UK OBTAINS £23m RESTRAINT ORDER ON UKRAINIAN ASSETS

sfoOn 28 April 2014, David Green QC, the Director of the UK’s Serious Fraud Office (“SFO”) announced the opening of a criminal investigation into possible money laundering arising from suspicions of corruption in Ukraine.

In furtherance of the new UK investigation, the  SFO also announced that it had obtained a restraint order freezing approximately $23m of assets in the UK in connection with this case. For reasons of confidentiality, no further details were provided.

As reported earlier, the EU designated 18 Ukrainians on 6 March 2014, alleging embezzlement and moving illegally obtained funds overseas. A previous blog also reported that the UK hosted a conference on Ukrainian asset recovery in London this week. The latest announcement by the SFO will be seen as part of that initiative.

Section 444 of the Proceeds of Crime Act 2002 makes provision for freezing UK property at the request of a foreign country. Such restraint orders can also be granted from the start of a UK criminal investigation. The restraint order in this matter would have been granted by the Crown Court, following a request from Ukraine, acted upon by the SFO. The Crown Court judge would need to have been satisfied that:

  • the request identified relevant property in the UK.
  • a criminal investigation had been commenced in Ukraine for which this request was made.
  • there was reasonable cause to believe that the defendant had benefitted from his criminal conduct, and
  • there was a risk that the identified property would be dissipated.

Any affected person, served with such an order can apply to the Court to have it varied or discharged.

 

 

EU ADDS 15 PEOPLE TO RUSSIA SANCTIONS LIST

We previously reported on the EU’s previous imposition of targeted sanctions on Russia – on 17 March the EU imposed asset freezes on a list of 21 people, then added another 12 on March 21st, and agreed with the USA last week to increase those numbers.  The USA did so yesterday and the European Union today, in a new implementing Decision and Regulation.

The new EU list is here and includes deputy prime minister Dmitry Nikolayevich Kozak, a deputy chairman of the Duma, Ludmila Ivanovna Shvetsova, and Valery Vasilevich Gerasimov, chief of staff of Russia’s armed forces.  All individuals named on the EU list have two months in which to challenge their designations before the European Court in Luxembourg.

US ADDS TO RUSSIA SANCTIONS LIST AND IMPOSES LICENSING RESTRICTIONS

As foreshadowed over the weekend, the White House has just announced that the USA has added 7 Russian government officials and 17 companies to its Ukraine-related Russia sanctions list.  The new US list is here and the White House statement here.

The statement says that the USA has:

1) Added individuals and companies linked to “President Putin’s inner circle” to be subject to the US asset freeze and travel ban.  List here.

2) Imposed “additional restrictions” on 13 of those companies by imposing new licensing requirements with a “presumption of denial” for the export, re-export or other foreign transfer of US-origin items to the companies.

3) Tightened policies to deny export licences for “any high-technology items that could contribute to Russia’s military capabilities” and to revoke existing licenses.

UK TO HOST UKRAINE ASSET RECOVERY MEETING

teresa mayTomorrow, London will host a meeting of the Ukraine Forum on Asset Recovery (UFAR), aimed at co-ordinating the international effort to recover Ukrainian state assets allegedly stolen by former president Viktor Yanukovych and certain associates.

Lasting two days, the London UFAR meeting will bring together senior government officials from at least the US, UK and Ukraine, asset-recovery lawyers, NGOs and representatives from certain key financial centres.  In announcing the meeting, the UK’s Home Secretary, Theresa May said:

By taking urgent and immediate steps to provide political and economic stability, the UK, US and wider international community has already demonstrated a strong commitment to the people of Ukraine. This forum provides a further opportunity to show our ongoing support.Building on our expertise in the field of asset recovery, it will also provide practical leadership and assistance to the Ukrainian government as they identify and recover assets looted under the Yanukovych regime and introduce political and economic reform,“.

US Attorney General Eric Holder also commented:

“The United States will never stop fighting alongside Ukraine and its partners to ensure accountability, to strengthen transnational cooperation, and to meet instability with resolve – and robust diplomacy,“.

As reported in an earlier blog, on 6 March 2014, Yanukovych and 17 other Ukrainian nationals were made the subject of sanctions for allegedly as being “responsible for the misappropriation of Ukranian state funds”. It is widely believed that shortly before this, Yanukovych fled Ukraine for Russia and is now reportedly living outside Moscow.

The Serious Fraud office has also announced that it has opened a criminal investigation into possible money laundering arising from suspicion of corruption in Ukraine, and that it has obtained a restraint order freezing approximately $23 million of assets in the UK in connection with the case.

G7 AND EU AGREE TO IMPOSE NEW RUSSIA SANCTIONS

The G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) agreed with the European Council and Commission last night that they would “move swiftly to impose additional sanctions on Russia”.  This was foreshadowed over the past few days.

Their statement of 25 April 2014 says: “We will now follow through on the full legal and practical consequences of this illegal annexation, including but not limited to the economic, trade and financial areas…  Given the urgency of securing the opportunity for a successful and peaceful democratic vote next month in Ukraine’s presidential elections, we have committed to act urgently to intensify targeted sanctions and measures to increase the costs of Russia’s actions… While we continue to prepare to move to broader, coordinated sanctions, including sectoral measures should circumstances warrant, as we committed to in The Hague on March 24, we underscore that the door remains open to a diplomatic resolution of this crisis, on the basis of the Geneva accord. We urge Russia to join us in committing to that path.”

EU AND USA CONTEMPLATE FURTHER RUSSIA SANCTIONS

The European Union and United States of America have both indicated in the last two days that they are contemplating more sanctions against Russia.

German Chancellor, Angela Merkel, said today that she told President Putin that Russia had not done enough to implement the Geneva accord and that EU foreign ministers would meet as soon as possible to contemplate further sanctions against Russia.  “This will be a joint European action and an action by the G7 … because of the lack of progress we will have to contemplate further sanctions within the second stage of sanctions.”

The US Secretary of State, John Kerry said on Thursday that the US would have no choice but to impose additional sanctions unless Russia took immediate steps to de-escalate the situation in Ukraine.  President Obama is reported to have spoken to the leaders of France, Italy and the UK to galvanise support for a new wave of sanctions against Moscow.

Previous blog pieces have summarised the existing EU and US sanctions relating to Russia / Ukraine, and the current EU measures are on the ‘sanctions in force’ section of this blog.  The Financial Times reports that the EU is now likely to add the names of 15 Russian or Crimean individuals to people already subject to travel bans and asset freezes, and that the USA is considering adding some banks or state-owned companies to the list of sanctioned entities.

EU RE-LISTS IRANIAN DRILLING COMPANY

We have previously reported a number of instances in which the Council of the European Union has re-listed companies and individuals on European sanctions lists after they have won their applications to annul their designations in the European courts (e.g. blogs herehere and here). The Council of the European Union has just done so again, in the case of the North Drilling Company.

As we reported here, that company won its annulment action on 12 November 2013, in Case T-552/12 North Drilling Co v Council (judgment here, available only in French).  The reason given for North Drilling’s original designation was that it was a 100% subsidiary of the National Iranian Oil Company. The General Court annulled that listing because North Drilling said it had been privatised and had had no connection with NIOC since 2011, the Council was not permitted to argue that even after privatisation the company was still under State control and still provided resources to the Iranian government, because that new reason had never been put to the company.  The new Decision and Regulation published yesterday re-list the company on the basis of new reasons, in effect from yesterday’s date.  North Drilling Company now has two months in which to challenge this new designation in the General Court.

CANADIAN EXPORT CONTROL ENFORCEMENT

Lee Specialities Ltd pleaded guilty last week to a violation of the Canadian Special Economic Measures Act, and agreed to pay a fine of $90,000 Canadian dollars.  This is the first time in over 20 years that a company has been charged with breach of this statute in Canada, and may mark an increase in Canadian sanctions / export control enforcement activity.  The company was charge with violating Canadian export control requirements for goods being shipped to Iran that were valued at $15.

We previously reported on Canada’s imposition of targeted sanctions on Ukraine / Russia.  Canada also has sanctions regimes relating to Iran, North Korea, Syria, Burma, and Zimbabwe.