08.10.2018 First Unexplained Wealth Orders in Force

08.10.2018 First Unexplained Wealth Orders in Force

Investigators from the National Crime Agency believe that hundreds of billions of pounds of ill-gotten funds are invested in British property – however it is almost impossible to charge the owners with a crime or seize the assets because of a lack of evidence.

What is an Unexplained Wealth Order?

The Unexplained Wealth Order (UWO) is a new power, which has been designed to target suspected corrupt foreign officials who have potentially laundered stolen money through the UK.

The new UWOs are an attempt to force the owners to disclose their wealth. If a suspected corrupt foreign official, or their family, cannot show a legitimate source for their riches, then the National Crime Agency can apply to the High Court to seize the property.

UWOs require the owners of assets worth £50,000 or more to explain how they were able to afford them when their declared income seems to be too low.

As well as targeting those suspected of serious criminal activity in the UK and abroad, the orders can also be issued against “politically exposed persons” such as politicians or civil servants, plus their family members or other people close to them, provided they are not citizens of EEA states.

The orders mark a warning shot by UK authorities toward Russian oligarchs, families of former African dictators and other so-called politically exposed persons parking their money in the UK. They are part of new legislation aimed at combating dirty money in the country, targeting people with political connections or suspected of serious crime whose means for buying property or other assets isn’t clear.

First Unexplained Wealth Order

In the first week of October the UK for the first time exercised a power to crack down on corrupt money, ordering a wife of a jailed Azerbaijani banker to explain how she and her husband could afford their multimillion-pound London mansion or face having it seized.

Zamira Hajiyeva, was the subject of the UK’s first UWO made in February this year. She could not be named as she was granted anonymity while challenging the action until on 10th of October the High Court dismissed her challenge and lifted an anonymity order preventing reporting of the case.

Under the terms of the UK’s first ever Unexplained Wealth Order, Mrs Hajiyeva, 55, must now provide the National Crime Agency with a clear account of how she and her husband, Jahangir Hajiyev, could afford to buy their large home in the exclusive London neighbourhood of Knightsbridge.

Who are the couple at the centre of this first action?

Up until the lifting of an “anonymity order” on Wednesday lunchtime, Hajiyeva could only be referred to as “Mrs A”.

It can now be revealed that Hajiyeva is the wife of Jahangir Hajiyev, the former chairman of the only state-owned International Bank of Azerbaijan, who was sentenced to 15 years in jail after being convicted of embezzlement and defrauding the bank out of £2.2 bn.

Properties subject to UWO

The National Crime Agency alleges that stolen funds were used to buy her a £11.5m five-bedroom property in Knightsbridge in 2009 through a British Virgin Islands company, just minutes’ walk from Harrods.

The second UWO relates to a £10.5m purchase of the Mill Ride Golf Club in Berkshire, a plush course and estate near Ascot. According to financial records, the property is owned by a Guernsey-registered entity called Natura Ltd, which also owns a UK company called MRGC 2013 Ltd. Mrs Hajiyeva was once a beneficial owner of MRGC.

Does Mrs Hajiyeva admit doing anything wrong?

Zamira Hajiyeva denies that the purchases were made with fraudulent funds. She has made an application to discharge the UWO but was unsuccessful. Her lawyers are appealing that judgment.

Lawyers for Mrs Hajieyva told the High Court that she and her husband are suffering a massive injustice.

“The decision of the High Court upholding the grant of an Unexplained Wealth Order against Zamira Hajiyeva does not and should not be taken to imply any wrongdoing, whether on her part or that of her husband,” they said in a statement.

“The NCA’s case is that the UWO is part of an investigative process, not a criminal procedure, and it does not involve the finding of any criminal offence.”

During her unsuccessful challenge to the Unexplained Wealth Order, Mrs Hajiyeva said her husband was a legitimate businessman who had become independently wealthy thanks to a string of successful businesses, before becoming a chairman at the bank.

But the National Crime Agency told the court that Mr Hajiyev had been a state employee between 1993 and 2015 – and as an official he would not have had the means to amass the wealth investigators have traced.

Jonathan Hall QC, who is representing the NCA, said: “As a state employee between 1993 and 2015, it is very unlikely that such a position would have generated sufficient income to fund the acquisition of the property.”

Hajiyeva husband’s official salary at the bank between 2001 and 2008 was a maximum of £54,000. However, Werner Capital, a family office that manages property investments for wealthy people, produced a report in 2011 that stated he was worth £55m.

The Future of Unexplained Wealth Orders

The Hajiyeva case is being closely watched and if the NCA succeed, it is expected to launch up to nine new UWO investigations.

Donald Toon, the NCA director for economic crime, said: “I am very pleased that the court dismissed the respondent’s arguments today. This demonstrates that the NCA is absolutely right to ask probing questions about the funds used to purchase prime property.

“We will continue with this case and seek to quickly move others to the high court. We are determined to use the powers available to us to their fullest extent where we have concerns that we cannot determine legitimate sources of wealth.”

Duncan Hames, the director of policy at Transparency International UK, welcomed the ruling and applauded the court’s decision to hold the hearing in public.

“The UK has been long identified as a safe haven for corrupt money and despite successive governments recognising this, money-launderers have continued to hide their ill-gotten gains here,” he said.

“Only firm enforcement action, as initiated with this case, will make a reality of ministers’ ambitions to create a hostile environment for dirty money in the UK.”