War in Ukraine: Illicit Finance

Jonathan Djanogly Excerpts

Thursday 17th November 2022 Westminster Hall

[Bob Seely]

I thank the hon. Member for his very sensible point. There is absolutely a wider issue. As well as shell companies, there are vast developments on the south side of the river, around the US embassy, where entire blocks are being bought up as investment options rather than being used to provide housing for Londoners. That is shocking, especially because we have a housing shortage. There is a wider argument on reform of our housing in the UK for giving options first to allow ordinary folks to be buying it, rather than—as much as we love them—Hong Kong, Chinese or Indonesian investors to block buy endless numbers of flat and rent them out or never have them occupied.

I was going to talk a bit about the Azerbaijani laundromat. Between 2012 and 2014, about £3 billion went through UK shell companies as part of the so-called Azerbaijani laundromat; funding was dispersed from Azerbaijani officials to various outlets in this country. As well as that, London’s open economic environment has been a key centre for raising finance for companies or individuals over whom there are now very considerable question marks.

In 2017, En+ was floated on the London stock exchange, raising £1.5 billion from international investors in an initial public offering. We now know—well, we knew at the time—that En+ was very closely associated with Oleg Deripaska, despite his ownership of companies linked to supplying Russian military materials and sanctioned Russian shareholders. He himself is now sanctioned, I believe. En+ and Oleg Deripaska were part of a considerable lobbying effort by a former Member of the House of Lords—a former Conservative Minister, as much as it shames me to say it—to separate Deripaska from En+ in frankly pretty questionable circumstances.

Shortly after the Skripal poisoning, Russia continued to sell Russian sovereign debt in London, facilitated by the sanctioned Russian bank VTB. While our financial services provide anonymity to those who wish to invest, many UK legal firms have sought to further silence those who question the origin of investments.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

My hon. Friend is making a very powerful case. I agree with everything he has to say. On sanctions, he will know, not least from the talk he did yesterday afternoon with a group of Ukrainians, that there is a big call in Ukraine at the moment to turn the freezing sanctions into confiscation sanctions, and to use the money we are holding, which would presumably otherwise be given back to the oligarchs, for the reconstruction of Ukraine. Would my hon. Friend comment on that?

[Bob Seely]

I would love to; we were debating that yesterday at the Henry Jackson Society with Bill Browder and a number of other people. My hon. Friend is welcome to correct me on this, but I think Canada has prepared an Act to enable that frozen money effectively to be given to the Ukrainian authorities or set up in some kind of international fund to help reconstruction in Ukraine.

[Mr Djanogly]

The Act is quite straightforward. By way of clarification, it takes the existing sanctions legislation, including the Canadian Magnitsky law, and latches on to that the ability to change freezing orders into confiscation orders. It is a relatively simple way of going about what could be a very complicated process.

[Bob Seely]

Indeed. If it is effective, I look forward to working with my hon. Friend, and potentially other Members, to see how we can bring in such a law in the UK, so that we move from freezing money to taking money and using it for a more moral purpose.