It’s time for Congress to wise up (re: Magnitsky)

Today, U.S. Senate Finance Committee will consider a bill that would establish permanent normal trade relations (PNTP) with Russia and also graduate Russia from the 1974 Jackson-Vanik amendment. Introducing the PNTP bill, the Committee Chairman Max Baucus (D-MT) pointed out that the bill will create “thousands of U.S. jobs across every sector of the American economy, including manufacturing, agriculture and services, by helping double U.S. exports to Russia within five years.” Unfortunately, some in Congress want to complicate the adoption of the PNTP bill – an urgency, given Russia’s upcoming joining the WTO — by artificially linking it to another, completely unrelated piece of legislation: the so-called Magnitsky bill (S. 1039 and H.R. 4405).

The Magnitsky bill bears the name of Sergei Magnitsky, a Russian auditor who worked for the British investment fund Hermitage Capital. In November 2008, Magnitsky was arrested on tax fraud charges; a year later, he died in a pre-trial detention center in Moscow. According to the bill’s sponsors, Sen. Ben Cardin (D-MD) and Rep. Jim McGovern (D-MA), Magnitsky’s arrest was illegal and was an act of retaliation for his uncovering of the embezzlement of Russian state funds committed by a group of tax and law enforcement officials. Moreover, Sen. Cardin and Rep. McGovern allege that while in prison, Magnitsky was tortured and perhaps even killed by his prisoners. Consequently, the Magnitsky bill (the Sergei Magnitsky Rule of Law Accountability Act of 2011) was introduced that would punish 60 Russian officials allegedly involved in Magnitsky’s death by banning their entry in the United State and also freezing their financial assets held in American financial institutions.

Last week, a delegation of the Russian Federation Council headed by Vladimir Malkin, Deputy Chairman of the Committee on International Affairs, came to Washington to meet with members of Congress to discuss the Magnitsky bill. Russian senators presented their American counterparts with a Federation Council preliminary report on the investigation of the Magnitsky case, a document that includes previously unpublished materials related to Magnitsky’s work for the Hermitage Capital, his arrest and pre-trial detention, and his death on November 16, 2009.

Regretfully, Sen. Cardin has refused to meet with Sen. Malkin and other members of the delegation. Even more regretfully, the U.S. legislators outright dismissed the findings of the Federation Council report without giving it full consideration. This is unfortunate, given that the report sheds additional light on the Magnitsky case, and Congress would be wise to review this information before voting on the Magnitsky bill in the coming weeks.

The Federation Council report makes it very clear that “the death of Sergei Magnitsky deserves a comprehensive, large-scale investigation.” It further establishes that Magnitsky “was not provided timely medical assistance in connection with the illnesses that he had” and claims that “those who are to blame…have been identified and must be held liable.” To this end, one has bear in mind that recently, Russia’s Investigative Committee has completed an investigation of the case of Dmitry Kratov, former head of the pretrial detention center where Magnitsky died. The investigation found that Kratov neglected his official duties — which led to Magnitsky’s death — and should stand trial.

At the same time, while admitting that Magnitsky had not received proper medical treatment in a pre-trial detention facility, the Federal Council report insists that his incarceration was legal. The evidence presented in the report alleges that Magnitsky, following the orders of his boss, the Hermitage Capital’s CEO William Browder, designed a tax-evasion scheme allowing the Hermitage Capital to defraud the Russian treasury in the amount of 5.4 billion rubles ($195 million).

The conclusions of the Federation report are not final, yet they put a spotlight directly on William Browder, a British citizen and the driving force behind the Magnitsky bill. Before voting for the bill, members of Congress must ask themselves what motivated Browder’s relentless lobbying for the bill. Is it solely concerns about the death of his former employee or an attempt to shift attention away from his own actions, possibly criminal?

Members of Congress should also explain to the American people why so much effort is being spent on investigating the death, tragic as it is, of a single individual in a remote country. Why has Congress never opened a similar investigation in the deaths of Adam Montoya and Xavius Scullark-Johnson, who both died in U.S. prisons as a result of the criminal negligence of prison officials, exactly as it happened with Sergei Magnitsky? And if our lawmakers are serious about corruption they should look around and reflect why a recent Washington Post op-ed called the District of Columbia a District of Corruption.

Finally, members of Congress should think about the damage that passing of the Magnitsky bill will do to U.S.-Russia relations. Who will benefit from sacrificing our vital national interests for the sake of promoting the selfish agenda of a foreign national?

It’s time for Congress to wise up and to put the Magnitsky bill on hold.

About Eugene Ivanov

Eugene Ivanov is a PMI-certified Innovation Management Consultant who helps organizations increase the efficiency of their internal and external innovation programs.
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9 Responses to It’s time for Congress to wise up (re: Magnitsky)

  1. Dear Eugene,

    Like all your posts on the Magnitsky affair this one is outstanding. I was particularly impressed by your success in tracking down the Federation Council’s report. I have looked for it everywhere but was unable to find it. I hope you will forgive me if on reading it I feel a measure of personal vindication? As you know I have always had my doubts about the story Magnitsky and Browder have been telling and what I read in the Federation Council’s report confirms what I have always suspected.

    One point I would of course make, which we have discussed already, is that all this flurry of activity by the Russian authorities and by the Federation Council has come far too late. If they had exerted themselves when the Magnitsky bill was first proposed or even a few months or weeks ago something might have been achieved. Too late for that now.

    • Eugene says:

      Dear Alexander,

      Thank you for your nice words. I totally agree that the Federation Council intervention came way too late. Still I love how the “usual suspects” reacted to the report: they repeated the whole “murder story,” they ridiculed the report, they even mentioned the Sen. Malkin’s personal wealth. Yet no one has bothered to tackle the most fundamental question: whether or not the Hermitage created the 3 companies the report named and whether or not these companies used the tax-evasion schemes the report alleges? This silence is telling.

      So is Sen. Cardin’s refusal to meet the Russian delegation. Looks like he was afraid of something.

      Anyway, not only our Congress is going to adopt a legislation promoted by a foreign national in the name of another foreign national; both may have been involved in unlawful activity. Nice!


      • Dear Eugene,

        Every point you make is spot on.

        The one thing the Russian government can in my opinion do to retrieve something from this shambles is instruct a good law firm in London (Herbert Smith or Freshfields would be the obvious ones to go for) to bring a claim in the High Court in London against Browder and Hermitage Capital for the tax money they have stolen. Since Browder is a British citizen and since Hermitage Capital is registered as a UK company there is no doubt the High Court has jurisdiction. Cross examination by competent legal Counsel before a High Court Judge in London would quickly expose the falsities in Browder’s claims and I see no reason why a Judgment for the outstanding tax money could not be obtained at which point the absurdity of the Magnitsky law would be exposed for what it is. High Court Judges value their independence and from personal experience I can say that there is absolutely no possibility that any one of them would fall for Browder’s absurdities. On the contrary cross examination by expert Counsel in front of such a Judge would for Browder be a frightful ordeal though one some of us might savour. An ungenerous thought I know but given the harm he has caused an understandable one.

        Do you think there is anybody within the Russian government who is considering this option? I don’t even though as tax money technically is the property of the Russian people the Russian government is under a positive duty to do all in its legal power to recover it.

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  3. Ali says:

    , what was the purpose of Rogozin’s Kyl-Kirk espaacde even if we leave aside his precise words? To warn the Russian government that the radical Republicans may come to power in the US? This is nonsense. Again, Rogozin is official representative of Russia, and his words matter. If this is a position of the Kremlin, then it must clarify it. If Rogozin was freelancing, he must be punished. Honestly, I see no third way.Best,Eugene

  4. Minka says:

    Eugene, why are you so opposed to Magnitsky act? I understand that you are concerned by US-Russian relations but in the end the US signing the act might inspire same act in Europe, which would really hurt Russian officials (since, as people say, Europe’s their favorite destination to buy property/school their children). It seems to me that this is much better way to deal with corrupt regime than by applying sanctions that hurt all population. Besides Magnitsky’s death being the result of “low level corruption” (as you say) and despite prison officials having been punished, and that the Magnitsky bill having been lobbied by dubious character Bill Brawder we still have a problem of massive corruption in Russian government which is negatively affecting Russia’s development. How else can Europe/US help but by freezing Russian assets?

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