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Azerbaijani banker's wife loses appeal against UK unexplained wealth order

Thursday, 6 February, 2020

The England and Wales Court of Appeal has dismissed an appeal by the wife of a jailed Azerbaijani banker to discharge the unexplained wealth order (UWO) against her property in central London (Hajiyeva v NCA, 2020 EWCA Civ 108). UWOs were introduced by the Criminal Finances Act 2017 and came into force in early 2018.

Zamira Hajiyeva was the first-ever person to be served with an UWO. She is an Azerbaijani national married to Jahangir Hajiyev, former chairman of the International Bank of Azerbaijan who is serving 15 years in jail for defrauding it of at least USD39 million. The UWO required the respondent to provide a statement setting out her interest in the property in respect of which the order is made; to explain how she obtained the property and the money to buy it, including if it is held in trust; and to give any other information specified by the authorities about the property.

Mrs Hajiyeva came to London in 2015, before her husband's arrest, and is applying for indefinite leave to remain there. She stated she was the beneficial owner of Vicksburg Global, a company incorporated in the British Virgin Islands, which bought a property in Knightsbridge in central London for GBP11.5 million in 2009. Since then, the BVI Financial Investigation Agency has informed the British police that the beneficial owner of Vicksburg Global is, in fact, Mr Hajiyev.

In February 2018, the UK National Crime Agency obtained the UWO against her in an ex-parte hearing, together with an interim freezing order in respect of the Knightsbridge property. Another property, a golf course, is also affected. The implementation of these orders has been stayed, pending the resolution of her appeal, which has already been rejected once by the England and Wales High Court, and now again by the UK Court of Appeal.

The original High Court judge refused Mrs Hajiyeva leave to appeal further, but was later overruled on the basis that the appeal raised issues in relation to what was the first UWO case to come before the courts, and that it would be beneficial to have guidance from the Court of Appeal on the scope of statutory powers underlying UWOs.

Mrs Hajiyeva's appeal was based on four principal grounds. The first was that the lower courts had wrongly interpreted the statutory test for a 'politically exposed person', one of the conditions of applying for a UWO. She also claimed that her husband's bank was not a state-owned enterprise, despite its shares being owned in part by the Azerbaijani government. Another ground was that the 'income requirement' of s.362B(3) Proceeds of Crime Act 2002, that there were reasonable grounds for suspecting that the Hajiyevs' legitimate income was too low for them to be able to buy the property, was not met; and that UWOs break the rule against self-incrimination and/or spousal privilege, although statements made by a UWO respondent cannot be used in evidence against that person in criminal proceedings.

All the grounds were rejected by the EWCA.

This judgment has been eagerly awaited by the NCA, which is keen to expand its use of UWOs but has, to date, used them sparingly for fear of successful legal challenges.

'This is a significant result which is important in establishing Unexplained Wealth Orders as a powerful tool helping us to investigate illicit finance generated in, or flowing through, the UK', commented the National Economic Crime Centre's director Sarah Pritchard. 'As a new piece of legislation we anticipated that there would be legal challenge [and] we are pleased that the court has upheld the case today. It will set a helpful precedent for future UWO cases.'

The EWCA's dismissal of Mrs Hajiyeva's appeal was not surprising, said David Rundle, of WilmerHale's UK White Collar Defence and Investigations practice. 'A court would be hard-pressed to conclude that a foreign conviction would not constitute reasonable grounds to suspect involvement in criminal activity', he said. 'The decision may clarify the scope of politically exposed persons and bolster the NCA's confidence in using these powers effectively.'

  • The Azerbaijani authorities have issued an extradition warrant against Mrs Hajiyeva in connection with her husband's embezzlements, but the UK courts have rejected it on the grounds that she would not receive a fair trial there.