Africa | How the US law inspired by a Russian tax man is helping close the net on ‘international financial pariahs’, the Guptas

Sergei Magnitsky, a tax accountant in Russia, gave rise to the law under which the US government sanctioned the controversial Gupta family and one of their associates. 

On Thursday, the US Treasury Department’s Office of Foreign Assets Control announced it had placed sanctions, under an executive order in the Magnitsky Act, against Ajay, Atul and Rajesh Gupta as well as associate Salim Essa.

The man who inspired the act rose to international fame after he exposed a Russian criminal enterprise, with links to the government, that had stolen more than $230m from the Russian Treasury.

Magnitsky uncovered the heist while representing businessman Bill Browder who had raised concerns about corrupt oligarchs.

In 2007, Magnitsky publicly accused Russian officials of fraud after which the same officials launched an investigation against him and threw him in prison.

For the next year, he lived in inhumane conditions and refused vital medical help.

He was allegedly tortured and beaten to death in his cell in 2009.

The US signed the act into law intending to punish those responsible for his death.

Under the act, and by extension the blocking the property of persons involved in serious human rights abuse or corruption executive order, the US excluded the Guptas from the country’s financial system.

Signed into law by former US president Barack Obama in 2012, the act allows the president to impose financial sanctions and visa blockages against those implicated in human rights abuses or corruption anywhere in the world.

The executive order builds on this, relaxing the definitions in the act to include corrupt behaviour.

It also broadened its scope to individuals who could be punished under the law to include, for example, organised crime syndicates or terrorist groups, and not just government officials.

“Building upon the Global Magnitsky Human Rights Accountability Act, on December 20, 2017, the president signed EO [executive order] 13818, in which the president found that the prevalence of human rights abuses and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity that it threatens the stability of international political and economic systems,” the US Treasury said in a statement on Thursday.

“The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuses or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.”

According to a statement from the US Department of Justice, South African and the US enjoyed “close collaboration on matters of mutual legal assistance”.

“Sanctions have a direct impact on the financial and private interests of affected individuals. Furthermore, these sanctions will ensure that companies or individuals are prohibited from conducting any business in the USA or with any American company worldwide,” it said.

Analysts believe the sanctions may have resulted from lobbying by President Cyril Ramaphosa, but they also questioned the timing of the action.

South African Ambassador to the US Lana Marks said in a tweet she had met with President Donald Trump on Wednesday to discuss her mission as ambassador.

“Many things in the works,” Marks tweeted about the meeting. It was unclear what she was referring to. 

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