Labour has called on the chancellor to investigate how a Russian oligarch and warlord was given permission to circumvent sanctions with a targeted legal attack on a British journalist in London’s courts.

Yesterday openDemocracy revealed how the UK Treasury had granted Yevgeny Prigozhin, head of the notorious Wagner mercenary army, special permission in 2021 to sue journalist Eliot Higgins of investigations website Bellingcat. Prigozhin was at the time under sanctions for major crimes by his group in support of Putin’s war efforts across the world.

Sign-off from the Office of Financial Sanctions Implementation, a department of the Treasury, meant Prigozhin in Russia could get full access to the finest legal representation in the UK. The office even granted permission for Prigozhin’s London lawyers to travel to St Petersburg to consult him personally, because sanctions meant he could not travel to Britain.

Now in response to openDemocracy’s revelations, shadow chief secretary to the Treasury Pat McFadden has written to chancellor Jeremy Hunt calling for answers.

“It is completely unacceptable that one of Putin’s allies was able to use the Treasury to attempt to subvert sanctions and silence a critical journalist,” he told openDemocracy.

“The chancellor must immediately explain how this was allowed to happen, and what steps he will take in the future to ensure that wealthy oligarchs are unable to use the Treasury or any government department as a weapon in this way.”

Prigozhin’s Wagner group is a private army that the US government last week announced it would designate a “transnational criminal organisation”. For years it has been accused of human rights abuses and war crimes in Ukraine and across the world in support of Putin’s regime.

Sanctions introduced in the UK and Europe in 2020 were supposed to prevent anyone from doing business with Prigozhin. He had also been sanctioned in the US in 2018.

But openDemocracy’s investigation, based on a vast cache of hacked emails, showed just how easily Prigozhin was able to work around the restrictions, thanks to the permissions granted by the Treasury, then under the leadership of Rishi Sunak.

We revealed that Prigozhin had paid his London lawyers directly via wire transfer from Russia.

Documents also revealed that Prigozhin believed the London case was a key plank of his strategy to thwart the global sanctions themselves.

The notorious libel suit, which was brought against Higgins personally, followed revelations by his website Bellingcat about Wagner’s shadowy operations. The case collapsed in March 2022, in the aftermath of Russia’s invasion of Ukraine.

In his letter to the chancellor, McFadden states that Prigozhin’s “aim was to silence Mr Higgins and his organisation” and notes that Bellingcat was instrumental in exposing Russian crimes in Ukraine and helping identify the killers who were responsible for the Skripal poisonings and the death of Dawn Sturgess.

“The critical question is: how could the Treasury have facilitated a legal action by the founder of the Kremlin-associated Wagner Group against a British journalist, and do so while that person was a sanctioned individual?” he asks.

McFadden also lists several questions for Hunt to answer, including what questions had been asked of the OFSI since openDemocracy’s story broke; whether it had given similar dispensation to other sanctioned oligarchs to sue British journalists; and what the Treasury would do to stop it happening again.

When openDemocracy previously asked the Treasury to comment on the findings of its investigation and asked if ministers were made aware of the decisions, a spokesperson said they couldn’t comment on “individual cases”.