Britain like the USA has had a system of expeditied residency visas for those who “invest” a large amount of money in the country. Also like the USA, this has led to property being an ideal way of getting oligarchs’ ill-gotten gains out of their home country. Now the UK is cracking down and demanding that such people show the source of their funds when issued an “Unexplained Wealth Order” (UWO). If not, any property purchased can be confiscated. Routing the money through a company in a tax haven does not provide an escape as the wife of a disgraced Azerbaijani banker is finding out in the first case to come to the courts.
Zamira Hajiyeva’s husband Jahangir worked for the Azerbaijani Ministry of Foreign Economic Relations from 1993 to 1995 after which he joined the International Bank of Azerbaijan. In 2008, the couple applied to live in the UK under the “Wealthy Investors Scheme”. In 2016, he was sentenced to 15 year’s imprisonment by a court in Baku.
According to the findings of the Court, as a result of Jahangir Hajiyev’s criminal activity of money laundering more than 9 billion dollars were laundered from the financial turnover of Azerbaijan. This is considered to be one of the factors that caused a drop in macroeconomic indicators of the country, since the laundered amount makes up approximately 25% of Azerbaijan’s average GDP for 2016/2017. Reportedly, after being allocated by the bank, money was almost completely laundered and transferred abroad to the personal accounts of Hajiyev, his relatives and counterparts.
Over the course of 10 years, Mrs Hajiyeva settled into London, often making daily trips to her local corner store from the house that had brought brought through a company in the British Virgin Islands for $15.2 million. One thing I should mention, the local corner store occupies all four corners of a city block; Harrods of Knightsbrige. Such was her spending that she had three store loyalty cards. Over the years she spent an average of £1.6 million ($2.11 million) a year on the 35 credit cards issued through her husband’s bank. She also owns a golf course (why is that unexpected?) purchased through a company in Jersey (another tax haven) purchased for $13.9 million.
The UK’s National Crime Agency is responsible for investigating serious frauds and financial crimes. They issued a UWO as her expenditure did not appear to conform with the family income.
Hajiyeva’s lawyers have filed an application to appeal the UWO. “Mrs Hajiyeva has made clear her intention to engage fully in the judicial process and will present her case to the court as appropriate through her lawyers. She will therefore make no further comment at this time,” her lawyer said.
Jahangir Hajiyev’s official salary as chairman of the IBA bank between 2001 and 2008 was a maximum of £54,000. However, Werner Capital, which manages property investments for wealthy people, produced a report in 2011 that stated he was worth £55m.
Her explanation of this is:
Lawyers for Hajiyeva argued in court that she should not have to prove the source of her wealth because she was not a “politically exposed person”, and said her husband was not a state employee overseeing a state bank but simply a “fat cat” banker.
The court did not buy her story and confirmed the order. They also released her name to the press, it has previously been restricted from publication until the outcome of this case.
Some £90 billion is estimated to have been invested in London from “questionable” sources. One group has identified at least £4 billion in property involved. Success in this case could trigger at least another 7 UWO investigations that the National Crime Agency is believed to want to launch.
Donald Toon, the director for economic crime at the NCA, said: “The NCA fully supports an open and transparent justice system that helps demonstrate our determination to ensure that the UK is not seen as a soft target for the investment of illicit finance. Where we cannot determine a legitimate source for the funds used to purchase assets and prime property, it is absolutely right that we ask probing questions to uncover their origin.
“Unexplained wealth orders have the potential to significantly reduce the appeal of the UK as a destination for illicit income. They enable the UK to more effectively target the problem of money laundering through prime real estate in London and across the UK, and we will now seek to move further cases to the high court.”
The government has also cracked down on the “Wealthy Investors Scheme” for residency permits. The minimum investment has been doubled to £2million and new applicants are required to make declarations similar to those under UWOs.
One Russian oligarch, Roman Abrahamovich fell foul of this when he was out of the country when his visa was up for renewal. This meant he had to make the financial declarations but he decided to withdraw his application and became an Israeli citizen. He can now only enter on a visitor visa, even to watch games played by Chelsea Football (soccer) Club which he owns. He is also in trouble with the French tax authorities for undervaluing a $115 million Riviera home (previously owned by the Duke of Winsor, the abdicated king) to reduce his property taxes. (We have heard that one before too!!!).
Mr Abramovich has been fighting for years to reduce his wealth tax on the Château de la Croë, a vast villa on the exclusive Cap d’Antibes peninsula in the south of France known as Billionaires’ Bay. It is just one of a string of palatial residences he owns around the world, along with Eclipse, his 533-foot yacht and the world’s second-largest, which he bought for nearly $400 million in 2010.