How cases of Paul Manafort and Sergei Magnitsky are linked: money laundering through Cyprus

The indictment this week of former Donald Trump presidential campaign chairman Paul Manafort and his aide Richard Gates, runs to 31 pages.

Much of it reads like a bank ledger, listing dozens of wire transfers both men allegedly made over several years, moving millions of dollars into the United States without paying taxes. Most of those wire transfers came from roughly a dozen bank accounts in Cyprus.

For anyone familiar with the money-laundering tale uncovered by Russian lawyer Sergei Magnitsky, that’s an interesting coincidence. The financial fraud case he discovered in Moscow in 2007 also saw millions passed through bank accounts in Cyprus.

“Cyprus is, effectively, the money-laundering country of choice for criminals from Russia,” says U.K. hedge fund manager Bill Browder. “And the reason … is because the Cypriot authorities turn a very active blind eye to the money-laundering.”

Magnitsky was working for the fund manager when he discovered several of Browder’s companies had been effectively stolen by Russian criminals with ties to the country’s judiciary, netting them $ 230 million US ($ 293.2 million Cdn).

A CBC News investigation earlier this year showed some of that money later flowed through bank accounts that tied back to Canada. It’s still not clear if any of the people who received the money here knew it may have originated with a brutal crime in Russia.

Paul Manafort and Sergei Magnitsky

Paul Manafort, left, is accused of funnelling millions through Cyprus to the U.S., avoiding tax. The fraud uncovered in Russia by Sergei Magnitsky, right, took a similar route. (Getty Images/Hermitage Capital)

Magnitsky was jailed by some of the very people he was investigating and died in prison nearly a year later.

“There are no real money-laundering investigations that have ever happened in Cyprus to my knowledge,” Browder told The Investigators for this week’s program (Saturday at 9:30 p.m. and Sunday at 5:30 p.m. on CBC News Network).

“And in fact, we have evidence to believe that the Cypriot authorities are effectively in league with the Russians in a number of these situations,” he said.

This week, the head of Cyprus’s anti money-laundering unit Eva Papakyriacou, dismissed Browder’s criticisms as annoying and untrue, according to a report on the Cyprus Business Mail website. It also reported the U.S. has signaled an interest in interviewing some bank officials in Cyprus in relation to Manafort.

Magnitsky widow and son react to the passing of Magnitsky Act in Canada8:04

But beyond the spectre of money-laundering, and the apparent use of Cypriot bank accounts to do it, there’s another element that links the stories of Manafort and Magnitsky.

Angered by the U.S. government’s decision in 2012 to pass the Magnitsky Act, seizing the U.S. assets, and barring the travel of Russians connected to his death, Russian President Vladimir Putin retaliated by cancelling the pending adoptions of Russian children by U.S. families.

That adoption issue was part of the now much-scrutinized meeting last year in the office of Donald Trump Jr. in New York’s Trump Tower.

The Russian lawyer who attended the meeting was apparently there to encourage Trump Jr. to convince his father to repeal the Magnitsky Act if he won the presidency.

Cda Magnitsky 20171101

Sergei Magnitsky’s widow Natalia, left, and son Nikita were in Ottawa Wednesday, praising Canada’s passage of the Magnitsky Act. ‘Thank you very much to everybody who took part in the creation of this law,’ she said. (Adrian Wyld/Canadian Press)

How far Russia was willing to go to ensure that would happen is now part of the focus of U.S. investigators looking into possible Russian interference in the 2016 election. One of the people in the room for that meeting was none other than Paul Manafort, then still head of Trump’s election campaign.

“It is a bit strange to think that my issue, and the Magnitsky issue, has sort of become front-and-centre in the entire Russia-Trump, election interference discussion,” Browder told CBC News.

Putin’s personal money

But why would Putin be so concerned about repealing the act? Browder believes he knows why.

“He hates it because it affects him personally. It affects his personal money. His net worth. He thinks that his money will eventually be frozen under the Magnitsky Act.”

Browder has sought the spotlight in an international campaign to bring those responsible for Magnitsky’s death to justice. The Russian government has taken a dim view of his efforts.

In an attempt to turn the tables, the Russian government posthumously convicted Magnitsky, accusing him of engineering the very fraud he had found, and convicted Browder in absentia, for the same thing. It has several times tried unsuccessfully to get Interpol to return Browder to Russia to serve a prison sentence.  

That’s an explanation flatly rejected by most Western countries. Since the U.S. passed the Magnitsky Act, Estonia has followed, the U.K. has passed a version of it, and Canada became the latest country to approve a Magnitsky law earlier this month.

“It’s been a hard, long struggle to get it done”6:03

Passing Magnitsky Act ‘opens the floodgates’ for other countries7:38

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