Red Notice and the Magnitsky Act

“In the US, it’s called The Magnitsky Act, formally known as the Russia and Moldova Jackson–Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012. “The law is named after Sergei Magnitsky, a Russian lawyer and auditor who in 2008 untangled a dense web of tax fraud and graft involving 23 companies and a total of $230 million linked to the Kremlin and individuals close to the government. Magnitsky was the target of investigations, arrested by authorities and kept in jail without charges. He was beaten and later died under mysterious circumstances in jail just days before his possible release.” (https://www.washingtonpost.com/news/the-fix/wp/2017/07/14/the-magnitsky-act-explained/?utm_term=.3ed67795fba5)

A similar law was enacted in Canada in October and what it does is ban corrupt officials of foreign governments from doing business in Canada, freezes any assets they have in Canada and prohibits their obtaining of visas to visit Canada. In Canada, the list includes mostly Russians but the current president of Venezuela is also on the list.

There’s considerable evidence that the Trump Tower meeting among Donald Trump Jnr. and others was primarily about the hated Magnitsky Act, suspicion being that a trading of help in electing Trump could end up making the Act go away.

Bill Browder was central to the story of Magnitsky’s death and to the enactment of Magnitsky Acts in the USA and Canada (as well as a few other countries.) Red Notice: A True Story of High Finance, Murder and One Man’s Fight for Justice is Browder’s version of events, a version in which he is the one man fighting for justice for Sergei Magnitsky.

Browder’s Russia involvement began when he discovered that in the privatization of Russian corporations, shares were being offered at ridiculously low prices. He set up a hedge fund named Hermitage Investments, drew in investors and bought up shares in the prospect of enormous profits when they would edge up to their true value. The fund grew into billions, but in comparison to what the “oligarchs,” (the wealthy Russian market manipulators that Browder alleges include Putin) could command, it was probably never more than a small player.

It was the attack on Hermitage that drew Magnistsky, a Russian lawyer and accountant, into a drama that would result in his demise. Browder had incorporated a number of shell companies in Russia to do his business and at one point, these were raided by police, assets seized (or would have been had not Browder already moved them off shore) and Magnitsky was hired to represent Hermitage since Browder had been banned from entering Russia. In his investigations, Magnitsky discovered (according to Red Notice) that the actions against the shell companies gave Russian oligarchs an opening to have the taxes paid previously by these companies—to the tune of 230 million dollars—refunded, and the money distributed among members of the cadre that set up this whole phoney scam.

Magnitsky was charged then with fraud and tax evasion, jailed and tortured in hopes of obtaining a confession on trumped-up charges. He died just before his scheduled release, the assumption being that no real evidence could be found against him.

And so began Browder’s campaign to punish those benefiting from this fraud on the Russian people through the tax system.

Browder’s convincing narratives could easily lead to an impression that cheating and fraud, money laundering and the accumulation of vast wealth by a few is endemic to the Putin regime and his cohort. What isn’t documented in Red Notice is the ethics of high finance generally. In a pristine world, would speculation on currency, hedge fund operations, short-selling and the many other tricks that allow people to amass wealth without ever producing a product or service of value even be permitted? Canadians are finding out to what degree their own wealthy and powerful are able to hide their incomes to avoid carrying a fair tax burden. It’s generally accepted that there exists in virtually every country—democratic and totalitarian—elites with the ability to profit on the backs of workers whose taxes are deducted before they ever cash their pay checks.

The fall of the Soviet Union and the opening of the doors to capitalism created an avalanche of opportunities in Russia. Much as citizens might relish the lifting of restrictions on travel, religion, speech, private ownership, etc., trading political hegemony for capitalist free enterprise can come to look more like license than freedom. Wealth is power, and in the Western world today, the amassing of wealth in the hands of a few has clearly demonstrated the folly of allowing that to happen. There inevitably comes a time when a few citizens have accumulated such a preponderance of wealth-power that they can effectively hold even elected governments by the short and curlies. Witness the freshly passed tax bill in the USA and the Canadian governments stalling on the issue of off-shore tax cheating.

Red Notice is a fascinating read; literate for the most part and intriguing—if the machinations of high financial dealing is your cup of tea. But can a story told by an involved principal ever be trusted? There have been so many incidents of perfidy coming out of the Putin government that Browder’s characterization of that regime seems plausible. The poisoning with plutonium of Alexander Litvinenko, the Olympic doping scheme and the occupation of Crimea are just a few glaring examples of the style of governance presided over by a former KGB operative. On the other hand, Russia has a large, well-educated citizenry . . . and secret ballot elections. They must have made a judgment as they cast their ballots, and that judgment has to carry some weight.

What is it about Russia that Browder leaves out, probably doesn’t have even an inkling of? I would like to balance Red Notice with an account of these events by a Russian journalist.

Nevertheless, there is no doubt that Sergei Magnitsky was found dead, bruised and emaciated in a Russian prison. That’s probably enough evidence to draw a safe conclusion about the Russian regime; all is not well over there and being wary in our dealings with Putin is probably a good idea.