The Global Magnitsky Act (or the The Global Magnitsky Human Rights Accountability Act) is a bipartisan Act passed in the United States that allows the US federal government to sanction officials from foreign governments who are suspected of violating Human rights onto their citizens, or are involved in some form of corruption. The Act itself has many variations worldwide and has recently came under the limelight for sanctions being done to China. However, to truly understand the implication of this Act onto foreign entities, it is important to detail the person for whom this Act was named after: Sergei Magnitsky.
Sergei Magnitsky was a 34 year old Russian tax lawyer and auditor who worked for the investment firm Firestone Duncan. Those that knew Mr. Magnitsky described him to be a man who had his heart set in the right place, as he always valued the rule of law and the notion that people should stand up in the face of any injustice. He was also described as someone who was incredibly smart and diligent in the world of finance before and while working for the investment firm, even attending the prestigious Plekhanov Institute in Moscow. It is also important to mention the co-founder of Firestone Duncan, Bill Browder, and his contributions to the international world and how this case unfolded.
Bill Browder, a British financier, is the CEO and financial advisor of the Hermitage Capital Fund. The HCF is a branch of the Hermitage Fund, which is the best performing fund worldwide, growing over 238% at its peak. With the amount of financial resources that the Hermitage Fund has, and with Bill Browder as its CEO, this makes him a force to be reckoned with internationally as the Fund can do some serious change to any company it may come across.
Not only is Bill Browder the CEO of a powerful firm, but he is also a political activist. He, however, executes this practice in a rather unconventional manner. Mr. Browder is described to be a shareholder activist, or an activist who utilizes their rights as a shareholder and Investor in a publicly-traded corporation/organization in order to create change within it. Whether the change in question is things relating to worker rights, accountability towards the environment, and so on. In particular, Bill Browder took this title as an activist to new heights by challenging one of the biggest places where his investment firms were located and did business with, Russia.
The late 1990s to early 2000s saw the rise in more and more activism from Bill Browder in many major Russian companies, many being state owned. Many of these companies were under intense international and regional scrutiny for their supposed unsound business practices, including supposed misplacement of financial resources and withholding shareholders’ rights. Browder continued challenging Russian companies through his activism until 2005, when Russia considered Mr. Browder to be a threat to national security and was refused entry into Russia, even revoking his Visa. Browder’s deportation from Russia had little effect on the many companies that he was still a part of that had offices in Russia, including those under the Hermitage Fund. In 2007, Russia’s Interior Ministry ordered 25 officers to raid the offices associated with the Hermitage Fund, including the Moscow office that housed Firestone Duncan. The reasoning from the Ministry was that the firms in association with the Hermitage Fund supposedly had been involved in a tax evasion scheme. The officers took important registration documents for the holding companies under the Hermitage Fund; this act by the government did not sit well for Mr. Browder.
As the events of the raid came to a close, Bill Browder assigned Sergei Magnitsky to help investigate the true purpose of the raids. After months of investigation, Mr. Magnitsky came to the realization that the purpose of such raids were made to retrieve the documents and fraudulently alter them. The various companies associated with the Hermitage Fund were registered under new owners (one has been stated to be involved in organized crime), in order to jeopardize their business operations and secure millions in fraudulent tax returns. Judges would confirm the owner and its new “representatives” pled guilty to the tax evasion claims and ended up racking the Hermitage Fund millions in debt, even though no one that was actually a part of the Fund knew what was occurring. What Sergei Magnitsky uncovered next, however, was something that astounded him completely.
His investigations also uncovered the mishandlings of the Russian Treasury by the same department that ordered the raid in the first place, the Russian Interior Ministry. In an act of State-wide corruption, the Interior Ministry seemingly robbed the Russian Treasury of approximately 250 million US dollars. Upon seeing this, Sergei Magnitsky sought to do the only reasonable thing and report the act.
In 2008, Magnitsky stood before the Russian State Investigative Committee in order to testify everything from his private investigations to expose the officials responsible. He exposed the names of many of those involved, including Lt. Colonel Artem Kuznetsov, Major Pavel Karpov, and Viktor Markelov (a convicted killer and the person that the Hermitage Fund was registered under), and thought that a formal investigation would be conducted by the Duma and justice would be served to those people that were involved in this seemingly corrupt practice. This, however, did not happen. In probably one of the most ironic twists of fate, about a month later, the same people that Magnisky testified against ended up ordering his arrest and apprehended him. He was imprisoned at Butyrka prison in Moscow for collusion with the Hermitage Fund, which by now has “pled” guilty for tax evasion, which means people associated with the Fund will be punished. In an effort for Magnitsky to withdraw his testimony, they proceeded to, from reports and private investigations, torture and leave him in a cell that has been described as “unbearable,” and deprived him of medical treatment while inside, despite the fact that he fell seriously ill.
Magnitsky still ended up doubling down, but after 11 months in prison, with no trials, and 5 days before he would have been released, Sergei Magnitsky passed away on November 16th, 2009. His death was the result of numerous health issues including: developing gallstones, pancreatitis, cases of physical assault, and more while being incarcerated.
Aftermath and the US Magnitsky Act
His death sparked major outrage over the prison system and by the actions of the government, which many already suspected may have been in part by the government. The aftermath saw many independent organizations coming into the limelight, investigating on their own pertaining to the suspicious events. One such organization called the Moscow Public Oversight Commission investigated Magnitsky’s death and found that the circumstances may have been intentional and that physical altercation may have been prominent during his final days.
Since then, the Russian government has made several trials convicting Magnitsky posthumously for supposed “tax evasion” for working with the Hermitage Fund and also convicting Bill Browder of the same offense. Magnitsky’s story, however, is not over as his testimony and the circumstances surrounding his death has made him a sort of martyr and champion for Human rights, and his story lead(s) many to be aware of their own governments power and its ability/danger to overstep at the expense of the people. This same rhetoric is shared with not only people worldwide, but also governmental officials.
The United States, for instance, passed a law called the Sergei Magnitsky Rule of Law Accountability Act of 2012 that seeks to directly punish the officials suspected of causing the death of Sergei Magnitsky and any other officials that have been accused of human right violations by refusing their entry into the United States and the refusal to access their assets in the states. This act was revised a little later that year to help normalize trade with Russia, but also to affect the officials responsible. President Barack Obama signed the bill into law on December 12th, 2012.
US Global Magnitsky Act
In 2016, the United States wanted to expand the Magnitsky Act to not only Russia, but to the rest of the world. The provisions and consequences are the same as before, but now it is targeted to not only Russian officials, but also to any official around the world that has been accused of violating Human rights to its citizens and have been accused of being corrupt. Aptly named the Global Magnitsky Act, this new, and still standing law, allows Visas to be banned and Americans are also not allowed to do any sort of business with the individuals on the list. This, like its previous incarnation, received bipartisan support in Congress and President Barack Obama signed the bill into law on December 23rd, 2016.
Since then, the Trump administration has been interested in seeing the Act’s enforcement and to collect more information in regards to including more individuals worldwide under the watchful eyes of the Act, only time will tell how they execute its enforcement thoroughly.
International response to the Global Magnitsky Act
It is not only the United States that has responded to the case in Russia through legislative action, many developed nations around the world, including many in Europe, have their own version of the Magnitsky Act, particularly in the United Kingdom. On February 21st, 2017, Parliament made an amendment to the Proceeds of Crime Act of 2002 to expand its interpretation of “unlawful conduct” for punishment to cases of Human rights violation. In 2018, the UK passed a “Magnitsky Amendment” to the Sanctions and Anti-Money Laundering Act, to execute its provisions fully. However, after leaving the European Union in early 2020, the UK intends to add on to their version of the Act, with Foreign Secretary Dominic Raab to take charge of its execution and as of now, they began sanctioning many individuals, but just like that of the United States, only time will tell how well this Amendment has been executed. As of the 20th of July 2020, the United Kingdom has stated their anger towards China for their treatment of the Uyghurs (will be discussed in more detail later in the article), they are preparing plans of official sanctions, and are restricting the Chinese-owned phone company Huawei in their and the United State’s plans to introduce 5G.
The Russian government responded to the many versions of the Magnitsky Act by calling out all of the countries that have done this, including the US. The Russian government banned Americans from adopting children that were born in the state of Russia, and even made their own version of the Magnitsky Act by creating a list of their own on US officials and banning them from entry which is referred to as the Guantanamo List. This, overall, may affect trading relations between the countries that have executed such an act and those targeted for trade, but in the face of preserving and ensuring Human rights everywhere, it is intended well.
Global Magnitsky Act and China
The Global Magnitsky Act has been brought up again as a hot topic due to many governments around the world broadening their scope of officials to put on their own respective list, the United States, in particular, is currently taking these actions, with many European nations following as well. There has been much speculation and controversy in recent years over the ethnic minority group the Uyghurs and their treatment from the Chinese government or the CCP (Chinese Communist Party). The Uyghurs are a muslim minority group that mostly reside in the Xinjiang region of North-Western China, once part of Turkistan until the region was annexed by China in 1949. Over the years, there has been much outcry and criticism over the treatment of the Uyghurs due to their cultural and religious differences with their neighbors. Starting from 2017-2018, the CCP has been under scrutiny for their assembly of internment camps. The CCP has denied their existence for a long time until it was proven to exist, they later switched their story to state it was to “re-educate” the populace. Many have stated that the purpose of these camps are to house the Uyghurs in an effort to keep them isolated at a forced labor camp, while doing brutal and tortuous things to the ones unlucky to be inside. The CCP has stated that the Uyghurs hold extremist views and are responsible for terrorist attacks and threats to China, and defended their “re-education” efforts by saying that the actions done were to protect their national security, but still deny the brutality of their actions.
Recently, many developed nations have responded to the actions done by the CCP by broadening their list of the Global Magnitsky Act to include officials from the political party, or those that are in higher levels of government. The United States, for instance, has been very vocal about the controversy surrounding China and broadened their list to include the following individuals (as of July 9th, 2020): Chen Quanguo, who is the secretary of the CCP in Xinjiang; Zhu Hailun, who was the former Deputy Secretary of Xinjiang; Secretary Wang Mingshan and Huo Liujun, both of whom worked for the Xinjian Public Security Bureau. Secretary of the Treasury Steven Mnuchin defended the actions of the United States by stating that it is intended to hold those that abuse human rights accountable for their actions by affecting the most important aspect of their day-to-day operation, their finance.
As of very recent, China has taken similar measures to Russia when it comes to retaliatory legislation passed amidst much controversy surrounding them; they issued a sanction against US officials from entering into China and as of the 13th of July, 2020 these officials include: Republican Senators and 2016 Presidential candidates Ted Cruz and Marco Rubio, US representative Chris Smith, US Ambassador for International Religious Freedom Samuel Brownback, and the US Congressional-Executive Commission on China. Many, however, claim that the decision by China in doing so is one that is meant to be symbolic, as many of these politicians have little to no exposure in China. Hua Chunying, who is the official spokeswoman of China’s ministry of Foreign Affairs, has stated that the sanctions imposed by the United States are some that show that they are trying to interfere in their foreign affairs which is starting to become a detriment to their relationship as states.
Bill Browder never expected the type of reaction that his and Sergei Magnitsky’s story would circulate as it helps make people more conscious of their and other governmental actions towards their citizens.
Today, Bill Browder still advocates for Human rights internationally and is still trying to spread the story of Sergei Magnitsky so that everyone can listen to and understand the brave story about a person that had his heart set in the right place and wanted to do good in the world, but paid the price in doing so, his death, however, spreads the message of Law and Order and governmental accountability everywhere.
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