Last Thursday, the United States Senate gave the cause of human rights in Russia and around the world a significant boost when it passed the Magnitsky Act. Russian officials involved in gross human rights violations will be held accountable, have their assets frozen and be denied US visas. The Act is named after the Russian lawyer Sergei Magnitsky, arrested and detained without trial as he investigated a $230 million fraud against a British investment fund, in which senior Russian officials were implicated.
Magnitsky was murdered in pre-trial detention, effectively beaten to death, having been previously denied much needed medical attention. Absurdly, proceedings are now underway in Russia, not to investigate Magnitsky’s murder, but to prosecute him posthumously on trumped up charges. The case hit the UK headlines two weeks ago, when Alexander Perepilichny, who had been assisting a Swiss investigation into the same scam, was found dead outside his Surrey home.
The Magnitsky case and subsequent US legislation has brought into sharp focus Russia's systemic challenges of official corruption, an abusive penal system and a lackadaisical approach to the rule of law. But while Magnitsky’s story is shocking and appalling it should surprise no one. According to a recent Foreign Office Report 50-60 people die in pre-trial detention facilities in Russia each year, with over 100,000 prisoners held under those conditions at any time.
Earlier this year, the Conservative Party's Human Rights Commission, which I chair, highlighted the Magnitsky case in our report on violations of human rights affecting doctors, lawyers, teachers, business people and other professionals around the world. We also identified the case of Mikhail Khodorkovsky, the Russian businessman arrested on spurious charges in 2003, who next year marks ten years of imprisonment. Khodorkovsky’s case was an early warning sign of the Putin regime’s direction of travel. It remains among the best indicators of Russia's future course. The fact Khodorkovsky was funding opposition parties and speaking out against corruption at the time of his arrest is unlikely to have been a coincidence, and he is recognised as a prisoner of conscience by Amnesty International.
The Yukos Oil Company he led was systematically broken up and in large measure, the state backed Russian oil giant, Rosneft, which recently signed a multi-billion dollar deal with BP, owes its existence to assets appropriated from Yukos. Both the Magnitsky and Khodorkovsky cases demonstrate that as long as Russia’s approach to law and human rights remains tainted by corruption and political motivations, it is difficult to have full confidence in Russia as a place to do business.
This concern is all the more relevant at a time when Russia is the UK’s fastest growing trading partner. It is in the interests of both countries for that business partnership to flourish and grow. But it will only fulfil its potential when British investors and business people can operate in Russia with the confidence that their assets and investments are protected by a principled system of law. That’s difficult when a British investment firm can be defrauded of $230 million by corrupt officials, let alone when the lawyer uncovering the fraud is killed in jail. That’s difficult when a political opponent of the Kremlin can be jailed on spurious charges for ten years, let alone when an entire giant oil company can be systematically carved up and reallocated to allies of the regime.
As Bill Browder, the investment fund manager who employed Magnitsky has put it, "Doing business in Russia is like playing Russian Roulette…you may get away with it a few times, but eventually, you will blow your head off.” Or as Khodorkovsky said when asked about the BP-Rosneft deal, “I would like to wish [BP CEO] Mr [Bob] Dudley good luck. He is going to need it.”
The Magnitsky Act has now passed both Houses and goes to the US President for his signature. As it passes into law in the US, it could be replicated elsewhere, including here. When it emerged last week that the Senate would move on the bill, Russia’s First Deputy Prime Minister Igor Shuvalov exuded nervousness, quickly assuring New York investors that trade would not be affected. A strong and growing trading relationship with Russia perhaps gives us more leverage than we realise. Closer to home, European lawmakers have proposed that a bail-out for Cyprus should be conditional on action against suspected money-laundering by Russian nationals there. Important steps are afoot to promote progress on human rights in Russia, and consequently around the world. In the long-term, by promoting greater transparency, and instilling greater confidence such steps will be good for business too.
Far from cutting ties with Russia, we should deepen them, but on the understanding that when it comes to the protection of human rights and the rule of law, reform is urgently needed. It is vital that we place human rights at the heart of our relationship with Russia, and other countries, not despite our business goals, but, in large part, because of them.