Russiagate and the Magnitsky Affair, Linked Again

Natalia Veselnitskaya being at the center of this week's explosive revelations is the latest indication that Russiagate didn't begin last year – but almost a decade ago

Credit: Getty (3)

When I first read the explosive New York Times story about Donald Trump Jr.'s meeting with "Kremlin-linked lawyer" Natalia Veselnitskaya, I had multiple reactions.

The first was amazement at Junior's sheer stupidity (responding affirmatively to "If you would like to participate in our country's state-sponsored effort to help your father's campaign, please respond 'yes' in writing here" will go down as an unsurpassable moment in unsafe political sex). The second was confusion, and the third was déjà vu.

I never met Veselnitskaya, but just months ago I did cross paths with one of her colleagues. Like Veselnitskaya, this person had been lobbying on behalf of a Russian-directed company called Prevezon to overturn the Magnitsky Act, a 2012 law which sanctions Russia for human rights abuses.

The interview was off the record, so I can't say much about it, except to say that my experience was weirdly similar to the account Trump Jr. offered about his meeting with Veselnitskaya.

I went into the meeting expecting a scoop on another topic, and instead found myself essentially being lobbied about the Magnitsky Act. I came away scratching my head about the Prevezon crew, unsure of whether they represented high-ranking Russian interests, or were instead just a bunch of provincial amateurs trying to get a sanctions regime lifted in order to unfreeze their assets.

According to The Hill, others who ran into Veselnitskaya recently came away wondering the same thing:

"The sources also described their interactions with Veselnitskaya in the same way that Trump Jr. did. They claimed not to know who she worked for or what her motives were.

'Natalia didn't speak a word of English,' said one source. "Don't let anyone tell you this was a sophisticated lobbying effort. It was the least professional campaign I've ever seen. If she's the cream of the Moscow intelligence community then we have nothing to worry about.'"

Though Veselnitskaya seems like a small-timer – and Leonid Bershidsky's excellent background report on her for Bloomberg makes her seem like the equivalent of a third-rate lawyer for the Staten Island Borough president – one never knows with this story. After all, the Trumps themselves aren't exactly sophisticates, and they live in the White House.

Moreover, the Trump Justice Department, after dismissing former U.S. Attorney Preet Bharara, subsequently settled a case for Veselnitskaya's client very much in their favor. That settlement earlier this spring is now highly suspicious, given this week's revelations. In my personal opinion, it's the most suspicious act to date in the whole panoply of much-denounced Trump behaviors with regard to Russia, perhaps even moreso than the firing of James Comey.

On the other hand, Trump himself came out strongly in favor of the Magnitsky law earlier this year, a piece of news that was then and remains now a weird fit with the collusion narrative. Overturning the Magnitsky Act is probably at or near the top of the list of Russian foreign policy objectives vis a vis the United States.

In the fall of 2012, Barack Obama breezily declared "the Eighties are calling, they want their foreign policy back" in response to Mitt Romney's charge that Russia is our top global threat. The Magnitsky rule was passed not long after that, precipitating a steep collapse in Russian-American relations that has continued through this TrumpRussia scandal.

There's no way to understand the now-inevitable sequel to the cold war without understanding the Magnitsky affair. The fact that anti-Magnitsky lobbyist Veselnitskaya is at the center of the most explosive Russiagate story yet, and moreover that the "oppo" she planned to deliver to the Trumps reportedly concerned the Magnitsky case, underlines this idea even more.

Somehow, this all goes back to Magnitsky.

At about 4 p.m. on August 24th, 2009, a 37-year-old Russian named Sergei Magnitsky curled up in a ball in his bed at the infamous Butyrka jail, an imposing building that, since the days of Stalin's purges, has stood as a symbol of repression and political murder.

Magnitsky had been arrested nearly a year earlier, in November of 2008. He worked for Hermitage Capital, the investment firm of an American billionaire, William Browder. In most Western accounts, Magnitsky helped Browder uncover a complex corruption scheme involving an array of Russian officials that had resulted in the theft of about $230 million from Hermitage.

When Browder complained about the theft, the story goes, the Russian government not only didn't act to remedy it, but instead forced Browder out of the country. They also ultimately threw Browder's employee Magnitsky in jail, charging him with the very crime he'd helped uncover.

The ex-pat community in Moscow was initially unsure of what to think about the apparent attack on Browder and his companies. Browder at one time had been one of Putin's most enthusiastic Western supporters.

While many ex-pats who lived through the transition to Putin (myself included) immediately saw the new president as a dangerous autocrat who in the very best case would be a human rights downgrade from the awful-enough Yeltsin regime, Browder was one of the leading Western voices insisting that Putin was a man with whom we could do business. So it was odd to see his Hermitage company targeted.

In any case, after nearly a year behind bars, Browder's employee Magnitsky, who was married and had a young son, became ill. Before being transferred to Butyrka he had been diagnosed with gallstones, pancreatitis, and cholecystitis in another jail, and scheduled for surgery. But he never received treatment.

On November 16th, 2009, Magnitsky was finally transferred to another infamous Moscow jail, Matrosskaya Tishina, ostensibly to go to the medical ward. He never made it there and was instead handcuffed to a bedrail in an isolation cell. According to Browder's book, Red Notice, guards in riot gear entered the room and beat Magnitsky with rubber truncheons. He was discovered by a civilian doctor dead on the floor a little over an hour later.

Magnitsky's death would become a major scandal abroad, but that was mostly due to the accident of his having worked for an influential American, Browder. In fact, Magnitsky was killed as part of a commonplace scam in the gangland state that is Vladimir Putin's Russia: a reidersky zakhvat, or "raider attack."

The scam works as follows: a group of thugs with strong government and/or police ties targets a private company with assets. They then cook up an excuse to "raid" the company offices, at which point the thugs take the company's seals, certificates of ownership, registration files, etc. From there, the "raiders" simply sign over the company to new owners while the old ones are either pushed out, killed, or thrown in jail.

This grotesque new interpretation of the "hostile takeover" began in the Yeltsin years but ultimately became a major part of the gangland revenue model in Putin's Russia. One study delivered to the Duma by Russia's then "Business Ombudsman," Boris Titov, showed that 600,000 criminal cases had been brought against Russian "entrepreneurs" between 2010 and 2013, and that 110,924 of them had resulted in prison terms.

The case involving Browder and Hermitage wasn't even close to being the biggest. A firm called TogliattiAzot, which has 10,000 employees and controls upwards of 20-percent of the world's ammonia production, was successfully raided by the oligarch Dmitri Mazepin in a case that has rattled Western investors for years.

The Magnitsky case, at least as described in Browder's book, was typical of the reiderovsky methodology. The raiders first forced Hermitage to pay an exorbitant tax bill, then raided Hermitage's offices and stole documents they later used to reassign ownership of three of Hermitage's subsidiaries to themselves. They then claimed for themselves a $230 million tax "rebate." When Magnitsky uncovered this fraud/theft, he was tossed in jail.

The billionaire Browder at this point made getting payback for Magnitsky his life's mission. As detailed in Red Notice, he became a self-taught lobbyist and in 2012 managed to push through congress the law that came to be known as the Magnitsky Act. Among other things, it listed 18 individuals deemed responsible for Magnitsky's death and not only barred them from entering the U.S., but made provisions for the freezing of any assets they held abroad.

Despite his financial power and profile, Browder for all his furious complaints had until the passage of the Magnitsky Act barely elicited a yawn from the Putin government. But once the Magnitsky law was passed, beating back the rule almost immediately became a primary focus of the Russian government.

"They didn't care before. But now that we could freeze assets, that interfered with the whole business model of the Putin regime," Browder told me a few months ago. "That got their attention."

It should be noted that support of the Magnitsky law was not unanimous in the Western business community. There are some who disputed Browder's version of events, or were at least unsure enough about what had happened to hesitate.

A common concern was that in Russia, you never know whether things are being executed on orders from the very top, or merely by self-motivated crooks operating under the krysha, or protection (literally, "roof"), of higher-ranking officials. Those who lived there long enough knew the amounts of money taken in the Browder case weren't enough to raise the pulse rate of the king thieves who run the Russian state. In fact, sanctioning Russia's leaders for having committed these crimes was sure among other things to anger them on the level of being an insult to their professionalism.

Some American business interests also quietly grumbled that the Magnitsky rule would derail the fragile relations between the two countries – the commercial relations, particularly – and that Browder might have achieved a moral right at the expense of irreversibly angering the Russians and queering lucrative business interests.

Hillary Clinton herself went so far as to oppose the Magnitsky rule at one point in time. Her opposition, as reported by the Wall Street Journal and others, coincided with a trip to Moscow by Bill Clinton in which he was paid $500,000 to give a speech by Renaissance Capital, a firm that Sergei Magnitsky himself had claimed was part of the tax fraud perpetuated against Browder.

The Obama administration, too, originally opposed the Magnitsky rule in favor of a "reset" and a continuation of a nervous détente with Putin, one that among other things would include further nuclear arms reductions. Obama at the time was pushing the idea of "nuclear zero," a world without nuclear weapons. But there was considerable opposition to this concept in the Senate, and the Magnitsky act became a vehicle for consolidating legislative opposition to the "reset."

Eventually, Obama relented and the Magnitsky law passed. The predictions that it would drive the Russians ape proved immediately true. Russian government officials were infuriated and felt unfairly maligned by the law. The general tenor of the Russian complaints that I remember hearing went something like this: We're not the only vicious kleptocracy in the world, and naming your human rights abuse/extortion law after Magnitsky makes it seem like we are.

After the law passed, the Russians fought back, hard. The counterattacks against the Magnitsky Act and Browder were numerous and ranged from savage to absurd.

One of the first moves was to ban Western adoptions of Russian children, which was one of the few moves Russia could make that didn't involve imperiling their own financial interests. The move had life-threatening consequences for abandoned Russian children with diseases like Down Syndrome and spina bifida, who might otherwise have been adopted by foreigners with means. As one U.S. official told the Daily Beast last year, the Russian messaging was, "You repeal Magnitsky and we'll let go of the kids."

Browder put it another way. "Banning adoptions was especially cruel because what they were essentially saying is, 'We're going to hurt kids because we don't care, and you do,'" he says.

The Russians also passed a counter-law petulantly banning 18 Americans from entering Russia because of "human rights abuses." The list included noted federal Judge Jed Rakoff and none other than former U.S. Attorney Preet Bharara, recently dismissed by Trump.

When none of these moves were successful in beating back the Magnitsky rule, some Russians tried a public relations campaign in the West. This included the production of a documentary called The Magnitsky Act – Behind the Scenes, which denied that Magnitsky had been mistreated and more or less absolved the Russian regime of any guilt.

The movie's director, Andrei Nekrasov, has a record as a staunch Putin critic, having among other things made a damning film about the assassination/poisoning of former intelligence officer Alxander Litvinenko. He has told reporters he began his Magnitsky project intending to tell it from Browder's point of view, even envisioning Browder as narrator, but became convinced the facts didn't support that narrative.

What that means is hard to say. But add it to the long list of factors that make the Magnitsky/Browder case a very difficult one to unwind.

What's not in dispute is that the anti-Magnitsky lobbyists have in recent years used singularly revolting tactics. Veselnitskaya and her clients at Prevezon among other things created an organization called the Human Rights Accountability Global Initiative Foundation, whose long-winded title is a sarcastic echo of the formal name of the Magnitsky Act.

The organization's purpose was really to lobby against the Magnitsky rule, but was couched as having been formed to seek out "legal and legislative options to help overturn this adoption ban." The HRAGIF, in other words, was essentially a vehicle for negotiating the release of children held as political hostages.

If you click on the website, you'll see heart-rending black-and-white photos of children who ostensibly could be living in peace and comfort with nice American families, if only the United States would drop its wrong-headed human rights sanctions law. If you want to make yourself ill, take a tour through the whole site.

Veselnitskaya is the wife of one Andrei Mitusov, at one time the deputy transport minister of the Moscow Oblast, the equivalent of a borough or maybe a county. Mitusov worked under Pyotr Katsyv, who in turn is the father of Denis Katsyv, identified by the Organized Crime Corruption Reporting Project as one of the people who ended up with the monies originally stolen in the Magnitsky case. According to these reports, the money ended up in the accounts of their Prevezon Holdings, which is registered in Cyprus.

When Prevezon was charged in the aforementioned money-laundering case, the company engaged an American firm to help with "litigation support." That firm was Fusion-GPS, the same company that commissioned the dossier on Donald Trump written by ex-spy Christopher Steele.

By an amazing coincidence, Fusion was working on behalf of this strange group of Russians at exactly the same time its founder, Glenn Simpson, was deciding to hire Steele to produce the most famous anti-Russian dossier of all time.

I originally thought that coincidence was too odd to ignore. But after looking into it and talking to some of the people involved, I came away believing that Fusion had not been employed by "the Russians," but rather by "some Russians," and not very sophisticated ones at that.

There were lots of conspiracy theories floating around in Washington at that time (including a theory, pushed variously by people in both parties, that "the Russians" had used Fusion to plant disinformation in the Steele report), but to me it seemed more likely that Fusion had just done what oppo firms do, i.e. take business wherever they can get it. Even dingbats like the Prevezon people are entitled to buy research help.

Still, this ultimately is the question that hovers over the latest revelations involving Trump Jr. Is Natalia Veselnitskaya a cutout for the Kremlin? Or is she just the lawyer for a group of provincial yahoos inveigled in a relatively small-time (by Russian standards) ripoff, in the States to push a preposterous and off-putting kids-for-sanctions deal to get their money back?

If it's the former, the collusion narrative is suddenly red hot. If it's the latter, then what we've got is a case of failed or attempted collusion, by a Trump scion who is too dense to know what he's meeting about and with whom.

What's the truth? I have no clue. This will be for poor Robert Mueller to sort out. Veselnitskaya seems like a nobody, but then again she scored a key meeting with the Trumps and also received special permission from the Obama Justice Department to remain in country. And there is that oddly auspicious settlement in the Prevezon case to ponder.

The relatively localized and specific Magnitsky controversy ultimately became a vehicle for a much broader and weightier disagreement between camps of powerful Russians and Americans. It became the nexus of two different ways to envision the future of Russian-American relations.

Hardliners on both sides originally used the Magnitsky affair as a way to argue – successfully – against the kind of pragmatic rapprochement/disarmament campaign that Barack Obama once favored with his "reset" idea.

With Russiagate en fuego, Magnitsky is no longer needed as an excuse to hype up aggression between the two countries. But it's not surprising that characters from the old divisive controversy keep appearing in this new one. 

Everything we know about the members of Trump's campaign who had contact with the Russian government. Watch here.