Magnitsky Acts: A Discussion with Jamison Firestone

Moscow Never Sleeps and I talk to Bill Browder's attorney, Sergei Magnitsky's boss, and Natalia Veselnitskaya's nemesis.

THIS WEEK’S GUEST is the lawyer-turned-anticorruption-activist Jamison Firestone. The Moscow-based American attorney was among the first to realize that Vladimir Putin was a thief, and his administration breathtakingly corrupt. He was also among the first to understand that the way to push back on Putin is to go after his ill-gained money. Along with his firm’s client, the hedge fund billionaire William (Bill) Browder, Firestone has lobbied extensively, and successfully, for the passage of the Magnitsky Act—named for his firm’s head of tax practice, Sergei Magnitsky, who was tortured to death in a Russian prison for the crime of telling the truth.

In heroically lobbying for the legislation—which punishes corrupt Russians by freezing their funds and denying them entry to the West, effectively making their money useless—Firestone has done more to combat Putin than almost any individual alive.

I’ve summarized some of our discussion below the jump, but I encourage readers to first…

LISTEN TO THE PODCAST.

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In the summer of 1991, right after taking the New York bar exam, Jamison Firestone hopped a plane to Moscow, in what was still the Soviet Union. Gorbachev was in power, perestroika was the watchword. The young attorney was looking for opportunity and adventure in a country that had always fascinated him. He found plenty of both.

The August putsch happened soon after his arrival. Communist hardliners, led by a former head of the KGB, kidnapped Gorbachev. But the coup did not take. In three fraught days, the whole thing was over. By Christmas of 1991, so was the Soviet Union, which voted to dissolve.

Firestone founded a law firm, Firestone Duncan, with his college friend, Terry Michael Duncan. The partnership, tragically, did not last long. Duncan died in 1993, during the Russian Constitutional Crisis of the Yeltsin period—felled by a sniper’s bullet, in the chaos outside a Moscow TV station. He had been evacuating the wounded from the scene, rescuing 12 people, including a photojournalist from the New York Times.

In spite of this tragic loss, Firestone Duncan thrived. The firm specialized in helping foreign companies navigate the byzantine Russian tax code. One of its clients was the hedge fund Hermitage Capital, helmed by William (Bill) Browder, who had a curious strategy: He invested in companies he knew to be corrupt and badly run, used his shareholder influence to oust the crooks from the managerial ranks, and then enjoyed the subsequent bump in stock prices when better executives prevailed. “Shareholder rights activism,” this was called.

That was how Browder’s relationship with Vladimir Putin went sour. When he first took over, Putin was seen as a straight arrow—a reformist who would, and in some cases did, clean up corruption. Hermitage Capital invested heavily in Gazprom, the state-owned gas company that was wildly corrupt, even by Russian standards. Browder, with help from the legal team at Firestone’s firm, produced a dossier on the wrongdoers, which was submitted to the government. Putin took aggressive action, sacking the crooks and thieves, and installing a new management team. The stock price soared. Browder made mint on that deal. And all Russians stood to gain from the corporate behemoth being properly run.

Niche law firm helps hedge fund billionaire amass wealth, while simultaneously improving the business environment for Russia in general: that should have been the end of the feel-good story. But the new managers that Putin installed at Gazprom were not reformers. They, too, were thieves—Putin’s thieves.

When Browder realized he’d been had, he liquidated his stock in Gazprom, to the tune of two billion dollars. In practice, the actual sale of all that stock was administered by Firestone Duncan—one of the services it provided its clients. The payment of the tax on the sale, a whopping $500,000,000, was overseen by the head of tax and audit at the firm: Sergei Magnitsky, who was at the time in his early 30s.

Putin’s thieves in the government boosted almost half of the Hermitage tax payment: $230 million. This was a massive tax fraud—the largest in Russia’s history—which Magnitsky investigated, uncovered and testified to in court. For the crime of telling the truth in court—a big no-no in Putin’s Russia—Magnitsky was arrested. He was tortured while in prison (on orders up the chain of command), he was denied medical attention, and he died, 11 months after being detained, at the age of 37. It was an abominable turn of events, undeniably evil, and it happened because Sergei Magnitsky had busted Putin’s goons pinching an ungodly sum of money from the Russian people.

After Magnitsky’s death in November of 2009, Jamison Firestone left Moscow for good. He worked with Browder—who “went Bruce Wayne,” as Firestone put it—to expose the crime and advocate for justice. Firestone produced a series of YouTube videos in both English and Russian on the case, that were watched extensively in Russia. (The style was later aped by Alexei Navalny, although, as Firestone modestly says, “The student is now the master.”)

Firestone lobbied for the passage of the Magnitsky Act in the United States—a bill the Obama Administration was not keen on. The official White House policy was a “reset” with the thieving murderer in Moscow. Despite Obama’s reticence, Firestone and Browder were successful. The act passed in 2012, and was later expanded.

Then the operation went global. It is not enough for one country to punish villainous thieves in this way; the West must show a unified front. The effort has borne fruit, as Forbes reports:

While the idea of the Magnitsky Act originated in the U.S., in recent years several other states have followed and introduced their own legislative framework to the same effect. Countries which now have the ability to impose sanctions upon grave human rights abusers, include Estonia, Canada, Lithuania, Latvia, Gibraltar, Jersey and Kosovo. In 2018, in the U.K., the British Parliament introduced a so-called “Magnitsky amendment” to the Sanctions and Anti-Money Laundering Act. The amendment equipped the government the power to impose sanctions on individuals who commit gross human rights violations. The UK Parliament is looking to introduce further laws to build upon the “Magnitsky amendment.” The details are yet to be disclosed. 

The Magnitsky Act infuriated Vladimir Putin, in part because there was no proportionate way to respond. What could he do, make sure wealthy Americans couldn’t spend money in Russia? Boo-fucking-hoo. All he could come up with was prohibiting Americans from adopting children from Russian orphanages—which punished innocent Russian children, many with developmental disabilities, who would now languish in horrible state-run institutions, more than anyone in the U.S.

In 2016, still impotently fuming, Putin dispatched his emissary, the attorney Natalia Veselnitskaya, to the U.S., to spread lies about Browder, Firestone, and Magnitsky. She hired Fusion GPS, Glenn Simpson’s company that had also retained Christopher Steele, to dig up information to help the cause. She testified before Congress. And, famously, she flew to New York, where she met with Donald Trump, Jr., Jared Kushner, and Paul Manafort on June 9, 2016 at Trump Tower. Junior was correct that the meeting was about “adoptions.” But it was primarily, Firestone tells me, about repeal of the Magnitsky Act: “The whole subject of the meeting was: Browder, Magnitsky, and Firestone are crooks. And if you kill the sanctions, right, you can have ‘good relations’ with Russia, and you can start adopting kids again.”

The implication that day was clear, even to a mouthbreather like Junior: lift the sanctions, and Russia will help Trump win the election. Well, Russia helped Trump win the election: that was the conclusion of the Intelligence Community, the Mueller Report, and Volume 5 of the Senate Intelligence Committee Report. But for all the myriad ways Trump damaged the country, he never managed to have the Russian sanctions lifted. Either he dicked over his Russian overlords (unlikely), or he didn’t have the juice to get it done. The Magnitsky Act held, even during that four-year nadir.

Even with his puppet in the White House, Putin lost.

The Magnitsky sanctions work. Expand them.

LISTEN TO THE PODCAST

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E13: The Magnitsky Act (with Jamison Firestone and Moscow Never Sleeps)

Description: In 1991, Jamison Firestone went to Moscow and established a law firm, helping foreign businesses with Russian law. Among his clients: William Browder. Among his employees: Sergei Magnitsky. Among his adversaries: Natalia Veselnitskaya. Among his acquaintances: Alexei Navalny. Greg Olear and Moscow Never Sleeps talk to Firestone about his remarkable experiences in Russia. Plus: The Revelation of Lin Wood the Divine.

Jamison Firestone’s YouTube channel:https://www.youtube.com/user/RussianUntouchables/videos

Thanks to Moscow Never Sleeps for his help.

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Photo credit: Jamison Firestone in 2010. Still shot from his YouTube videos.