Bill Browder, CEO of Hermitage Capital Management, says U.S. legislation designed to punish corrupt Russian officials could be extended to tackle human rights abuses elsewhere
LONDON (TrustLaw) - A bill introduced in U.S. Congress to slap sanctions on Russian officials allegedly linked to the death of a tax lawyer working for investment fund Hermitage Capital Management could become a powerful legal instrument to tackle human rights abuses worldwide, Hermitage Capital CEO Bill Browder said.
The bill imposes asset freezes and visa bans on officials accused of involvement in the death in custody of Sergei Magnitsky almost a year after he was arrested on tax evasion charges.
His arrest had followed claims by Magnitsky that Moscow tax and police officials had embezzled $230 million in tax levied on Hermitage Capital profits.
“This doesn’t just have to apply in Russia,” Browder told TrustLaw in an interview. “There’s a lot of talk in America about broadening this to the entire world. And if that becomes the new technology for fighting impunity then I think Sergei’s death won’t be a meaningless death. Perhaps it will save some lives.”
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The 2009 death of 37-year-old Magnitsky spooked investors and tarnished Russia's image. While the Kremlin human rights council says he was probably beaten to death, official investigations have not brought any high profile suspects to justice.
U.S. Senator Benjamin Cardin introduced the Sergei Magnitsky Rule of Law Accountability Act last May. A companion bill by Representative James McGovern, who like Cardin is a Democrat, was also introduced in the House of Representatives.
While focusing on Russian officials whom Washington says were linked to Magnitsky's detention and death, the bill before Congress also imposes sanctions for “other gross violations of human rights in the Russian Federation”.
And a new U.S. Senate draft of the bill, which already has the bipartisan support of more than 30 senators, would extend penalties to human rights violators "anywhere in the world" to avoid specifically targeting Russia.
But the Obama administration hasn’t embraced the legislation and the bill has been stuck in committee phase in Congress.
'WATCHING THESE GUYS SQUIRM'
Browder, a former big investor in Russia who says he had to flee the country after accusing officials of corruption, said that while visa sanctions and asset freezes might not sound particularly punitive, they had the power to make crooked officials think twice.
“If you’re a Russian government official involved in high crimes... you do that stuff so you can get money,” he said. “And you don’t want to keep your money in Russia because you know how easy it is to steal because you just stole it from somebody else. So what do you do? You want to get that money outside of Russia as quickly as possible.
“You want to buy property on the frontline, between Monaco and St. Tropez in the south of France. You want to buy something in Belgravia. You want to send your kids to boarding school in England. You want to buy an apartment in Manhattan. You want to send your wife shopping in Manhattan.
“That’s what it’s all about for these people when they do these crimes and if you take that away, that shocks them.
“How do we know that this has been such an effective policy tool? By watching these guys squirm and send delegations to Washington and Strasbourg and various places, desperately threatening them, doing anything.”
Browder, grandson of the head of the American Communist Party, began investing in Russia in the mid-1990s. By the late 1990s, he had become the biggest foreign portfolio investor in Russia but his relationship with the country soured when, in 2005, he was denied entry on the grounds of national security.
Soon after, Browder began pulling his assets out of the country.
Magnitsky had been charged with abetting two Hermitage Capital subsidiaries to avoid 500 million roubles in taxes in 2007. The case was brought by the same law-enforcement officials whom he accused of embezzling $230 million of tax refunds.
Some of the officials named by Browder as playing a part in Magnitsky’s death have been promoted and received state honours while Interior Ministry investigators announced that they plan to seek a posthumous conviction of Magnitsky for theft.
Browder said the renewed prosecution attempt proved his campaign was working.
“When the Russian government announced that they were going to try Sergei Magnitsky two-and-a-half years after he died, which would be the first ever posthumous trial in Russian history... it suggests a level of desperation that you can’t imagine,” he said.
“If they’re doing something as unprecedented and truly historic in both its evil and its absurdity, it says that they’re in a corner.”
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