Russian Assets: Seizure

Chris Bryant Excerpts

Tuesday 14th March 2023 Commons Chamber

[Sir Iain Duncan Smith]

I would happily welcome that. It is a very good idea.

Ultimately, the war Putin initiated on Ukraine must now be punished in a variety of ways. It is unwarranted aggression against another country, and it therefore changes how international law should be applied. We should readjust and redefine international law to the new reality that Putin’s invasion has brought about. The old order is now broken, and we need to redefine it to make sure that the lesson for any other oligarch, future leader or demagogue is that they can never again hide behind these rules.

Although international law is always evolving, we need to recognise the exceptional nature of Russia’s aggression and conduct in Ukraine, as that is critical to what we do next. Russia’s aggression and invasion are breaches of the most fundamental principles of international law and order. Russia is aware of this breach but has not stopped its conduct, and it continues to threaten international security and peace. That unprecedented conduct creates a need for all Governments in the west to amend their laws together to deter other states. These amendments should use specific and limited criteria to preserve sovereign immunity in all cases. It is possible to do both without hiding behind the idea that sovereign immunity is an absolute that cannot be breached. Putin has breached it, and in future that should be the rule.

The Economic Crime and Corporate Transparency Bill could and should be strengthened to enable the seizure of undisclosed assets—that is the key. We already have a vehicle. It is wholly possible to make that difference, and to make it quite quickly. I say to my right hon. Friend the Minister that I hope she will give that serious consideration, as it is really important.

As we know, sanctions evasion is already an offence. Embedding a new “disclosure or lose it” principle would go a long way to ensuring that sanctioned oligarchs are no longer able to conceal their dirty money here with impunity. That would help us to clean up what became a bad reputation for the City of London, whereby much of that ill-gotten money was hiding here, in one of the leading nations of the free world, and we did little or nothing to stop that.

[Sir Chris Bryant (Rhondda) (Lab)]

I get a bit frustrated when I keep hearing the Government talking about how many people we are sanctioning. There is no point in sanctioning people unless we enforce those sanctions. I find it difficult to comprehend that so far we have fined only two firms in this country. I am sure that there are many more sanctions busters in the UK than have thus far been revealed. It is important that that is not allowed to proceed with impunity, is it not?

[Sir Iain Duncan Smith]

Of course, I completely agree with the hon. Gentleman on that. Interestingly, if we manage to criminalise the failure to disclose sanctioned assets, we are halfway there on his point, because they cannot then escape. If we prove that sanctions evasion is taking place, this can be the basis for asset recovery in due course; we would then have a reason why we should be doing this, not just because of the criminal purpose, but for the fact that we would actually be able to gain funds.

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[Sir Chris Bryant (Rhondda) (Lab)]

It is a great delight to take part in this debate. I feel as if I spend more time than I ever thought I would with the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) these days, and I have friends who are bit disturbed by it. But he probably has friends who are a bit disturbed by it as well. The important point is that, if the Russian ambassador, or for that matter the Ukrainian ambassador, were to look at this debate, they might think that there are not that many people in this Chamber, but that is not because of a lack of resolution by the whole membership of this House, which is determined to ensure that we will do everything in our power—we will make sure that the Government of this country and the whole of this country will do everything in their power—to ensure that Putin does not win this illegal, criminal war that he is engaged in and has been engaged, to my mind, since 2014, not just since last year.

I am going to talk about three things: sanctions, seizing assets and who pays. On sanctions, it is often said by Ministers—I am going to be nice to Ministers because I like this Minister, and because I want them to do something and sometimes being rude about them does not work—that we are doing more sanctioning than we have ever done before. I just gently say that that is not true. We had a more comprehensive sanctions regime over Iran—not at the moment, but formerly—than we presently do over Russia. So we have to consider further sanctioning, which has to happen. It is true we did not sanction any individuals in relation to Iran and we are doing more individuals in relation to Russia, but it is the whole Russian economy that we need to debilitate so it cannot win the war.

The Minister knows that I worry we are not sanctioning enough individuals. Sometimes it feels as if the Government feel that job is done. It is not. As several hon. Members, including my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), have said, there is an issue about sanctions busting. I am certain, although I do not have proof, that sanctions busting is going on in the UK every single day of every week and has been ever since we started this process. For a start, we gave plenty of warning. People have referred to Roman Abramovich. I recall the then Prime Minister saying at Prime Minister’s questions that he had been sanctioned, but it turned out that he had not. That was a pretty good signal that he was about to be sanctioned. A couple of weeks later, because of stuff I was able to reveal about what the Home Office had been saying about Abramovich for several years, he was then sanctioned. By that time, however, yet more money had been siphoned off to another part of the world. It is true that the proceeds of the £2.3 billion sale of Chelsea football club, which happened in May last year, will eventually go Ukraine, but it has taken a very long time to put that in place. I know Mr Penrose is engaged in that and is eager to make that happen as fast as possible—incidentally, it will dwarf the contribution the UK has already made— but that contribution was not forced on Abramovich by law. In the end, he decided to agree to it. So that does not really quite count.

Treasury licences have been referred to. They are giving carte blanche to many individuals to circumvent the sanctions regime. There are undoubtedly enablers in the City of London, the same enablers we have known for years, who have enabled the dirty money to swirl around in the UK economy. There are the lawyers, the very posh law firms with very thick carpets and very thick marble walls that are doubtless refurbished every two years on the back of money that was stolen from the Russian people by people who should have been sanctioned. There are estate agents, banks and countless individuals who, without any thought to the morality of the situation, are still happy to enable sanctions busting. My worry is that there is hardly anybody in Government tracking down whether that is happening or not. Has anybody turned up to any estate agent office in Mayfair and said, “Are you checking whether any of these individuals you are buying and selling from are sanctioned individuals?” Has anybody done any investigations? I very much doubt it.

[Liam Byrne]

As ever, my hon. Friend is making a brilliant speech. I was shocked to hear that suspicious activity reports are not triggering enforcement actions for sanctions busting either. Is that not an argument for broadening the suspicious activity report regime, so that it does include people like estate agents? Surely, we should be using that as evidence to trigger prosecutions.

[Sir Chris Bryant]

Absolutely. I do not know whether my right hon. Friend has ever tried to open a bank account in the last few years, but it is almost impossible for a British Member of Parliament. I suspect it is much easier for a Russian oligarch to do so than it would be for anybody else. I really hope the Minister will take away the view of the whole House that we have to get serious about cracking down on sanctions busting in the UK.

I like a Magnum when I go to the cinema. It still upsets me that Unilever thinks that Magnums are essential in Russia, which is why it is still doing business there. Unilever should be pulling out completely from Russia. The Russians should forgo their Magnums—or is it Magna? I do not know what the plural is. For that matter, Infosys should not be operating in Russia, either.

I worry that some of our allied countries are providing a very safe haven for sanctions busting, including the United Arab Emirates. In the last year, it has become a complete paradise for dirty Russian oligarch money. If countries such as the UAE want to remain allies with us, they need to think very carefully. They may say, “Oh, but it’s only money. We are only doing what you did for years.” I hope that we in the UK are now learning the lesson of what happens when we give out golden visas to people just because they have lots of money, and do not ask any questions. It ends up biting you on the backside.

On seizing assets, I am sick and tired of the pearl-clutchers. People say, “Oh, I know. It’s really, really important. We really have to do something, but you know, Mr Bryant, you don’t understand. It’s terribly, terribly hard.” I am sorry, but where there is a will, there is a way. People want to wave sovereign immunity around all over the place, but what about the sovereign immunity of Ukraine? That was guaranteed by Putin personally, and the UK and other countries when we all signed up to the Budapest accord. Several years later, it turned out that we did not mean it quite as categorically as we stated on that piece of paper. There must surely come a time when sovereign immunity has to be waived because otherwise there is complete impunity when one country invades another. In the end, that is simply inviting countries to invade other countries.

I understand that the seizure of oligarchs’ assets is not easy. Prigozhin’s mother has just managed to win an appeal, as I understand it. But it would be much easier if there were an amendment to the Economic Crime and Corporate Transparency Bill, as several Members have mentioned already in this debate, to make it an offence for a sanctioned individual not to reveal all their assets. That would certainly make it easier for us to do that.

On state assets, I do not believe that sovereign immunity can be absolute. It is preposterous that we are sitting here, watching Canada and wondering how it will go there. When was it ever the British attitude to watch what is happening across the other side of the ocean? As my right hon. Friend the Member for Birmingham, Hodge Hill, said, it would be much easier for us to take legal action if, first, we had a United Nations resolution and, secondly, we set up a special war crimes tribunal to consider the matter of a war of aggression. Unfortunately, although the British delegation at the Nuremberg war trials said that a war of aggression was the ultimate war crime, that has not thus far been so determined. It would certainly assist us if we were able to get that. It would also assist us if we were to amend the State Immunity Act 1978.

I come to the fundamental point: everyone knows that Ukraine will have to be reconstructed. Cathedrals; schools; libraries; hospitals; people’s homes; hundreds and hundreds of apartment buildings have been completely destroyed; roads turned into craters; bridges destroyed—sometimes by the Ukrainians to prevent the Russians further invading; electricity pylons. The whole system is completely in need of reconstruction.

In the end, there are only three options for who will pay for that. The people of Ukraine cannot afford it, and it is immoral to say that they should pay. There are Ukraine’s allies, or rather their taxpayers around the world. I am absolutely certain that, as individuals, many people in the UK—including in my constituency—will want to make a personal contribution. The British taxpayer has already made contributions through the British Government. But in the end, we are talking about $1 trillion-worth of reconstruction costs already. To be honest, the £23 billion-worth of Russian state assets sitting in British banks at the moment will only touch the sides. However, if we add the €350 billion-worth sitting in European banks, along with the amounts in Canada, Australia, the USA and all the other countries in the world, we might just be able to make a dent.

Anybody from Ukraine who is watching this debate will know that we all stand four-square behind them. We want to do so not only in our words, but in our deeds. I beg, I implore the Government: you do not have to use my Bill. My Bill is completely irrelevant; it is just a way of teasing you along to do the right thing. I know you want to do the right thing—I mean the Government, not you, Mr Deputy Speaker, although you probably want to do the right thing as well. Whenever the Government are prepared to table the legislation, we all stand ready to vote it through as swiftly as we can.

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[Anne-Marie Trevelyan]

I will come back to that in a moment.

The right hon. Gentleman also set out, with his usual articulateness, a very clear pathway through which the UN and the international community might work together to seize Russian state assets. I hope I can reassure him that we will continue to work at the UN with all like-minded countries to address the asset seizure challenge.

The latest package of internationally co-ordinated sanctions and trade sanctions was introduced to mark the anniversary of the invasion on 24 February, and it includes export bans on every known item Russia has used on the battlefield. This combined package of sanctions has been carefully constructed with our allies to cripple Putin’s supply chains, to limit his ability to finance his war and to target those who are propping up his regime. It serves as a stark reminder to Russia and any other would-be hostile actors of the cost of flagrantly assaulting the democracy, sovereignty and territorial integrity of another nation.

As Members have highlighted in the debate, the reconstruction of Ukraine is absolutely at the top of the international agenda, while we continue to support Ukraine to defend its country. In September, the World Bank estimated a cost of $349 billion to rebuild Ukraine—a figure that has been rising every day since. Indeed, colleagues have highlighted recent assessments with figures of about $750 billion. Those are monumental sums to consider in respect of the reparations that will be needed.

The UK Government will continue to take a leading role in determining how to assist in this long-term reconstruction challenge. In June, we will be co-hosting the 2023 Ukraine recovery conference in London, alongside the Ukrainian Government. Together, we will mobilise public and private funds to ensure that Ukraine gets the reconstruction investment it needs.

We also remain committed to continuing our direct support for Ukraine. To date, we have helped more than 13 million Ukrainians affected by the war, providing them with £220 million of vital humanitarian assistance, delivered through the United Nations, the Red Cross and other non-governmental organisations. We will continue to work alongside our Ukrainian friends in support of their military defence for as long as they need us to do so.

The key issue of seizing Russian assets to fund Ukrainian reconstruction is one that the Government are extremely focused on, and we are in close discussions with friends and allies. The Government remain clear that Russia must be made to pay for the harm it has caused in its illegal war in Ukraine, in line with international law. The Prime Minister made that clear in the London declaration he signed with President Zelensky during his recent visit to the UK and in the G7 leaders’ statement on 24 February. We have been 100% clear: Putin must pay. We are working in the FCDO, in consultation with other Whitehall Departments and our G7 partners, to review all lawful options to make frozen Russian assets available for rebuilding Ukraine.

[Sir Chris Bryant]

We have a motion before us on the Order Paper, and I hope that the Government will not oppose it and that we will not have a Division at the end of the debate. The Government will therefore be agreeing the following:

“That this House calls on the Government to lay before Parliament proposals for the seizure of Russian state assets with the purpose of using such assets to provide support for Ukraine”.

So it is a legitimate question to ask: when will the Government be introducing the proposals that they are calling on themselves to introduce?

[Anne-Marie Trevelyan]

I thank the hon. Gentleman for that. If I may, I will continue with my speech before I run out of time. I hope to give him some assurance on his question.

We are continuing to engage with think-tanks, lawyers and Members of the House, and those they are working with, to ensure that we test every available option in detail. I reiterate that I am genuinely grateful to all colleagues for their interventions and proposals to help us work on these challenges, and we are meeting them regularly.

I want to be clear that the Government believe that we should develop the power for frozen assets to be used to rebuild Ukraine, to ensure that we can achieve that practically and lawfully. Given that Ukraine is fighting for its future and the principles of the UN charter and international law, it would be an own goal for Ukraine’s allies to risk being seen to act inconsistently with domestic and international law in their approach to seizing Russian assets.