Posts Tagged ‘jamison firestone’
Magnitsky Verdict Is In: Russia Is a Criminal State
On Thursday, almost four years after Sergei Magnitsky’s death in a Russian prison, Magnitsky was convicted of tax fraud by a Moscow court.
Back in 2008, after the Yukos show trial, corporate raiding with the help of corrupt police and courts had just become a new fact of Russian life at a time when the country’s new, seemingly liberal president, Dmitry Medvedev, was asking his countrymen to fight legal nihilism.
It so happened that at exactly this time my law partner, Sergei Magnitsky, discovered a staggering case of fraud.
In 2007, police officers raided Magnitsky’s and my law office. They took the corporate documents for three companies belonging to Hermitage Capital, the largest hedge fund operating in Russia. Shortly thereafter, the documents were used to put convicted criminals in control of the companies, and the $230 million in taxes the companies had paid while under Hermitage’s control were refunded in one day to accounts in a small Russian bank owned by a convicted criminal.
The tax officials who refunded the money then went on vacation with the bank owner and bought millions of dollars of property in Dubai. The police officer who had custody of the corporate documents went on vacation with the lawyer who made the refund possible. Nobody — not even the Russian government — contests these facts.
Back in 2008, Magnitsky was sure that if he exposed this fraud, the government would prosecute those behind it. Magnitsky didn’t know whether Medvedev’s declared war on corruption was genuine, but he believed there were at least some limits to the country’s lawlessness and criminality.
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Managing Magnitsky in a Managed Democracy
Last Tuesday, the Investigative Committee announced that it had closed the investigation of the death of Sergei Magnitsky because they couldn’t identify an “event of crime.” I was immediately inundated with calls from journalists asking if I was surprised or disappointed and what our next move would be.
I was certainly not surprised. Russia is a managed democracy, and the Magnitsky case is also managed. It has become obvious that the highest levels of government have decided to protect the people who stole hundreds of millions of dollars from the government and who killed the whistleblower who exposed this crime.
In late 2007, Magnitsky discovered a crime in progress, and his client, Hermitage Capital, reported it on Dec. 3, 2007, before any tax money was stolen. In the summer of 2008, Magnitsky documented that $230 million was stolen with the help of government officials, and Hermitage reported this as well. The two complaints consisted of hundreds of pages of supporting documents, all of which were ignored by the Russian government.
Prosecutors then accused Magnitsky of being a tax cheat and of committing the very theft that he reported. It based its case solely on the testimony of the people whom Magnitsky accused of corruption and extortion. Prosecutors named Magnitsky’s alleged co-conspirators, but conveniently they were all dead.
When Magnitsky died in November 2009, we were first told that he died from pancreatitis, a condition that he was repeatedly denied treatment for while he was detained for almost a year in pretrial detention. Then, after people began to question why his pancreatitis wasn’t treated and ask whether this was intentional, we were told his death was a result of an unpredictable heart failure. This is the reason there were no arrests in Magnitsky’s death, we were told, and this became the basis for closing the inquiry into his death.
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Why Russia Is Trying a Dead Man
At the end of November, the Prosecutor General’s Office announced the upcoming trial of Sergei Magnitsky, a man who’s been dead for more than three years. Putting a dead person on trial hasn’t been done in Europe in more than 1,000 years. The reason is obvious: a dead person can’t defend himself, no matter how absurd the charges.
The story of this latest twist in the Magnitsky case begins with his death on Nov. 16, 2009. Magnitsky’s death in detention led to the automatic closing of the criminal case against him.
In July 2011, the Kremlin’s human rights council published its conclusions about the arrest and death of Magnitsky. They were unequivocal:
1. Magnitsky’s arrest and detention were in breach of the European Human Rights Convention.
2. Magnitsky was beaten by prison officials before his death.
3. In contravention of the law, Magnitsky was prosecuted by the same officers he earlier implicated in corruption.
4. Authorities resisted full investigation into corruption and fraud uncovered by Magnitsky.
5. The Russian courts failed to provide any legal redress to Magnitsky.
These were not conclusions Russian law enforcement officials wanted to hear. They led to an avalanche of criminal complaints, many of which were filed by Magnitsky’s mother, against those who participated in the theft Magnitsky reported and in his illegal arrest and death. Therefore, in July 2011, the Prosecutor General’s Office decided to legitimize the case against Magnitsky by reopening it.
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Why Obama Should Sign the Magnitsky Act
The U.S. House of Representatives approved the Magnitsky Act last week, legislation that would simultaneously sanction Russian officials implicated in human rights abuses and normalize U.S. trade relations with Russia. The dual nature of the bill may seem at cross purposes, but this is not the case. Increasing trade with Russia and investment in Russia requires the rule of law.
For the past four years, under U.S. President Barack Obama, the “reset” policy has delinked questions of human rights, democracy and rule of law from all other areas of U.S. policy toward Russia. In doing so, it has sent a message that the U.S. may talk about these issues but it will not do anything to discourage abuses.
The Magnitsky Act is a recognition by Congress that the reset policy was a mistake. In 1975, after the U.S. Congress passed the Jackson-Vanik amendment, which withheld U.S. trade benefits to certain countries that restricted emigration, the effects were profound. Year after year, the Soviet Union “paid” to obtain U.S. trade benefits by allowing some of its citizens to emigrate. About 1 million Jews were allowed to leave the Soviet Union, while thousands of other minorities also emigrated. Jackson-Vanik was one of the most successful examples of U.S. human rights legislation. It increased trade and promoted universal human rights.
In August, Russia finally joined the World Trade Organization. According to WTO rules, members may not discriminate against each other, and those members who do are penalized. If the U.S. leaves Jackson-Vanik on the books, Russia can choose to give the U.S. less favorable trade terms with Russia, while U.S. firms that have trade disputes with Russia can be denied access to WTO dispute-resolution mechanisms. That is a situation nobody wants. It’s clear that it is time to repeal Jackson-Vanik and for the U.S. to grant Permanent Normal Trade Relations, or PNTR, to Russia.
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Fire fighting
Russia is on the verge of becoming a WTO member, but practitioners with in-depth, first-hand experience of the country’s legal, political and business infrastructure believe it is rotten to the core.
It is Russian Business Week 2010 and students in a crowded lecture hall at the London School of Economics (LSE) are on the edge of their seats as Roger Munnings, chairman of Russia’s Audit Committee Institute, stands up to deliver his keynote speech.
Before he begins he asks any Russian members of the audience to raise their hands: 200 hands shoot straight up. He then asks how many people wish to return to Russia to work after completing their studies: 190 hands quickly disappear.
Munnings carries on with his speech regardless, but when it finally comes to a close, one member of the audience cannot resist standing up and passing comment.
Maybe you weren’t paying attention when you asked for a show of hands,” he says, “but only 10 of 200 Russian LSE students want to return to Russia. These are the best and brightest students that Russia has to offer and they don’t want to go back home. Just what good news and a true picture of Russia are they supposed to be spreading?”
The audience member was none other than Jamison Firestone, managing partner of both Moscow law firm Firestone Duncan and London-based FD Advisory. His probing comment earned him an overwhelming ovation from the student body.
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Arrest of Russian Opposition Leader Raises Tough Questions for Country’s Legal System
Russian prosecutors charged anticorruption lawyer and blogger Alexei Navalny, one of President Vladimir Putin’s harshest critics, with embezzlement Tuesday in connection with a 2009 timber deal in which he participated as an unpaid adviser.
The criminal charges, which carry a five-to-10 year prison term, are the latest to be lodged against a vocal Kremlin critic and have some U.S. lawyers with Russian expertise skeptical about the country’s commitment to the rule of law.
“Russia is falling into a dictatorship and [Navalny’s] arrest is entirely political,” says Jamison Firestone, the cofounder and managing partner of Moscow-based law and accounting firm Firestone Duncan, who fled Moscow for London in 2010 after he discovered that someone was trying to obtain a $21.5 million fraudulent tax refund by forging his signature on client documents and the authorities refused to act. “At its best, the indictment says to Navalny that if you continue to open your mouth, you’re going to prison. At its worst, he’s already going to prison.”
The Investigative Committee of the Russian Federation—a body akin to the Federal Bureau of Investigation—filed the charges against Navalny under Article 160 of Russia’s criminal code, according to a press release outlining the allegations. Prosecutors claim Navalny embezzled roughly $500,000 from the regional government of Kirov, a province just west of the Ural Mountains, by participating in a scheme to steal timber from a state-owned company.
Navalny, who has publicly described the charges as “strange and absurd,” has been released by Russian authorities and agreed not to leave Moscow while his case is pending. Regional prosecutors in Russia previously investigated similar charges against Navalny before dropping the matter, according to news reports. But as a leading Putin and anticorruption crusader—Time once called Navalny “Russia’s Erin Brockovich” for taking on corporate greed—Navalny continued to draw the interest of those loyal to the government.
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Senators Bungled Anti-Magnitsky Road Show
Last week, a delegation of Russian senators traveled to Washington to make a last-ditch attempt to derail the Sergei Magnitsky Rule of Law Accountability Act. By the time they were finished, the trip had turned into a fiasco, highlighting the need for the law they so vehemently oppose.
The Magnitsky act seeks in part to ban entry to the United States and freeze the U.S. assets of the people responsible for the illegal arrest, torture and murder of my former law partner, Sergei Magnitsky. It also seeks to do the same to any Russian government official who abuses his position to attack anti-corruption activists, journalists and people who defend fundamental human freedoms.
The Kremlin is categorically opposed to the Magnitsky act and argues that punishment of corrupt Russian officials must be left to the Russian government. It is adamant in asserting that its criminal justice system works and should be trusted by other nations. To demonstrate why there is no need for the Magnitsky act, the senators said the purpose of the trip to Washington was to present findings of a new and independent Federation Council investigation of the Magnitsky affair.
The timing of the announcement was not coincidental. The Magnitsky act is sailing through hearing after hearing on Capital Hill. There is huge inertia to pass it before the summer recess. Just about the only thing that could derail the act is if the Russians carried out a legitimate investigation and started prosecuting their own corrupt officials.
But the composition of the Russian delegation was disquieting. It was headed by Vitaly Malkin, whose net worth is estimated to be more than $10 million and who was previously named by the Canadian government in court proceedings as “a member of a group engaging in organized or transnational crime.” Malkin has been banned from entering Canada. A politician accused of skimming $48 million off a debt-reduction deal with Angola and who enjoys immunity from prosecution in Russia was probably not the best choice to head a delegation determined to prove that the Russian government is capable of punishing its own corrupt officials.
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Abandoning Sergei Magnitsky
As Vladimir Putin settles into his third term as president, government corruption is running rampant. Putin is steadily cutting back on his people’s most basic rights — and Russians are finally saying “enough.” As the opposition movement gets off the ground, international efforts to discourage Putin’s government from squelching political dissent are critical. Unfortunately, however, a recent article by Secretary of State Hillary Clinton signals that the United States may be preparing to forsake that role.
Writing in the Wall Street Journal, Clinton makes the case that Congress should repeal the Jackson-Vanik law, which was passed in the 1970s to hold the Soviet Union accountable for restrictions it placed on its citizens’ right to emigrate. Her argument, however, intentionally misstates the nature of Congress’s position on repealing the law. Jackson-Vanik “long ago achieved this historic purpose,” Clinton writes. “Now it’s time to set it aside.”
Suggesting that Jackson-Vanik’s mission has concluded, or describing its repeal as a simple trade issue, is disingenuous spin. No one is opposed to repealing Jackson-Vanik on economic grounds. Everyone would welcome the increased trade that lifting the law could provide. Jackson-Vanick, however, is a law intended to promote respect for human rights in Russia. Congress is deeply opposed to repealing Jackson-Vanik without replacing it with effective human rights legislation that meets today’s circumstances. Clinton, on the other hand, would apparently prefer that human rights issues not enter the conversation.
But the discussion of Jackson-Vanik cannot be separated from the increasingly authoritarian drift of Russia during Putin’s 13 years in effective control of the country. Putin has methodically removed every force in society that could challenge his hold on power: He has taken control of the national television channels, destroyed all real opposition parties, and dominates the Duma, Russia’s parliament. His party also effectively controls the judiciary and other branches of law enforcement — it can obtain any ruling with only a phone call. It set up youth groups that draw their members from small towns within driving distance of Moscow and St. Petersburg, and indoctrinated its charges at state expense in outrageous nationalism, anti-Americanism, and pro-government dogma. When needed, it buses in crowds of duly indoctrinated youth to intimidate foreign diplomats, human rights defenders, and anti-corruption activists.
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I’m Sick and Tired of the Kremlin’s Blatant Lies
Last week, anti-corruption blogger Alexei Navalny was arrested and sentenced to 15 days in jail for protesting election fraud.
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To learn more about what happened to Sergei Magnitsky please read below
- Sergei Magnitsky
- Why was Sergei Magnitsky arrested?
- Sergei Magnitsky’s torture and death in prison
- President’s investigation sabotaged and going nowhere
- The corrupt officers attempt to arrest 8 lawyers
- Past crimes committed by the same corrupt officers
- Petitions requesting a real investigation into Magnitsky's death
- Worldwide reaction, calls to punish those responsible for corruption and murder
- Complaints against Lt.Col. Kuznetsov
- Complaints against Major Karpov
- Cover up
- Press about Magnitsky
- Bloggers about Magnitsky
- Corrupt officers:
- Sign petition
- Citizen investigator
- Join Justice for Magnitsky group on Facebook
- Contact us
- Sergei Magnitsky