Standard victory in secret papers fight over £14m ‘dirty cash’ case

Chief Magistrate Emma Arbuthnot said this newspaper had an 'important story to tell'
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Secret documents showing how a London couple brought at least £14 million of allegedly corrupt money from an “Azerbaijani laundromat” into Britain have been cleared for release by a judge in a partial court victory for the Evening Standard.

Chief Magistrate Emma Arbuthnot said that this newspaper had an “important story to tell” as she granted permission for access to court papers submitted by the National Crime Agency into the husband and wife at the centre of the “dirty money” allegations.

She said the case involved claims by law enforcers that frozen bank accounts held by the pair contain funds “derived from international corruption and .. laundered through a myriad of limited companies” including in Belize, the Marshall Islands and the Seychelles.

The judge added that there were “indications that the funds came in a manner described as “the Azerbaijani Laundromat”, a method of moving money from a ruling elite to the West where property etc is bought”’and that information from Danish bank accounts was also being sought as part of the investigation.

But in a setback for transparency in the justice system, the judge also ordered that the couple’s names be kept secret at least until a later hearing.

The rulings follow an application by the Evening Standard for documents submitted to Westminster Magistrates Court by the National Crime Agency when it obtained ten account freezing orders against a husband and wife referred to as X and Y because of the anonymity order.

Two days of hearings took place as a result during which the couple were represented by James Lewis QC, one of the country’s most senior barristers. His other recent cases include prosecuting in the extradition of Julian Assange and defending Zamira Hajiyeva, an Azeri banker’s wife who has been given an Unexplained Wealth Order requiring her to explain how she bought her £15 million Knightsbridge home and an £11 million golf club.

He argued for access to the documents to be refused, saying that because they contained unproven allegations that the couple “are money launderers and corrupt” it would be disproportionate to release them and contrary to their right to privacy.

In her judgment, however, Ms Arbuthnot says she accepts that the Evening Standard newspaper has “a proper journalistic purpose in wanting to have access to the documentation” and “is concerned about the flow of ‘dirty money’ in to the United Kingdom”.

She orders access to a “redacted document” as a result and says that she is doing so because the court has to balance the risks to the couple against “the open justice principle claimed by a journalist who has an important story to tell, in the public interest.”

In relation to the couple’s identity, the judge says that this should remain confidential “at this early stage in proceedings” but confirms that “X is related to senior government officials in Azerbaijan”.

The judge also states that the documents contain allegations that the pair “received £13,897,280.00 from 21 corporate entities” as part of the “grounds for suspicion” in the case and that “a number of the entities have been directly linked to the reporting of the ‘Azerbaijan laundromat’”.

She further discloses that “there are other applications” by law enforcers in relation to the couple and that the couple’s “financial and business interests would be damaged very much” if the allegations against them are made public.

The judgment adds that “Danish banking records in relation to companies in the list of 21 entities” and “details of the beneficial ownership of various companies in Belize, the Marshall Islands and the Seychelles” are still being sought by investigators.

The “Azerbaijan laundromat” was a scheme used to launder £2.2 billion of illicit money plundered from Azerbaijan through four UK registered companies and the Estonian branch of a Danish bank between 2012 and 2014.

The money was spent in countries including Britain, Germany, France, Turkey, Iran and Kazakhstan on property and luxury goods. The beneficiaries included members of the Azerbaijani elite as well as European politicians.

The Account Freezing Order powers used against X and Y were introduced in the Criminal Finances Act of 2017 and are regarded by law enforcers as a powerful new tool for recovering allegedly “dirty money” brought into Britain or circulating in this country’s financial system.

Duncan Hames, director of policy at Transparency International UK, said: “We welcome this judgment which confirms that the public have a right to know how account freezing powers are being used.

“It is good to see these powers being deployed to target suspicious funds belonging to politically connected individuals. The Azerbaijani laundromat raised a number of questions about Britain’s defences against dirty money; thorough investigation of the proceeds of this scheme helps to send a message that these funds are not welcome here.”

Graeme Biggar, director general of the National Economic Crime Centre, said: "The principle of open justice is highly significant within the UK legal system and one that the NCA fully supports.

"Ultimately it is for the court to determine what information can be released, but we always seek to be as transparent as possible in our legal processes and had no objection to the Evening Standard’s application.

"The court ordered that the names and other identifying details of the individuals are to remain anonymous, and the NCA will comply with the court’s decision.”

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