Murder, Blackmail, Corruption: Why CEE Needs Magnitsky Act

ADÉLA-KLEČKOVÁ-featured-image-1-1536x864
via The Eastern Focus Quarterly

What action can the Central and Eastern European (CEE )countries take against the “bad guys?” How to send out a clear message that political corruption, blackmail, organ trafficking, rape and other crimes have no place in our countries? And how can we protect ourselves from the worst criminals of the world? The answer is this: the Magnitsky Law.

It is an unprecedented global initiative to pass legislation which would allow national governments to impose personal sanctions on human monsters resembles a thriller movie more than anything.

Who was Sergei Magnitsky, the man whose name probably makes Vladimir Putin to grind his teeth in anger? Why is there an undeclared hybrid war raging around this piece of legislation? And how can passing the legislation help the CEE region?

An Accountant Who Changed the World: The Story of Sergei Magnitsky

Eleven years ago, in November 2009, died in a Russian prison. The reason was neither old age, nor an unfortunate deadly disease. He was tortured, denied medical care, eventually dying of a gallbladder infection. Until the very last moment, he did not stop believing in justice and the positive power of rule of law.

Each week, he submitted lengthy official complaints about the state of his health and the way he was treated, requesting contact with his family and proper medical care. During 358 days in detention, he wrote over 400 complaints and petitions seeking justice.

His name is often mentioned together with Anna Politkovskaya and Boris Nemtsov, as a straightforward example of  yet another Russian who paid with his own life for fierce criticism of the Russian political regime. Yet Sergei Magnitsky was never a member of the Russian opposition.

He was a lawyer and accountant, working for British billionaire businessman Bill Browder and his hedge-fund Hermitage Capital Management that was until 2004 the biggest foreign investor in Russia.

Before his arrest, Magnitsky was investigating a 230 million dollar web of financial fraud, allegedly involving Russian government figures misappropriating funds related to companies which were confiscated from Browder by a criminal group with close ties to Kremlin representatives. His investigations were completely apolitical, purely business motivated. 

Yet, in November 2008, three representatives from the Russian Interior Ministry arrested Magnitsky. Ironically, the Interior Ministry officials who arrested him worked for the same officer he testified against.

A year later, Magnitsky died in prison. His death has become a symbol of the fight against corruption and the oppression of human rights all over the world. Magnitsky was an accountant who changed the world, and one who may yet change it still even more, especially in the context of the CEE region.

Putin’s Biggest Enemy and International Crusade for Passing the Magnitsky Act

Magnitsky’s death set in motion a spiral of events no one could have anticipated. However, if there was ever a man who could make the impossible possible, Magnitsky’s boss – Bill Browder – was a likely candidate.

This billionaire with influential connections at the highest levels of global politics turned almost overnight from one of the biggest advocates of appeasement with the Russian regime and the biggest foreign investor in Russia into, as some call him, Putin’s number one enemy. 

His motivation was quite straightforward, there were no legislative tools to bring criminals responsible for Magnitsky’s death to justice. So he has decided to persuade the British and the American government to change the legal gamefield.

Simply put, this law imposes visa bans and asset freezes on individual human rights abusers — particularly those who played a role in Magnitsky’s false arrest, torture and death.

However, eventually, he has decided to turn this into a global initiative, with the ultimate goal of persuading governments all over the world to implement their own version of a piece of legislation called the Magnitsky Act. Browder has spent the last nine years fiercely campaigning for the law, and his efforts are clearly bearing fruit. 

Explaining and Defending the Magnitsky Act

Proponents call it the first solely human rights violations focused sanction mechanism in the world. The Magnitsky Act, specifically, is a piece of legislation allowing individual countries to impose personalised sanctions on individuals violating human rights anywhere in the world. The measures which can be implemented include the power to freeze bank accounts and other assets, and ban individuals from entering a given country

As a result, the Magnitsky Act can be perceived as a tool to strengthen the foreign policy toolkit of individual countries. So far, seven countries have implemented the legislation: the US, Canada, the UK, and the three baltic countries; Estonia, Latvia, and Lithuania.

The newest addition to this group  and also the first Balcan country is Kosovo which has passed the Magnitsky Act at the beginning of 2020.

However, it is not always sunny in the realm of human rights protection, and the piece of legislation does have a number of forceful critics too.

One of the strongest arguments against it concerns a) a fear of unnecessary antagonisation of Russia, while other critics call the legislation superfluous, given that there is already b) a number of recognised and effective international sanction regimes under the auspices of international organisations such as the European Union and the United Nations.

A final common argument against it is c) the altogether defeatist retort that “sanctions will not change anything.” Taking each of these in turn however, reveals these concerns to be largely misplaced and unfounded. 

Universal Human Rights Protection Tool

Russian President, Vladimir Putin, has called the law a“purely politically and unfriendly act.”  And just days after the US act was passed, Russia retaliated through deploying a number of countermeasures, including; barring Americans from adopting Russian orphans.

However, one can strongly argue that, given the established principle of state sovereignty internationally recognized following the  Vienna Convention in 1815, laws at the national level should be judged on the merits they bring to their citizens, not on the basis of the potential responses of a second- or third-country

More importantly however, even though the initiative was originally envisaged as a tool targeted against a criminal group with close connections to Russian police and ministry of finance  responsible for Magnitsky’s death, it has since developed much further.

Currently,  sanctions apply to 148 individuals and entities suspected of human rights abusers and corruption worldwide. The US government, for instance, has unilaterally imposed sanctions on 94 individuals and 102 entities from 24 countries, including South Sudan, Uganda, Iraq and Cambodia. Among the individuals listed, we find Myanmar officials responsible for the genocide of Rohingya; doctors and Chinese officials involved in illegal organ trafficking of Uyghurs; and Warlords from Africa.

The most prominent individuals listed on the US Magnitsky sanctions list include: Chechen Leader Ramzan Kadyrov; the daughter of  late Uzbek President Islam Karimov, Gulnara Karimova, who is involved in political corruption; 17 individuals involved in the murder of Saudi journalist Jamal Khashoggi; and, billionaire Israeli mining magnate Dan Gertler.

Judging by the diversity of the countries as well as the crimes committed, no one can fairly criticise the law for being oriented towards one case or one country

Targeted Sanctions Mechanism

To address the second counterargument, unlike many international sanction regimes, the Magnitsky Act, by targeting individuals rather than entire countries or sectors, avoids ‘broad-brush’ sanctions that can disproportionately affect more vulnerable citizens in target states.

This targeted approach also enables the direct sanctioning of malicious individuals and networks, even from countries that are considered to be allies or crucial for broader foreign policy priorities.

For instance, the 2017 and 2018 US Global Magnitsky sanctions listed above involved Saudi and Israeli nationals, individuals from countries which are strategic allies of the US and, thus, unlikely to be the subject of broader international financial sanctions.

It is true that the EU already has the power to impose sanctions to promote international peace and security, prevent conflict, fight terrorism and defend democratic principles and human rights. Sanctions can be imposed upon governments of third countries (Iran, Burma, Venezuela and others), or non-state entities and individuals.

However, this current mechanism seems to be insufficient in ever changing geopolitical environments, and the challenges democracies must face. The EEAS has already undertaken steps to prepare a new sanction mechanism based upon the same principle as the Magnitsky Act however it is very likely that the EU will decide to omit Magnitsky’s name which could create an impression this law is primarily anti-Russia oriented. 

This would go directily agains the main idea behind the new EU sanction regime proposal, which is to enable the EU to impose visa bans or to freeze the assets of individuals who commit serious human rights violations and abuses from any country in the world.

Among the proposed crimes that would trigger such sanctions are: extrajudicial, arbitrary or summary executions, enforced disappearances, torture and other cruel, inhumane and degrading treatment. If passed, this would send a strong message, to those who may commit or be complicit in abuses, that the financial centres and currencies of the world’s two largest economies (the EU and the US) are off limits.

Nevertheless, some EU member states still choose (or have chosen to) pass their own versions of the Magnitsky Act. One of the reasons for this might be that this piece of EU legislation is not without its flaws - the proposal only applies to human rights abuses and doesn’t cover corruption like the US version does.

However, that is not the case for example for the UK whose original version of the Magnitsky Act does not cover corruption either. In the case of the UK and other member states the most likely explanation is that they prefer not to solely rely on the EU’s often slow and cumbersome foreign policy processes.

Indeed, the Magnitsky Act can actually strengthen the foreign policy even of the member countries of the EU and make it less independent on it. The Act enables national countries to pass sanctions more quickly and flexibly or pass them towards those individuals who might not be approved by the majority of the EU members.

Strong Global Message

It is important to maintain that the Act is not simply a symbolic  ‘virtue signal’ of International law. Personalized sanctions are of course only one part of the anti-corruption puzzle, but they are an important tool in our arsenal.

Such sanctions make it more difficult for criminals to launder ill-gotten gains or continue to do such business in dollars, pounds or euros, the most common global currencies. They will enable countries to freeze the bank accounts and assets of individuals within their own territories or local banks.

They are a successful example of concrete action being taken against the corrupt and the worst human rights abusers, hitting them where it hurts the most – in their pocket. Indeed, as Browder himself states: “These types of individuals keep their money in the West, where property rights and rule of law exists. This led to the idea of the Magnitsky Act, which freezes assets and bans visas of human rights violators.” 

Additionally, the inconvenience of being denied entry to the US, Canada, the UK, or the EU is also a significant penalty, as is the considerable stigma that comes with being sanctioned. Australia, for instance, is currently considering setting a new precedent in its version of the Magnitsky Act, by also including family members of targeted individuals into travel bans, such as children wanting to study at private schools and universities or hospitals for parents.

And to present one powerful, idealistic argument to counter defeatist detractors, in the words of Elaine Pearson, director of UN Human right watch:

“By joining other countries with similar laws, Australia will be sending a strong message to abusive leaders everywhere that there are far-reaching consequences for their actions.”

Status Update

For such laws to be effective and to have a meaningful impact, it is crucial that more states join in and introduce an equivalent of the Magnitsky Act. Besides the EU, Australia and Sweden, three countries in the CEE region are currently undertaking steps to pass the law: the Czech Republic, Slovakia, and Romania.

What then must these countries do, in order to successfully implement the Magnitsky Act, and also to ensure that its detractors are proven wrong?

The Czech Republic

In the Czech Republic, the crusade to get the legislation passed has largely taken the form of a one man show. The legislation is currently being advocated for by one Member of the Czech Parliament – member of the Czech Pirate Party, vice chairman of the committee on defence and the foreign affairs committee, Jan Lipavský.

Mr. Lipavský already has the first draft of the legislation finished, is currently in intensive dialogue with both the Ministry of Foreign Affairs to ascertain their professional opinion, and the Minister of Foreign Affairs, social democrat Tomáš Petříček, to get his political support.

Surprisingly and unfortunately for the time being at least, Mr. Petříček, a supporter of the EU version of the Magnitsky Act, seems reluctant to embrace a Czech version of the legislation as well.

This might be partially a result of political pressure from his own political party and from the Czech president, both of which are known for their adoration of autocratic regimes such as Russia and China. 

Together with the fact that the Pirate Party is in opposition and therefore has very limited options to get any piece of legislation passed, this means that the chances for passing and implementing  the Magnitsky Act by the end of the current political mandate in October 2021 are very slim to say the least.  

Interestingly, similarly to the EU approach, Mr. Lipavský has also decided to omit the name “Magnitsky” in the title and simply name it “The Law on Human Right Protection.” Primarily, because it is against the Czech common practice to name laws after humans.

Secondly, for reasons akin to the EU’s; to avoid  allegations of intentionally targeting only Russian officials.

Slovakia

For Slovakia, the Magnitsky Act bears a unique meaning. Until this day, Slovakia is the only country from the CEE region which has a citizen who has been directly targeted by the Magnitsky Act.

The US administration has decided to add to its sanction list Marián Kočner, a Slovak oligarch who is directly responsible for the murder of Slovakian investigative journalist Ján Kuciak and his fiancee Maria Kušnírová in early 2018. Similarly to the Czech Republic,  Slovakia also supported the European version of the Magnitsky Act. 

Nevertheless, Slovak political representatives have indicated their interest in the Magnitsky Act before the decision made by Washington.

Like in the Czech Republic,  the main driving force behind the legislation also in Slovakia was a group of MPs led by a member of the Slovak  Parliament and leader of the Political Party “Together”, Miroslav Beblavý.

One of the promises made during the political campaign was the promise of passing this legislation if re-elected.

Unfortunately, during the late February 2020 parliamentary elections, the coalition of liberal parties Together and Progressive Slovakia did not pass the threshold for entering the parliament. With no other political party having the implementation of the Magnitsky Law on its agenda, it is very unlikely that there will be any significant progress on this matter in the foreseeable future. 

Romania

Out of the three CEE countries in question, the Magnitsky Law proposal got the furthest in Romania. It went from a purely theoretical form, transferred into a written piece of legislation, eventually being presented on the floor of the Romanian Senate. The main initiators of this legislation were three members of the Union to Save Romania (USR); Adrian Prisnel, Iulian Bulai, and Cristian Ghinea. 

Fighting corruption is the most important topic for the third biggest Romanian party and so it made sense for the USR to make this human rights initiative their own. New sanctions were to be made more “flexible” than the older, country-based ones, and were therefore predicted to have a “strong psychological effect” on the abusers.

The main punishment was supposed to be the visa ban and asset freeze. However the proposal was primarily focused on severe human rights abuses. Similarly to the UK and EU Magnitsky Acts, also the Romanian proposal did not list corruption as a crime. However this might come as a surprise of many observers, given that the proposal rose from the so-called “anti-corruption” party.

When the three MPs submitted their proposal to the Committee on Foreign Affairs of Romanian Senate in September 2019, they were most likely expecting a positive reaction from the fellow MPs.

This was partly because, in 2018, 43 Romanian MPs signed a petition urging the government to adopt a ‘Magnitsky Act’, imposing sanctions on human rights abusers.

It was also because the draft had been signed as a sign of support by 33 MPs out of 136, most of them from their own faction, but also by three deputies from the ruling Social Democratic Party and two from the National Liberal Party, the second largest party. Thus, there was an indication of broader support.

However, the draft was finally declined by the Committee and only members of the USR ended up supporting it. 

In the Romanian case, some claim that the Magnitsky Law became a victim of political power plays. Indeed, it may well  have been viewed by other Romanian political forces as a potential internal political weapon in political battles with the Social Democratic Party and the on-going attempt by the USR to take over support from the National Liberal Party, while also reinforcing its position in its tenuous alliance with the PLUS party, another reformist entity led by former European Commissioner and technocratic Prime Minister Dacian Cioloș.

Another possible explanation is that maneuvering against the proposal  may also have simply been an attempt to prevent further antagonizing Russia, with relations between the two countries at their lowest point in decades and dialogue practically non-existent.

However, the USR was not completely discouraged by their loss. In January 2020, the leadership of the USR announced that they would seek to reintroduce a new version of the law.

There has been no progress on this matter ever since. Partially also because according to some, there is a sense that institutions like the DNA are strong enough to handle corruption, including transborder.

Also, the state had shown the will in the past to sanction individuals such as denying Dmitri Rogozin the right to transit Romanian air space. In conclusion, there is a very little urgency or impulse to the Magnitsky act and it is very unlikely it will resurface in a foreseeable period of time.

The CEE and Human Rights 

With all the cases listed above, the Magnitsky Act surely seems like  a pivotal  instrument in the foreign policy toolkit, however there are key reasons, specific to the CEE region, for passing this piece of legislation.

Primarily, it is about the establishment of an international order based on universal and undeniable values and equipped with mechanisms enabling extortion of these rules. The existence of such an order is advantageous for smaller or weaker countries, such as countries in the CEE region.

A piece of legislation strengthening domestic foreign policy in the name of human rights is an epitome of such an order and hence a logical addition to a national diplomatic toolkit of post soviet countries.

Given its historical background, the CEE region has always been an unfortunate  arena for different great world powers to fight in, a strategically geopolitical playground and a sphere of political influence for which to vie. An example is the history of the Czech Republic (and partly Slovakia) which went from an independent kingdom to part of Austrian Empire, briefly gaining its independence only to lose it first to Nazi Germany and consequently to Communist Soviet Union.

Currently, it is Russia and China who are using the CEE region as a springboard for interests including flexing muscles towards the West

Thus, given the historical background together with the current state of geopolitical affairs, it is incumbent on the CEE region to make the most of any legal tool available in order to strengthen its foreign policy. Indeed, it is paramount for the CEE region to act in order to ensure reduce reliance on international sanctions, but to also have sanctions mechanisms of its own.

Nevertheless, and this cannot be strengthened enough, passing the legislation is only the first step. It is just as equally crucial for the CEE countries to continue building a state apparatus which is strong, independent and functioning enough to secure proper implementation of this legislation.

And in this area there is still quite a lot of work left for the CEE governments to finish. 

However, it cannot be denied that the Magnitsky Law can serve not only as a strong political message, but also as a keen deterrent to international bullies, big or small.

Ultimately, whom else but the people of CEE, having suffered for decades under different autocratic regimes could better understand the significance of human rights and the pressing and eternal necessity of doing everything in one’s power in order to safeguard and protect them. 


The article was originally published at: https://eastern-focus.eu/2020/08/murder-blackmail-and-corruption-why-cee-needs-the-magnitsky-act/


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