[Joint House and Senate Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
COUNTERING OLIGARCHS, ENABLERS, AND
LAWFARE
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HEARING
BEFORE THE
COMMISSION ON SECURITY AND
COOPERATION IN EUROPE
U.S. HELSINKI COMMISSION
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
APRIL 6, 2022
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Printed for the use of the Commission on Security and Cooperation in
Europe
[CSCE117-13]
Available via www.csce.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
55-533 WASHINGTON : 2024
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COMMISSION ON SECURITY AND COOPERATION IN EUROPE
U.S. HELSINKI COMMISSION
SENATE HOUSE
BENJAMIN L. CARDIN, Maryland STEVE COHEN, Tennessee Co-Chairman
Chairman JOE WILSON, South Carolina Ranking
ROGER F. WICKER, Mississippi Member
Ranking Member ROBERT B. ADERHOLT, Alabama
RICHARD BLUMENTHAL, Connecticut EMANUEL CLEAVER II, Missouri
JOHN BOOZMAN, Arkansas BRIAN FITZPATRICK, Pennsylvania
TIM SCOTT, South Carolina RUBEN GALLEGO, Arizona
JEANNE SHAHEEN, New Hampshire RICHARD HUDSON, North Carolina
TINA SMITH, Minnesota GWEN MOORE, Wisconsin
THOM TILLIS, North Carolina MARC A. VEASEY, Texas
SHELDON WHITEHOUSE, Rhode Island
EXECUTIVE BRANCH
Department of State - to be appointed
Department of Defense - to be appointed
Department of Commerce - to be appointed
C O N T E N T S
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Page
COMMISSIONERS
Hon. Benjamin L. Cardin, Chairman, from Maryland................. 1
Hon. Steve Cohen, Co-Chairman, from Tennessee.................... 3
Hon. Joe Wilson, Ranking Member, from South Carolina............. 4
Hon. Roger F. Wicker, Ranking Member, from Mississippi........... 7
Hon. Sheldon Whitehouse, from Rhode Island....................... 14
Hon. Jeanne Shaheen, from New Hampshire.......................... 17
WITNESSES
Daria Kaleniuk, Executive Director, Anti-Corruption Action Centre 5
Scott Stedman, Founder, Forensic News............................ 9
Bill Browder, Head, Global Magnitsky Justice Campaign............ 8
Anna Veduta, Vice President, Anti-Corruption Foundation
International.................................................. 11
Shannon Green, Executive Director, USAID's Anti-Corruption Task
Force, and Senior Advisor to the Administrator................. 13
COUNTERING OLIGARCHS, ENABLERS, AND LAWFARE
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COMMISSION ON SECURITY AND COOPERATION IN EUROPE,
U.S. HELSINKI COMMISSION,
HOUSE OF REPRESENTATIVES,
Wednesday, April 6, 2022.
The hearing was held from 2:36 p.m. to 4:03 p.m., Room 562,
Dirksen Senate Office Building, Washington, DC, Senator
Benjamin L. Cardin [D-MD], Chairman, Commission for Security
and Cooperation in Europe, presiding.
Committee Members Present: Senator Benjamin L. Cardin [D-
MD], Chairman; Representative Steve Cohen [D-TN], Co-Chairman;
Representative Joe Wilson [R-SC], Ranking Member; Senator Roger
F. Wicker [R-MS], Ranking Member; Senator Richard Blumenthal
[D-CT]; Senator Sheldon Whitehouse [D-RI]; Senator Jeanne
Shaheen [D-NH].
Witnesses: Shannon Green, Executive Director, USAID's Anti-
Corruption Task Force, and Senior Advisor to the Administrator;
Bill Browder, Head, Global Magnitsky Justice Campaign; Daria
Kaleniuk, Executive Director, Anti-Corruption Action Centre;
Scott Stedman, Founder, Forensic News; Anna Veduta, Vice
President, Anti-Corruption Foundation International.
OPENING STATEMENT OF BENJAMIN L. CARDIN, CHAIRMAN, U.S. SENATE,
FROM MARYLAND
Chairman Cardin: Hearing will come to order.
It is my understanding that one of our witnesses, Bill
Browder, will be here shortly with Co-Chair Cohen. I assume
they are coming over from the House side, so they may be here a
little bit later.
I want to acknowledge Senator Blumenthal, who is with us, a
member of the Commission.
This hearing is one of a series of hearings that we have
had in regard to Mr. Putin and Russia's incursions into
Ukraine. We have had hearings dealing with the impact this has
on surrounding countries. We have had hearings to deal with
misinformation. We are going to have a hearing later this week
on the refugee and trafficking issues. This hearing is to deal
with confronting the oligarchs, enablers, and lawfare, which I
think is particularly important.
Earlier today we had a chance to meet with Khodorkovsky--
Mikhail Khodorkovsky, of course, who is very much familiar with
this subject. I think we had a chance to be briefed earlier on
some of these issues, and his perspective as to what is
happening with Mr. Putin. We all recognize that the corrupt
system in Russia has been the fuel that allows Mr. Putin to do
what he does. If he did not have the corrupt system, he did not
have the revenues coming in, and if he did not rob the people
of Russia of their resources, he would not be able to pursue
these types of campaigns. We also know that it cannot work
without enablers. There are people who might look like they are
in innocent positions that are enabling the corrupt system to
continue and the resources to be used as Mr. Putin has used
them in regard to his campaign.
We hope that as a result of today's hearing, we will have a
chance to understand this better. We recognize the oligarchs
are the appendages of Mr. Mafia's--of Mr. Putin's mafia state.
They use--what we like to say, they use our system against us.
When you look at Lawfare, you recognize that they have hired
some of the most talented people in the West to tie things up
in courts and exhaust those who want to challenge their way.
They are using our system against ourselves, and we need to be
a lot smarter in the way that we do this.
Mr. Abramovich and Mr. Usmanov are two examples of these
notorious oligarchs. Mr. Abramovich is highly influential in
the U.K., where he has been the owner of the Chelsea Football
Club, a popular soccer club. He controls a large swath of
investments, a stake in the Russian economy. Most notably he
has shares in Evraz, the Russian steel company whose materials
are used to make tanks. He recently obtained Portuguese
citizenship, ostensibly to evade our sanctions. Mr. Usmanov has
been called one of Mr. Putin's favorite oligarchs, who solves
Putin's business problems. Both live luxury lifestyles in the
West while helping to enable Russia's bloody invasion of
Ukraine and deny Russians their basic rights.
I welcome President Biden's focus on targeting the
oligarchs, disrupting their corrupt networks, and seizing their
stolen assets. The new KleptoCapture Task Force to pursue these
powerful corrupt individuals is a profoundly important
initiative. Already we have seen--we have seen seizures of
yachts and luxury properties, and we expect to see more to
come. Oligarchs are sure to fall back on lawfare, the abuse of
our courts to pursue their aims. Their stolen fortunes give
them the means to sue their opponents into submission and draw
out cases to such an extent that they can no longer be
completed. We have to fortify our system against lawfare, and
we hope that we can win this fight.
We should have no illusions about how difficult it will be
to root out this influence in our society. For two decades,
oligarchs have had license to loot the Russian state, launder
that money through an opaque financial framework, and hide it
in the United States and other Western democracies. The
financial sector in this country needs to be fortified to
defend itself against these types of improper use. I do applaud
the administration for establishing the task force, and
Congress. I want to acknowledge Senator Whitehouse's leadership
and work on this issue, to get beyond the shell companies and
the way in which oligarchs have tried to shield their assets
from being able for us to get control over it.
Yet, we need to do more, and we need to stop the lawyers,
accountants, and company trust formation agents who enable the
kleptocracy to continue as it is today. All must ask basic
questions of their clients to ensure that they are not
accepting tainted funds. These are some of the efforts that we
need to do. I was pleased to see President Biden announce
earlier today increased sanctions against Mr. Putin and Russia,
including individual sanctions. If that is going to work, we
have to be able to enforce those sanctions. They cannot hide
them in a different account or a different person. That
requires us to be a lot smarter in the way that we handle our
laws.
We have an excellent panel of witnesses today. We have a
large panel, so we are going to stick to the five-minute rule
so that everybody has a chance to not only present their
testimony but also respond to questions from members of this
committee. With that in mind, let me first recognize my
distinguished co-chair, the Congressman from Tennessee,
Congressman Cohen.
STATEMENT OF STEVE COHEN, U.S. HOUSE, FROM TENNESSEE
Representative Cohen: Thank you, Mr. Chairman and members
of the Commission. I want to thank you for calling this hearing
on this so important and timely topic. Many of the witnesses
have risked their own freedom speaking out on these issues
against Putin, and we know that can be dangerous. We thank you
for your courage and for coming here to inform us of your
thoughts and your experiences.
Mr. Putin and his oligarchs work together to help fund this
war machine and, with his enablers, they steal and oppress the
Russian people. The Russian people, all of the money they have
came from the Russian people. That should be wealth to the
people. It is unbelievable what happened.
Communism, bad, but they had the idea of giving money to
people who needed it. Now the subsequent Russian world is
taking it and keeping it for a few--just the opposite. Mr.
Browder, you were instrumental in the creation of the Magnitsky
Act, and that--Mr. Cardin championed that. I thank you for
that. Signed into law in 2012. As Putin's illegal war in
Ukraine drags on, Russian oligarchs have been at the forefront
of our national attention. Many have been sanctioned, but they
do not have that much influence anymore. Still, they should be
sanctioned. They are a critical component of the regime and
they often run Russian state-owned and state-influenced
companies--positions they gained, of course, through corruption
and through having Putin hand them that money.
In exchange for the lavish lifestyles that they live, these
oligarchs pledge their loyalty to the mid-level KGB agent who
rose to be--as a graduate became the president, prime minister,
president now again, currently overseeing Europe's biggest land
war since 1945. They turn the other way as Russian armies
continue to commit heinous war crimes against citizens of
Ukraine, the extent of which we are just beginning to see.
Oligarchs maintain their wealth with the help of enablers, as
has been mentioned, lawyers, et cetera, et cetera. I, along
with many of my colleagues here, co-sponsored the Enablers Act,
which would finally force those professionals that help them to
ask basic questions about the source of the funds for
suspicious clients.
In this unprecedented time of war, the U.S. and our allies
have sanctioned many individuals close to Putin, making it
harder for them to access their wealth. We must continue to
keep the pressure on. President Biden has unified our allies
and led the way with unprecedented crippling economic sanctions
and significant military defensive aid--but not enough
defensive aid and military aid. We need to give the Ukrainians
everything, because if they do not win we all lose, and it sets
the way for the rest of Europe to fall. It is no different than
the Sudetenland. We are experiencing it now, and we need to
recognize that fact.
At the end of the last year, it was published by the
administration, our strategy for countering corruption. They
have one. Last month's Department of Justice launched a Russian
oligarch task force, KleptoCapture, which works to identify
sanctions evasion and related criminal conduct. Fine and good.
The Helsinki Commission and the Counter Kleptocracy Caucus have
been working hard in this space as well. I need to recognize
Paul Massaro on our staff. He brought kleptocracy to my
attention. It is how I got involved. He has been a great leader
on this. He has been fantastic, and in fact, the first meeting
we had, like a reception to kind of launch the Kleptocracy
Caucus, was in a building on Pennsylvania Avenue overlooking
Trump Tower. [Laughter.] How prophetic. [Laughter.]
I introduced an omnibus package, the Counter Kleptocracy
Act, along with Ranking Member Wilson, which includes six bills
that would address and punish Putin's corruption system and
regime. The rest of what I have got here I think other people
have said or will say, and I will allow them to say it. I look
forward to your testimony, of the expert witnesses, and for
your continued courage, and for standing there with us today. I
yield back the balance of my time.
Chairman Cardin: Thank you. The ranking Republican member
from the House, Congressman Wilson.
STATEMENT OF JOE WILSON, U.S. HOUSE, FROM SOUTH CAROLINA
Representative Wilson: Thank you very much, Chairman Ben
Cardin and Chairman Steve Cohen, for holding this important
hearing today on "Oligarchs, Enablers, and Lawfare." Putin's
brutal murderous invasion of Ukraine has shaken the world to
the core. He has committed atrocities and war crimes in Ukraine
and leveled Ukrainian cities, all to fulfill the delusions of
Dictator Putin. Putin ordered the invasion of Ukraine because
Ukraine is a democracy. After all, it shows freedom from
oppression, and because it shows accountability over
corruption. This is the most back-and-white conflict in recent
memory.
Ukraine is defending itself from an aggressive, corrupt
tyrant, and must win. As you just saw, he is done something
absolutely remarkable. He has brought together Republicans and
Democrats as we have not been brought together for a long time.
Indeed, he is brought NATO together--the 21 countries of NATO
together. He has done what President Trump was trying to do to
help our German allies increase their defense capabilities, and
they have. Now they have doubled their defense capabilities.
Then the EU--I am very grateful to be the co-chair of the
EU Caucus. He has done something for the 27 countries that I
did not think could be done, and that is that the EU has
provided military equipment. With my Democrat colleague Brendan
Boyle of Philadelphia, we did not know the EU had military
equipment, and so how far we have come.
With the corruption of the political system by Putin we
need--and I am going to accelerate what I am saying and give a
full copy, with your approval, chairman. But--and this is
incredible--I want to quote President Biden. He is correct that
we have autocracies where they are ruling by the rule of the
gun in a worldwide conflict, not just--as Steve pointed out--
not just the Sudetenland or Donbas, but it is the rule of law
by the democracies and rule of a gun by the autocracies, and
indeed, I could go on.
I want to point out that I have got another big of
legislation. I have such faith in the Russian people, and that
is what they need to know. The world needs to educate them, and
for those who defect, particularly in the military and
diplomats, the persons in the Duma. If Russians will defect to
come to the aid of Ukraine, we would, in the bill I have,
authorize--if they bring over equipment to the people of
Ukraine--it would be pre-delivered. I had a nice conversation
with Speaker Pelosi about how helpful this would be. We would
not, the Senator, have to deliver it, Mr. Chairman. It would
already be there.
With that, I want to yield back. I look forward to the
witnesses.
Chairman Cardin: Thank you. Any member who wishes to put a
statement in the record will be made part of the record. Our
witnesses, your entire statements will be made part of our
record, without objection. If you will proceed and try to
summarize your testimonies in about five minutes, to allow for
our members to be able to ask specific questions. I think I
will introduce you individually, let you speak, and then
introduce the next witness since there are five witnesses.
Daria Kaleniuk is the executive director of the Ukrainian
Anti-Corruption Action Centre. I am particularly pleased that
she is with us today. We haave been working with Ukraine since
it regained its independence to make sure that it had the
institutions to fight corruption within its own country. It has
been a matter of domestic politics over several elections. It
has been a work in progress. I am glad that we have a person
who is a real expert on that area who can help us understand
how Ukraine itself is trying to protect itself from the
influences of corruption that we now see being the source of
funding that has allowed Mr. Putin to invade their country. You
may proceed.
TESTIMONY OF DARIA KALENIUK, EXECUTIVE DIRECTOR, ANTI-
CORRUPTION ACTION CENTRE
Ms. Kaleniuk: Thank you. Thank you for inviting me, Mr.
Chairman. I am honored to testify here.
I am running an anticorruption organization in Ukraine, and
during the last 10 years, we have been advocating for
anticorruption and rule of law reforms. On February 22, Mr.
Putin made a speech that was, in fact, a declaration of war on
Ukraine. He mentioned every single reform we were advocating
during the last seven years. National Anticorruption Bureau of
Ukraine, High Anticorruption Court, High Council of Justice. He
mentioned that to the extent that even average Ukrainians do
not understand and do not know that. It was clear to me at that
moment that Ukraine's successful story in fighting corruption
is the ultimate threat to Vladimir Putin and his kleptocratic
regime.
Two days after the speech, he started the war to punish us
for our decision to live in dignity and freedom. Today is the
42nd day of this war. Here is a picture of a six-year-old boy
from Bucha. He is standing near the grave of his mother in the
backyard of their house. His mother died of hunger. This story
is one of thousands of horrible atrocities Putin's army is
performing in my country. There is genocide happening now in
Ukraine and the entire world observes it as a reality show.
Let us think what has empowered Putin to become a new
Hitler of our time? Partially this is the complicity of the
West. Putin has two armies. One is visible. It operates in
Ukraine, 100 000 troops, heavy weapons, missiles, tanks, bombs,
and guns. The goal of this army is to eliminate Ukrainians and
destroy Ukraine state from the map. Another army is invisible,
unobvious. It has operated all across Western liberal
democracies for decades. This is the army of lawyers,
lobbyists, accountants, financial managers, real estate agents,
and PR consultants.
What do they do? They help to park billions of dollars
stolen from Russian people to the West. They help to disguise
their illicit origin by structuring complex financial
transactions, by hiding the beneficial owners behind them.
Using this money, they help to purchase the loyalty of the West
to Putin's oligarchs.
How big and powerful this army is? The estimated market
cost of just one superyacht of Roman Abramovich, a Russian
oligarch, is about $1.2 billion. His Eclipse superyacht. The
estimated budget cost of weapons Ukraine received from the U.S.
this year is about $2 billion. We are receiving now one and the
cost of a superyacht from Roman Abramovich to defend 40 million
people in Ukraine from the second-largest army in the world.
Imagine what could have happened if all these yachts, and
mansions, which are worth billions of dollars, could have been
seized and then used to arm Ukraine and to defend our freedom.
I believe these atrocities could have been prevented.
Russian oligarchs are Putin's Western wallets, and they
must be treated now as war criminals. They were empowering
Putin's regime during the last two decades and helped him to
finance the war against Ukraine. However, there are also
enablers in the West who made this possible. Lawyers who
silence investigative journalists for exposing corrupt
oligarchic networks. Western former politicians who enter
supervisory boards of Russia's state companies. Prestigious
international forums like the Munich Security Conference invite
Russian oligarchs. Top world universities that accept donations
from Putin's Western wallets. Real estate agents, who do not
dare to check the source of origin of funds invested into the
most expensive mansions in the U.S., U.K., and other capitals
of the world. The list could be continued.
This is obvious to me now, that there are two battlefields
of the Russian war against liberal democracy. One is in
Ukraine, and we urgently need help from the USA to arm
Ukrainians to win this battlefield. We need weapons. Another
one is in the West, where America is obliged to fight by
targeting Russian oligarchs and their enablers. I hope Congress
will pass the Enablers Act, which is a very important and good
start to this fight. It is just the beginning. It will be a
long war, both in Ukraine and in the West. We have to fight
this war together because it is a matter of who you are and
what you stand for. God bless America. Slava Ukraini! [Glory to
Ukraine]
Audience Member: Heroiam Slava! [Glory to the heroes]
[Applause.]
Chairman Cardin: Thank you very much for your testimony.
Our next witness, he is known better than any of us are known
so it is hard to introduce Bill Browder. I remember the first
time we had a chance to meet, it was during a Helsinki hearing
when we were trying to do justice for Sergei Magnitsky. That
was in the very early stages. We were facing obstacles from all
sides, from the members of Congress to the administration, and
Bill Browder never gave up. As a result of his efforts, we were
able, of course, to pass originally the Sergei Magnitsky
Accountability Act, and later the Global Magnitsky. I want to
acknowledge the extraordinary work of my late colleague John
McCain in getting those bills passed, and the work today of
Senator Wicker, who has been our partner no making sure that we
keep that statute strong and active.
Bill Browder did what he could to help Russia, and when it
was unsafe for him to be there, when his properties were
stolen, he did what anyone should do--hire a lawyer and try to
do it through the courts. As a result, his lawyer was
imprisoned, tortured, and killed--Sergei Magnitsky. He has
maintained his crusade for justice ever since. I mean, he is
truly a--I think a hero to many of us. He currently heads the
Global Magnitsky Justice Campaign, and is a founder and CEO of
Hermitage Capital Management. He spends his time mostly in
London but does a lot of traveling when it is safe for him to
travel. It is a pleasure to have Mr. Browder with us.
Senator Wicker: If my friend would yield.
Chairman Cardin: Oh, I would yield to my--Senator Wicker.
STATEMENT OF ROGER F. WICKER, U.S. SENATE, FROM MISSISSIPPI
Senator Wicker: Just subscribe to every compliment and
every statement of praise that Chairman Cardin has made with
regard to Bill Browder. I think we would probably be remiss in
not mentioning the contribution of Senator Lieberman in
addition to Senator McCain in the initial Magnitsky Act. Bill
Browder was a voice crying in the wilderness. It turns out, he
is become a voice heard around the world, and as legislative
body after legislative body and parliament after parliament
adopts the Global Magnitsky Act, it is a credit to the tenacity
expertise, and eloquence of our next witness. I just appreciate
my friend, the chairman, giving me a moment to say what an
honor it is to have someone who is made such a difference
globally on behalf of human rights and standing up against
kleptocracy around the world. Thank you, Mr. Chairman.
Chairman Cardin: Mr. Browder.
TESTIMONY OF BILL BROWDER, HEAD, GLOBAL MAGNITSKY JUSTICE
CAMPAIGN
Mr. Browder: Chairman Cardin, Co-Chairman Cohen, members of
the Committee, Senator Wicker, thank you for having me here
today. Thank you for these amazingly kind words. You know, the
work that we all did together on the Magnitsky Act made
Vladimir Putin very, very mad. Why did he get so mad? Because
the Magnitsky Act freezes the assets of human rights violators
and kleptocrats, and Vladimir Putin falls into both categories
very firmly. He knew that one day we were not just going to be
going after the murderers of Sergei Magnitsky, we were going to
be going after Vladimir Putin himself. He made it his single
largest foreign policy priority to repeal the Magnitsky Act.
He went after me personally. He went after me with death
threats. At the Davos World Economic Forum, Dmitri Medvedev was
asked by some journalists about the death of Sergei Magnitsky.
Medvedev said, yes, it is a shame that Magnitsky has died and
Bill Browder is still alive and running around. The general
prosecutor of Russia in 2018 said: That Bill Browder should not
sleep peacefully at night. Later in 2018, when Donald Trump met
with Vladimir Putin, Vladimir Putin asked Donald Trump to hand
me over.
Now, these are all things you would expect from Vladimir
Putin. What you might not expect is that there was a whole team
of Western enablers--of lawyers, investigators, PR firms--that
assisted Vladimir Putin in going after me. I would like to tell
one story, which is emblematic of this whole thing. This one
story is just one story. There are many other stories that I
could tell, and I am sure other people on the panel will tell.
There is--but when you hear this story I think you will
understand that these people were effectively operating as arms
of Russian--of the Russian secret police, here in America.
The story I want to tell you is about the Prevezon case.
When we started to investigate the dirty money that Sergei
Magnitsky was killed over, we found some of the money going to
a company called Prevezon, which was a Cyprus company owned by
the son of a Russian government official. We found some of the
money came to New York. The person who helped me find the money
was a former New York prosecutor named John Moscow. John Moscow
worked for the firm BakerHostetler. He helped me find the
money. I filed a complaint with the Department of Justice and
the New York attorney general. On the back of that complaint, a
federal forfeiture case was opened up and $20 million of
properties were seized.
As soon as the case was opened by the U.S. government, I
discovered that John Moscow had switched sides and had become
the lawyer for the people--for Prevezon, for the people whose
assets were frozen. He was hired by a woman named Natalia
Veselnitskaya. Natalia Veselnitskaya was reporting to the
general prosecutor of Russia. The one who said: Bill Browder
should not sleep peacefully at night. Then they immediately--
John Moscow, BakerHostetler, went on a rampage using subpoenas
from the courts to find out all personal information about me.
Find out my security details, find out my travel details, find
out which governments I was talking to, find out which law
enforcement agencies I was talking to, to find out the details
of my colleagues in the U.K. and Russia.
Of course, the moment that they found those details they
would be handed over to Natalia Veselnitskaya, Natalia
Veselnitskaya would then hand them over to Yuri Chaika. Then I
would be in grave danger, and I am not overstating the danger
that I was in, because I was warned by the Department of
Justice that there was a Russian kidnapping plot being plotted
against me.
We eventually got the Second Circuit Court of Appeals to
disqualify John Moscow and BakerHostetler for the obvious
conflict of interest. These people continued after they had
been disqualified from illegal work for BakerHostetler and
provided them with legal advice until the case was settled and
the Russians handed over $5.9 million to the Department of
Justice. Why did these lawyers compromise themselves in such a
dramatic and horrible way? Because they got $15 million or so
to do it. These people are willing to sell their souls for a
kopeck, I will say.
Let me just finish up very quickly by saying, what should
we do? One second, I know I am running out of time. What should
we do with these people? I have got a good idea, which is that
we should make a list of these types of firms that do this
enabling, the list should be put together by the U.S. Congress,
and there should be a recommendation to the U.S., government
not to do business with these firms going forward. They can
pick sides. They can decide they want to work for the bad guys.
If they work for the bad guys, then they should not get any
money from the U.S. government. I have got other
recommendations in my--in my presentation. I will leave it at
that. Thank you.
Chairman Cardin: Thank you very much for your suggestions.
We look forward to working with you on these different
recommendations. We will now hear from Scott Stedman, the
founder of Forensic News. When he was a college student he
started doing some investigative news reporting in regards to
the Mueller investigation of the Russian attack in 2016. He
became very interested in the subject, ultimately publishing a
book titled "Real News" chronicling the findings of the
Russians' contact with the Trump campaign. Now is studying to
become, I did not know this was a title, studying to become a
certified anti-money laundering specialist. I expect we will
have legislation in Congress to regulate that profession in the
not-too-distant future. [Laughter.]
With that, glad to hear from you, Mr. Steadman.
TESTIMONY OF SCOTT STEDMAN, FOUNDER, FORENSIC NEWS
Mr. Steadman: Chairman Cardin, Co-Chairman Cohen, and the
rest of the members of the Commission, thank you for inviting
me to speak at this important hearing at such a crucial moment
in our history. I also want to thank Paul Massaro for
organizing this hearing and for his incredible efforts in the
fight against corruption.
Journalists and anti-corruption activists around the world
today are facing an unprecedented volley of threats. An
emerging weapon of choice used by Russian oligarchs and their
enablers is the power of the legal system to not only punish
journalists for critical reporting but also threaten and
intimidate us into silence. Over the last 18 months, I have
lived the increasingly too common life of an investigative
journalist who splits his time between researching and writing
articles and tending to a defamation lawsuit.
I report on issues of national security, financial crime,
and corruption so I closely followed the investigation
conducted by the Senate Intelligence Committee into foreign
interference in the 2016 election. During that investigation,
it was reported that the investigators in the Senate were
interested in interviewing Walter Soriano, a man who was
initially described as a mysterious security consultant. Over
the following year, I produced six reports and one podcast on
Mr. Soriano along with my colleagues at my media startup,
Forensic News--Eric Levai, Jess Coleman, and Robert DeNault. We
unraveled Mr. Soriano's business relationships with power
brokers in both Russia and Israel. The articles, keeping in
line with the mission of Forensic News, were largely based on
hard evidence--corporate records, court documents, foreign
media reports, et cetera.
Well-placed sources in multiple countries around the world
supplemented this evidence. Here is what was established:
Walter Soriano is an enabler of the oligarchy. Mr. Soriano, who
is a former Israeli intelligence officer, has worked closely,
albeit covertly, for multiple Russian oligarchs. Namely, Oleg
Deripaska, a sanctioned Russian billionaire described by the
Senate as, "one of the Kremlin's most significant malign
influence operatives." With these unique, powerful connections,
Mr. Soriano has acted as a key intermediary between the Russian
oligarchs, including Mr. Deripaska and Dmitry Rybolovlev, and
intelligence and surveillance companies mostly based in Israel.
Before our last report was published, Tom Clare, who is a
top defamation lawyer representing Mr. Deripaska, wrote to me
and threatened legal action while also demanding, "You must
provide him with your sources and any documentation public or
otherwise." Mr. Soriano's U.K. lawyer Shlomo Rechtschaffen
emailed me and asked a question attempting to identify my
father. More recently, Mr. Soriano's U.S. litigation counsel
Andrew Brettler wrote to me threatening yet more legal action
if I did not pay a U.K. court for more money than I have ever
had in any bank account. Mr. Brettler said, "Should you ignore
this demand, you will be proceeding at your peril." This is
what lawfare looks like. It is designed to suppress, stall, and
scare critical coverage of the Russian elite and their
enablers.
Soon after the last article, we published Mr. Soriano filed
an expansive lawsuit in London against the corporate entity of
Forensic News and all of the contributors to the podcast and
the articles personally. For over a year, we contested the
jurisdiction of the lawsuit. I have never stepped foot in the
United Kingdom. Forensic News has no corporate presence there
and the vast majority of my readers are here in the U.S.
Perhaps more importantly, I am an American citizen. I went to
great public schools my entire life and I started and
incorporated my business in California, where I live. I expect
the First Amendment to apply to me. With a landmark ruling
handed down by the England and Wales Court of Appeals, I am now
forced to continue fighting this lawsuit from a man who has
made millions from the Russian oligarchy.
Let us study Walter Soriano as he represents the enabler
class that Russian oligarchs continue to hire to spread their
influence into the West. The very core of our rights as
Americans and freedom-lovers everywhere is the ability for
journalists, the truth seekers of our societies, to operate
without fear of intimidation or retaliation. Do not let the
oligarchy shoot the messenger. Thank you again for inviting me,
and I look forward to your questions.
Chairman Cardin: Thank you very much for your testimony.
We are now going to hear from Anna Veduta, who is the vice
president of the Navalny Anti-Corruption Foundation
International. I think we all know that Alexei Navalny is the
most prominent opposition leader in Russia, currently in
prison. We have in Congress taken action to try to stand up
with him, defend his rights, and his ability to speak out and
be freed from imprisonment. We very much welcome your testimony
and how you see the current circumstances of Mr. Navalny, but
also in Russia.
TESTIMONY OF ANNA VEDUTA, VICE PRESIDENT, ANTI-CORRUPTION
FOUNDATION INTERNATIONAL
Ms. Veduta: Thank you so much for having me here. I am
honored.
Putin's corruption kills, literally. It is not a figure of
speech. It never was. Alexei Navalny and his team have been
saying it for over a decade. Tragically, it takes poisoning
Navalny with a novichok nerve agent and him almost dying from
it, his imprisonment, and the outlawing of the opposition
movement in Russia for this message to be heard loud and clear.
It is even more tragic that it took a total invasion of Ukraine
and the deaths of thousands of innocent civilians for the West
to finally act with strength when the message had been clear
for so long. I am confident at this point all of us agree that
we are paying a terrible price for not acting sooner.
Yet, now is no time to regret, but to act to prevent
further atrocities. As one of the lucky few who corresponds
with Alexei Navalny regularly, through lawyers, I will quote
his letter from a few days ago, "Sanctions work. There is a
split in Putin's elites and it is our job to exacerbate and
enhance it." Repeat the words Leonid Volkov, my colleague, said
in these very walls last fall: Let us fight this fight
together. No matter what Russian elites are trying to signal
out of fear and despair, they are, for a fact, terrified and in
despair.
That is a good place to start. Sanctioning corrupt
politicians, oligarchs, and their family members, along with
enablers, proxies and nominal owners of assets is the most
straightforward way to make them suffer as beneficiaries and
supporters of Putin's regime. Extended family members are the
key here, but I need you to understand that that is not what
most people think when they hear extended family. Let me start
with Vladimir Putin, the war criminal. My colleagues'
investigation of his palace proved, on paper Putin owns next to
nothing but he has a distributed wealth system centrally
managed and funded by state-owned enterprises and oligarchs'
donations.
The legal owners of various assets that are believed to
belong to him are bound to Putin by ties of family and
patronage. They include Putin's relatives of various degrees of
remoteness, endless in-laws, and vassals whom he allows to run
companies dependent upon the state. A normal person would have
a finite number of, you know, extended family and relatives. It
is not the case for Vladimir Putin, who has at least three
families. Two daughters with his ex-wife Lyudmila--and I know
they have been sanctioned today, thank you for that. Long-
established partnership with Alina Kabaeva, and a daughter with
his mistress Svetlana Krivonogikh. All these people, their
relatives, dozens of Putin's remote relatives, benefit from the
regime he has established and nominally hold his assets.
Without sanctioning all these people you are letting Putin off
the hook.
It is not just Putin's family. Putin's corrupt wealth
management system includes the members of his security council,
the oligarchs, and all his closest team members. They all hold
things for Putin and their extended families hold things for
them. They may be personally sanctioned, but their actual
wealth structure allows them to keep assets and their family
members to use them.
Last but not least, this inhuman war would not have been
possible to wage if it was not for the propaganda machine Putin
built over two decades of his rule. The faces of propaganda
might not possess wealth comparable to oligarchs, but some of
them hold significant assets abroad. These are the people
directly responsible for the war crimes in Ukraine, and without
their lies, Putin would have no support for his war. Atrocious
lies, like NATO have been preparing the provocation of Bucha
for a long time. It is confirmed by the fact that President
Biden called Putin a "butcher." Butcher and the name of the
city "Bucha" are consonant.
Forty days into the war, the Mariupol massacre, and the
Bucha bloodbath. People responsible for these lies, people who
are poisoning Russian people with those lies, still can enjoy
spring break in Miami and take their kids to Disneyland. They
can also own property here and keep their money safe. I am
going to quote Alexei Navalny once again, "Warmongers must be
treated as war criminals." From the editors-in-chief to the
talk show hosts, and the news editors, all of them should be
sanctioned now and tried someday. Most drastic measures must be
taken to make the work of these people more difficult. From a
complete ban on the supply and service equipment to seizing
their assets in the West and putting them on visa blacklists.
The monstrous atrocities in Bucha, Irpin, and other
Ukrainian cities were committed not only by those who tied the
hands of peaceful people behind their backs, not only by those
who shot them in the back of their heads but also by those who
stood by and whispered: Come on, shoot. Give us some nice
material for our late-night TV show. Let me remind you this
quote comes from a man who spent more than a year behind bars
in the hands of the very same people who tried to kill him in
August 2020, with no guarantee they will not attempt to do it
again. He just had his sentence increased from two and a half
to nine years in maximum security prison. Alexei Navalny and
all of us on his team have no illusions. His term is a life
term. His or Putin's. Let us fight this fight together. Thank
you.
Chairman Cardin: Thank you very much for your testimony.
We will now hear from Shannon Green, executive director of
the USAID Anti-Corruption Task Force and a senior advisor to
the administration. She serves as the senior advisor to the
administration executive director of the Anti-Corruption Task
Force. She previously was the senior director of programs at
the Center for Civilians in Conflict, where she oversaw the
organization's global effort to recognize the dignity and
rights of civilians, prevent civilian harm, and protect
civilians caught in conflict.
TESTIMONY OF SHANNON GREEN, EXECUTIVE DIRECTOR, USAID'S ANTI-
CORRUPTION TASK FORCE, AND SENIOR ADVISOR TO THE ADMINISTRATOR
Ms. Green: Thank you. It is an honor to testify alongside
these guardians of democracy.
Autocrats do not just destroy democracy and the rule of law
in their own countries. They also stifle discourse, corroding
economic integrity, and interfering in politics in other
countries. They cannot do it alone. They rely on cronies,
oligarchs, and professional enablers to do their bidding. Yet,
there are powerful champions on the side of democracy, like
those serving on the Helsinki Commission and those we just
heard testify. These are the enablers of democracy.
As part of the Biden-Harris administration's historic fight
against corruption, USAID is launching bold new initiatives. I
will touch on each briefly. First, supporting reform
coalitions. Much of what we have learned about Kremlin
kleptocracy is due to the heroic reporting of investigative
journalists and dogged efforts by civil society to uncover the
truth. At USAID, we are investing in these change agents,
building their capacity and coalitions to expand wrongdoing and
demand reform. These actors have tremendous reach and
creativity. Over the past month, we have marveled as novice
internet sleuths and civil society experts tracked down
oligarchs' assets and pushed to impose costs on those
responsible for Putin's unprecedented and unprovoked assault on
Ukraine. USAID is helping make sure this evidence gets into the
hands of the departments and agencies that are responsible for
sanctions, asset freezes, and other economic countermeasures.
Second, confronting lawfare. Too often autocrats and
oligarchs escape accountability by filing defamation lawsuits,
not meant to be won in court but instead to bully journalists
into silence. For too long, those standing for integrity have
been outmatched. We aim to change that. At the Summit for
Democracy, USAID announced that we will establish a global
defamation defense fund to insure journalists against lawsuits
designed to deter them. This groundbreaking insurance system,
tentatively called Reporters Mutual, will not only allow
journalists to purchase reasonably priced legal defense
coverage but will also deter autocrats from suing them in the
first place, knowing that this tactic will not stop the media
from exercising their rights.
Then, third, helping our partners follow the money. Four
months ago, the administration released the first-ever U.S.
strategy on countering corruption. The strategy outlines major
new steps the U.S. is taking to prevent oligarchs from using
the U.S. and international financial systems to shelter their
ill-gotten gains. Of course, there is much more that we need to
do, especially to address the enablers. Professional service
providers--like lawyers, accountants, and trust and company
formation agents--are not required to know how their clients
came by their wealth. The administration is considering ways to
address this gap and will work with Congress to secure
additional authorities as necessary.
As the U.S. confronts these vulnerabilities at home, USAID
is developing new programs to take on kleptocracy abroad.
First, our Combatting Transnational Corruption Grand Challenge
will build new coalitions, particularly with the private
sector, and source novel tools, technologies, and approaches to
curb the corruption that strips entire countries of resources
that should be used for development. Second, our Global
Accountability Program will work in key countries to build
resilience against kleptocracy and illicit finance, including
by supporting beneficial ownership disclosure, integrity of
government contracting and procurement, and anti-corruption
investigations. Third, we are drawing lessons from the former
Soviet bloc where populations fed up with corruption have
innovative radical transparency and accountability measures. We
are developing guidance on this reform process to benefit other
countries trying to free themselves from the clutches of
foreign-backed kleptocracy.
In closing, progress against corruption often invites
backlash. Seeing his influence over Ukraine diminish, Putin
started an unjust and brutal war. Yet, as President Biden said
in Warsaw, Russian forces have met their match in the brave and
stiff Ukrainian resistance. He advised Europeans, "Be not
afraid." He assured the people of Ukraine, "We stand with you."
Well, Russian oligarchs and cronies have met their match with
the fearless reporting and bold advocacy of journalists and
activists. Anna, Bill, Daria, and Scott, we draw inspiration
and courage from your example. The U.S. government's message to
you, and all of your fellow change agents, is: Be not afraid.
We stand with you.
Thank you and I look forward to your questions.
Chairman Cardin: Thank you very much for your testimony.
I am going to yield my time to Senator Whitehouse.
STATEMENT OF SHELDON WHITEHOUSE, U.S. SENATE, FROM RHODE ISLAND
Senator Whitehouse:: Well, thanks, Chairman. I appreciate
it. I am delighted to have all these terrific witnesses here. I
want to thank, first of all, you, Chairman, for your leadership
on the Magnitsky Act. That is a Cardin project initially,
particularly with John McCain, our dear and common friend. I
also want to thank Senator Wicker, who had to step out for a
moment, who is my cosponsor in the asset seizure for the
Ukrainian Reconstruction Act, which would strengthen, Ms.
Green, the U.S. government response to these sanctions
opportunities and also allow the value of those assets, those
seized assets, to go to help Ukraine.
I am also working on finding a Republican co-sponsor for
the Enablers Act, to do as you have suggested, go after the
securities funds, the art dealers, the real estate folks,
everybody who helps these people hide assets--whether it is
yachts, or jets, or Lamborghinis, or Matisse. Wherever it is,
we want to make sure that there is transparency and we can hunt
out their ill-gotten gains. If anybody wants to find a
Republican senator to join in that I would be delighted to have
your--have your help. It seems pretty straightforward.
I wanted to ask about enforcement. It is a great thing to
have sanctions. It is another great thing to have a sanctions
enforcement environment in which the U.S. is dynamic, is
operating adaptively, aggressively, at high op-tempo, and is
moving with alacrity, even where the evidence is not complete.
Where there is a sufficiency of evidence to know that it is an
oligarch's yacht, we ought to go grab the damn thing, even if
we have not pressed through the Cypriot account and the Cayman
Islands trust or, hell, the South Dakota trust through which
all of the obscuring is done. We want to be able to make sure
that the operation that the Biden administration is standing up
for can and will run on whistleblower evidence, on intel out of
DNI.
For a long time, the State had a sanctions office and DOJ
what it called its kleptocracy initiative within the asset
forfeiture division. Treasury has always had FinCEN. We want to
see those combined, working in real-time as if this was an
ongoing game, in which when you find a piece of information you
can move that day on it and not have everything go into the
slow bin of careful analysis and be done later, and not suffer
death by interagency process, which is one of the worst fates
that can befall an initiative in the United States government.
We want to see the DNI actively supporting this effort by
providing ownership intel to it to support the decisions to go
and seize things. We want to make sure the Department of
Defense can ensure a safe operating environment for the seizure
in a foreign country for the folks who are going to go and
actually grab it.
As I said, I cannot wait to see police tape around mansions
in Belgrave. I cannot wait to see police tape around Penthouses
in Miami. We got one yacht, which on the one hand is a cause
for celebration, a first-ever, bravo by the administration. On
the other hand, really? This is the first time we have managed
to seize an oligarch's yacht in all the time we have known
about this. A huge step up in performance at the operations
level is necessary, again, with the same kind of op tempo and
drive that you see the military bringing to a combat
environment. We have all been to combat environments in
Afghanistan and Iraq. We have seen the rooms with the
television screens all over the walls that are in real-time
tracking the activities that are taking place in that combat
environment to make sure there is deconfliction, to make sure
that things are coordinated and happening effectively.
That is the spirit that needs to come to this. I hope, Ms.
Green, you will take that message back to the department and
encourage them to continue stepping up their game. This is part
of another Biden first, the democracy initiative, which for the
first time recognized the national security threat to our
country of this whole wretched, rotten, dark economy that
supports essentially all of the institutionalized evil in the
world, and crime, and terrorism. We support that institutional
architecture. We have got to withdraw support for it. It is a
national security imperative. Thank you.
Chairman Cardin: Thank you. Next time we will have you
down--[laughter]--we always--Senator Whitehouse has been an
incredibly inspirational leader. We have caucuses weekly, and
he has been motivating our caucus in this area for a long time.
I think a lot of the action you have seen in Congress and the
administration has been motivated by Senator Whitehouse-so good
work.
Congressman Cohen.
Representative Cohen: Thank you, Mr. Chair. I want to just
say, that for years I have thought Mr. Whitehouse should be
president. He still has my endorsement, but not as much good as
it did him the last time. [Laughter.]
Mr. Browder, you gave us one recommendation. You have
others in your paper, but I would like for you to tell us some
of the highlights. The top two other recommendations--number
two and three.
Mr. Browder: Thank you. Is this on here? The other one,
which kind of fits with our whole Magnitsky program, is about
visas. Now, of course, John Moscow and his colleagues at
BakerHostetler are American citizens, so we cannot ban them
from coming to America. In my five minutes of testimony, I did
not have a chance to rattle through the same stories that I
have in the U.K. One of the things that I have been discussing
with the people in the U.K. and here is to reciprocally ban
enablers from each other's countries. If there is a British law
firm or a British lawyer--a British lawyer who is been
consistently acting on behalf of Russian intelligence to
terrorize journalists in the U.K., the United States should ban
that lawyer from coming to America. Visa bans are highly
powerful. I think that if we were to do that, and if Britain
were to ban the John Moscows of the world, I think people would
think twice about it.
Number two on my list is that a lot of trouble came from
Russia--Russia has a mutual legal assistance treaty with the
United States. It is a treaty that exists as of today. They can
ask for assistance in legal matters, and vice versa. That
mutual legal assistance treaty should be canceled as soon as
possible.
Representative Cohen: Thank you.
Ms. Veduta, I am sorry I did not get to hear your testimony
because I wanted to. I had to go vote. It comes with the job.
Are you still Mr. Navalny's vice president of his anti-
corruption group?
Ms. Veduta: Yes. Not still, this is my new position
actually.
Representative Cohen: Oh, it is your new position. I got
you. How often do you have an opportunity to interact with him,
or is there any way to communicate with him?
Ms. Veduta: We actually can communicate with him through
the lawyers--through the letters that we get from his lawyers.
While typically it is possible to do it every weekday, the
weekends, though, are really a tough time for us all,
especially since the time that he went on a hunger strike,
because the lawyers cannot enter the prison building during the
weekend. We never know what happens to him. On weekdays, yes,
we can talk to him.
Representative Cohen: Your lawyers talk to him every day?
Ms. Veduta: They tend to, yes.
Representative Cohen: Yes. Has he ever been treated poorly
in prison, in a way--attacked, or anything like that, while he
has been in prison and or submitted to any particular
penalties?
Ms. Veduta: The tortures that they are putting him through
in this prison are a little bit different from what you could
think about torture. He is isolated. He is imprisoned in a
prison. Although right now he has his inmates, they are not
allowed to talk to him. That will not be the case after, you
know, this next verdict is empowered. Although we will appeal,
there is not much hope that you know, anything would come from
that. Yes, a life term, and he will be even more isolated with
this new term. As of now, he was not allowed to talk to anyone,
and no one was allowed to talk to him. You can only imagine how
it can be, to be in prison with no one to talk to.
Representative Cohen: How do you communicate his thoughts
and his opinions for the Russian people? What platforms do you
use?
Ms. Veduta: We still have his blog, which was used to--
well, as a tool for whistleblowing for a long time. It is a
stand-alone blog. We also have three YouTube channels which we
are trying to grow because, as you know, right now in Russia
the free media is extinct. As of last week, even the Nobel
Prize-winning Novaya Gazeta also was forced to stop the
operation because of the new laws in Russia, which forbid
calling the war a war and force you to call it a special
operation. As of today, there is no free press in Russia. The
only way to correspond the truth and the evidence of the
atrocities happening in this war is through YouTube because it
has not been blocked yet.
Representative Cohen: I have only got 20 more seconds. I
thank you.
Ms. Kaleniuk, I thank you for your testimony. I thank you
for your choice of wardrobe. It represents your country
beautifully. I agree with you, we should have put--I mean 1.2
billion compared to 2 billion is a joke. When history is
written it will not--it may not write well upon our actions in
acting as late as--dilatory as we have. Thank you for your
courage and for being with us. I yield back.
Chairman Cardin: Senator Shaheen.
STATEMENT OF JEANNE SHAHEEN, U.S. SENATE, FROM NEW HAMPSHIRE
Senator Shaheen: Thank you, Mr. Chairman. Thank you to each
of our panelists for being here. I would like to begin with
you, Mr. Browder. As a resident of the U.K., you had some sense
of how the U.K. has been willing to respond. Like the United
States, I think they have been slow, as has the rest of the
Western world, in responding. One of the areas now that they
have begun to do a better job in the U.K., one of the areas
that stands out is their overseas territories, which have been
outliers in allowing individuals to use those territories and
avoid other crackdowns in Britain itself. Can you speak to
that? I see Mr. Stedman also nodding on that, so maybe you
would speak to it as well.
Mr. Browder: It is an excellent question. If we actually
look at the amount of dirty money from Putin and his cronies
that are held by oligarchs around the world, the vast majority
of them are not--of the money is not held in the United States,
London, or Switzerland. Of course, we see the mansions and the
yachts. That is just a very small amount of money. The vast
amount of money is held in financial assets. They are held by
Cayman Island, British Virgin Island, Jersey, et cetera,
companies. As you mentioned rightly, those companies are all
British overseas territories, which is a problem.
If you actually were to go to the law enforcement agency of
the Cayman Islands, you would probably find, like, an office
with six people in it, or five people in it. They probably have
a lot of other things to do beyond policing these billions--
tens of hundreds of billions of dirty money that is coming into
their country. There is one very interesting thing that nobody
noticed, which is when the U.K. passed its Magnitsky Act, and
when the U.K. does other types of sanctions, it does not just
apply to the U.K. It applies to all of these overseas
territories, and all of them apply it uniformly.
For what it is worth, even though the United States has not
sanctioned Roman Abramovich, Britain has. All of his hedge
funds are held--or, not all of them--but I would imagine a lot
of them are held, according to reports, in Cayman Island
companies that are involved in--or, that are a part of hedge
fund investments. Those hedge funds are not allowed to send in
money, receive money from him, et cetera. That money is frozen.
In spite of the fact that there is no enforcement in these
places, the fact that they are part of Britain, and Britain is
acting appropriately, and Britain is sanctioning people, means
that a lot of this stuff is getting caught in this new
sanctions regime. If we were to actually look in terms of
chasing down the assets going through these structures, et
cetera, they are all highly obscured. There is no public
registry. There is no ownership, and there needs to be a lot of
reform done before the situation is ever going to be
satisfactory.
Senator Shaheen: Do we need to get at that by going after
the laws? By trying to get Parliament to address that, just as
we got to try to get Congress to look at some of the more
obscure laws? Or is there--or is it the enforcement piece that
is the most critical?
Mr. Browder: There is everything. At the moment, there is
no public register. If you have a U.S. company, for the most
part, I believe, you can actually look and see who owns that
company. Same thing with a British company. If you have a
British Virgin Islands company, it is secret. Nobody can look
behind and see who owns it. That cannot exist. That is absurd.
That needs to be changed. The British government has promised
to change it for a long time. There are timetables that keep on
slipping for it to change. I think it would perfectly
appropriate for the U.S. Congress to--you do not have to even
go through the government. Write a letter directly to the
British government. They will be sensitive to it. Say, why are
the--why is there no--why have you not created public
disclosure of ownership in these offshore territories? We are
disappointed with you.
Senator Shaheen: Thank you. Mr. Stedman, do you want to
speak to that as well?
Mr. Stedman: Yes. I wanted to agree with Bill and disagree
with Bill on one point. Yes, when we get into the off-shore
jurisdictions, like the British Virgin Islands, Malta, and
elsewhere, we run into a dead end, especially as an
investigator--investigative journalist, like myself. We also
have to look inward. Increasingly states in the U.S., like
South Dakota, and Nevada, their secrecy laws that are
obstructive to any investigator. We can apply a legislative fix
here internally that would solve a big problem.
The other point I wanted to make is that we need to focus
on these registered agents that register the companies and then
wash their hands and say: I have nothing to do with the
company's business and I have no legal obligation to follow
where this money is coming from or what it is being used for,
and that is--
Senator Shaheen: They are lobbyists, essentially?
Mr. Stedman: I am sorry.
Senator Shaheen: They are lobbyists, is that what you are
talking about?
Mr. Stedman: No, they are company formation agents.
Sometimes they are lawyers. They set up dozens or hundreds of
LLCs in places like South Dakota, Nevada, other states,
Delaware, in the U.S. I think there need to be requirements for
these kinds of people to know what their LLCs are doing. Sure,
they are the registered agent on the filing for the company,
but under current law, they have no obligation to investigate
where the money is going through this LLC. I think we can make
a big difference there.
Senator Shaheen: What would you--what would you have--how
would you change current law to address that?
Mr. Stedman: I think the Enablers Act is a great start. I
think applying the kind of anti-money laundering laws that we
have with the financial system, I think they need to be
extended to these company formation agents, to these lawyers
that are facilitating these shell companies, here in the States
and elsewhere, that are being laundered--money is being
laundered through them by the millions and billions, even here
in the U.S. The scrutiny on those kind of people is, I think,
an area where we can really improve.
Senator Shaheen: Thank you. Thank you, Mr. Chairman.
Chairman Cardin: Congressman Wilson.
Representative Wilson: Thank you very much, Mr. Chairman.
Again, I am grateful that Republicans and Democrats are truly
united for the people of Ukraine. President Biden is correct,
we are in a conflict between democracies with the rule of law
versus the opposed to the autocracies with the rule of guns.
The people of--I believe, of Ukraine will win. They will save
the people of Georgia, the people of Moldova. They will save
ultimately the people of Taiwan from the Communist Party of
China. Then we will also save the people of Israel from
vaporization by Iran. We will promote India, led by Prime
Minister Narendra Modi, an extraordinary champion of the
world's largest democracy.
With that in mind, for Mr. Stedman, I appreciate your
courageous journalism that has focused on the corrupt
oligarchs' network. As a journalist, what are your main
takeaways on how oligarchs operate, and how can Congress
protect journalists who investigate oligarchs?
Mr. Stedman: Thank you for the question, Senator. I think
broadly this discussion is a good starting point. We need to
focus on the enablers. Speaking of the legal threats that
journalists like myself and others are facing, there need to be
some changes to the way that these lawsuits are dealt. For
example, my case is in the U.K. I have never been there, but
the action has been brought there. There needs to be a way for
journalists in the U.S. to apply to a judge at the beginning of
the process to have these lawsuits deemed as abusive and as
SLAPP lawsuits because, I think it was Anna or Shannon, who was
saying that the process of the lawsuit is the punishment.
I have spent 18 months with this lawsuit and we are just
now clearing the jurisdictional hearings. It is going to be
another year at least--a year or two. We have to have a hearing
on the meaning of the words that are complained before we can
even get to the trial. The process is the punishment. I am
spending--and journalists in my shoes are spending tens of
thousands of dollars to fight these lawsuits. There needs to be
a way at the beginning of the process to maybe alleviate some
of that stress from foreign lawsuits.
Representative Wilson: Well, we appreciate your efforts.
Director Kaleniuk, the American people are so impressed by
the people of Ukraine. It is just every day we see heroism, and
you have some of your colleagues here today that are just
incredible. To see the families that will bring their families
to Romania or Slovakia, to Poland, and then go back to stop the
imperialists that are proceeding, it is just--again, we are
just so grateful for your hard work. Additionally, the Anti-
Corruption Action Centre has pushed hard for sanctions against
Putin's cronies. Are the sanctions against oligarchs effective?
Have we identified the right oligarchs to be sanctioned?
Ms. Kaleniuk: Thank you, Senator. Actually, before
aggression, before the war, we started the campaign to blow up
Putin's wallet. We started mapping that Western access of Putin
oligarchs. Not all oligarchs are sanctioned yet, even in
America. Roman Abramovich was not sanctioned, and it is
important to synchronize these sanctions also with other
countries, specifically the EU. We have to do something with
the European Union because most of the assets are hidden
actually there--in Germany, in France, in Italy. We are just
hearing, you know, some peanuts information about first
seizures, but it is top of the iceberg, and the sanctions
regime of the EU has to be increased.
As well as visa bans for the EU, for family members of
these oligarchs, is probably even more hard for these oligarchs
than, say, economic sanctions. I think that America could lead
in strengthening the sanctions regime of the EU and also in the
U.K. Sanctioning of oligarchs should include visa bans and
travel for them--and travel bans for them, but also their
family members. It is also very true for America. If you
sanction an oligarch, it is a must-have to sanction all his
family members. Then I would, to reflect what Senator
Whitehouse said, it is important to follow up on how actually
these sanctions are being implemented. I have seen in my
practice many examples when after sanctions they are just
reregistering their business on some--on their wives, on other
family members, and sanctions, you know, can be bypassed. You
have to sort it out. Thank you, Senator.
Representative Wilson: Well, thank you very much, and not
another question, but I just want to thank Mr. Browder. I think
your book is going to help identify kleptocrats, and then we
can work to really--bipartisan, to indeed make a change to go
after the kleptocrats and oligarchs and people who are
benefitting from the misery of people around the world. I yield
back.
Chairman Cardin: Thank you. Well, it is clear that we want
to and must win the war. To win the war, yes, we have to give
the Ukrainians all of the weaponry they need in order to defend
themselves so that we can win on the battlefield. It is more
than winning just on the battlefield, as we have been pointing
out. We have seen the propaganda that Mr. Putin has used within
Russia. We have to be able to counter that because we need the
support of the Russian people so Russia moves in a different
direction than Mr. Putin has led them. The sanctions regimes
are critically important to take away the support system for
this type of governing and to also make it clear that there
would be a price to pay. I think the enforcement issues are
important, and we have talked about that.
Clearly, we have to do a better job, first, on the net of
enablers. I personally think the sanctions statute is probably
broad enough to cover that today if it is used in that way. We
do know that there are professional responsibilities that need
to be strengthened so that professionals know there is going to
be accountability if they participate in this type of corrupt
regime. We have not tightened our laws enough on that, Ms.
Green. I think that is one of the issues that you said you are
going to be going after that. If you need additional authority,
please let us know. I would hope that we could work in unison
with you. I support Senator Whitehouse's efforts to make sure
that our laws are strong enough to make sure that all these
enablers are covered under that definition.
Then we have the lawfare issue, which is very complicated.
When we deal with our democratic institutions and our rights of
a democratic society, and we see those that are trying to bring
down our democracy using our democratic institutions against
us, it is a lot more nuanced as to how we are going to have to
deal with that issue. We need to deal with it. Because of what
you all have suffered through, those of you who have been
victimized by the system and then the lawfare challenges that
have not only been expensive but dangerous the way they have
been used, we have got to figure out a way. Again, it may deal
with professional standards, because lawyers are prosecuting
these cases they should have some responsibility regarding the
way that they conduct their activities.
Ms. Green, I am going to ask you about one other part,
because part of this, to me, is accountability. One of my
greatest worries is that there is a resolution on the
battlefield, the Russian troops go back to Russia, and Mr.
Putin goes back to doing his business until the next time he
decides to take out his military because of whatever reasons he
thinks it is needed for domestic politics or his satisfaction.
That is, he has to be held accountable. You have talked about
providing help. At this time, the only entity I see on the
ground in Ukraine gathering evidence for war crimes are the
Ukrainians themselves.
I do know the strong statements that have been made by
President Biden and others about Mr. Putin being responsible as
a war criminal, but I do not see any of the international
organizations that are responsible for accountability of war
crimes actually engaged in an aggressive way to make it clear
that there will be accountability. Is there something that we
should be doing stronger at USAID or in the government to get
this process moving, to make it clear it cannot be compromised
in any settlement?
Ms. Green: Mr. Chairman, thank you for that question. We
are thinking about accountability on two levels. One, when it
comes to sanctions and asset freezes and these confiscations,
that is about imposing costs right now on the people that we
can, when we can, and to make it hurt as much as we can. That
is sort of the day-to-day accountability. At the same time,
there are really robust efforts going on within the U.S.
government and international community on accountability. The
U.S. government has been spending a lot of time internally
making sure that we are supporting international accountability
mechanisms, including the Commission of Inquiry.
In particular, USAID's role is that for a long time, we
have had Ukrainian organizations documenting abuses in the
Donbas and Crimea. These organizations are now shifting so that
they can document those abuses and gather evidence at a really
high level of standard to feed into future accountability
processes. I think we absolutely share your concern about
accountability. There is an ongoing, very intense focus on that
issue. I will most certainly take back to my colleagues the
interest and concern that those efforts be deepened.
Chairman Cardin: I just implore us to be there to preserve
the evidence. That is something we can do directly. We do not
need the international organizations to be activated to do
that. We had the wherewithal through our experts and resources
to be able to help in that regard. Secondly, I think we need to
energize the international organization--recognizing there will
be opposition from Russia--to make it clear that their
expertise needs to be able to document what is happening so
that we do not lose the fresh evidence that is necessary for an
easier prosecution. It is not going to be difficult here, we
have so much evidence. We need to make sure that is preserved.
One last question, I think I will ask the panel. That is,
one of our strategies is that Russia should not be
participating in many international organizations. They have no
legitimacy. We took steps this past week to deny Russia shared
information, that we were sharing on Treasury. That has been
cut off by the United States. There are some international
organizations that have taken action already. Are there
additional steps that we should be taking? I am thinking about
Interpol and that issue. Are we satisfactory--are we satisfied
that Russia cannot utilize these international organizations
under the current circumstances? Have those steps been taken,
or do we need additional steps to be taken in that direction?
Yes.
Ms. Kaleniuk: Thank you, Senator. There is such an
organization, the Financial Action Task Force. It is the
intergovernmental organization that is actually setting up the
standards for anti-money laundering. Russia is apparently a
member. I believe that Russia has to be kicked off this
organization and Russia has to be blacklisted by FATF, and
blacklisting by FATF means that actually Russia will be cut
from financial markets, and it will be very significant, harsh
sanctions against the entire Russian economy. I would strongly
advise to do that. Thank you.
Chairman Cardin: Mr. Browder.
Mr. Browder: That is an excellent suggestion, and it is
sort of similar to SWIFT, which if they are blacklisted then
nobody can do business with them. I just want to bring back the
Interpol point. I know that the U.K., the United States,
Canada, and various other countries, are--have tried to kick
Russia out of Interpol. That is just an absolute necessity. You
cannot have a country that is going and murdering people
chasing their enemies abroad. There is one further step the
United States, Great Britain, and the EU can take in that
regard, which is that we fund Interpol.
Interpol is sort of like the United Nations, where at the
beginning of this whole conflict a Russian person was allowing
a Ukrainian to speak about this. It is the same type of thing,
where Russia is a member of Interpol and there are lots of
other terrible non-democratic countries that are also members
of Interpol. The people who pay for Interpol have a--have a big
sway in this whole thing. I think that it would be perfectly
appropriate to call on the U.S. government and our allies to
basically threaten the funding of Interpol if Russia is not
expelled.
Chairman Cardin: Thank you.
Senator Shaheen.
Senator Shaheen: Thank you, Mr. Chairman. I do have another
question that I would like to ask of Ms. Veduta. Because it is
been really interesting to me to watch the news reports coming
out of Russia, and the ability of Vladimir Putin to totally
control the messaging that goes to the Russian people. At least
in terms of the reports that we are getting, to see the
increase in their support for Putin and support for the war in
Ukraine. I wondered if you could talk about how that affects
your ability to deal with Mr. Navalny and the ability, through
the work that you all have been doing with him, with the
Russian people.
Ms. Veduta: Russia is a big, magnificent country.
Fortunately, it does not consist only of people who support
Putin. I would actually warn you to be very cautious about
those reports you get about the, you know, enormous support of
Russian people for the war, because you should understand that
when just saying the word "war" can cost you 15 years in
prison, you are not likely to tell the truth to the responders,
even if they are asking--to the pollsters--I am sorryif they
are asking you. I mean, can you imagine, like in a basically--
yes, basically fascist state, when someone from the--affiliated
with the government would, you know, call you and ask: Do you
support President Putin? You are not to say no, of course not.
You are not to say, and so, I mean, I would be very cautious
about that.
We still see a huge number of support, as I said. We do
have those YouTube channels where we try to broadcast the truth
show the atrocities and show the real nature of what is going
on in Ukraine. You know, your viewership--well, the Russian
number of it, is constantly growing. People are seeking the
future, and as I said, the whole independent media has been
just basically canceled. People turn elsewhere for the truth.
They are still in very huge need of that truth because, yes,
these are the lies--the poisonous lies they can only get from
propaganda.
This propaganda is specifically aimed at people isolated,
people who are not supporting the war, who are not supporting
these atrocities, specifically making them feel isolated. Like
they are the only people, and the rest of the world just, you
know, approves. That is not true. Yes, some people approve, and
from the bottom of my heart, I am so sorry that it came to
that. This is not the most of the population of Russia. Please
do not think that this is like that now. There is Alexei
Navalny. There are a lot of people who support Alexei Navalny.
Now we will not stop our work for the sake of these people and
the sake of Alexei Navalny. nThank you.
Senator Shaheen: Thank you. Well, I hope you will share
with Mr. Navalny how much support he has in the United States
and here in Congress.
Let me ask another question for you or others. One of the
things that the Belarussian opposition activists have been very
successful at is getting information through social media,
YouTube, and other channels about what is going on in the
country. Do you see that kind of effort in Russia as well?
Ms. Veduta: Well, there are a lot of--as I said, like,
because the independent media has been suspended, has been
canceled, there are a lot of journalists who basically went
abroad. Well, and then, you know, fellow European countries,
they were kind enough, you know, to host, for example, my
colleagues from the Anti-Corruption Foundation, because we are
based in Lithuania now. I mean, the main office. A lot of
journalists have been exiled in Russia, and they are trying to
do the same that we are doing with our YouTube channel. They
are trying to rebuild what has been taken from them, like, for
example, TV Rain and other journalists who launched their own,
you know, solo projects for the very same reason, actually:
Just to, you know, to fill this void. Because there is a void.
Because--and to your previous question, I mean, if there
was such a huge support for the war, why go to these, you know,
extreme measures? Why just, you know, kill off free media? Why
impose those laws that will, you know, send you to prison for
15 years just for one word, for the word "war"? I mean, like,
this does not signal support, to me. This signals despair, to
me. Yes, a lot of--a lot of effort is trying to be, you know,
done now. Of course, with all the obstacles, and with all the
pressure it is more difficult than it ever was. It does not
mean that we are going to stop.
Senator Shaheen: Thank you. Thank you, Mr. Chairman.
Chairman Cardin: We have been asked by members of the
Commission that there be questions for the record. If you do
not--if you all would cooperate I am going to give you until
April 15 for questions for the record. If you could respond for
the record, we would appreciate that very much.
Senator Whitehouse: Mr. Chairman, my question for the
record would be to simply ask for your reaction to my comments
regarding the effective operationalization of our sanctions
regime. What would you like to see the capability of the United
States government be as regards quickly being able to spot an
asset, act on that asset, seize the asset, and litigate later?
We have got plenty of time to litigate over who owns it. I
would love to see a situation in which the oligarch shows up to
say, that is actually not my yacht. [Laughter.] In which case,
the obvious question is, then why are you here? The equally
good--the equally good question is the person who comes and
says: That actually is my yacht, not the oligarch's. Then you
have a chance in a court with evidence to actually ask
questions to prove the ownership and where the money came from.
I think at the end of the day, what we will find is that nobody
will really contest the seizures because we are right. If we
are not operating fast, at a real-time tempo, then we are going
to miss a lot of opportunities. We have to have that
capability. We got to treat this as serious, rapid-fire, high-
tempo stuff. What do we need to get there? That can be a
question for the record, so you all have a chance to reflect on
it and write recommendations by--what was the date, Chairman?
Chairman Cardin: A week from Monday. I would say April 15.
Senator Whitehouse: Thank you very much, Chairman.
Chairman Cardin: It is a date that you all should remember.
April 18 is tax day this year because of the district.
Congressman Cohen?
Representative Cohen: Thank you. Just if you all do not
know Senator Whitehouse, he represents Newport, Rhode Island.
He knows a lot about yachts.
Chairman Cardin: With sincere thanks, I thank all of our
panelists not just for your participation in this hearing, but
for what you do every day to advance freedom and your own
personal commitment to doing the right thing. You inspire all
of us. We are all inspired by the people of Ukraine their
courageous defense of their country and their inspirational
leader. You all also provide us a great energy to pursue
justice here in the United States. Thank you all for your
testimony.
With that, the Commission will stand adjourned.
[Whereupon, at 4:03 p.m., the hearing ended.]
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