Russian Assets: Seizure

Alex Sobel Excerpts

Tuesday 14th March 2023 Commons Chamber

[Sir Iain Duncan Smith]

I must say, the hon. Lady’s debate was fascinating. She demonstrated that by our failure to follow this course, a UK company is essentially sanctioned because it is unable to get payment. The measures bounce back at us and honest, decent companies find themselves trapped by the failure to square the circle of the process and get everyone all along the chain. It was a brilliant debate, and I congratulate her on raising the subject on behalf of her constituents.

The Government should introduce new legislation to allow the seizure of already-frozen assets that are linked to criminality. The Russian Government have a huge amount of money of course, but many oligarchs are guilty of benefiting financially from war crimes and atrocities in Ukraine, so we should activate new legislation. Under such a mechanism, an enforcement authority such as the National Crime Agency could bring proceedings in a UK court to have property belonging to a sanctioned person involved in a gross violation of international human rights law or international humanitarian law confiscated without compensation, so that the frozen property can be used to fund reparations. That is the key.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

That is a really important point. As co-chair of the all-party parliamentary group on Ukraine, I know that Ukrainian parliamentarians, including those from the Rada who are in the Gallery, are desperate to repair and reconstruct their country. The air raid early warning system in Ukraine is broken—only 12% of the country is covered. They need reparations to be able to wage war and to reconstruct their country.

[Sir Iain Duncan Smith]

The hon. Gentleman is right, and I obviously completely agree.

If we did this, we could have tougher sanctions. A recent example involved Eugene Tenenbaum, a close associate of Roman Abramovich—I am told that “Abram-oh-vich” is the correct pronunciation—and former Chelsea football club director, who was given permission by the Treasury to sell his Surrey mansion for £16 million a month after the Government designated him for UK sanctions and froze all his assets. How did that happen? Why did that happen? Who is not talking to someone else to tell them what they are doing? We are letting stuff slip through because we are not being serious about implementing measures properly.

I could give plenty of other examples. Yevgeny Prigozhin, the boss of the Wagner Group, is deeply involved in another current row about aircraft leased by western companies to Russia that were seized after sanctions were imposed. The Russians are refusing to pay reparations or hand the aircraft back. Huge amounts of money are available to these people. I have a list, but will not go through all the names, because I realise that many others want to speak.

Putin’s brutal invasion has now entered its second year. The Government must amplify their efforts. They have done a great deal, and I congratulate them on much of it, but much more is needed. The Government need to get right down into this issue and make sure that we have a plan for reparation and rebuilding of Ukraine. Let us start with the dirty money—that is the key. We may yet have to give more money, and so may America, but let us start where the bill lands first: with those who are responsible for this brutal invasion of Ukraine. The Ukrainians are a peaceful and decent people whose lives have been turned upside down. Families have been destroyed or have had to flee, and many young men and women are now having to go to the frontline for the first time as soldiers and put their lives on the line, standing for the freedom of their country. We must seize those assets wherever appropriate and ensure that Russia is held to account. As I said earlier, there is much to say “Well done” to the Government for, but there is also much more that needs to be done.

I will leave hon. Members with this simple thought: as we come together across the House, let us also try to work out how we can bring all the other western Governments together in this action. To do it by ourselves will, I recognise, be a slight problem, but if we could get the US Congress, the Canadian Parliament and the European Union to engage on this, then we would have something that would frighten the Russians completely and give us the tools to finish this particular job.

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[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I welcome the speech by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), which I thought was excellent. I will supply three further thoughts and set the context for the scale of the task of Ukrainian reconstruction. I am glad the Government have offered to host the June conference for reconstruction finance, following on from a member of conferences in Lugano.

It is worth setting out for the House the sheer scale of the finance we need to mobilise, which is why the right hon. Gentleman is correct to say that we must start by seizing Russian assets now. Frankly, we will need to provide an enormous amount of money to our Ukrainian colleagues. Ukrainian GDP has been hit by about 45%; the World Bank thinks its budget deficit this year will be something like $38 billion. As many who have been there know, Ukraine has very high inflation and therefore very high interest rates; perhaps one third of businesses have stopped operations, 14 million people have left their homes, 6 million have gone abroad, there has been huge educational disruption for the next generation of Ukrainians and about half the energy infrastructure has been knocked out.

This has been a moment where the Bretton Woods institutions have really stepped up. Between the International Monetary Fund and the World Bank, something like $27 billion has been supplied this year. Those Bretton Woods institutions offer us one of the most efficient and effective routes for providing what could be, on current estimates, a $750 billion bill to rebuild the great country of Ukraine. As chair of the parliamentary network on the World Bank and International Monetary Fund, I am delighted that we have just launched the Ukraine chapter of the network. I am also delighted that at our global parliamentary forum, at the beginning of the spring meetings in Washington in April, we will have a special session focused on reconstruction finance for Ukraine.

However, $750 billion is a big number. Capitalising those kinds of loans could take $150 billion-worth of equity. That is why seizing, let us say, $300 billion of Russian bank reserves frozen abroad will be incredibly important in helping to supply that money.

[Alex Sobel]

With the reconstruction conference taking place in London on 21 and 22 June, does my right hon. Friend not think it is important for us to involve the IMF and World Bank in that conference and ensure that we have a rounded package for Ukraine, rather than working in silos or isolation?

[Liam Byrne]

It is crucial that we do that, and the spring meetings in Washington should provide a springboard, but the most efficient way of surging the necessary money into Ukraine is through the Bretton Woods institutions that we set up in 1944 to finance post-war reconstruction. We did it before—let us try it again.

My second point, having set the stage and set out some of the numbers, follows on from the right hon. Member for Chingford and Woodford Green. We now have to identify the legal strategy for turning this idea into a reality. All of us in this House are frustrated that the Government—and, indeed, Governments around the world—are, we feel, dragging their feet when it comes to putting in place the necessary laws to move from freezing to seizing. There are probably three components that we need to shift into place: there needs to be action at the United Nations; there needs to be action to set up the tribunal to prosecute Russia for the crime of aggression; and then we need to implement the ten-minute rule Bill of my hon. Friend the Member for Rhondda (Sir Chris Bryant), which would create the legal framework for action.

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[Alex Sobel]

The right hon. Gentleman is just coming on to the point I was going to make. There is some contention about assets held by private individuals and about their getting caught up in a very long legal process, but that is not the case with state assets and the assets of state-owned companies that he has just talked about, which we can address now. He talked earlier about reconstruction, but we do not need to wait until the war is finished. Many liberated areas need reconstruction now, and many other projects need to be financed. That work needs to happen now, not after the war has finished.

[Sir John Whittingdale]

I completely agree with the hon. Gentleman. I think the legal process for seizing the assets of Russian state institutions will be complicated, but it is certainly more feasible than addressing those of private individuals. That is not to say that we do not need to move to do so, but it will be legally much more complex.

Many of the oligarchs hold immense wealth and assets in western countries, and they do so at the behest of the Russian Government. No oligarch is able to hold enormous sums of wealth and maintain their position in Russia, unless it is with the agreement of the Russian Government. A number of them are known as wallets, which means they are simply taking care of the wealth of Mr Putin and others at the senior levels of the Russian Government. It is right that we should address that, but we have to accept that this country has a proud history of respect for property rights and the rule of law, and we have also seen the extent to which lawyers will pursue cases on behalf of those individuals. The right hon. Member for Birmingham, Hodge Hill (Liam Byrne) mentioned strategic lawsuits against public participation, and we have already seen examples of that.

I do not in any way underestimate the complexity. This will be an unprecedented legal measure, but it is necessary because, as has already been said, the devastation wreaked in Ukraine has to be put right, and it is only proper that that should be done by those responsible, who are the Russian Government. I agree with my right hon. Friend the Member for Chingford and Woodford Green that that will need international agreement. It cannot be done by us alone, but it is right that we start to look now at seeking that multilateral agreement among all the countries where these assets are held and to prepare for the day when we can start to make Russia pay for what it has done.