Posts Tagged ‘financial times’
Council of Europe slams Russia over ‘appalling’ Magnitsky case
Russia has been accused of a “high-level cover-up” of a “gigantic robbery” from the state exposed by Sergei Magnitsky, the anti-corruption lawyer beaten to death in jail, in a scathing report for Europe’s top human rights body.
The draft report says the fact no one has been punished for Magnitsky’s death or for the $230m theft of public funds he was investigating is “appalling”. It labels the Russian government’s response as “belated, sluggish and contradictory”.
It also says explanations offered by Moscow that were used to exonerate officials for their role in the theft, and then posthumously to blame Magnitsky himself for the fraud, were “unconvincing and doubtful”.
The 41-page report is the result of a six-month investigation by Andreas Gross, a Swiss member of the parliamentary assembly of the Council of Europe, responsible for enforcing the European Convention on Human Rights.
The report will step up the diplomatic pressure on Moscow over the case. It may also prompt European countries to examine similar steps to the US Magnitsky Act, which imposed visa bans and froze assets of 60 Russians allegedly linked to the crimes – though the report says such measures should be a “last resort”.
Russia responded furiously to the Magnitsky Act, banning US citizens from adopting Russian children and drawing up a tit-for-tat blacklist of US officials.
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MEPs threaten to block visa-free travel for Russian officials
Senior members of the European parliament are threatening to block a measure allowing some Russian civil servants visa-free travel to the EU unless the union in turn blacklists Russian officials linked to human-rights abuses.
On Tuesday 48 MEPs signed an open letter to demand that Brussels implement its own version of the US “Magnitsky list”, signed into law in December by President Barack Obama, which has sent US-Russia relations to their worst point in years.
The ban could be implemented only if the European Commission, the EU’s executive branch, formally made it a condition of accepting visa-free travel for Russian civil servants, something the Kremlin has long sought from Brussels. So far the commission is “considering” such a condition, according to someone familiar with the situation, but could be forced to impose it if parliament had the votes to block the visa-free regime.
“Of course, if parliament makes it a condition for its consent, then at the end of the day we will need parliament on board,” the person said.
However, the commission appears to be preparing a compromise that stops short of the parliamentarians’ demands, according to an official in Brussels. Instead of a strict travel ban on certain Russian officials, it would consider restricting their access to the visa waiver.
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Cyber theft: A hard war to wage
Washington is angry. Really angry. It is just not sure what to do about it. US officials have accused Chinese hackers of stealing corporate trade secrets since the mid-2000s but during the past few months the outrage has reached a political tipping point. cyber security has been thrust to the top of the agenda in US-China relations.
The Obama administration, members of Congress and the think-tanks that advise them have cast around for ways to punish hackers from China and elsewhere. Washington is considering a series of unilateral trade and other sanctions against Chinese entities and individuals.
“We will start sending a message to countries, especially China, that there is a consequence to your economic espionage,” says Mike Rogers, the chairman of the House intelligence committee who is preparing a bill to penalise hackers. “We should have a dial we can turn up and a dial we can turn down. That means adding some teeth.” When Barack Obama welcomes Xi Jinping for their first presidential meeting on Friday, he will press his Chinese counterpart on the issue of cyber theft.
Yet while political pressure is building for Washington to find ways to do something about the theft of trade secrets, it faces two big problems. First, it is not clear if any of the suggested remedies are workable. Moreover, given that China denies the US allegations, American attempts at retaliation risk escalating into a broader trade war between the world’s biggest economies.
John Veroneau, a former deputy US trade representative, worries that the mounting tensions over cyber theft could cause deep damage to the global trading system. “The great recession did not cause a surge in protectionism despite many predictions,” he says. “But cyber theft is changing things.”
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US lawyer expelled from Russia over fresh spy allegations
A US lawyer and former Justice Department official was expelled from Russia earlier this month after he apparently refused to co-operate with Russia’s domestic spy agency, it has emerged.
Thomas Firestone was posted to the US embassy in Moscow by the Justice Department but had left the US government to work at private law firm Baker & Mackenzie. On May 5, according to an acquaintance who requested anonymity, he was returning to Russia from a trip abroad when he was detained and interrogated at Moscow’s Sheremetyevo airport for 15 hours and then declared persona non grata.
The acquaintance of Mr Firestone said he had been the target of a recruitment attempt by Russia’s Federal Security Service, or FSB, in March, but had refused to co-operate, and the person speculated that Mr Firestone’s expulsion was a consequence of that encounter.
Russian officials declined to comment, saying they had no information on the matter.
The case comes amid a shadowy struggle between US and Russian spy agencies that spilled over into the press this month following the arrest and expulsion of Ryan Fogle, a third political secretary at the US embassy whom the FSB detained and accused of having tried to recruit a senior Russian counterintelligence official. Mr Fogle was apparently arrested wearing a blond wig and carrying a street atlas and a compass; a videotape of his detention was broadcast on Russian television.
Russian officials told state television that they had been monitoring an increase in spy recruitments by the US over the past two years, and had previously complained to the CIA station chief in Moscow about tactics that they said “went beyond the ethical lines that exist within the security service”. They also said they had quietly expelled another US diplomat in January after a similar failed attempt to recruit a spy.
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Moscow uses Irish adoption threat to block use of Magnitsky list
Russia has threatened to block Irish adoptions of Russian children if the Dublin parliament adopts a US-style “Magnitsky List” imposing sanctions on Russian officials.
Moscow barred US citizens from adopting Russians in retaliation for the US Congress passing the Magnitsky Act last December, marking a chill in transatlantic relations. The act imposed visa bans and asset freezes on officials allegedly connected with the 2009 death in jail of the anti-corruption lawyer Sergei Magnitsky.
The warning to Ireland, in a letter from Russia’s ambassador to the parliament’s foreign affairs and trade committee, is the first time Moscow has threatened similar action against another country.
It appears designed to head off attempts to persuade other EU states to adopt Magnitsky measures. Ireland holds the EU presidency, and a draft motion before the committee last month called on the government to use that role “to impose EU-wide visa sanctions”.
The March 11 letter from Maxim Peshkov, a career diplomat, warns that steps by Ireland towards adopting such sanctions “can have negative influence on the negotiations on the Adoption Agreement between Russia and Ireland being proceeded”.
The Russian embassy in Dublin on Thursday declined to connect calls to Mr Peshkov, saying the embassy was “closed for technical reasons”.
Bill Browder, the formerly Russian-based fund manager who employed Magnitsky and has led the campaign to bring those linked to his death to justice, said the letter was an “attack on Irish democracy”.
“Even though Ireland is a small country, the fact that they are [EU] president means they have a hugely disproportionate voice, for a fixed period,” he said. “The Irish parliamentarians have interpreted this as a threat to their adoptions.”
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Elite Russians adopt the staycation habit
Annette Loftus, owner of a high-end Moscow travel agency, gets plenty of odd holiday requests from plenty of exotic people. She has had to organise a golf tournament at the North Pole, a buggy race on Bolivia’s salt flats and a getaway with an ice bar in the middle of a frozen Siberian lake.
Then, there was the mysterious caller who asked for “a holiday in a non-Interpol country” on behalf of his boss, who he would not name. She turned the last one down – first of all, she said, non-Interpol countries are very few, “and I would not be willing to run a trip in any of them”. Second, there was “the moral issue . . .”.
Recently Ms Loftus has seen more requests like the last one – clients with, as she puts it, “jurisdictional issues”. For a small but growing number of elite Russians, travel opportunities are increasingly limited. The trend was epitomised by the US Magnitsky act, which late last year imposed a US visa blacklist and asset freezes on roughly 60 Russians suspected of human rights violations. Its open-ended wording leaves open the possibility that the list of names will lengthen. The E U looks set to eventually pass similar legislation.
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Russia: why Magnitsky matters, even to hard-headed investors
By curious coincidence, Russia is prosecuting a dead man on the 60th anniversary of Stalin’s death. Just days after the commemoration of the Soviet leader, the trial is due to start on of Sergei Magnitsky, the lawyer who died in a Moscow jail after accusing officials of fraud.
It perverts the law in a way which even the ruthless Georgian did not attempt. But Stalin would have appreciated the idea: like his show trials, it is a demonstration of power, not of justice. Many foreign investors will say this has nothing to do with them. They are wrong. It has.
Indeed, Russian prosecutors have established a direct connection with the investment world by naming as Magnitsky’s co-defendant his former client, Bill Browder, a UK-based American fund manager, who was once the biggest investor in Russia.
Browder’s troubles began after he criticised the management of Gazprom, the state-run gas monopoly. He was denied entry into Russia and put under investigation by interior ministry officials whom he and Magnitsky later accused of involvement in a $230m tax fraud.
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Russia alleges $70m fraud against Browder
Russia authorities are seeking to charge former investor and shareholder activist Bill Browder with illegally obtaining Gazprom shares worth $70m, interior ministry officials announced on Tuesday.
The American fund manager based in London said the allegations were yet another attempt to intimidate him as he campaigns for Europe to adopt US-style legislation barring Russian human rights violators known as the “Magnitsky Law” named for Mr Browder’s former lawyer who died in a Russian prison in 2009.
The announcement that charges would be brought against Mr Browder followed a well-tested formula in Russia, where criminal indictments usually follow denunciation on state television. Russian network First Channel on Sunday night devoted a seven-minute slot to Mr Browder’s financial dealings in Russia prior to his ejection from the country in 2005.
The allegations themselves focus on whether Mr Browder violated any Russian laws when his fund, Hermitage Capital, used Russian companies registered in the region of Kalmykia to purchase shares in the gas monopoly between 2001 and 2004. At the time, according to presidential decree, foreigners were barred from directly owning Gazprom shares, but many funds used Russian derivative structures to play the market nonetheless.
“Browder used specially developed schemes according to which foreign companies bought liquid shares in the name of Russian legal entities, registered in zones with special tax treatment,” said Mikhail Alexandrov from the Interior Ministry’s Investigative Department on Tuesday. He also accused Mr Browder of seeking to use share holdings in Gazprom to gain a seat on the board, and to exercise influence at the gas monopoly.
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Russia’s missing billions revealed
Russia’s central bank governor has lifted the lid on $49bn in illegal capital flight last year – more than half of which, he says, was controlled “by one well-organised group of individuals” that he declined to name.
Sergei Ignatiev, due to step down in June after 11 years in his post, is seldom outspoken about any issue other than interest rates. But he unburdened himself in an interview with the Moscow newspaper Vedomosti about money leaving the country through the back door, which he said equalled 2.5 per cent of gross domestic product last year.
“This might be payment for supplies of narcotics . . . illegal imports . . . bribes and kickbacks for bureaucrats . . . and avoiding taxes,” he told the daily, which is part-owned by the Financial Times.
Russia’s central bank has access to daily monitoring data on all payments within the commercial banking system, and Mr Ignatiev said the $49bn figure was mainly drawn from analysing “payments made by Russian organisations to non-residents, the stated aims of which are clearly false”.
He added: “Apart from this, our analysis shows that more than half of the total of shady operations is conducted by firms directly or indirectly linked to each other by payments. The impression is created that they are all controlled by one well-organised group of individuals.”
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