Subcommittee on International Human Rights Committee on April 29th, 2014

[The Chair, Conservative, Scott Reid]

Welcome to the 23rd meeting of the Subcommittee on International Human Rights of the Standing Committee on Foreign Affairs and International Development. Today is April 29, 2014.

Notwithstanding my threats to Mr. Simms that he had to leave the room immediately or face the wrath of the Speaker, we are actually doing the in camera stuff at the end of this meeting, not at the beginning. I offer my apologies in absentia to Scott Simms.

We have today with us William Browder, who is the CEO of Hermitage Capital Management. He is giving us an update on the situation relating to Sergei Magnitsky. You will all recall, of course, from a previous hearing of some time ago, the story of Sergei Magnitsky, which I will not repeat, and the reaction of the Russian government to attempts to seek out justice for Mr. Magnitsky. We're now getting an update on that situation. Anybody who has interest in it can speak to our analyst through our clerk and get the minutes of those earlier proceedings in order to gain any additional contextual information.

That being said, I turn the floor over to you, Mr. Browder. Normally we have a 10-minute opening statement, more or less, but you can do it more quickly or less quickly. In the end, it just affects how much time is available for the questions and answers that will take place in the remaining available time.

Please begin.

[William Browder, Chief Executive Officer, Hermitage Capital Management, As an Individual]

Ladies and gentlemen of the committee and Mr. Chairman, thank you very much for giving me this opportunity today to tell you the story of Sergei Magnitsky in Russia. Thank you for your continued vigilance on the story. This is my third opportunity to address Parliament here in Canada.

There are a lot of terrible things that happen in the world, and I'm very grateful to you for giving me and Sergei's family the opportunity to tell the story. Most of you have heard it, so I'm not going to tell the whole story again. I'll just summarize it in 30 seconds and then tell you what's happened since I was last here explaining the story.

As most of you will remember, Sergei Magnitsky was my lawyer. I was a large investment fund manager in Russia. When I was there, I discovered corruption in the companies that I invested in. I exposed the corruption, and in response, the Russian government expelled me from Russia and declared me a threat to national security. I evacuated all my staff and took all of my firm's assets out of the country, and then the authorities raided my offices after that and seized all of our documents.

I hired this young lawyer, Sergei Magnitsky, to investigate what they were going to do with the seized documents. He discovered that the documents were used to perpetuate a $230-million tax rebate fraud—a fraud against the Russian government, not against me. Sergei, who was both a good lawyer and a good patriot, exposed the theft of the money and the people involved. He was then arrested by some of the same people he testified against, put in pretrial detention, tortured for 358 days in pretrial detention, and ultimately killed on November 16, 2009, at the age of 37.

On November 17, 2009, when I got the news of his murder, it pretty much changed my life forever. I put aside my activities as a businessman, and I became a full-time campaigner for justice for Sergei Magnitsky and for other people who are suffering the same fate in Russia. I've spent the last four years travelling around the world looking for justice. In that time I've come across a number of different ideas that I'll tell you about today. I wouldn't call them real justice, but they have allowed us to prick the bubble of impunity that exists in Russia today.

After Sergei was killed, we tried in every way possible to get the people who killed him to be prosecuted in Russia. The Russian authorities completely circled the wagons and exonerated every single person who was involved in Sergei Magnitsky's death. But they not only exonerated them, they promoted a number of the key people, and they even gave special national state honours to some of the people who were most complicit in the whole Magnitsky story.

It became obvious to me, in the midst of this whole situation, that if we wanted to get justice we were going to have to go outside of Russia. We then asked ourselves what kind of justice we could get outside of Russia. The answer was that the people who killed Sergei Magnitsky didn't kill him for ideological reasons and they didn't kill him for religious reasons: they killed him for money. They killed him because he discovered the theft of $230 million from his own government and he testified against the people involved, and they wanted to silence the witness.

The one thing we felt was that if they killed him for money, then the people who got this money would generally like to spend it in the west and save it in the west. They wouldn't actually feel comfortable keeping their money in Russia, because as easily as they stole it from the government, it could be stolen from them by other people. So we came up with this idea of imposing visa sanctions and asset freezes on the people who killed Sergei Magnitsky.

I originally took the idea to the U.S. Congress. I presented it to a number of senators and members of House of Representatives. I phrased the question very simply: how would you like to support a piece of legislation to ban Russian torturers and murderers from coming into America? The answer was pretty straightforward. There's nobody who would be against that.

Slowly but surely, the Sergei Magnitsky Rule of Law Accountability Act worked its way through the U.S. Congress. On November of 2012 it was passed into law.

The Sergei Magnitsky Rule of Law Accountability Act sanctions those people who killed Sergei Magnitsky, but more importantly, it sanctions all other gross human rights abusers in Russia. I would describe this as the new technology for dealing with human rights abuses. This is it. In the old world 35 or 40 years ago when people committed human rights abuses in Russia, they didn't have assets in the west. They didn't travel to New York, Toronto, Saint-Tropez, and London, but now they do.

The Russians' reaction to the Magnitsky Act was furious. They were absolutely furious. Putin was furious, and he was furious because it touched him exactly in his Achilles heel. This is the one place where we have leverage and they have vulnerability.

My mission now is to take this concept and expand it, so that not just the United States bans the people who killed Magnitsky and the people who commit other gross human rights abuses, but so the Canadian government does, the European Union does, and the member states of the European Union do. I was here two years ago asking for the same thing to happen in Canada. Irwin Cotler has proposed a private member's bill basically proposing the same legislation here in Canada.

Two years ago, there was some reluctance in Canada. It's not just Canada where there's reluctance. There was reluctance in America. There was reluctance in Europe. But we're now living in a different world, whereas the thought two years ago was that we don't want to upset Russia, that it's a delicate strategic relationship.

Well, Russia is now in a state of mind where they don't seem to mind upsetting the rest of the world. They're aggressively acquiring territory that doesn't belong to them. They're openly lying about it to the world leaders.

Sanctions are no longer Bill Browder's crazy idea. This is the basic concept that has now been employed about the people involved in invading Crimea and Ukraine. My hope is that this will be a concept that can be expanded beyond just the geostrategic discussions about invading Ukraine to deal with the human rights abuses that exist in Russia.

I should point out that all of the world's attention right now is on Donetsk, Sloviansk, Kharkiv, and various other places where the Russian agents or troops, or pro-Russian separatists, if you want to use that term, are all gathered. But while this is all going on, the Russians continue to tighten the screws in every possible way on their own people. If you're an anti-corruption activist, a human rights activist, or a journalist, or if you're involved in any type of non-conventional religion or a member of the LGBT community, you're being persecuted in Russia.

Those people have absolutely no recourse right now unless something like a Magnitsky Act is imposed, so I've come here today to suggest, to implore, and to ask you to consider again the proposal by Irwin Cotler—and to perhaps make it a proposal by the entire committee—for implementing a Magnitsky Act in Canada, so that Russian torturers and murderers aren't allowed to come here and keep their money here.

[The Chair, Conservative, Scott Reid]

Does that conclude your comments?

[William Browder]

Yes.

[The Chair, Conservative, Scott Reid]

Thank you.

Before we go to anything else, I would like to note that, given the time, we're going to have six minutes available for each round of questions and answers. That will allow us to wrap things up and to vote. I think we'll only need a couple of minutes to do the in camera item that has come up, because I think we're merely acting on a consensus. Am I correct? Okay.

I have a couple of preliminary points before we go to our first questioner.

I received a book—I think it's by one of your colleagues—called Why Europe Needs a Magnitsky Law. I'm simply drawing it to people's attention. I'm assuming that it got sent to other members of the committee. If it did not, I have a copy. Our clerk cannot distribute it because it's in one official language only, but you're welcome to come to my office and see it.

Second, before we go on, I want to be clear about this. You made a reference to what has recently been going on in Ukraine, but to be clear, Sergei Magnitsky was a Russian citizen—I assume he was a patriotic Russian citizen—acting out of a desire to make his country a better place for other Russian citizens. This in no way overlapped in any respect with current Russian foreign policy, just to be clear.

[William Browder]

The only overlap between the Magnitsky case and what's going on right now is that the Magnitsky case was an emblematic example of how Russia defies laws and goes about covering up crimes and publicly lying. Sergei Magnitsky was a Russian citizen exposing a crime against his own country and was murdered by his own government. That was then covered up by his own government, going right up to Vladimir Putin.

The mindset of what happened to Sergei Magnitsky is the same mindset that allows Russia to invade Ukraine and to do various other things, but there's no overlap in terms of the facts of the case.

[The Chair, Conservative, Scott Reid]

Thank you very much.

Ms. Grewal, would you like to begin the questioning?

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Thank you, Chair.

Thank you, Mr. Browder, for presenting to our committee today. You have shed light on an extremely important human rights issue. What happened to Sergei Magnitsky is a truly shocking and very heinous violation of human rights. It is an unfortunate example of what many more freedom-loving Russians continue to experience within Russia.

To your knowledge, to what extent has the Russian government deteriorated in terms of Russian citizens who are interested in the democratic process and how they are treated?

[William Browder]

Vladimir Putin is running a system under which any time anybody presents any possible alternative to his rule, he eliminates those people.

For example, a very popular young politician-activist-blogger named Alexei Navalny started to complain about government corruption and exposed huge government corruption in his country. This young man ended up becoming so popular that he had the potential, if there were a real democratic process, to become president of Russia.

What Putin did was to trump up a number of absolutely objectively ludicrous criminal charges against him, prosecute him on the basis of charges that anybody would say were completely unjust, and then convict him. When he was convicted, 10,000 people went onto the streets of Moscow and protested, and Putin realized that if he actually put him in jail, that could potentially cause an uprising. He was then put under house arrest and refused any access to any technology, so he's effectively neutered.

There's another fellow named Udaltsov, who is a member of the opposition. Again, he was convicted of various crimes and put under house arrest.

This is what they do. They don't register your party, or they convict you of a crime, or they attack you and in some cases murder you, to make sure that nobody wants to become a member of the opposition in Russia.

Putin is like an athlete who's cheating. He can't tolerate any competition, so he eliminates anybody who might potentially be his competition. He's now also eliminating any possible journalists' organization that says anything bad about him. Any journalists' organization that has been in any way supportive of the opposition is now being shut down in Russia.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

In your opinion, how should democratic countries like Canada, the United States, and those within the European Union work together and respond to Russia's human rights violations, bearing in mind that Russia is a nuclear power?

[William Browder]

Well, the historic response to that question—and not just in Canada but in every other country in the world—says, “Let's just not do anything about it.” That has been the historic response: let's just not do anything. As a result of that, Putin has enjoyed absolute impunity, and it has actually emboldened him to invade neighbouring countries.

Because Putin is a kleptocrat—it's now widely acknowledged that he's a kleptocrat—and he doesn't keep his money in Russia, the one thing we can do is sanction him. In other words, we can sanction his money and freeze his assets so his money is no longer safe. I don't think Putin will start a nuclear war over his money being frozen, because he can't really acknowledge that he has any money. This is their Achilles heel. This is the main way we can get to them in the west. There's no reciprocal way in which they can go about doing anything about this.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Thank you.

Chair, do I have some more time left?

[The Chair, Conservative, Scott Reid]

You have one minute.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

I will pass my time over to Mr. Sweet.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Thank you very much.

I have a quick question for the people who are watching. How is it that someone like Sergei could uncover the fact that people were stealing from the government and then government officials actually would make sure that he was incarcerated and then later killed? Why would those people who did that be given state honours afterwards if they were stealing money from that very government?

[William Browder]

We have the same question. There's an assumption you're making in that question, which is that the people who are running the country are acting in the national interest.

If you change that assumption just slightly and say that the people who are running the country are kleptocrats and are benefiting from this particular scam or many scams like it, that changes the assumption you make about the answer to the question. Let's just say that there are senior ministers in the government who are benefiting from this and who also have the ability to award state honours and also the ability to arrest a young man who exposed the crime. Then it's entirely logical. If they are the crooks who are doing the crime, they then have every power to cover up the crime and to do that.

What the Sergei Magnitsky story did, probably better than any other story in Russia because the details are so clear, is put the bare face of Russia out there for everybody to see, not just for this case, but for every case. Because this is just the tip of an iceberg. It just happens to be a well-documented iceberg, and I have the opportunity to come and speak to you about it.

But this is going on everywhere on a grand scale, and not just in Russia. It went on in Ukraine. That's why the president of Ukraine was run out of the country: because people couldn't tolerate it anymore. It completely ruins the lives of average Russians, because the money doesn't go to build hospitals and schools. The money goes to villas, yachts, and foreign bank accounts, and to fancy prep schools for their children, and that's where the whole problem is.

[The Chair, Conservative, Scott Reid]

That used the one minute that was available. We'll go now to Mr. Marston.

In all fairness, because I do want to get to the end, in situations like this if we run over, I'll just subtract it from the next time, so we'll have five minutes when we get back to you.

Mr. Marston.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I think that's very fair, Mr. Chair.

I'm of the generation, Mr. Browder, of MAD: mutual assured destruction. That was a two-edged sword, because everybody thought it would prevent nuclear war, and due to the fact that everybody thought so, then Russia was free to do a lot of things without really believing that anybody would take them up on the challenge, because of the risk factor. I tend to agree with your analysis that Mr. Putin is not prepared to die for his money, but I wouldn't want to be proven wrong in that.

There's one thing I'd like to ask you about. Our researchers have brought this next question to us, and I think it's very pertinent considering the motion Mr. Cotler had before us. Before I ask you the question, though, are you aware of any interactions with government members seeking support on that bill and what kind of reaction they've been getting?

[William Browder]

We arrived in Ottawa just this morning, so I'm going to be meeting with the government tomorrow about this. All I can say from a predictive standpoint is that we're now in a completely different world, where nobody is trying to make nice with the Russians. Sanctions have already been imposed, so as for the idea of a leap of faith to impose sanctions and a leap of faith that we're worried about upsetting Russia, neither of them are big leaps of faith now.

I was sort of in the wilderness for the last four years. A lot of people were saying that maybe this Magnitsky case was just some obscure case, an extreme example. Now, all of a sudden, every government is interested in my opinions about who to sanction, and every news station is interested about whether the sanction policies are appropriate or should be strengthened.

I'm now in the mainstream as far as my thoughts about sanctions go, so I'm hoping that since the world has changed, we can actually use this tool properly. As I've said, this is sort of the iPad technology. We used to be on typewriters, but now we have an iPad as far as fighting human rights abuse goes.

As for the idea of going after these people's money, we're not just talking about going after heads of state or senior government officials. In the case of Magnitsky, we're talking about mid-level people who won't be able to travel, who can't use their Visa card anymore. Then the question is, do they take the order to do something bad if they know they're going to be held personally accountable and they won't be able to travel and use their money, and their government can't protect them from that?

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Well, the very impunity that they've lived under for so long.... North America is quite aware of the gangster problem in Russia, and you seem to have some really direct information linking certain people, which you've attested to before and which would put you in a rather unique position compared to all of the things that are happening.

The reason I started this line of thought, though, is that my understanding is that there's Canadian law that already addresses the provision to prevent individuals or criminal organizations from entering Canada if they're suspected of committing the more serious types of crimes. It sounds to me like you have the kind of evidence that could be used against at least a number of these people. Do you believe that if we took the existing law and applied it, that would be good enough to address this particular situation?

[William Browder]

The law prevents people from entering Canada, but it doesn't oblige the government.... First of all, it allows the government to prevent them if it chooses to. It doesn't oblige them to. It doesn't freeze their assets and it doesn't name their names.

There are three things about the Magnitsky Act that are unique and useful and that go beyond what exists under current legislation in Canada. The U.S. version went beyond current legislation in the United States. That's the first thing. It requires the government to name the names publicly on a federal register, which is extremely important. The second is that it obliges them to ban their visas, and then it freezes their assets. That doesn't exist under current legislation.

I can tell you one thing, and it's hard to appreciate it if you're not a specialist on sanctions; I've become a specialist on sanctions through this exercise. However, if a person's name is on an international sanctions list, that's pretty much the end of their financial life. If you're on a sanctions list, whether it's a Canadian sanctions list, a U.S. sanctions list, or a European sanctions list—even on one and not all three—every bank in the world runs a database of who is on the sanctions list—every bank.

If someone is on a Canadian sanctions list and no other sanctions list, they won't be able to open an account at RBS in London. Most companies won't want to do business with them when they do their due diligence on that person. Even if they have no assets in Canada, naming and shaming them and putting them in that position has a very material, very direct, and very negative impact on their lives.

The existing legislation doesn't do that.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

How much time do I have, Mr. Chair?

[The Chair, Conservative, Scott Reid]

You have five, four, three, two...one second.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I think it's over.

[The Chair, Conservative, Scott Reid]

It's over.