There has been much talk from the UK government about cleaning up dirty money, especially from Russia after the Skripal affair and using the UK’s new investigative tool, the Unexplained Wealth Order (UWO), to do so.
It’s hardly surprising that there has been huge interest around revelations that the UK’s first ever UWO involved £22 million ($29 million) of UK property including a golf course belonging to wife of the head of the majority state-owned Central Bank of Azerbaijan, Mrs. Hajiyeva, who has also been exposed for having some very expensive spending habits.
Mrs. Hajiyeva is still appealing the UWO to the UK Court of Appeal, and the case will no doubt end up in the UK Supreme Court. Should she lose that appeal she will have to explain the source of her wealth for buying the properties, and if she cannot, then the properties will be presumed to be the proceeds of unlawful conduct, and therefore open to civil recovery proceedings.
Hats off to the UK National Crime Agency that it applied so quickly for the first two UWOs — just a month after the tool became available on January 31 of this year. The government predicted before their introduction that none would be sought in the first year, with 20 annually after that. How quickly others follow now that the UK’s judiciary has shown itself comfortable with their use is yet to be seen.
In June, the head of the National Crime Agency’s Economic Crime Command, Donald Toon, told journalists that his unit was looking at 120-140 potential UWOs, with a Whitehall insider saying most of these were Russia related. In September, Security and Economic Crime Minister Ben Wallace told the UK Parliament that there were more in the pipeline.
But the first UWO raises some important questions.
First, how ambitious are enforcement agencies likely to be with their use of UWOs? The NCA looks like it has brought a fairly slamdunk and clearcut case as its first UWO (subject to appeal obviously). Mrs. Hajiyeva’s husband has been convicted in Azerbaijan and he appears to have been her only source of wealth.
A significant portion of the judgement is devoted to whether Mr. Hajiyev’s conviction should be discounted on the grounds that Azerbaijan’s justice system is too rigged for its judgements to be respected — an argument put forward by Mrs. Hajiyeva’s lawyers in her defense. Judge Supperstone, who heard the case, made clear, however, that the bar for discounting a foreign conviction in UK courts is a high one and that it was legitimate for the NCA to take Mr. Hajiyev’s conviction into account. The argument is likely to be raised again in Mrs. Hajiyeva’s appeal and any civil recovery proceedings if the NCA gets to bring them.
But UWOs are much more far-reaching in their power as an investigative tool than this case would suggest. Law enforcement is not required to prove any suspected criminality when asking a Politically Exposed Person (PEP) for the source of their wealth. This power, controversial in legal circles, reverses the burden of proof in relation to PEPs outside the European Economic Area in order to help law enforcement freeze and recover assets in cases where they cannot get evidence from abroad, often because of lack of cooperation.
So the real test of how powerful UWOs can be as an investigative tool is going to be the difficult cases, where there is no such conviction, no cooperation from the foreign jurisdiction, and where getting any evidence of criminality from abroad is going to be nigh on impossible.
That leads to a second and related question, which is whether the NCA has the appetite to use UWOs to go after the assets of those who are still in power and not just those who have fallen out of favor. When Hajiyeva’s husband was convicted of fraud in Azerbaijan in 2016, there were Azerbaijani commentators who questioned whether it was an attempt by the Aliyevs, Azerbaijan’s repressive first family, to distract people from their own dealings.
The Aliyevs were exposed in the Panama Papers for having “an empire of hidden wealth” including $33 million worth of London property. While the UWO has clearly revealed that Hajiyev and his wife were far from innocent victims in this case, and appear to have engaged in theft from the state bank, if the NCA fails to even-handedly go after other allegedly corrupt actors from the Azerbaijani government with property in London, including the Aliyev’s, it could look like it is unwittingly siding with a corrupt regime.
The final and perhaps most important question is just how serious is UK law enforcement about going after those who “enabled” the Hayijevas to stash and splash their wealth in the UK?
Ben Wallace told Parliament that he had made clear to enforcement bodies that tackling illicit finance “is also about going after facilitators — those who allow those crooks to enjoy their money in London. We must ensure that we deal with them all — not just the far-distance crime baron, but the smart, perhaps sharp-suited individuals who think they are just helping and not really engaged, but who in fact are absolutely corrupting our system, littering our streets with dirty money and then allowing those crooks to enjoy it.”
This is fighting language that needs to be followed up by strong action. The court documents in the Hajiyeva case are littered with potential “facilitators” or “professional enablers,” from those who provided a mortgage, to those who may have handled Hajiyeva’s goods as she has sought to liquidate wealth since her husband’s conviction, helped create companies for her husband to buy a private jet, and verified Hajiyeva’s wealth so she could get her golden visa.
If the NCA is serious about tackling “professional enablers,” one has to hope that they are seriously investigating whether any of those handling Hajiyeva’s wealth, from when she was the wife of a PEP to when she was the wife of a convict, failed to file suspicious activity reports, or breached the Money Laundering Regulations.
If the NCA and other regulators fail to file any charges or bring any action against those who helped “litter” London with Mrs. Hajiyeva’s money, the talk about going after the “professional enablers” from government and enforcement will start to look very hollow indeed.
Susan Hawley is Policy Director of Corruption Watch. She worked for six years at the Corner House on corruption issues, having previously worked in the policy team at Christian Aid on ethics and corruption issues. She was behind the successful judicial review by the Corner House of the Export Credit Guarantee Department (ECGD) for weakening new anti-bribery rules following secret lobbying by defense and aerospace companies.