London - The U.K. said Wednesday it was reviewing how sanctioned individuals are permitted to use the country's legal services, after reports the government helped the head of Russian mercenary group Wagner sue a British journalist.

The finance ministry currently grants licenses allowing sanctioned people to circumvent restrictions so as to hire U.K. lawyers and pay their fees for lawsuits filed in British courts.

It reportedly allowed Wagner boss Yevgeny Prigozhin - who was sanctioned by Britain and others in 2020 - to launch a libel suit against Eliot Higgins, a journalist for investigative outlet Bellingcat.

The Netherlands-based site had reported extensively on Wagner's previously shadowy operations, which have been on more public display in the war in Ukraine.

U.K.-based investigative website openDemocracy reported this week that the ministry's Office of Financial Sanctions Implementation (OFSI) had granted licenses for a U.K. law firm to work on the case.

The office also approved those lawyers flying business class to Russia to meet Prigozhin's legal representatives there face-to-face and allowed payments from him by wire transfer into U.K. bank accounts, openDemocracy said.

The revelations are based on a cache of hacked emails and documents from one of Russia's biggest law firms. Although the lawsuit eventually failed, the revelations have sparked an outcry in Britain.

Government 'complacent'

Responding to an urgent question on the case in parliament, junior finance minister James Cartlidge refused to comment on the specific case. But he did say OFSI processes were now under review.

'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 told lawmakers.

Such decisions had been taken by officials, rather than ministers, using a pre-established framework, said Cartlidge. 'The issuance of licenses for legal fees are not and should not be political,' he added.

The main opposition Labour party, which has persistently criticized the ruling Conservatives for failing to deliver on promises to curb illicit Russian money entering the U.K., called the government 'complacent.'

'The government appears to have granted a waiver for a warlord that enabled him to launch a legal attack on a British journalist,' Labour's foreign affairs spokesman David Lammy said.

Prigozhin's libel suit, which collapsed last year after Russia invaded Ukraine, was the 'perfect example' of trying 'to silence critics through financial intimidation,' he said.

The government last year promised a 'crackdown on corrupt elites' abusing the U.K. legal system, which would target so-called 'Strategic Lawsuits Against Public Participation (SLAPPs).' SLAPP suits are aimed at intimidating and silencing critics with burdensome legal action.

But the government has not yet introduced any legislation reforming the legal system.

Asked when a draft law could be expected, Cartlidge told lawmakers that was 'above my paygrade.'