Canada’s proposed ‘Magnitsky Act’ and Canadian-Russian relations

By Halyna Mokrushyna,

source New Cold War.org, February 22, 2017

 

Relations between Canada and Russia have rarely been worse. After the Conservatives with their strong anti-Russian rhetoric were defeated in the Parliamentary election in October 2015, a tiny hope for improvement flared. The new foreign affairs minister Stéphane Dion stated that his Liberal government would at least engage in some kind of dialogue with Russia. Alas, the good intention didn’t amount to much and was short-lived. Canada maintained its anti-Russia alliance together with the U.S. and NATO; it even increased sanctions against Russia. Then in a cabinet shuffle last month on January 11, Dion was replaced by one of the most outspoken anti-Russia politicians among all the parties, Liberal MP in Toronto and former financial journalist Chrystia Freeland.

Freeland moves out of the post of minister of international trade. There, she negotiated with difficulty the Comprehensive Economic and Trade Agreement between the European Union and Canada. She has little experience in international relations, but she is seen as well suited to handle the challenge of unpredictable relations with the presidential team of Donald Trump. Her appointment as foreign minister is not good news for the relations between Canada and Russia.

Freeland is known for her strong anti-Russian views. She claims to love Russian people and culture. She lived in Russia for four years during the 1990s where she served as Moscow bureau chief and Eastern Europe correspondent for the Financial Times. Those were very difficult times in Russian history. The former socialist economy was plundered by the emerging class of oligarchs who were making fortunes on ruthless privatization for pennies of large state enterprises worth millions. Freeland believes that it is during these times that a kleptocracy was formed in Russia. She sees today’s Russia under Vladimir Putin as moving towards dictatorship.

Arguments she uses in her programmatic article My Ukraine and Putin’s big lie published in May 2015 are not new. She repeats routine accusations of Russia having a deeply rooted absolutist political system and President Putin squashing freedom of speech, annexing Crimea and sending the Russian army into Donbass. In her world, Ukraine is the victim, Putin is the villain.

Left out of Freeland’s tableau of events in Ukraine is the presence of neo-Nazi paramilitary battalions on Maidan Square during the mass protests in Kyiv during the winter of 2013-2014; the anti-Maidan movement that arose in South-Eastern Ukraine and Crimea in December-March 2014, complete with massive demonstrations of pro-Russian sympathies; the jailings of journalists and pro-Russian Ukrainians in post-Euromaidan Ukraine; and the corruption of the post-Euromaidan leadership of Ukraine.

The majority of Canadian politicians see Russia as Freeland does. The strongly anti-Russian Ukrainian-Canadian Diaspora organizations influence to a large extent this framing of Russia as an authoritarian state.  The anti-Russianness of the Diaspora is rooted in its no-less virulent anti-Sovietism of the Cold War era.  They presented the Soviet Union as a totalitarian state. They boycotted visiting delegations from Soviet Ukraine to Canada, staged demonstrations in front of the Soviet Embassy in Ottawa, and so on. Ultra-nationalist voices in the Diaspora did not and do not see the complexity of the Soviet experience with its positive and negative features. The world is black and white, Communist and anti-Communist. Post-communist Russia quite logically took the place that the Soviet Union once held as a villain in the collective imaginary of the Ukrainian Diaspora and the Canadian political establishment.

Listening to the vocal Ukrainian-Canadian lobby, Canadian politicians fail to perceive critically the reality of modern Russia. Russia is not an authoritarian state, and freedom of speech has similar constitutional restraints as in Western democracies. Opposition media functions in Russia, but it is popular only within liberal circles whose views represent only a small minority of the Russian population.

Liberal opposition leaders such as Mikhail Kasyanov and Alexei Navalny are active in the country’s political life, but Vladimir Putin has the overwhelming support of the Russian population. What else to expect from tens millions of people who consciously chose to support a leader who improved their standards of living, gave them back hope and restored their self-respect as citizens of a great country? Russians rejected the Western neoliberal capitalism of the 1990s which brought their country into economic and social chaos and misery. But they did not reject democracy. To frame Russia as an authoritarian state is conceptually and factually erroneous. The facts on which such conceptualization is based are, at the very least, contentious. Here is one example.

A Canadian ‘Magnitsky Act’ in the works

The Canadian Senate and the House of Commons are now concomitantly debating a bill similar to the ‘Magnitsky Act’ which was passed by the U.S. Congress and ratified by President Obama in November–December 2012. The proposed Canadian law aims to punish Russian officials said to be responsible for the death of an accountant and auditor Sergei Magnitsky in a Moscow prison in 2009. Two bills have been introduced by politicians of Ukrainian descent: in the Senate by Conservative Senator Raynell Andreychuk (Bill S-226) and in the House of Commons by Conservative MP James Bezan (Bill C-267). The choice of Ukrainian-Canadians to introduce each bill was done purposefully in an effort to pressure reticent politicians, in particular Stéphane Dion at the time. Dion stated last year that Canada already has legislation in place to prevent human rights violators from entering Canada and to punish them economically. The legislation takes the forms of the Special Economic Measures Act and the Immigration and Refugee Protection Act.

Dion also stated that adoption of a ‘Magnitsky Act’ in Canada would hurt the interests of Canadian businesses dealing with Russia and would thwart his department’s plans to reopen a (vaguely defined) dialogue with Russia.

As in the case of the American Magnitsky Act, the moral justification for the Canadian bills is the death of Sergei Magnitsky, who in the West is incorrectly referred to as a lawyer. Magnitsky was an accountant/auditor for a western investment fund known as Hermitage Capital that was investing in Russia. The CEO and the co-founder of Hermitage Capital is Bill Browder, a British-American financier who became one of the biggest foreign investors in Russia following the collapse of the Soviet Union. Browder expanded his original seed capital of approximately US$25 million in 1996 to an estimated US$150-180 million in 2006, profiting from the large-scale privatizations in Russia from 1996 to 2006.

Browder boasted he was an ‘activist shareholder’. He claimed that he was campaigning for Russian companies to adopt Western-style governance, while in fact he was seeking to destabilize companies he was targeting for takeover. Canadian blogger Mark Chapman, who writes under the name ‘The Kremlin Stooge’, shows how Browder, after buying a minority share in a company, would resort to lawsuits against this company through shell companies he controlled, upsetting of the voting proportionality among shareholders and launching whisper campaigns in the press about a company’s corruption and insolvency until that company stumbled. Because targeted companies were publicly traded, the government would step in to prevent collapse. The company would be infused with capital injection, its stock price would rise and the ‘activist stakeholder’ would see his profits rise exponentially.

Browder crossed the line when he started messing with Gazprom, vital for Russia’s economy. In November 2005, he was refused entry to Russia upon landing at Sheremetyevo airport in Moscow. He was declared a threat to national security and sent packing. He has not returned to Russia since.

Browder did not take lightly his rebuff by the post-Yeltsin Russian government under Putin. He began to engage in a worldwide campaign against the Russian authorities, accusing them of corruption and violation of human rights. The death of his accountant and auditor Sergei Magnitsky while in prison became the occasion for Browder to launch an international campaign presenting the death as a ruthless silencing of an anti-corruption whistleblower. But the case of Magnitsky is anything but.

The story is not as heroic and one-sided as Bill Browder presents. Magnitsky was charged by Russian prosecutors with participating in a scheme to avoid paying appropriate taxes. Through Browder front companies, Magnitsky acquired extra shares in gas companies like Surgutneftegaz, Rosneft and GAZPROM, paying the residential tax rate of 5.5% instead of the 35% foreigners have to pay. Magnitsky was found guilty of corruption in a posthumous trial. In the West, this trial is portrayed as an example of the inhumane nature of Russian repressive justice system – how can one try somebody who is dead? But the trial’s main purpose was to investigate alleged fraud by William Browder. Magnitsky was part of this file. The Russian court found both of them guilty of fraud. The case against Magnitsky was closed because of his death.

The official Russian investigation of Magnitsky’s death did not find any malicious intent or torture by public officers that could have caused Magnitsky’s death. It was established that Magnitsky died of a failure by prison officials to provide prompt medical assistance. As a result of the investigation, many high level functionaries in the prison system and tax investigation bureaucracy were fired or demoted. Russian law was changed such that no criminal investigation would be opened against those facing a first criminal accusation of tax evasion, and an accused would not be detained during the processing of their case by authorities.

Browder claims that Magnitsky died in Russian prison because of torture and bad treatment. This interpretation fits neatly into the narrative about the repressive nature of the Russian justice system. However, there are documents and testimonies that Magnitsky died because of medical neglect – he was not provided adequate treatment of a gallstone condition. It was negligence typical of the Russian bureaucracy, not a premeditated killing.

2016 documentary film on Magnitsky

There are many other inconsistencies in Browder’s narrative, as shown in Andrei’s Nekrasov 2016 docudrama The Magnitsky Act: Behind The Scenes. Director Andrei Nekrasov is a renowned Russian filmmaker and a critic of Putin. For instance, in his 2009 documentaryRussian Lessons, on the 2008 war between Russia and Georgia, Nekrasov argues that the Russian establishment and mainstream media mounted propaganda and manipulated the emotions of the Russian population to justify the sending of Russian troops into Georgia.

Nekrasov belongs to liberal circles of the Russian intelligentsia who adore the West and criticize Putin. Nekrasov and Browder were good acquaintances, and Nekrasov’s movie on Magnitsky was intended to follow Browder’s narrative. However, in the course of making the film, Nekrasov discovered inconsistencies and contradictions in Browder’s storyline and started posing uncomfortable questions to Browder. Browder stopped answering Nekrasov’s calls and avoided any further contacts and requests to meet. Now Browder accuses Nekrasov of producing Russian agitprop and is threatening with lawsuits anyone who dares to organize a public screening of the documentary (more on The Magnitsky Act: Behind The Scenes can be found here).

Nekrasov has been harshly criticized by his friends from the Russian liberal opposition for daring to debunk the Western myth about Magnitsky. They accuse him of playing into the hands of the Russian official propaganda, of lies, of being paid by Putin regime. And yet, based on the total of Nekrasov’s artistic work which has not hesitated to criticize Putin’s Russia, these accusations sound false and ridiculous.

Nekrasov has stated on several occasions that he is ready to challenge Browder in court, but Browder has declined to accept the challenge. Nekrasov, indeed, has a point. A high court in Britain ruled in 2013 that Browder’s story is unsubstantiated. Browder had accused the lead investigator in the original case, Pavel Karpov, of torture and inhumane treatment of Magnitsky leading to his death. Karpov sued Browder and his company for defamation in the England and Wales High Court (Queen’s Bench Division). Although the court rejected Karpov’s suit because it said he could not prove jurisdiction or harm to his reputation in Britain, the judge wrote in his decision: “… the Claimant [Karpov] has achieved a measure of vindication as a result of the views I have expressed on his application. The Defendants are not in a position to justify the allegations that he caused, or was party to, the torture and death of Sergei Magnitsky, or would continue to commit, or be party to, covering up crimes.”

The British court decision as well as Nekrasov’s revelations in the process of making his film cast serious doubts about Browder’s claims. And yet Canadian politicians lend their ears only to William Browder, who skillfully plays into the West’s misunderstanding and apprehension of Russia. They should open their horizon beyond the perspective of the Ukrainian-Canadian Diaspora and the politicians that represent its views. One likely reason for the dismissal of Stéphane Dion was his opposition to a Canadian Magnitsky Act. Who took his place? Chrystia Freeland, a friend of William Browder. With her appointment, one can imagine that Magnitsky legislation will be pushed through the Senate and the House of Commons, wrapped in the righteous and unbeatable rhetoric of human rights.

Canadian politicians whose job is to steer Canada’s foreign policy should seek information from a variety of sources before acting. In the case of a Magnitsky Act, they did not do so, as the preamble to the proposed bill in the House of Commons shows. The preamble lumps together alleged human rights violations in both Russia and Ukraine. It states that, based on the records of the new Ukrainian government, former President Yanukovych was directly involved in the snipers’ shootings during Euromaidan protests in Kyiv in February of 2014. Yet this fact has not been proven. The investigation into the sniper shootings is dragging on interminably and has constantly been disrupted by interventions by nationalist right radicals who loudly attend court proceedings and intimidate judges. Three years after the event, the Ukrainian authorities have not managed to bring the investigation to a close.

The preamble to the bill in the House of Commons also mentions former Prime Minister of Ukraine Mykola Azarov, who, according to the bill, has misappropriated state funds and fled Ukraine. These lines are clearly dictated by the Ukrainian-Canadian Diaspora. Azarov fled Ukraine because attempts were made to kill his wife, his family was intimidated and he himself received several death threats.

Azarov is an honest and transparent politician and academic. He served Ukraine to the fullest of his potential. It is thanks to his efforts that the Ukrainian economy recovered its growth after disastrous management by the team of President Viktor Yushchenko in 2005-2010. Azarov is a professional, knowledgeable manager who loves Ukraine. But he has one huge defect in the eyes of right-wing nationalist Ukrainians – he is pro-Russian and he speaks Russian. That suffices to cancel out all that he did for the good of the Ukrainian people.

The preamble to the Canadian ‘Magnitsky Act’ makes a link between Yanukovych, Azarov and Putin, saying that the Russian president has been protecting them from extradition to Ukraine.  The implication is that petty villains are protected by the biggest villain of them all. The picture is thus drawn, culprits and victims are named. Yet, as I tried to show in this article, one should be cautious about stories that feed into stereotypes. This should apply especially to politicians.

Browder’s narrative is controversial, to say the least. The other side of the story should be examined, too, and taken into account without prejudice. Lines of communication should be opened with the Russian authorities, in spite of the existing tensions. Only by confronting various points of view can the truth be established. Why not invite the Russian judges who were involved in the Magnitsky case? Inviting Russian opposition leaders is not enough because they present a skewed perception of the Russian reality. These leaders do not represent the will of the majority of Russians. They embrace the Western gaze on Russia, reinforcing the fatal misunderstandings between Russia and the West. What we need is an open dialogue, even confrontational and difficult, but a dialogue, between Russia and Canada.  As Stéphane Dion rightfully stated, all would benefit from it: Canadians, Russians, and Ukrainians.