William Browder, chief executive officer of Hermitage Capital Management, testifies during a Senate Judiciary Committee hearing titled 'Oversight of the Foreign Agents Registration Act and Attempts to Influence U.S. Elections' in the Hart Senate Office Building on Capitol Hill, July 27, 2017 in Washington, DC. (Getty Images)[/caption]To say that the Trump-Putin summit in Helsinki caused an international outrage would be an understatement. The fallout, primarily directed at President Trump, was so severe that the infamously crude-mannered president had to make a retraction a day later. Unfortunately, the hidden, and not so hidden, disturbing messages that came out of that meeting were all too abundant to be remediated by the replacement of a “would” with a “wouldn’t.” One such message, uttered very strategically by Mr. Putin at the press conference, merits extra attention as it tells a story of corruption, murder, and international espionage on the highest levels in Russia. The story of a wealthy US-born investor's decade-long crusade against Putin is well known to most foreign policy pundits, but much less known publicly. The events that led to the adoption of the Magnitsky Act in the US, Canada, and Europe, serve as an illustration of just how far and deep the Putin regime is willing to go when it comes to silencing its critics and hoarding money. It is also a story of astonishingly successful, yet fragile, international cooperation in support of human rights.
SERGEY MAGNITSKY’S MURDER
Bill Browder, an American-born investor, founded and ran the largest investment firm in Russia, called Hermitage Capital Management. As Browder later wrote in his Politico story, he was very successful, but faced tremendous amount of corruption at the Russian companies in which his fund invested.
Browder wrote that, as a result of these public complaints “President Vladimir Putin had me expelled from the country and declared a threat to national security.” Eighteen months later in June 2007, my Moscow offices were raided by the police, and the documents they seized were used to fraudulently re-register the ownership of our investment holding companies as well as to create $1 billion of fake tax liabilities. In December, the corrupt officials used their new ‘ownership’ of our companies and the fake liabilities to fraudulently reclaim $230 million of taxes we paid in the previous year.” According to Browder, it was the largest tax rebate in the history of Russia.
After the raids took place, Browder hired Sergey Magnitsky, a young Russian lawyer and auditor. In 2008, acting on behalf of Browder, Magnitsky untangled a dense web of $230 million in tax fraud. His investigation led directly to the Kremlin and Putin’s inner circle of oligarchs. Magnitsky quickly became the target of investigations and police intimidation. He was arrested without charges and beaten to death while in police custody. As Browder later recounted, “There was no plausible deniability to Sergey’s torture and murder. In his 358 days in detention, Sergei had written over 450 complaints documenting what had been done to him. We received copies of these complaints, and together they provided one of the most granular accounts of human rights abuse to come out of Russia in the last 35 years.”
What came after that was a decade of one (very wealthy and angry) man’s fight for justice, on an international scale.
THE MAGNITSKY ACT
In 2004, US President George W. Bush signed Proclamation 7750 to suspend entry “as immigrants or nonimmigrants of persons engaged in or benefiting from corruption.” As the proclamation states: “I have determined that it is in the interests of the United States to take action to restrict the international travel and to suspend the entry into the United States, as immigrants or nonimmigrants, of certain persons who have committed, participated in, or are beneficiaries of corruption in the performance of public functions where that corruption has serious adverse effects on international activity of U.S. businesses, U.S. foreign assistance goals, the security of the United States against transnational crime and terrorism, or the stability of democratic institutions and nations.”
The Proclamation 7750 inspired Browder’s idea for the Magnitsky Act, a piece of legislation that could possibly avenge Magnitsky’s tragic death. The act would be operational within President Bush’s Proclamation 7750, so the individuals who had a part in his death, and who have engaged in such high-level corruption and human rights abuses would not be able to benefit from access to Western nations physically or financially.
Browder headed to the State Department and pleaded his case to the head of the Office of Russian Affairs: “This is the most well documented human rights abuse case since the end of the Soviet Union. It’s been independently recognized that a number of Russian officials were involved in Sergei’s death.” The meeting did not go in favor of enacting the 7750. After all, it was March 2010, and the Obama-led US-Russia “reset” had not yet proven itself a futile undertaking.
Soon after, Browder met with Kyle Parker, a Senate staffer at the US Helsinki Commission, a US government agency that promotes human rights, military security, and economic cooperation in 57 countries across Europe, Eurasia, and North America. With Parker’s help, and Senator Ben Cardin’s direct support, the Magnitsky story reached Secretary of State Hillary Clinton, as well as the entire legislative branch of the US government, with a list of 60 Russian individuals who, according to Browder’s investigation, played a role in Magnitsky’s intimidation, arrest, torture, and death.
It took Browder nearly two years of relentless lobbying in Washington to get the Magnitsky Act passed. Finally, President Obama signed it into law on December 14, 2012. The law bans Russian individuals who have been suspected in murder and serious human rights abuses from entering the United States and also freezes their US assets. The Magnitsky act not only sanctions the people directly involved in Magnitsky’s murder, but also all human rights violators in Russia.
But why do the Magnitsky sanctions matter to Putin? It turns out that they have really struck a nerve for the former KGB officer turned president. To stay in power for a long time, Putin has had to create a certain elite base in the Kremlin. “The Putin cronies,” as they are often referred to, or his group of ultra-wealthy supporters, are an important factor in keeping the regime stable, and propping up the president. In return, Putin guarantees the safety of their foreign bank accounts and vast wealth, much of which has been obtained through corrupt means. Providing this cover, or “krisha” as they often call it in Russia, is Putin’s main tool for garnering the necessary elite support to safely stay in power. When Western nations systematically start freezing and confiscating these assets, and denying visas so these individuals can no longer enjoy all that the prosperous Western countries have to offer (from London to New York to Miami and Los Angeles), the disgruntled elites in Russia will no longer see an incentive in supporting Putin. The Magnitsky sanctions were designed to hit Putin where it would have hurt most, and all of this took place well before the Ukraine-related sanctions or any of the other headline-making sanctions that have been put in place since.
In an act of retaliation in December 2012, Putin signed into law a ban on adoptions of Russian children by American citizens. This law blocked the departure of hundreds orphans in the midst of the adoption process from Russia. Until 2012 Russia was one of the main “suppliers” of adoptable children to the United States. At the time of the adoption ban some 120,000 orphans in Russia were up for adoption, many of them with special needs. Three times as many lived in the foster care system. One could argue that this was more of a punishment of orphan Russian children, than that of the United States, but as recent commentary put it, it was “an example of tit-for-tat diplomatic warfare.”
The adoption ban, as dramatic as it was, did not stop the US government from implementing the sanctions. The steadily expanding list of targeted Russian individuals includes more than three dozen people so far. Moreover, soon after the signing of the US Magnitsky Act, European allies followed suit. Various EU bodies, as well as a number of individual EU states, including the UK, Holland, Estonia, Italy, and Poland, adopted similar sanctions. In October 2013, Canada joined that list. In the fall, the parliament of Moldova is set to vote on adopting Magnitsky-related sanctions.
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A picture taken on December 7, 2012, shows snow clad grave of Russian lawyer Sergei Magnitsky with his portrait on the tomb (C) at the Preobrazhenskoye cemetery in Moscow. (Getty Images)[/caption]THE MAGNITSKY ACT AND THE TRUMP ADMINISTRATION
The Magnitsky Act is a lot more than an Obama-era measure. In December 2017, during his first year in office, President Trump signed the Global Magnitsky Act which, like the original Magnitsky Act, targets human rights abusers, in this case all over the world, by freezing their US assets and denying them US visas. Additionally, the Trump administration, whether reluctantly or not, has overseen a process of increasing and deepening further Russia sanctions. For example, in April 2018, the US government passed another round of sanctions imposed by the US on Putin’s top cronies. The new sanctions target seven of Russia’s richest men and 17 top government officials.
However, the Trump administration’s relationship with Russia is a lot more complex. For example, the fateful Trump Tower meeting between the Russian lawyer, Natalia Vesilnitskaya, and Trump campaign staff before the 2016 presidential election was reported to have been about the Russian child adoption ban. But adoption ban really means sanctions. Vesilnitskaya has been working for years on overturning the Magnitsky Act. While the details of this meeting are unknown, it is clear that Moscow has been seeking out various ways to get the Trump team to help Putin get to Browder. Jury is still out on whether the Trump team has agreed or collaborated.
But the real evidence of just how much Browder has gotten under Putin’s skin was put on display for the world to see at the post-Helsinki summit press conference.
“So far, I can say the following. Things that are off the top of my head. We have an existing agreement between the United States of America and the Russian Federation, an existing treaty that dates back to 1999. The mutual assistance on criminal cases.” …
… “This treaty has specific legal procedures we can offer. The appropriate commission headed by Special Attorney Mueller, he can use this treaty as a solid foundation and send a formal, official request to us so that we could interrogate, hold questioning of these individuals who he believes are privy to some crimes.” … “We can actually permit representatives of the United States, including the members of this very commission headed by Mr. Mueller, we can let them into the country. They can be present at questioning.”
“In this case, there’s another condition. This kind of effort should be mutual one. Then we would expect that the Americans would reciprocate. They would question officials, including the officers of law enforcement and intelligence services of the United States whom we believe have something to do with illegal actions on the territory of Russia. And we have to request the presence of our law enforcement.”
After the long lead-up, Putin finally got down to the specifics of what was really on his mind:
“For instance, we can bring up Mr. Browder in this particular case. Business associates of Mr. Browder have earned over $1.5 billion in Russia. They never paid any taxes. Neither in Russia nor in the United States. Yet, the money escapes the country. They were transferred to the United States. They sent huge amount of money, $400 million as a contribution to the campaign of Hillary Clinton. Well, that’s their personal case. It might have been legal, the contribution itself. But the way the money was earned was illegal. We have solid reason to believe that some intelligence officers, guided these transactions. So we have an interest of questioning them. That could be a first step. We can extend also it. Options abound. They all can be found in an appropriate legal framework.”
“Unfortunately, what created a real sense of unease, even more than Putin’s words, was Mr. Trump’s reaction to this “offer.”
“So I have great confidence in my intelligence people, but I will tell you that president Putin was extremely strong and powerful in his denial today. And what he did is an incredible offer. He offered to have the people working on the case come and work with their investigators, with respect to the 12 people. I think that’s an incredible offer.”
While bi-partisan outrage ensued in the US, the White House Press Secretary told reporters two days after the summit that Putin had actually asked Donald Trump to let Russian officials question the former US ambassador to Russia, Michael McFaul, as well as other US individuals, many of whom are known Russia critics and avid Magnitsky Act advocates, including the congressional staffer, Kyle Parker. However, the US Senate quickly voted 98-0 for a nonbinding resolution opposing the "making available of current and former diplomats, officials, and members of the Armed Forces of the United States for questioning by the government of Vladimir Putin."
On the other hand, it took the US President days to “consider the offer”, according to his Press Secretary, before declining Moscow’s request for access to the individuals in question. This situation, and the White House’s clumsy way of handling of the clever, yet transparently ill-intended, Russian maneuver has raised many questions. Was Mr. Trump unaware of the magnitude of the Magnitsky Act? Was he naive enough to think that handing over a former American diplomat or any other US official to a murderous autocratic regime for “questioning” was even a possibility? After all, he himself signed the Global Magnitsky Act, and has on many occasions said that he is much tougher on Russia than President Obama ever was. Does this mean that Mr. Trump was fully informed going into his private meeting with Mr. Putin, but still chose to call Putin’s clearly cynical, if not dangerous offer on “exchanging intelligence” an “incredible offer”?
Another important question concerns the fate of Mr. Browder himself. The avid Kremlin critic is front and center on Putin’s radar, yet he has managed to grow his mission by leaps and bounds while also staying safe. So many of his friends and supporters have become victims of Russia’s manipulation of the Interpol or have been assassinated. Is Browder safe? He says Putin wants him dead but he isn’t hiding from the fame and attention he has garnered over the years. He frequently appears on CNN, FOX, and other major media outlets. Thanks to his crusade, one man’s death has become the symbol of a greater cause. Can the same be said for the thousands of Ukrainians and Georgians who have been killed in the various 21st century wars waged by Russia in their countries? Will the US continue to stand its ground against Putin’s policies as Georgia prepares for its month of national mourning in August at the 10th anniversary of Russian invasion, or as Ukraine enters its fifth year of civil war in Donbas? The Magnitsky Act and its impact are a reminder that supporting the victims of human rights abuses in Eastern Europe and elsewhere is a long-standing American tradition, and that it can be done well when its done with conviction.
Browder’s 2015 book, Red Notice, documents the story of Sergei Magnitsky and Browder’s own journey seeking justice for the young lawyer’s death.
*Maia Otarashvili is a Research Fellow and Deputy Director of the Eurasia Program at the Foreign Policy Research Institute (FPRI). She is co-editor of FPRI’s 2017 volume Does Democracy Matter? The United States and Global Democracy Support. Her research interests include the geopolitics of the Black Sea-Caucasus region, the post-Communist CEEE countries, EU’s eastern enlargement policies, and Russian foreign policy.
