Russian Assets: Seizure

Jonathan Djanogly Excerpts

Tuesday 14th March 2023 Commons Chamber

[Mr Jonathan Djanogly (Huntingdon) (Con)]

This war must see Ukraine and its people emerge victorious—there are no plausible alternatives—but there is still a gap as to how to pay for Ukraine’s reconstruction in the short term and once the war is won. There is no doubt that the west will do its part when it comes to it, but a question of fairness, or the lack thereof, remains. It cannot be right for the burden of reconstruction to fall solely on the shoulders of western taxpayers, especially as estimates for it are astronomically high. As has been said, the suggestions on the ground in Ukraine are that it will cost around $750 billion, and that figure will only continue to grow as Russian armed forces and mercenaries continue their indiscriminate destruction.

The aggressor in this case—the Russian Federation—its political and military leadership, and, yes, its people must pay the price. They must pay the price for disregarding, and in fact smashing, the rules and norms of the post-1945 world order that had guaranteed the peace in Europe for so long. What Russia started by invading Georgia in 2008, it continued in Crimea, Donbas and then wider Ukraine, so there must be no more free passes for Russia to invade, brutalise and plunder. To appease Putin would only encourage him to greater brutality.

Our current freezing sanctions are robust, wide-ranging and necessary, but in the light of Russia’s barbarism, they do not go far enough. There remains some debate as to the quantity of assets frozen here in the UK—assets of the Russian state and of individuals, and we have had a discussion about that this evening—but regardless of the specific value of those frozen assets in the UK, it is clear that frozen assets worldwide could form the lion’s share of future support to Ukraine, including for the vital reconstruction of people’s homes and national infrastructure.

Seizure, however, requires both political courage and will, and that has been exhibited by our Canadian allies. I advise my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) that the Canadians are doing more than talking about it; they are acting on it. In June last year, lawmakers in Ottawa empowered the relevant Canadian Ministers to approach their Attorney General to apply to the courts to forfeit assets—assets that had already been frozen—for the benefit of Ukraine. The legislation builds in important safeguards to protect rights to property, including that any person who appears to have an interest in the frozen assets may be heard by the court. None the less, seizures are now under way specifically in relation to an estimated $26 million held by Granite Capital Holdings, a company owned by the sanctioned oligarch Roman Abramovich. Discussions are, I understand, ongoing about how the proceeds should be used and distributed in Ukraine, be that directly through the Ukrainian state or by select non-governmental organisations, but the fact of seizure is now a legal reality in a friendly nation with a legal system similar to our own.

Conversations I have had with lawmakers in other allied nations, such as the US, indicate that they are also considering how to make seizures legally viable and feasible in their own jurisdictions, and media reports suggest that this is also the case in capitals across the EU, such as Tallinn. We should be doing likewise here in the UK as well. Not to do so, I believe, risks our finding ourselves in the morally dubious political situation of handing back frozen assets to Russia and to sanctioned individuals, or it could lead to individual national deals with sanctioned people that could put us out of lockstep with our allies.

One of the many lessons of the last year since the renewed invasion is how important it is to present a relentlessly united front to Russia. On the day that we were privileged to welcome President Zelensky here for his outstanding address, the Prime Minister made positive and welcome comments about the necessity of asset seizures, as I note did the Leader of the Opposition. Now is the time to follow that up with firm action. As of today, I am confident in predicting that such action would have the overwhelming support of this House, and I think we have seen the cross-party support here today. Where there is political will, there is always a way, as our fellow Canadian parliamentarians have demonstrated. I strongly welcome this debate, and I urge the Government to set out a practical and effective plan for frozen Russian assets to be seized and repurposed to Ukraine’s benefit.

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[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.

[Mr Djanogly]

Is there not also a concern that if we do not act with our allies to move ahead on this principle, and we all start doing our own deals on releasing assets, that would be very damaging for the wall of sanctions? Indeed, the Ukrainians have said that they would be very much against individual deals.

[Anne-Marie Trevelyan]

I thank my hon. Friend for setting out one of the important issues that we are making sure we work on as effectively as possible. We are working very closely with our allies on the handling of seized Russian assets, and we will continue to do so. Let us be clear: our international partners face the same challenge. No country has yet found a legally tested solution. The right hon. Member for Barking (Dame Margaret Hodge) highlighted that Canada is testing the first seizure proposals and we are watching closely. I reassure the House that as progress is made by individual international partners, we will be right alongside them in considering how the UK can find solutions here too. Of course, as has been set out by colleagues, many proposals need UN leadership, and we will keep on driving that coalition.

In the meantime, we have made it clear that, consistent with our legal systems, Russia will have no access to the assets we have frozen or immobilised until it ends, once and for all, its violation of Ukraine’s sovereignty and territorial integrity. Russia will not get a single euro, dollar or pound back until that is realised.

Colleagues have raised questions about the Economic Crime and Corporate Transparency Bill. It will sit alongside the National Security Bill, the Online Safety Bill and the forthcoming economic crime and fraud strategy. It will bear down on criminals who abuse our open economy by reforming Companies House to prevent abuses of limited partnerships; there will also be reforms to target more effectively information sharing to tackle money laundering. The right hon. Member for Barking is right about the effectiveness of section 11 of the Sanctions and Anti-Money Laundering Act 2018, and it is used regularly.

I know that right hon. and hon. Members will be disappointed that I cannot speak more fully about sanctions enforcement and OFSI, as these are matters for His Majesty’s Treasury, but I know they will continue to raise their concerns directly and I have heard them today.