Magnitsky to be posthumously tried for corruption today

(Business New Europe – bne.eu – February 18, 2013)

Sergei Magnitsky, a lawyer was allegedly killed while in pre-trial detention in 2009, will go on posthumous trial today in what is going to be Russias most controversial case since the jailing of oil tycoon Mikhail Khodorkovsky.

The Kremlin has been outraged by the so-called Magnitsky law, passed last year, which bans Russian officials from entering the US and in theory allows the government to seize their assets in retribution for Magnitskys death. The Kremlin argues that the law is an unwarranted interference with Russias internal affairs. It quickly countered with an equally controversial (and domestically unpopular) ban on US adoption of Russian orphans. Relations between the two countries have decayed significantly as a results of this ding-dong.

At the centre of the row is Bill Browder, the head of investment fund Hermitage Capital, and Magnitskys former boss, who has actively lobbied for the Magnitsky bill in Washington. Browder, once the biggest portfolio investor into Russia and a one-time Kremlin champion to foreign investors, has turned on Russia since his visa was pulled in 2006 and accused by the Russian authorities of tax evasion.

Browder says Magnitskys trial, the first time a dead man has been put on trial in Russian, or Soviet, history, is a continuation of Russias rage over the Magnitsky bill and an attempt to sully the lawyers name in the face of the US legislation. Russian law does allow for dead people to be brought to trial, but it is usually used to rehabilitate victims of Stalin or other Soviet excesses, and is usually done at the request of the family.

The whole situation has become a morass of accusations and counter accusations. Browder has convincingly proven in a series of videos call the Russian Untouchables that tax officials connected to the case that Magnitsky was investigating were on the take to the tune of tens of millions of dollars.

On the flip side the Kremlin claim that the US has no business passing laws concerning Russian legal judgements is a strong argument. Moreover, in principle this law could, and should, be applied to any country that abuses citizens rights such as Americas ally Uzbekistan but it has been exclusively applied to Russia.

Ironically, the Kremlin has not been totally impassive to the tragedy; Dmitry Medvedev ordered a criminal investigation into the case, while he was still president, and two officials are currently on trial for Magnitskys death, while several other officials were sacked.

Magnitsky is accused of abusing tax incentives to help a company avoid paying taxes in 2001, charges he was originally jailed for in 2008, after he accused several high-ranking police officials of perpetrating a $230m tax fraud. He died in prison after a year in which he refused to recant his accusations against the police.

The case is clearly a farce, but the Kremlin is determined to see it through. More generally the case is only another signpost on the path moving Russia and the west apart. Both Russian President Vladimir Putin and Medvedev repeatedly said in the last decade that they were willing to work more closely with their natural allies in the west, but the west had to meet a resurgent Russia half way. However, the west has rebuffed what olive branches has offered (and the Kremlin has proven itself totally inept at diplomacy making the task even harder) but as of November lasts year at the ASEAN summit Russia seems to have abandoned all semblances of trying to make nice with Washington or Brussels and has turned the main thrust of its foreign policy east and especially China.