Review: The cat and mouse game of Russia sanctions

En+ MKPAO

15/07/2022 13:07

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Dasha Afanasieva
    LONDON, July 15 (Reuters Breakingviews) - Bill Browder used
to style himself as President Vladimir Putin’s biggest enemy.
Ukrainian President Volodymyr Zelenskiy and jailed opposition
politician Alexei Navalny, who accuses the Russian leader of
poisoning him, probably have a stronger claim to that title.
Still, the investor-turned-activist’s latest book, “Freezing
Order”, supports his claim. Browder describes how he lobbied
governments to suspend the assets and deny visas of those deemed
responsible for the death of his employee in a Russian prison.
    The push and pull over enacting and expanding the Magnitsky
Act, which played out in U.S. courtrooms and backrooms, carries
a warning for those enforcing sanctions against Russia today.
Moscow is likely using some of the same tactics it deployed
against Browder in response to the invasion of Ukraine.
    Sergei Magnitsky was a lawyer who discovered a $230 million
fraud. His employer, Browder’s Hermitage Capital, was framed for
it. Magnitsky was sent to jail, where he was beaten and denied
medical treatment. The 37-year-old died in 2009 after spending a
year in prison without charge. Guilt-ridden Browder made it his
mission to make life difficult for people he held responsible
for Magnitsky’s death.
    Thanks to Russia’s laissez-faire approach to data privacy,
Browder and his team were able to obtain information on how
billions of dollars were laundered through European banks. They
collaborated with journalists and, with the help of the leaked
Panama Papers, followed the trail back to Putin himself.
Browder’s team found transactions that linked $800,000 of the
$230 million to Sergei Roldugin https://www.theguardian.com/news/2016/apr/03/panama-papers-money-hidden-offshore.
 The cellist and friend of Putin didn’t answer the allegations https://www.theguardian.com/world/2016/apr/10/russian-cellist-sergei-roldugin-panama-papers-donations-putin,
 but said the cash disclosed in the Panama Papers came from
donations.
    Russia deployed lawyers, consultants and police to stop
Browder. He evaded summons and arrest warrants and fought back
in the media. At one point then-President Donald Trump was even
considering handing the businessman over to Russia for
questioning https://www.nytimes.com/2018/07/19/us/politics/trump-putin-browder-mcfaul.html.
    The assassination of Kremlin critics, including the 2015
shooting of opposition leader Boris Nemtsov next to Red Square,
served as a reminder of the risks Browder was running. Other
methods appeared less deadly: Browder describes attracting the
attention of a 6-foot blonde beauty in Monaco who he immediately
assumes was sent to seduce and trap him.
    In its attempts to create obstacles to the Magnitsky Act,
Russia had plenty of help from Western lawyers and consultants.
Though everyone is entitled to legal representation, some of the
antics would raise most readers’ eyebrows. For example, Browder
writes he initially hired top U.S. lawyer John Moscow to defend
his fund against being framed for the fraud Magnitsky uncovered.
The lawyer ignored Browder’s calls and later resurfaced as
counsel for a Russian holding company. Moscow argued there was
no conflict of interest.
    Protecting institutions from corruption is a constant
battle. But even in the world’s biggest economy, where multiple
agencies crack down on nefarious financial activity, progress
depends on individuals. In Browder’s telling, the enactment and
enforcement of sanctions is vulnerable to the push and pull of
humans and their individual economic interests. One example
Browder doesn’t discuss is En+  ENPG.MM , owner of the aluminium
giant Rusal  RUAL.MM , which had restrictions lifted by the
United States because of their impact on the global market for
the metal.
    Browder does not shy away from settling scores with people
who stood in his way. But the entertaining thriller carries a
lesson for policymakers too. Lawyers working for Russia will
seek to overturn sanctions or limit their scope. It is now
tougher to be a Western lackey for the Kremlin. Since Russia
invaded Ukraine on Feb. 24, the United States and Britain banned
the export of consultancy and PR services. Law firms dumped
Russian clients en masse. These networks of advisers and lawyers
are merely in hibernation, though.
    Putin went to a lot of effort to stop or limit the Magnitsky
legislation. His invasion of Ukraine dramatically raised the
stakes. Oligarchs, banks, businesses and even central bank
reserves are under Western sanctions. The break with Moscow has
pushed up energy prices, hitting European and U.S. economies.
Western economic interests will be central to the argument the
Kremlin’s servants will make when they eventually resurface.
    Follow @dasha_reuters https://twitter.com/dasha_reuters on
Twitter
    
    CONTEXT NEWS
    “Freezing Order: A True Story of Money Laundering, Murder,
and Surviving Vladimir Putin’s Wrath” by Bill Browder was
published by Simon and Schuster on April 12.

 (Editing by Peter Thal Larsen and Oliver Taslic)
 ((For previous columns by the author, Reuters customers can
click on  AFANA/ 
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe
 |dasha.afanasieva@thomsonreuters.com; Reuters Messaging:
dasha.afanasieva.thomsonreuters.com@reuters.net))