Posts Tagged ‘EU’
Sergei Magnitsky uncovered Russia-to-Cyprus money laundering, and look what happened to him
The latest eurozone crisis comes down to controversy over bailing out a Cypriot banking system that is flooded with Russian black money.
The EU-proposed “haircut” solution — with a 9.9 percent levy on large deposits in Cyprus — received zero votes in Cyprus’ parliament and Russian president Vladimir Putin called it “unjust, unprofessional and dangerous.” Attempts to find a compromise have foundered.
In any case, it is clear that powerful people in Russia want to preserve the ability to use Cyprus as a tax haven, alleged money-laundering vehicle, and backdoor into the eurozone.
Just look at what happened to Sergei Magnitsky, the Moscow-based lawyer who was imprisoned and died mysteriously in jail after calling attention to Russian corruption, including alleged money-laundering in Cyprus.
Magnitsky had been working for Hermitage Capital, a fund managed by American Bill Browder. After Hermitage’s offices were raided in 2007, Magnitsky began investigating and later testified that he had uncovered a huge scam by top police officials to embezzle $230 million in taxes from money that Hermitage Fund companies had paid in 2006.
Magnitsky alleged that the corrupt cops had used corporate seals and documents seized in the raid on Hermitage’s Moscow office and set up fake companies under the same names, which then received a full tax rebate.
Hermitage said that some $31 million of that money was then moved out of Russia using five Cypriot banks: Alpha Bank, Cyprus Popular Bank, FBME Bank, Privatbank International and Komercbanka.
The story quickly turned tragic. In November 2008, Magnitsky himself was charged with tax evasion and taken to prison. Kept in Moscow’s notorious pre-trial prisons, Magnitsky unexpectedly died in November 2009. His death was originally attributed to a an abdominal membrane rupture before officials changed that to a heart attack. Magnitsky is one of four witnesses in the case who have died in mysterious circumstances.
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Sergei Magnitsky Uncovered Russia-To-Cyprus Money Laundering, And Look What Happened To Him
The latest eurozone crisis comes down to controversy over bailing out a Cypriot banking system that is flooded with Russian black money.
The EU-proposed “haircut” solution — with a 9.9 percent levy on large deposits in Cyprus — received zero votes in Cyprus’ parliament and Russian president Vladimir Putin called it “unjust, unprofessional and dangerous.” Attempts to find a compromise have foundered.
In any case, it is clear that powerful people in Russia want to preserve the ability to use Cyprus as a tax haven, alleged money-laundering vehicle, and backdoor into the eurozone.
Just look at what happened to Sergei Magnitsky, the Moscow-based lawyer who was imprisoned and died mysteriously in jail after calling attention to Russian corruption, including alleged money-laundering in Cyprus.
Magnitsky had been working for Hermitage Capital, a fund managed by American Bill Browder. After Hermitage’s offices were raided in 2007, Magnitsky began investigating and later testified that he had uncovered a huge scam by top police officials to embezzle $230 million in taxes from money that Hermitage Fund companies had paid in 2006.
Magnitsky alleged that the corrupt cops had used corporate seals and documents seized in the raid on Hermitage’s Moscow office and set up fake companies under the same names, which then received a full tax rebate.
Hermitage said that some $31 million of that money was then moved out of Russia using five Cypriot banks: Alpha Bank, Cyprus Popular Bank, FBME Bank, Privatbank International and Komercbanka.
The story quickly turned tragic. In November 2008, Magnitsky himself was charged with tax evasion and taken to prison. Kept in Moscow’s notorious pre-trial prisons, Magnitsky unexpectedly died in November 2009. His death was originally attributed to a an abdominal membrane rupture before officials changed that to a heart attack. Magnitsky is one of four witnesses in the case who have died in mysterious circumstances.
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Push For Magnitsky Sanctions Intensifies In Europe
The battle over the Sergei Magnitsky case is moving to Europe. After being lobbied by activists for nearly three years, the U.S. Congress passed legislation in late 2012 to sanction Russian officials implicated in the prosecution and death of Magnitsky, a whistle-blowing Moscow lawyer who died in pretrial detention. The case has come to symbolize Russia’s perceived rights failings.
The U.S. law, which provides for asset freezes and visa bans on Russian officials who violate human rights, was never meant to be an end in itself. Instead, the legislation was a stepping stone to passing something similar in the European Union.
And that effort is now gaining momentum.
“Russians consider themselves, really, like a part of Europe — Europeans,” says Kristiina Ojuland, a member of the European Parliament from Estonia who has spearheaded the push. “And therefore it’s significant that Europe reacts, not only [to] the Magnitsky case, but in broader terms, reacts against this corrupt, black money that is flying into the EU countries.”
Asset freezes and visa bans in Europe would hit Russian officials considerably harder than similar sanctions in the United States. As Ojuland notes, Russian officials are fond of vacationing, shopping, and educating their children in EU countries. They are also more likely to keep money in European banks.
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Show trial strengthens the case for an EU Magnitsky Act
The posthumous trial of Sergei Magnitsky, the anti-corruption lawyer beaten to death in a Moscow jail, is not just the moment Russia’s legal system becomes the theatre of the absurd, but something worse. It is a show trial that harks back to the blackest days of the Soviet Union. Even in the Stalin era, however, such trials took place before defendants met their deaths in the dark recesses of the penal system, not after.
Posthumous trials are not unheard of in history. Pope Formosus (891-896AD) was tried post mortem by political enemies in the Cadaver Synod. Joan of Arc’s sentence was annulled in a retrial after her death; Oliver Cromwell’s body was exhumed to be posthumously “executed”. The Nazi Martin Bormann was named as a defendant in the 1945 Nuremberg trials, his whereabouts unclear, and later proved to be dead.
But in modern legal practice, posthumous trials are usually held to provide justice for victims, or to clear a defendant’s name. A 2011 constitutional court ruling in Russia allowed such a hearing if the defendant’s family pressed for it. In this case, none of those elements applies.
Mr Magnitsky’s trial on trumped-up tax evasion charges is a clear attempt to blacken his name. It comes as Bill Browder, his former employer, embarks on a push to persuade European capitals to adopt measures similar to the US Magnitsky Act – which imposed visa bans and asset freezes on officials implicated in the lawyer’s death. Yet if the Kremlin believes a “guilty” verdict obtained in such bizarre fashion will alter perceptions outside Russia, that shows how divorced from reality it has become.
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MEP Leonidas Donskis: The Magnitski list as a wake-up call
The Magnitski list becomes much more than merely a benign and disconnected political fantasy. After the United States Congress adopted this law, with its clear legal and political implications, Russia retaliated by prohibiting American citizens from adopting Russian orphans – a mean, regrettable, and ugly move from Russia’s side with a total confusion of political and humanitarian agendas. Now it is a decisive time for the EU to take a stand.
That Sergei Magnitski posthumously became a litmus test of our political sensibilities and moral commitments is obvious. A brave and conscientious Russian lawyer, who exposed shocking corruption of a cleptocratic regime, and who refused to abandon his struggle by cooperating with high-ranking officers involved in this money-laundering enterprise, Magnitski reached out to the world paying the highest possible price – his own life.
The Magnitski list of the aforementioned officers, whose bank accounts and assets would be frozen, who would be denied the EU entry visa, and who, in effect, would face charges and legal prosecution for a crime, appears as a slap in the face to Putin and his regime. The official Russia is quite used to EU lecturing on the grounds of its deteriorating human rights record and severe human rights violations, as if to say that these are parallel realities – you can talk as much as you wish, yet when it comes to oil and gas, just calm down and make up your mind.
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Do EU sanctions work?
The European Union has increased its use of sanctions against “outlaw countries” in the last few years. But one analyst argues that it has failed to police them – as a result, the efficacy of sanctions remains unclear.
For an international power often dismissed as too soft, the European Union is becoming increasingly fond of using sanctions to coerce other countries to its will. But a new paper by Konstanty Gebert, of the European Council on Foreign Relations (ECFR), accuses the EU of a “wilful blindness” in the way that sanctions are imposed, which has led to inconsistent successes and protracted deadlocks.
As of June 2012, the EU had sanctions in place against 26 countries around the world. And there has been a sharp increase in the last three years – from 22 decisions in 2010 to 69 a year later. Most of these have been focused on “outlaw” countries like Syria and Iran, but the EU has also shown that it is more willing to spread these diplomatic and economic weapons around – imposing them on 16 different nations in 2002, but to 28 in 2011.
The term “sanctions” can of course refer to a range of measures, some political, others economic. Some aimed at governments, others at individuals within those governments, and others still at private individuals. Often it comes down to freezing financial assets, or blocking trade in certain industries.
And the aim of sanctions can be equally wide-ranging – they can either be punishment for severe human rights violations or democratic backsliding, or deterrents to prevent countries from carrying out actions that could threaten European security.
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A Magnitsky law for Europe: The US statute is a pro-Russian, not anti-Russian, act
Even by its own recent standards, Moscow’s response to the US Magnitsky law, which bars Russian officials accused of human rights violations from the US, has been ugly. President Vladimir Putin last week signed into law a ban on US citizens adopting Russian children. In effect, this strands thousands of Russia’s most vulnerable citizens in often appalling orphanages, as hostages to US-Russian relations.
The Kremlin clearly hopes, in part, to persuade other countries not to follow the US. They should not be cowed. For Moscow’s reaction also reflects just how these measures have hit home. Many Russian officials hold property and assets in the west, travel back and forth, and send their children to schools there. So a visa ban and asset freeze on those with at least prima facie cases to answer over rights abuses or criminal activity is a highly effective sanction.
The Magnitsky case, moreover, is egregious, well documented and encapsulates the darker side of Putinism. Tax officials used the shell of an investment fund, whose founder had been mysteriously barred from Russia, as a vehicle to steal $230m from the state. When the fund found out and presented evidence, the authorities did not prosecute anyone implicated. Instead, they arrested the lawyer investigating it, Sergei Magnitsky, and accused him of orchestrating the fraud himself. In jail, he was denied treatment for serious stomach problems and eventually beaten to death.
Even now the case has attracted international opprobrium, Russia has refused to back down. Instead it has launched an absurd posthumous prosecution of Mr Magnitsky for tax evasion. Moscow’s failure to act against the real suspects is at best bloody-mindedness. At worst, it suggests they have high-level protectors, who risk being dragged down with them.
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Tough Talks Expected At EU-Russia Summit
President Vladimir Putin will meet with European Union leaders in Brussels on Friday for a pre-Christmas summit, but the mood will hardly be festive.
Disputes involving visas, trade and energy have cast a shadow over EU-Russia relations in recent months, giving both sides tough issues to discuss. More broadly, the Europeans are expected to voice concern about the Kremlin’s crackdown on dissent, while Moscow’s stance toward Europe is cooling following its recent foreign-policy emphasis on Eurasia.
“I have no high expectations of this summit,” said George SchЪpflin, a member of the European Parliament from Hungary’s conservative Fidesz party.
Schopflin said feelings among Brussels officials toward Moscow had definitely cooled over the past months.
“There is considerable unease about human rights,” he said by telephone.
In a highly critical motion passed last week, the European Parliament demanded that Russia end “politically motivated persecutions, arrests and detentions” among opposition members.
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MEP calls for entry ban on those involved in Russian lawyers’ death
The EU has been urged to impose an entry ban for “all people” incriminated in the death of a Russian anti-corruption lawyer.
Sergei Magnitsky is said to have uncovered what he described as a ‘web of corruption’ involving Russian tax officials.
He is said to have uncovered the theft of more than €152m and, after reporting it to the authorities, he was himself detained on suspicion of aiding tax evasion, and died in custody on 16 November 2009 at the age of 37.
The lawyer’s colleagues insist the case against him was fabricated to make him halt his investigation into a number of high-profile corrupt officials.
Green MEP Werner Schulz, deputy chairman of the EU-Russia parliamentary cooperation committee, has praised the late lawyer for “daring” to speak out against alleged corruption in his country.
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