‘McMafia’ orders designed to seize illicit foreign wealth are so broad they could be used against the heads of Sainsbury’s and the Royal Bank of Scotland (RBS), a court has heard.
A legal challenge against the UK’s first unexplained wealth order (UWO) was yesterday brought before the Court of Appeal by the wife of an Azerbaijani banker, who blew more than £16 million at Harrods in a decade.
The new powers were brought into force last January under so-called McMafia laws - named after the BBC organised crime drama and the book which inspired it.
Zamira Hajiyev was the subject of the first two UWOs, which were obtained by the National Crime Agency (NCA) against two properties worth a total of at least £22 million.
Her husband, Jahangir Hajiyev, was the chairman of the International Bank of Azerbaijan and is currently serving a 15-year sentence in the country for fraud and embezzlement.
Yesterday, lawyers for Ms Hajiyev, 56, argued that the businessman had been wrongly targeted by British authorities after they miscategorised him as a state official.
Under the wealth orders, assets can be seized if the owner is believed to be a politically exposed person (PEP) and they are unable to explain the source of their wealth.
A PEP is defined as someone from outside the European Economic Area who has been given a position of power “by an international organisation or by a state” that makes them liable to bribery or corruption.
However, James Lewis QC, for the appellant, said in a written argument: "The reality is that Mr Hajiyev was the chairman of Azerbaijan's largest bank, an open joint stock company and global financial institution, in which the Government had a 50.2% stake in 2008, rising to 60% in 2013.
"Mr Hajiyev was therefore no more a 'government functionary' than Sir Howard Davies, chairman of the Royal Bank of Scotland (in which the UK Government has a 73% stake)."
Similar argument could be deployed against Sainsbury’s, in which Qatar has investments, while it could also mean the chairman of Channel 4 is technically a politically exposed person, Mr Lewis added.
He said of the legislation: "It is not dealing with ordinary listed companies, it is dealing with corrupt state officials."
The NCA denied the orders would lead to such “absurd” consequences, saying the ownership factor was not “viewed in isolation” and such orders would require additional considerations.
Jonathan Hall QC, for the respondent, said the Azerbaijani bank’s audit reports additionally revealed the government was the “ultimate controlling party” in 2013.
The legal battle has unfolded after Mrs Hajiyeva lost an initial High Court bid last year, when she argued criminal proceedings against her husband in Azerbaijan were "a show trial".
But Mr Justice Supperstone, upholding the UWO, found “corroboration” of the evidence in the trial - including "three separate loyalty cards” that were issued to Mrs Hajiyeva by Harrods, where she spent more than £16 million between September 2006 and June 2016.
Court documents later released to the media revealed Mrs Hajiyeva splashed £600,000 in a single day during a decade-long spending spree.
Mrs Hajiyeva also fought off an attempt to extradite her to Azerbaijan to face fraud and embezzlement charges in September.
The Lord Chief Justice, Lord Burnett - sitting with Lord Justice Davis and Lord Justice Simon - will hear Mrs Hajiyeva's challenge over a single day and judgment is expected to be reserved.