Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Seizing oligarch assets is a slippery slope (Reuters)

Introduction LO:

This topic is a huge moral dilemma (to me) as Isaac Newton‘s Third Law of Motion must apply: for every action (force) in nature there is an equal and opposite reaction (eg, NASA, Wiki).

Moreover, this will create a legal precedent for forthcoming centuries that will erode the separation of powers a.k.a. trias politica. Quite possibly, this cure is worse than the disease.

While this “cure” is certainly (very) pragmatic, it also confirms Russian allegations of Western hypocrisy (eg, FT, my May 31 blog). Western condemning of the rule of law in authoritarian countries would become hollow.

Actually, one can only afford such drastic measures, once you assume that you will “win” this conflict. After all, the Winner takes all.

Reuters BreakingViews: Seizing oligarch assets is a slippery slope

By: Lisa Jucca and Gina Chon
Date: 26 May 2022

Follow the money. Western nations want to play Robin Hood with Russian oligarchs’ villas and yachts. Hoping to use proceeds to rebuild Ukraine, the European Commission on Wednesday proposed ways to make it quicker and easier to seize assets from blacklisted billionaires like metals magnate Alexei Mordashov and fertilisers tycoon Andrey Melnichenko. Washington has pitched similar moves. But loosening judicial standards too much would undermine confidence in the Western rule of law.

The European Union’s patchwork sanctions enforcement creates big loopholes. Some member states consider violations a crime; others don’t. The divergence encourages targeted individuals to base their wealth in the most lenient jurisdictions. The commission wants to make sanctions evasion a serious crime across the 27-nation bloc, on a par with money laundering.

Going further looks tricky. Member states have impounded nearly 30 billion euros’ worth of yachts, villas and cash in bank accounts belonging to Russians and Belarusians. The United States has stepped up requests to countries like Fiji to go after possessions. But the oligarchs remain the assets’ legal owners and Western governments often have to pay for their maintenance.

Simply grabbing the goodies looks tempting, but risks damaging property rights and may invite future abuse by overzealous governments. In April, the White House suggested skipping judicial proceedings before confiscations. Sanctions cases could also be grouped together to make them easier to prove, much like mob prosecutions.

Brussels faces similar hurdles. Confiscation normally requires a conviction in court. But under the commission’s proposals, EU governments could seize property based on mere suspicion of links to organised crime. The plan needs backing from member states and the European Parliament; most of the White House proposals need congressional approval.

Such action would open the door to a raft of lawsuits. Germany has already suggested the bar for confiscation should be very high. And the EU’s track record with sanctions is hardly stellar. Individuals including former Ukrainian President Viktor Yanukovych have successfully challenged EU asset freezes.

Using proceeds to help Ukraine creates other problems. The White House argues the funds would compensate for Russian aggression. But that begs the question of why Georgia and others affected by Moscow’s militarism don’t deserve similar reparation. Taking from Russia’s super-rich to give to Ukraine’s newly poor is a slippery slope.”

“Context News

The European Commission proposed on May 25 to make evading sanctions a crime throughout the 27-nation bloc. The proposals, which could apply to the frozen assets of Russian oligarchs, introduce the possibility of confiscating property based on “suspicion of involvement in organised crime activities”. Confiscation, which normally requires a criminal conviction, would be allowed if a court was convinced the assets derived from criminal activities. The commission said on April 8 it had frozen 29.5 billion euros ($31.4 billion) of assets belonging to Russian and Belarusian oligarchs. U.S. President Joe Biden on April 28 proposed measures to enhance U.S. authority to confiscate and sell assets seized from blacklisted Russian oligarchs. Many of the proposals need approval from Congress.”



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