Where Those Russian Sanctions Came From

The IdealistImagine that you are a lawyer, respected for your willingness to take on corrupt bureaucrats in a country where bribes are so commonplace that executives claim businesses can't turn a profit without them. Imagine that you find evidence that your American client is being defrauded of an additional $230,000,000+ after an illegal seizure of his company and assets. You learn that the judge is in on it. You learn that the two cops investigating the case are in on it. Your American client tells you that an informant in the Russian intelligence service has warned him that the operation is commanded from a high level.Imagine that you persist. You confront the police officers. You trace the bank accounts that your American client's stolen money is siphoned through. The other members of your legal team flee the country. One goes through Siberia to escape the men chasing him. And you remain. You will not go. This is your country, and you love your country.One day you open the door and the police are there. They turn your apartment upside down, upsetting your oldest son and your wife. You promise them that everything will be all right.The police take you away. They imprison you for months without a charge. The guards beat you. You are told that you must confess to falsifying the evidence. You refuse. You become ill. You cannot eat. Your cellmate tells the guards you need a doctor. They ignore him. You are told to confess. You refuse, and men in riot gear beat you to death.When your mother comes to collect your body, they tell her that you died of illness. She can see the bruises and breaks on your face.This tragedy caused the first round of sanctions against Russia.The Magnitsky ActI came across this story while reading Red Notice by Bill Browder, an American financier who operated Hermitage Capital, a hedge fund, out of Moscow during the chaos of the 1990s. In the mid 2000s, Browder's visa was revoked, and the hedge fund's assets were seized by the Russian government. Sergei Magnitsky was a lawyer on his legal team who figured out the ploy: a judge and two police officers were planning to show - in fabricated documents - that Hermitage Capital owed a shell company 230 million dollars. In Russia, because the government had seized Hermitage Capital's assets, the government was responsible for this 230 million dollar debt. And the government paid. Magnitsky proved all of this.And for his trouble, Magnitsky was imprisoned for 358 days and killed on November 16, 2009.Browder brought Magnitsky's death to the attention of the U.S. State Department. They brushed him aside. President Obama's foreign policy toward Russia would not allow punitive action to be taken against Russian citizens whose crimes had been committed in Russian territory. However, Browder continued to push for justice for Sergei. He floated the idea of an asset freeze and visa revocation for everyone involved in Magnitsky's death. By telling Sergei's story to everyone he could think of, he found the bill a Republican and a Democrat to cosponsor it. Eventually, the act expanded to punish anyone who committed human rights violations, not only those men and women Browder had named. To the fury of the powerful in Russia, including Putin, President Obama signed the Magnitsky Act into law in December 2012.BlowbackThe Magnitsky Act brought two retaliations (so far) from Putin. Putin's fury was apparent in his first action: he banned Americans from adopting Russian orphans. It is difficult to think of something more cruel. The orphans that Americans had been allowed to adopt were sick, needing treatments they could not receive in Russia. Through the law, Putin was condemning a helpless segment of his own society.Where did this anger come from? The asset freeze and visa revocation denied powerful Russians their jet-set lifestyle. A typical embezzler would stash his money abroad, where it was secure. The asset freeze meant that these Russians could not store their money in countries who cooperated with the U.S. policy. Browder observed, from their Instagram accounts, that traveling to the Mediterranean islands or to the Alps for skiing were important activities for Russian socialites. The visa ban put limitations on their freedom to vacation.The second retaliation is still playing out: Russians, under the orders of Putin, meddled in the U.S. elections.The rest is on CNN.