The government is reviewing its sanctions regime after openDemocracy revealed that the Treasury gave a sanctioned Russian warlord permission to sue a British journalist under Rishi Sunak’s watch.

Emails seen by this website showed that in 2021, when Sunak was chancellor, the Treasury issued a special licence to Yevgeny Prigozhin, the boss of Russia’s murderous mercenary army Wager Group. 

This allowed Prigozhin to circumvent UK government sanctions to pursue a frivolous legal attack that would leave Eliot Higgins, the editor of investigative website Bellingcat, tens of thousands of pounds in debt.

On Wednesday, James Cartlidge, the Exchequer secretary to the Treasury, confirmed that the government is now reviewing its protocol for deciding whether to grant such licences to sanctioned individuals.

Cartlidge said the civil servants tasked with making these decisions consider only the costs involved, and not whether the legal cases have merit.

“The Treasury is now considering whether this approach is the right one and if changes can be made without the Treasury assuming unacceptable legal risk and ensuring that we adhere to the rule of law,” he added.

Cartlidge’s comments came in response to an urgent question from Labour’s shadow foreign secretary, David Lammy, who asked whether Treasury ministers had political oversight of the case.

The Exchequer secretary said that while the government “does not comment publicly on individual cases”, senior civil servants are responsible for deciding whether to grant licences that would allow sanctioned individuals to cover their legal fees.

“We are not aware of any case of legal fees under any of the sanctions regime of being taken by a minister,” Cartlidge added.

Lammy accused the government of being evasive in its response and called for an independent inquiry into the case.

“This is a perfect example of a SLAAP [strategic litigation against public participation] lawsuit designed to silence critics through financial intimidation. Prigozhin is one of the most dangerous and notorious members of Putin’s inner circle, the Wager Group, which he leads, is responsible for appalling atrocities in Ukraine and around the world. 

“If the now prime minister’s Treasury had any hand in alleviating pressure on Prigozhin I’m sure every member across this house would agree that this would be absolutely unconscionable,” he said.

The prime minister’s spokesperson has denied that Sunak was involved in the decision to issue the licence, which was made by the Office of Financial Sanctions Implementation (OFSI), a little-known department within the Treasury.

Earlier on Wednesday, Sunak had refused to say whether he had knowledge or responsibility over the decision. 

Responding to a question from Labour MP Clive Efford during Prime Minister’s Question Time, the prime minister instead said: “Mr Speaker, I’m proud of our record in leading actually when it comes to sanctioning those people connected with the Putin regime. I think at last count we’ve sanctioned over 1,000 people and frozen tens of billions of pounds of assets. 

“I am aware of the case he’s raised, we are looking at it but there is, as he knows, OFSI who deal with the licensing situations in these matters but I’m happy to get back to him on the specific case that he raised.”

Despite having been sanctioned by the UK in 2020, Prigozhin was allowed by the Treasury to hire British lawyers to pursue a libel case against Higgins after Bellingcat exposed Wagner’s shadowy operations. 

The case collapsed in the aftermath of Russia’s invasion of Ukraine in March 2022, but left Higgins with £70,000 of legal costs.

Wager controls tens of thousands of mercenaries fighting for Russia in Ukraine on the frontlines near Bakhmut, the majority of which are believed to have been drawn from prisons. The group’s mercenaries have been accused of war crimes including killing and torturing civilians near Kyiv. 

Prior to the invasion of Ukraine, Wager has been used in Russian military operations in many countries including the Central African Republic, where it was accused of committing rapes and robberies against civilians.

Speaking in the Commons, SNP MP David Hendry criticised the government for granting Prigozhin the licence, saying, “These revelations present a serious and immoral disregard for human rights obligations and due process at the heart of his government and all on the current prime ministers’ watch as he was chancellor at the time.”