UK to jail fraudulent property listers with new law
By Jeph Ajobaju, Chief Copy Editor
Nigerians named in the Pandora Papers published in October 2021 will suffer collateral damage in the Russian war against Ukraine, as the United Kingdom fast- tracks legislation to expose and prosecute fraudulent property investors.
About 87,000 properties are owned by offshore companies in the UK but the authorities do not know the real identities of those who own them.
The Economic Crime Bill will include a new register that will mean foreign owners of UK property must declare and verify their identities with Companies House.
The aim is to stop overseas criminals and oligarchs from using agents to create companies or buy property for them in the UK.
Entities that refuse to declare their owners will face restrictions in selling property and those who break the rule could be imprisoned for up to five years.
The register also applies to property bought by overseas owners up to 20 years ago in England and Wales and from December 2014 for property in Scotland.
Fraudulent Nigerians in the net
Nigerians are included on the list of fraudulent property owners in the UK, as revealed in the Pandora Papers published in October 2021 by global media outlets, including Nigeria’s PREMIUM TIMES.
The Pandora Papers named several Nigerian personalities – Governors, judges, public servants, politicians, among others – who invested millions of pounds in the UK property market using offshore companies to hide their identities.
To name just four public officials who acquired such assets without declaring them to the Conduct of Conduct Bureau (CCB) as required by law:
- Ogun Governor Dapo Abiodun, whose luxury home in London Bola Tinubu lodged in during his medical treatment last year.
- Mohammed Bello-Koko, whom President Muhammadu Buhari appointed substantive Nigerian Ports Authority (NPA) Managing Director on 15 February 2022, after acting in that capacity since 6 May 2021.
- Senator Stella Oduah, who bought a property in London with N5 billion cash and whose investigation by the Economic and Financial Crimes Commission (EFCC) has been killed by federal Attorney General Abubakar Malami.
- Stella Ogene, a judge in Delta State who incorporated an offshore company in Seychelles in 2009 and through it bought a London property for £224,000 in 2010. She retired from the judiciary in 2020.
But by far the biggest non-EU investors in the UK property market for the purpose of obtaining residency are Saudis, Emiratis, other Middle Eastern billionaires; and Russian oligarch billionaires – many of them allies of Vladimir Putin.
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New legislation against dirty money
The BBC reports that the law in the works in the UK follows Russia’s decision to invade Ukraine on 24 February.
As part of the measures, foreign property owners will have to declare their identities rather than using companies as a façade.
It follows the economic sanctions announced by Prime Minister Boris Johnson on 22 February which targeted major Russian banks and leaders.
Johnson said that there is “no place for dirty money” in the UK.
“We are going faster and harder to tear back the façade that those supporting Putin’s campaign of destruction have been hiding behind for so long.”
“Those backing Putin have been put on notice: there will be nowhere to hide your ill-gotten gains,” Johnson added.
The government said the legislation will support the National Crime Agency work in targeting corruption.
A register will compel foreign owners of UK property to declare and verify their identities with Companies House, in order to stop overseas criminals from using agents to create companies or buy property for them in the UK.
Entities that refuse to declare their owners will face restrictions in selling property and those who break the rule could be imprisoned for up to five years.
The register also applies to property bought by overseas owners up to 20 years ago in England and Wales and from December 2014 for property in Scotland.
Companies House will also have more information on firms to increase corporate transparency, the government said.
On Monday Business Secretary Kwasi Kwarteng said agents from overseas would no longer be able to create UK companies on “behalf of criminals”. The process to register a new company in the UK can cost as little as £12.
Kwarteng told Parliament that oligarchs and kleptocrats have benefited from the “veneer of legitimacy” provided by UK-registered companies and partnerships, while using high-end property to help “launder proceeds of corruption”.
Kwarteng said the new register will “shine a light” on who owns what in the UK so the government could “flush out the oligarchs, criminals and kleptocrats who think they can use UK property to hide their illicitly obtained wealth”.
The National Crime Agency’s ‘Kleptocracy’ cell, announced last week, will also begin to investigate sanctions evasion and be able to seize crypto-assets used for money-laundering.
The legislation also strengthens Unexplained Wealth Orders (UWOs) which were powers brought into force in January 2018 in the fight against suspected criminal money invested in property.
However, UWOs have been used just four times since 2018 and only one has resulted in property being surrendered so far.
UWOs will be reformed to give law enforcement agencies more time to review case material and to protect them from substantial legal costs if they pursue reasonable cases which are ultimately unsuccessful.
Time is up for Putin’s cronies
“Time is up for Putin’s cronies hiding dirty money in the UK and this new legislation will help to crack down on economic crime, including removing key barriers to using Unexplained Wealth Orders,” Home Secretary Priti Patel said, per BBC reporting.
‘Not far and fast enough’
British officials trying to freeze individual accounts held by Russian billionaires face difficulties in part due to the systems of trusts and shell companies that hold their fortunes.
Thomas Mayne, visiting fellow from thinktank Chatham House’s Russia and Eurasia Programme, said while revealing ownership was a “step forward”, enforcement needed to be effective.
“If there are no penalties for submitting false or misleading information (and, like with Companies House, funding of UK authorities to properly investigate), then the bill will be useless,” Mayne told the BBC.
Around 87,000 properties are owned by offshore companies in the UK which Mayne said means the authorities have “no idea who owns them”.
“Actually getting the owners on record, checking the information and penalising those who submit false information will likely take years,” Mayne added.
Shadow chancellor Rachel Reeves said Labour supports the legislation and will “scrutinise the strength of these measures, which the government must enact in their strongest form to tackle dirty money once and for all.
“The long overdue Register of Overseas Entities, originally promised in 2016, must now be implemented at speed. Any transition period must be completed by the end of March and be accompanied by tough enforcement measures.”
Shadow Home Secretary Yvette Cooper said the measures were “welcome” but “don’t yet go far and fast enough.
“Alongside strong sanctions we need an urgent crackdown on illicit finance, corruption and organised crime linked to Russia. For too long the City of London and the UK economy has been used as a laundromat by corrupt elites linked to organised crime”.
Anti-corruption organisation Transparency International has identified at least £1.5 billion of UK property owned by Russians accused of financial crime or with links to the Kremlin.
As part of the latest round of sanctions, Johnson said the government will also limit the amount of money Russian nationals will be able to deposit in their UK bank account.
