as a result of the Litvinenko assassination and the illegal annexation of Crimea by Russia. We continue to engage with Russia on a guarded basis, defending UK national security where necessary. We will continue to pressure the Russian Government to do more to co-operate with the investigation into Mr Litvinenko’s death. This includes the extradition of the main suspects, the provision of satisfactory answers, and an accounting of the role and activities of its security services.

This new freezing order maintains the asset freeze originally imposed by a similar order passed in 2016. It acts as a deterrent and a signal that the UK will not tolerate such acts on British soil and that we will defend our national security and the rule of law. I beg to move.

[Viscount Waverley (CB)]

My Lords, following the protocol to declare such interests, I do so, informing the House that I am a vice-chair of the All-Party Parliamentary Group on Russia.

It is the nature of the challenge—the noble Lord, Lord Young, touched on this—that UK/Russia relations can charitably be defined as fraught. However, for ever wishing to see justice adhered to, and given that Russia is highly unlikely to agree to the extradition to the United Kingdom, not least because under the Russian constitution no Russian can be extradited if it undermines their citizens’ rights—in addition to the concern that in the UK the proceedings were, I understand, held in camera, thus suggesting to the Russians that this process is all being conducted in secrecy—I understand that there is a willingness by Russia to make these two men available for interview or for a process through a mechanism such as Skype or some other such means.

I want to make one point about something that troubles me. The Foreign Secretary travelled for a bilateral meeting in Moscow with his opposite number, Foreign Minister Lavrov, on 22 December, but I understand that the Foreign Secretary failed to discuss this case with Minister Lavrov. Since the case of Mr Litvinenko is a plank of UK foreign policy towards Russia, this is surprising to me, to say the least, as it sends conflicting messages to the Russians.

Given that background, would it not be more practical to consider encouraging other jurisdictions to assist—for example, by calling on the International Court of Justice to play a role and, in effect, lend good offices to allow for a fair hearing to be conducted? That would in no way suggest that the individuals in question would not receive a fair hearing here in the UK.

--- Later in debate ---

[Lord Tunnicliffe (Lab)]

My Lords, we on these Benches accept and believe that the order is an appropriate, commensurate and proportionate response in relation to the specified persons. In coming to that conclusion, we have of course looked at the order with care. I also looked up the time when the first order was initiated—two years ago—only to discover that I was in fact the Opposition spokesman then. Time has not changed much.

The noble Lord, Lord Ashton of Hyde, answered all my questions at that time, except one. I quote him:

“As the noble Lord may know, Mrs Litvinenko’s lawyers provided a list of people who she felt should have further action taken against them. Some are members of the Russian authorities who are already under sanctions relating to Crimea and activities in Ukraine. The rest of the list is being considered by the Home Secretary, but so far no action has been decided upon”.—[Official Report, 10/2/16; col. GC 228.]


Has any further action been decided upon for individuals on that list?

[Lord Young of Cookham]

My Lords, I am grateful to all noble Lords who have taken part in this debate for their broad support for the order. I will try to deal with the points that have been raised, but I may have to write in respect of some of them.

To the noble Viscount, Lord Waverley, I say that the Russian authorities should be in no doubt about the position the Government have taken in relation to Litvinenko. We have reinforced our message several times: we have made very clear our profound concerns to the Russian Government in Moscow, we have summoned the Russian ambassador to the Foreign Office in London and we continue to demand that the Russian Government do more to co-operate with the investigation into Mr Litvinenko’s death, including extraditing the main suspects, providing satisfactory answers and accounting for the role of their security service. The noble Viscount raised the issue of the ICJ. I think that is probably a matter for the ICJ but I will make further inquiries.

[Lord West of Spithead (Lab)]

I speak from an intelligence background. Does the Minister agree that when one looks at patterns of operation, the way in which this whole affair has been dealt with by Russia is exactly the same way as it dealt with similar things when it was the Soviet Union—particularly its normal, KGB-type way of reacting and acting when these sorts of things happen?

[Lord Young of Cookham]

I agree with the noble Lord. It is very disappointing that these practices have reappeared in the Soviet Union and have damaged our relationship with that country.

My noble friend Lord Robathan asked what we were doing to stop Russian criminals from exploiting the UK financial system. He may know that we passed the Criminal Finances Act 2017, which introduced criminal offences relating to companies that failed to prevent tax evasion. We made a commitment at the 2016 Anti-Corruption Summit to publish an anti-corruption strategy, setting out a work plan through to 2022. We have created a new National Economic Crime Centre within the National Crime Agency to bring together all our capabilities to fight economic crime, including the specific instances mentioned by my noble friend.

My noble friend may also know that we recently introduced unexplained wealth orders, so in addition to the action we have taken to deal with money laundering—such as the register of beneficial owners—we have taken powers to require people who own property that would ordinarily be beyond their obvious means to prove how they lawfully acquired it. On 31 January this year, the regulations that introduced UWOs came into force. A UWO requires a person who is reasonably suspected of involvement in—or connection to someone involved in—serious crime to explain the nature and extent of their interests in a particular property and to explain how the property was obtained where there are reasonable grounds to suspect that the respondent’s known, lawfully obtained income would be insufficient to allow the respondent to obtain the property.

The noble Baroness, Lady Kramer, asked whether cryptocurrency was included. In Schedule 2 of the order, “funds” is fairly embracing, meaning,

“including (but not limited to) … gold, cash, cheques, claims on money”,

et cetera, and Schedule 4, which deals with freezing prohibitions, refers to,

“making available the proceeds of realisation of property belonging to a specified person, and … making a payment to or for the benefit of a specified person”.

So my advice is that the order includes cryptocurrency. I agree with the noble Baroness that it is unlikely that these individuals will come to the UK or indeed that they have any assets in the UK.

The freezing order applies to overseas banks. The noble Baroness asked a more specific question about shell companies. I would like to write to her about that, but if the money from a shell company went through a bank, it would be caught by the order. She also asked about the delay in introducing the freezing order. She will know that there was a sequence of events—the inquiry that culminated, eventually, in the Sir Robert Owen inquiry. It was some time before we knew who to go for after the tragic death of Litvinenko. I agree with what she and other noble Lords said about the widow, Mrs Litvinenko.

I am sorry that the noble Lord, Lord Tunnicliffe, has had to wait two years for an answer to the question that he asked last time. The Government decided not to implement asset-freezing orders against those individuals mentioned in the letter under this legislation with the exception of Lugovoy and Kovtun but, as was indicated in 2016, a number of individuals on the list provided by Mrs Litvinenko’s lawyers have been designated for other reasons under sanctions relating to Crimea and activities in Ukraine. There is an ongoing police investigation into the two individuals that we discuss this evening.

I will have to write to the noble Lord, Lord Hylton, in answer to his questions about the total volume of assets frozen under freezing orders. I think he went just beyond the order that we debate this evening and his question applied to all freezing orders, so I will write to him. I am sorry if I have not answered all the questions raised by noble Lords. I will write in respect of those that I have not been able to answer.

Motion agreed.