The man behind the Magnitsky Act explains why now is the time to go after the Russian elite’s assets


Russian President Vladimir Putin, center, and Defense Minister Sergei Shoigu, left, and the Chief of General Staff Training Directorate, Gen. Ivan Buvaltsev, right, watch a military exercise near St.Petersburg, Russia, on Monday, March 3, 2014. Putin has sought and quickly got the Russian parliament's permission to use the Russian military in Ukraine. (AP Photo/RIA-Novosti, Mikhail Klimentyev, Presidential Press Service)

As much as everyone is very mad at Russia right now for its actions against Ukraine, it still isn't exactly clear what will happen next. Might the United States and Western Europe send troops into battle against Russia? Even if Russia weren't a nuclear power, that seems incredibly dangerous.

Instead, the discussion is moving to economic measures, with the Obama administration saying it is "highly likely" they will use sanctions against Russia.

However, at least one person is arguing that there may be another option, one that could zero in on the interests of the Russian elite more accurately without hurting the Russian public in general: a 2012 human rights law known as the Magnitsky Act.

"This is exactly what the Magnitsky Act was created for," Bill Browder, founder of the investment fund Hermitage Capital Management explained in a phone call from his London base Monday morning. For Browder, his link to the act isn't just political -- it's also personal. The man for whom "the Magnitsky Act" is named worked for him.

The story of the Magnitsky Act began in 2008, when Sergei Magnitsky, a Moscow-based lawyer working for the Hermitage Fund, testified in a Russian court that he had uncovered a huge scam by top police officials. According to Magnitsky, the officials had embezzled $230 million in taxes from money that Hermitage Fund companies had paid in 2006, with corrupt police officers using stolen corporate seals and documents seized in a 2007 raid on Hermitage's Moscow offices to set up fake companies under the same names, and then used these fake companies to get a tax rebate.

Instead of a more thorough investigation he apparently hoped for, Magnitsky was himself charged with tax evasion. He was taken to prison for pretrial detention, where he died unexpectedly in 2009. The circumstances of his death remain murky, though officially it was said to be a heart attack.

Browder never accepted that version of events: In his phone call with The Washington Post, he referred to Magnitsky's death as a "murder," perhaps alluding to one report from Russia's Presidential human rights council that said torture contributed to the lawyer's death. Browder, who had been barred from entering Russia himself, began to lobby back in Washington for the introduction of a "black list" of Russian officials involved in the crime. Those on the list would have bank accounts frozen and assets seized.

The Magnitsky Act passed in December 2012, and a few months later 18 names were released. Importantly, the scope of the act was expanded to include a number of people not related to Magnitsky's case. Browder feels that now is a perfect time for the list to be updated again. “You can’t just let Russia take over another country without consequences," he said, reasoning that the Magnitsky Act worked better than sanctions as going after individuals made them "face real personal consequences which their commanders can't protect them from."

“The main reason Magnitsky has been so successful is that it addresses the state of the world in modern Russia vs. the Soviet Union," Browder explained, arguing that nowadays officials who commit human rights violations for profit in Russia often keep their money in the West as they fear the instability of Russia. “I guarantee you, if put them on a sanction list, they'd think twice about what they are going to do next in Ukraine and elsewhere.”

While it's difficult to quantify the exact impact of Magnitsky Act, the reaction from Russian lawmakers suggests it hurt: Shortly after it was implemented, Russia passed a law banning U.S. parents from adopting Russian children. Later, Russia responded with their own "black list" of U.S. officials, and Magnitsky himself was finally found guilty of tax evasion – even though he was already dead.

Of course, the Magnitsky Act was initially envisaged as a response to one particular incident, and it's hard to foresee how it might be used in the case of Russia's state-sanctioned aggression in Ukraine. How many people, for example, would it target? Browder argued that it should be easy to work out the target, and that it could even go all the way to the top. When e-mailed about the possibility of targeting Russian President Vladimir Putin with the Magnitsky Act, Browder e-mailed back: "I don't see why not. He is said to be the richest man int the world holding lots of money offshore, which could be frozen."

Adam Taylor writes about foreign affairs for The Washington Post. Originally from London, he studied at the University of Manchester and Columbia University.
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