Congress and the Sergei Magnitsky Rule of Law Accountability Act

“The following month, late at night on Friday, November 13, my phone rang. It was a voicemail and another threat. There were no words. Just the screams of someone being beaten. Badly.” William F. Browder, founder and CEO of London-based Hermitage Capital Management

By  Nicholas Dima l December 16, 2012

If the 20th Century was an era of conflicts and wars, the 21st Century largely has been an era of cooperation, economic globalization and international free trade.  In this new context, after the dissolution of the Soviet Union, trade between Russia and the United States liberalized and began to develop. However, post-communist Russia is not an ideal place, and human rights abuses continue to mar the new relations. Nevertheless, the international climate has been much better recently than at any time during the Cold War period.  Yet, one relic of the Soviet past that needed to be addressed was the Jackson-Vanik Amendment adopted by the U.S. Congress in 1974.  This piece of legislature conditioned trade with the Soviet Union on respecting human rights and freedom of emigration. The amendment has continued its validity even after the dissolution of the USSR and applied to most of the former Soviet republics, Moldova included.

This past November, the U.S. House of Representatives voted to lift the Jackson-Vanik Amendment for Russia and Moldova and the Senate did the same on December 6.  After the vote, Mark C. Toner, Deputy Spokesperson of the State Department declared: “The United States welcomes the passage by the Senate today of H.R. 6156, which terminates the application of the Jackson-Vanik Amendment to Russia and Moldova and authorizes the President to extend Permanent Normal Trade Relations to both countries.” The legislation takes effect once President Obama signs it into law.

On December 11, the Weekly Bulletin of the Moldova Foundation, announced that Chisinau had greeted with satisfaction the new trade opportunities with the United States. Russia should have had a similar reaction, but something happened that soured again relations with the United States. Sadly, political freedom and respect for human rights are only a facade in  post-communist Russia. People have freedom only as long as they agree with the government. And they enjoy individual rights only if they close their eyes to the corruption and their leaders who abuse the system.  For example, Mikhail Khodorkovsky, former head of the Yukos petroleum company, and one of the richest men in post-communist Russia, was tolerated as long as he did not challenge the new system. Once he challenged it, he was accused of tax fraud and in 2005 was sentenced to nine years in prison.

Now, the so-called “reset” of U.S.-Russian relations has been marred again by another prominent case of human rights abuse. This time a case of abuse far more egregious having to do with the arrest and death in prison in 2009 of Sergei Magnitsky, a Russian lawyer working for the American law firm of Firestone Duncan advising Hermitage Capital Management owned and operated by William F. Browder. Magnitsky had exposed a huge case of governmental corruption in Moscow. His arrest and subsequent death in police custody at the age of 37 generated international opprobrium and launched several investigations.  Magnitsky had discovered a large-scale fraud amounting to over $200 million dollars and reported that the theft was sanctioned by high officials in the Russian government. During his arrest, Magnitsky was most likely mistreated and tortured. He died while in police custody just days before the one year time limit that he could be legally held without a trial.  His case was taken up by several human rights groups and brought before the United Nations, but to no avail. The new Russia continues its old habits and to play by its old rules.

This case of flagrant abuse prompted the overall reaction of the U.S. Congress. In June 2012, the House Committee on Foreign Affairs passed a bill known as the Magnitsky Rule of Law Accountability Act of 2012 (H.R. 4405).  Its intent is to preclude those Russian officials associated with the death of Magnitsky from entering the United States and using the American banking system.  The legislation was then taken up by a Senate panel where the list of Russian officials who are supposed to be subjects of the bill was also published. In November, provisions were attached to a House bill normalizing trade with Russia, and on December 6 the Senate passed the House version.

At the end of the day, it was the American business man Browder who had relentlessly pursued the Magnitsky case from London, where he had set up shop after being denied reentry into Russia, as far back as 2005. In the United States, he was winning over bipartisan supporters like Senators John McCain, Republican of Arizona, and Ben Cardin, Democrat of Maryland. In fact, Browder wrote on November 3, 2012 in an article published in London’s Daily Mail about post-communist Russia’s ‘gangster regime’ of Vladimir Putin. The sensational headline alone spoke volumes:

Tortured to death by Putin’s jackboot state: Inside the rat-infested Gestapo-like Russian prison where eight guards beat lawyer who exposed Moscow’s gangster regime

Browder set the stage in his first several paragraphs, writing:

“I was eating brunch in the fifth-floor restaurant at Harvey Nichols in late October 2009 when we got the first warning, by text. It had been sent from Russia, but the sentiment was American Mafia: ‘If history has taught us anything, it is that anyone can be killed,’ a quote from Don Michael Corleone in The Godfather. We were in no doubt about its meaning.

I was safely in London with the rest of my team. But my Russian lawyer, Sergei Magnitsky, was not. He had been arrested in Moscow a year earlier on trumped-up charges by the Russian Interior Ministry after exposing a major government corruption scandal. I was worried, and with good reason.

The following month, late at night on Friday, November 13, my phone rang. It was a voicemail and another threat. There were no words. Just the screams of someone being beaten. Badly.”

The Kremlin’s reaction has been strong and appeared in many papers. The newspaper, Romania Libera of 12 December, for example, explained the background of the case and gave the position of several Russian leaders. Foreign Affairs Minister Sergey Lavrov declared that Moscow would deny entry visas to those “American citizens who are guilty of human rights violations.” In addition, there were threats of trade retaliations. It is obvious that the new Russia needs American trade and technology, as did the old Soviet regime, but Moscow would accept no conditions and no interference from outside. Nevertheless, Russia cannot afford to lose its new trade status with the United States. Consequently, in spite of its vocal public reaction, Moscow acted through Goldman Sachs Bank and hired an American public relations company to lobby against the Magnitsky legislation. Alas, to no avail.

Nicholas Dima, Ph.D., is a former professor and author of numerous books and articles including the autobiographical memoir, Journey to Freedom, a description of the effects of communist dictatorship on a nation, a family and an individual. (Refer to updated editions). He is currently a contributor to

SFPPR News & Analysis.