The Magnitsky Act

The Russian government and its sympathizers have embarked on a concerted campaign to keep ill-gotten Russian money, and the crooks behind it, in business in the United States.

To do that, they want to rewrite the history of one of the most notorious corruption scandals of the Putin era. And, strangely, some members of the U.S. Congress and European Parliament seem to be playing along.

It all dates back to the passage of the Sergei Magnitsky Rule of Law Accountability Act on Dec. 14, 2012. This landmark piece of U.S. legislation, named for a tax lawyer in Moscow who uncovered massive corruption and allegedly died for that sin, sought to sanction and bar from entry into the United States dozens of Russian officials and mobsters implicated in a $230 million tax fraud and its murderous cover-up.

Since then, the Kremlin has tried every trick in its playbook to have the law repealed.

Early on, it promoted a series of “counter-Magnitsky” measures. One of these was a vindictive satire on the original law, barring certain U.S. citizens from traveling to Russia (not that the blacklisted U.S.
senators or federal prosecutors of Russian arms traffickers had much of a desire to visit in the first place).
Another, crueler “counter-Magnitsky” measure prevented Americans from adopting Russian orphans, many of whom are disabled or stricken with debilitating illnesses and languishing in substandard state institutions.

Jo Becker, the children’s-rights advocacy director for Human Rights Watch, denounced the anti-adoption law for making “vulnerable children pawns in a cynical act of political retribution.”

But to the Kremlin’s enormous frustration, the U.S. law stayed on the books.

In four years, the Magnitsky Act has not been repealed. The Obama administration, which treats Russia as a kind of frenemy that’s potentially useful in some areas even when it’s criminal in others, has enforced the law only fitfully, but a handful of Russian officials have been publicly named and shamed by Congress.

Meanwhile, efforts to have the law replicated in other democratic jurisdictions, including the European Parliament, have gained momentum, thanks largely to the relentless activism of one American financier.

William Browder is the CEO of the Hermitage Fund, a onetime Moscow-based investment firm whose offices were raided and whose subsidiaries were stolen and reregistered for use in dummying up tax liabilities in 2007.

Sergei Magnitsky was Browder’s tax lawyer, a Russian everyman who uncovered the fraud and took his findings to the authorities, expecting them to be relieved at the prospect of recovering money effectively stolen from the state.

Instead, Magnitsky was accused of being a tax fraudster himself. He was arrested by some of the same Interior Ministry officials he’d implicated in the Hermitage fraud, and there is strong evidence—corroborated by Russia’s Presidential Council on Human Rights, no less—to suggest that he was deprived of life-saving medical treatment for gallstones and acute pancreatitis while in pretrial detention.

There is further evidence that Magnitsky was handcuffed to a bed and beaten by truncheon-wielding guards who left him to die in an isolation cell in Matrosskaya Tishina prison in Moscow.

Browder has spent nearly a decade promoting Magnitsky’s investigative work about the fusion between organized crime and the state in Putin’s Russia. Burdened by an enormous sense of guilt about the death of his attorney, Browder has become a full-time flame tender for the Magnitsky legacy, vowing to bring to justice those who took part in the frame-up job of an innocent man.

Now permanently based in London, Browder has come under unremitting vilification and legal attack from Moscow.

In 2013, a Moscow court put Browder on trial in absentia alongside the dead Magnitsky in the first posthumous prosecution in the history of Russia.

Browder has since defeated efforts to use an Interpol Red Notice to have him extradited back to Russia to face trial for what he insists are bogus tax-evasion charges.

Since the passage of the Magnitsky Act, much of the looted $230 million has been found or frozen. Some was in Swiss and Latvian bank accounts; some was in offshore companies technically “owned” by Russian concert cellist Sergei Roldugin (who happens to be Putin’s best friend), and some was even in six-figure condos in Manhattan.

About $14 million of these assets, including cash deposited in U.S. bank accounts controlled by a Cyprus-registered company called Prevezon Holdings, Ltd., was confiscated by the U.S. Department of Justice.

As the investigations and asset seizures have begun to bite, a lobbying effort has gotten under way to try once again to have the Magnitsky Act repealed.

As before, disadvantaged Russian children are being dangled as bait, with a wink-and-a-nudge promise to have the Russian law rescinded if the American law is taken off the books.

As one U.S. official put it privately, the current messaging is being “led by ogres out of central casting. They’re saying, ‘You repeal Magnitsky and we’ll let go of the kids.’ And it’s not even American kids. It’s their own. And they’re kids with Down syndrome and spina bifida.”

In February, an organization calling itself the Human Rights Accountability Global Initiative Foundation, an obvious echo of the full name of the Magnitsky Act, was registered in Delaware. Little trace of the activities or provenance of this organization exist online, apart from its “under construction” website, whose homepage is written in ungrammatical English.

HRAGIF claims to be “working on analyzing legal and legislative options to help overturn this adoption ban,” according to its site. “We would like to present our findings to the members of U.S. Congress, Administration and U.S. public and is planning to brief them on possible ways of resolution of this stalemate on adoptions.”

The Daily Beast has seen an email sent to the Open Dialog Foundation, a Poland-based NGO, from a man named Anatoli Samochornov, who claimed to “represent” HRAGIF along with Natalia Veselnitskaya, identified in the email as “a Russian lawyer who conducted an extensive investigation of the Magnitsky case.”

Both Samochornov and Veselnitskaya were seeking press accreditation to attend an event last month at the Open Dialog Foundation where Browder was slated to speak.

They were denied accreditation.

The Russian-born, partly U.S.-educated Samochornov is a former project manager at the Meridian International Center, a subcontracted nonprofit hired by the U.S. State Department where, according to his LinkedIn profile, he worked on programs to “establish an understanding of U.S. foreign policy goals and objectives for current and future international leaders,” and served as an interpreter at “high level UN and private sector meetings for the Secretary of State and other VIPs.”

Samochornov was also apparently a “program officer” at the FBI’s field office in New York, according to an FBI press release.

The Daily Beast spoke briefly to Samochornov last week. He confirmed the authenticity of his email to the Open Dialog Foundation and his and Veselnitskaya’s involvement in the setting up of HRAGIF. But he asked to be interviewed on the record alongside his colleague, who was not, at the time of the call, available to speak.
Then, after agreeing to such an interview, neither Samochornov nor Veselnitskaya responded to The Daily Beast’s follow-up inquiries, and neither was available in time for the publication of this story.

Their silence may owe to the fact that, unmentioned in Samochornov’s email to the Open Dialog Foundation and nowhere apparent on HRAGIF’s website, is Veselnitskaya’s role as the family attorney for the owner of Prevezon Holdings, Ltd., the company accused in U.S federal court of money-laundering.

Veselnitskaya is not shy about her opinions of the Magnitsky Act, about Browder, or about journalism aimed at uncovering Russian corruption. Her Twitter feed and interviews on Russian state television reveal her to be a staunch adherent of the Kremlin’s position on all of the above.

For instance, after the so-called Panama Papers disclosures about Putinist cronies stashing billions in offshore companies, Veselnitskaya tweeted that the Organized Crime and Corruption Reporting Project, one of the partner organizations investigating the leaks, is a “cistern earning serious investments from Western investors in the sewer wars.”

In an appearance on Russia’s RBK TV on Dec. 12, 2014, Veselnitskaya said “there is no Magnitsky case, as such. There is Mr. Browder’s case who used the death of this poor boy in his own personal interests.” And: “Sergei Magnitsky did not uncover any theft referred to in the Magnitsky Act…No one tortured him and no one killed Sergei Magnitsky as it is stated in the Magnitsky Act.”

HRAGIF was founded in February. Two months later, when four U.S. representatives took part in a congressional delegation to Moscow, they were given a letter marked “confidential” that makes much the same case as Veselnitskaya does about this notorious affair.

The delegation featured Rep. Dana Rohrabacher (R-CA), a member of the House Foreign Affairs Committee, a longtime admirer of Putin (they once arm-wrestled in a Washington, D.C., bar), an opponent of U.S. sanctions on Russia, and an outspoken advocate of closer bilateral cooperation between the two former Cold War enemies, particularly in the realm of combating Islamic terrorism.

The confidential letter given to Rohrabacher, a copy of which The Daily Beast has reviewed, carries a litany of serious allegations against Browder, Magnitsky, the Hermitage Fund, and one of its U.S. investors, which the letter accuses of committing securities and tax fraud in the United States.

Browder, the letter states, is guilty of “an illegal scheme of buying up Gazprom shares without permission of the Government of Russia” between 1999 and 2006, Gazprom being Russia’s state-owned gas company. “There is not a jot of truth in Browder’s story, but this is the doctrinal essence of the story known as the ‘Magnitsky case’ put in as a basis for the U.S. Act that caused the most severe damage to the U.S.-Russian relations in recent years,” the letter reads. Then its authors offer to bring the “collected evidence” before the House Subcommittee on Oversight and Investigations and “other concerned U.S. government agencies.”

The document ends with a conspicuous quid pro quo enticement: “Changing attitudes to the Magnitsky story in the Congress, obtaining reliable knowledge about real events and personal motives of those behind the lobbying of this destructive Act, taking into account the pre-election political situation may change the current climate in interstate relations. Such a situation could have a very favorable response from the Russian side on many key controversial issues and disagreements with the United States, including matters concerning the adoption procedures.” (Emphasis added.)

Rohrabacher’s press secretary, Ken Grubbs, told The Daily Beast that the letter “came from the Russian government itself, as indeed most information from Russia comes from the government itself,” but declined to specify who, exactly, in the Russian government presented the document to the California congressman and his colleagues.

As for the letter’s contents, wherein a U.S. company is implicated in securities and tax crimes and the founding premise for a four-year-old U.S. law is deemed illegitimate, Grubbs did not wish to comment beyond saying: “The congressman simply wants to give [the document] careful consideration. He recognizes that various partisans are impatient for a conclusion, but he wants intellectual honesty to prevail, which requires some patience.”

Careful consideration of these accusations was the stated reason for Rohrabacher’s participation, three weeks ago, in temporarily deferring the markup of a new and expanded draft bill that would apply the economic measures of the Magnitsky Act on a global scale, making gross human-rights abusers from any country susceptible to U.S. asset freezes and visa bans.

That deferral more or less coincided with the scheduled debut in the European Parliament of a two-hour documentary, The Magnitsky Affair—Behind the Scenes, reiterating many of the accusations made in the Russian government letter Rohrabacher received.

The documentary was directed by famed Russian filmmaker Andrei Nekrasov, who has a reputation as a critic of the Russian government. The documentary’s debut was canceled at the last minute, however, owing to legal pressure brought by Browder, who considers it morally squalid in tone and libelously wrong on the facts, and also by the public outcry of several MEPs who agree with him.

But how did Nekrasov’s work get to be slated for exhibition in Europe’s legislature? Here the story gets even weirder. Heidi Hautala, a Finnish MEP from the Greens voting bloc whom Browder once considered to be a stalwart proponent of Magnitsky sanctions in Europe, hosted the abortive screening. (She is reportedly dating Nekrasov.)

Also in attendance were two invited guests whose presence raised eyebrows among those familiar with the real Magnitsky affair. The first was Maj. Pavel Karpov, one of the Interior Ministry policemen the lawyer identified as an accomplice to the Hermitage fraud and one of the first state officials to be sanctioned under the U.S. law.

The second was Natalia Veselnitskaya, who told state-controlled Russian television channel NTV from Brussels: “We have not yet unraveled the chain of all those nuances with which Mr. Browder has lived and keeps living. He alone knows for sure the reason for Magnitsky’s death.”

When the film was ultimately yanked, Veselnitskaya was incensed: “We are deeply outraged and…feel a sense of disgust. Withdrawal of the film from the premiere shows that freedom of speech in the European Parliament is granted only to one side.”

Browder believes that Veselnitskaya played an integral role in the Nekrasov documentary. “The Russian press referred to her as one of its organizers and the person who provided input for this anti-Magnitsky film,” he said. “It is certainly consistent with their own anti-Magnitsky sentiments.”

Among the more contentious claims in The Magnitsky Affair is the suggestion that the lawyer was not really a lawyer (despite the fact that even Putin’s presidential website describes him as such) and was never beaten by prison guards, despite postmortem photographs showing bruises about his arms and legs, an official death certificate that refers to a suspected cerebral cranial injury, and a Russian government forensic team’s findings that he suffered from blunt force trauma consistent with that inflicted by rubber truncheons.

Nekrasov also claims that Magnitsky never uncovered any involvement by Russian Interior Ministry officers in the theft of Hermitage subsidiaries and the subsequent tax heist, despite complaints that Magnitsky prepared and testimonyhe personally gave to Russia’s FBI-like Investigative Committee outlining his findings in great detail.

Nekrasov’s film, following the Kremlin’s line, also blames Magnitsky and Browder for stealing the $230 million.

Rohrabacher appears to find that allegation persuasive. On May 4, the congressman tweeted: “Don’t ignore courageous Ru journalist who exposes Putin’s sins, Andrei Nekrasov. He reports Magnitsky case is a lie. Open Ur mind.”

Many more tweets in a similar vein preceded and followed this one.

Curiously enough, as this article was being edited Tuesday, The Daily Beast learned about a further development in the the Global Magnitsky Human Rights Accountability Act, which is due to be marked up Wednesday in the House Foreign Affairs Committee.

According to a U.S. congressional staffer, former California Rep. Ron Dellums and someone named Rinat Akhmetshin showed up Tuesday without an appointment.

“They said they were lobbying on behalf of a Russian company called Prevezon and asked us to delay the Global Magnitsky Act or at least remove Magnitsky from the name,” the staffer said. “Mr. Dellums said it was a shame that this bill has made it so Russian orphans cannot be adopted by Americans.”

Rinat Akhmetshin was identified in February 2015 by The New York Times as the “director of a Washington think tank called the International Eurasian Institute.”

Late Tuesday evening, The Daily Beast obtained a copy of Rep. Rohrabacher’s proposed amendment to the bill for Wednesday’s markup session. On Page 2, line 2, the congressman instructed the Foreign Affairs Committee, “Strike Magnitsky.”