Putin, corruption and the Magnitsky case

March 27, 2012

By Thomas Lowe

It’s not easy to hear of how Russian lawyer Sergei Magnitsky was killed.

“You need to be sitting down for this story” said chair, Edward Lucas, foreign correspondent with the Economist. “Could those people at the back find a space?”

William Browder was once the largest foreign portfolio investor in Russia with the Hermitage fund before he was thrown out of the country in 2005.

Sergei Magnitsky

“Twenty-five police officers raided my office in Moscow” Browder said, “and 25 more police officers raided the office of my American law firm. . . . One of the lawyers protested at the seizure of these documents and he was beaten so badly he was hospitalised for three weeks.”

Browder hired seven lawyers to find out more about the mess, one of them was a 36-year-old Sergei Magnitsky. They started an investigation that unearthed a high-level attempt to siphon a high-volume of funds. It was a complicated scheme that lead to a false tax refund of $230m that came – not from Browder‘s company but from the Russian taxpayer.

Six out of seven of Browder’s lawyers left  Russia for safety. Sergei Magnitsky decided to stay.

“He testified against the police officers who did the raid used to get the documents . . . and one month later the same police officers came to his home . . . and arrested him and put him in pre-trial detention and then began to torture him.”

He was later sent to the infamous Butyrka prison and got very sick after months of serious mistreatment.

“They did move him to a facility that had an emergency room but instead of treating him in an emergency room they put him in an isolation cell and chained him to a bed and allowed eight riot guards with rubber batons to beat him until he died.”

Browder is now trying to push the Sergei Magnitsky Rule of Law Accountability Act through US congress. If approved, this would allow assets of those responsible for his detention, abuse or death to be seized.

Corruption

Brutal truths about the Russian state unravel through the Magnitsky story. From a citizen’s point of view, bribery is a part of what Masha Gessen, author of a recent book on Putin, says is the “daily humiliation of living in Russia”.

But she said corruption in the country should be concerning from a strategic point of view, too.

“Russia happens to have one of the two largest arsenals of nuclear arms that’s reason enough to pay attention to the fact that . . . it’s extremely corrupt and on the brink of collapse.”

According to Browder the rot runs deep. He cites the beginnings of the investigation that ultimately led to Sergei Magnitsky’s murder.

“I discovered . . . that all the Russian companies I was investing in were basically losing all the money they should have been sharing with the shareholders with a bunch of corrupt officials and corrupt management.”

Putin

Gessen said the Russian president models government on the Russian spy agency – his former employer.

“I think Putin seriously believes that the KGB is the best thing ever invented. And he’s done everything in his power – and that’s a lot –  to re-shape Russia in the image of the KGB.

“The KGB’s a closed system, it’s best on personal connections and paranoia, where information comes in and doesn’t go out.”

This is the system that allowed Magnitsky’s death. As Browder said when asked by the audience what happened to his Russian investments, “I didn’t lose any money, I lost something far more precious; the life of a young man.”