Business Matters

Who’s afraid of Sergei Magnitsky?

He is, after all, dead. He died in 2009, according to Russia’s Presidential Human Rights Council, after severe beatings while detained in a Russian prison for abetting tax evasion. But the circumstances of his death led to US legislation carrying his name. Meanwhile, current international concerns over human rights violations and the US election controversy have suddenly thrust to new prominence the laws he inspired.

An auditor in a Moscow legal firm, Magnitsky exposed a $230-million tax fraud scheme that he discovered while engaged as legal adviser for the London-based Hermitage Capital Management (HCM), one of the largest private equity firms investing in Russia. Human rights groups and HCM blamed his arrest and death on government officials who wanted to silence him. The government also subjected the whistle-blower to a posthumous trial to undermine his credibility. The investigators, who included parties implicated in the tax fraud case, concluded that he had been legally arrested and had not been tortured.


Undeterred, Magnitsky’s supporters compiled a list of some 60 officials from the interior ministry, police and tax authorities whom he had identified as involved in the corruption. In 2012, as retribution for Magnitsky’s death, the US Congress passed the Magnitsky Rule of Law Accountability Act. With rare bipartisan support, Congress expanded the scope of the law in 2016, by enacting the Global Magnitsky Human Rights Accountability Act.

The law empowers the president to deny entry into the United States and to freeze the assets of any foreign person or entity found responsible for torture, EJK and other gross violations of internationally recognized human rights, and anyone acting as agent in such activities. Explicitly covered also are government officials and their senior associates responsible for, or complicit in, committing these violations and other acts of significant corruption.


These laws have not been widely enforced, even against Russians; the earlier, narrower law had resulted in action against 18 Russian individuals. But the ongoing investigation of possible collusion between Donald Trump’s presidential campaign organization and Russian government agents to discredit Hillary Clinton has focused attention on these laws. The mission of the Russian group that met with Donald Trump Jr. was apparently to lobby against the Global Magnitsky Act. Two factors may explain why this law would concern Vladimir Putin and why its repeal or weakening would become an important foreign policy priority.

First, President Trump, writing to Congress last April, said his administration was “actively identifying persons and entities to whom the Act may apply and collecting the evidence necessary to apply it.” He also expressed the intent to “fulfill our commitment to hold perpetrators of human rights abuses and corruption accountable.” While there is no assurance that Trump can deliver on this promise, the issue of Russian meddling in the US election will make it difficult for him to take a stance that appears to soften the law.

Second, other countries have begun the process of passing their own versions of the Global Magnitsky Act. During the third reading of the Criminal Finances Act in the Commons, UK Security Minister Ben Wallace stressed the need, in an increasingly global marketplace, to “make the UK a hostile environment for those seeking to move, hide and use the proceeds of crime and corruption.” In 2015 then Canadian Justice Minister Irwin Cotler tabled a unanimously adopted parliamentary resolution for a Magnitsky Act to protect international human rights as a key foreign policy goal of Canada and the expression of its principles and core values.

In deploying the Magnitsky Act or its equivalent as a weapon against cross-border corruption and human rights violations, governments can apply punitive measures on specific individuals implicated in these crimes without imposing sanctions that indiscriminately punish an
entire country. This targeted response sends a clear signal that the rejection of corrupt business practices and respect for human rights have emerged as values shared worldwide.

Those whose current control of political institutions enjoy impunity at home for gross human rights violations, such as complicity in EJK, enjoy no assurance that this control is permanent. Their world will shrink into an increasingly smaller place as more countries reject granting them impunity for their crimes abroad.

Edilberto C. de Jesus ([email protected] gmail.com) is professor emeritus at the Asian Institute of Management. Prof. Rofel Brion’s Tagalog translation of this column and others earlier published, together with other commentaries, are in http://secondthoughts.ph.

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