A new law, modelled on a controversial American act, gives the Foreign Affairs minister extraordinary powers to impose travel bans and financial sanctions on foreigners. By Brian Toohey.
The unfettered power of Australia’s new ‘Magnitsky Act’
Before anyone can be punished for a serious crime under Australian law, proof of guilt usually has to be established in a court. That changed last year. On December 2, 2021, Foreign Affairs Minister Marise Payne announced that parliament had expanded her powers to make rulings against foreign individuals and entities believed to be complicit in malicious cyber activity, serious human rights abuses and serious corruption.
As minister, Payne can punish any alleged offender without going near a court. She can impose targeted financial sanctions and travel bans and enforce exclusions from financial services by “listing” them on a register held by her department.
The new legislation, called the Autonomous Sanctions Amendment (Magnitsky-style and Other Thematic Sanctions) Act 2021, replaces a more limited 2011 act whose title did not mention Magnitsky. The new law was welcomed by all sides of politics and the media. “Magnitsky” references the Magnitsky Act introduced in the United States in 2012 after a long campaign by American hedge fund manager Bill Browder, who claims one of his Moscow employees, Sergei Magnitsky, was wrongly imprisoned and murdered by Russian police.
The US law was confined to Russians and allowed the government to freeze assets and prevent Russian officials from entering the country. In 2016 , the US passed a new law, the Global Magnitsky Human Rights Accountability Act, that applies to corruption as well as human rights abuses but not malicious cyber attacks. It does not apply to the many violations of human rights committed by the US around the globe, nor acts of corruption by US corporations. The US Treasury secretary imposes the sanctions in consultation with the secretary of state and the attorney-general, as well as the chairs of several congressional committees.
Britain, Canada, Estonia, Gibraltar, Jersey, Kosovo, Lithuania and Latvia have adopted Magnitsky-style laws without having his name in the title. In 2020 the European Union adopted the European Magnitsky Act, which has global application. In broad terms these other versions function in the same way as Australia’s act, except they don’t include malicious cyber attacks in the criminal behaviour covered.
Australian parliamentarians strongly pushed for the introduction of a law with Magnitsky in the title, after being influenced by the US acts and lobbying from Browder.
The Australia Institute’s international and security analyst, Allan Behm, is concerned that “identifying Magnitsky in the title of the act is to give quasi-legislative legitimacy to Magnitsky himself, whose provenance and relationships with senior Russian officials was at least ambiguous”.
Behm questions why we are getting into a matter involving Russian officials when “crooks of all kinds exist around the globe”.
The Saturday Paper asked the Department of Foreign Affairs how it’s possible to know the source of a malicious cyber attack, noting that WikiLeaks released a vast collection of CIA documents in 2017 revealing it can make it appear that a hack came from a particular source when the CIA is the real perpetrator. A department spokesperson did not address this issue.
The spokesperson said that before making a listing the minister has to be “satisfied that a person or entity has been complicit in a significant cyber incident. Whether this criteria is met will depend on the circumstances and all the evidence available.” A suspect can’t present any evidence to the Foreign Affairs minister before being sanctioned. In cyber cases, the minister will rely predominantly on secret information, provided by government agencies.
In recent years, the mainstream media has increasingly relied on intelligence that is later exposed as false. An American journalist, Glenn Greenwald, among others, has reported many examples. In 2020, parliament’s joint standing committee on foreign affairs, defence and trade recommended an independent body should advise the Foreign Affairs minister on who is to be sanctioned. The Morrison government dismissed this proposal because sanctions are a “foreign policy tool” for the government to use with flexibility.
The government agreed to allow anyone who is listed to subsequently apply to the minister – the same person who listed them – to have the listing revoked or to seek a judicial review of their listing.
Anton Moiseienko, a law lecturer at the Australian National University, points out that the parliamentary joint committee on human rights noted the “extraordinary amount of discretion renders judicial review nugatory because there is no standard to measure the government’s decision against”. Tass Liveris, the president of the Law Council of Australia, says the council has serious reservations about the extension of the 2011 autonomous sanctions regime to cover Magnitsky-style laws that “lack significant safeguards necessary to ensure that the sanctions are reasonable, necessary and proportionate”.
Minister Payne argues the targeted nature of the new law is better than previous sanctions applied on a countrywide basis. But Australia has a poor record on corruption and human rights. The Morrison government refuses to establish a federal corruption commission. It has conducted a secret trial of Bernard Collaery, who objected to the misuse of the Australian Secret Intelligence Service in East Timor.
Speculating on who is the source of a cyber attack holds a strong attraction for the Australian media. In February 2019 the ABC reported there was a possible “China link” in a brief cyber attack on the Australian parliament’s computer system. Unlike the highly secure, top-secret communication systems used by ministers and their staff, almost nothing of significance goes over the ordinary Parliament House computer system. But this did not stop the ABC reporting a cyber security expert at Canberra University claiming that if a nation state were “looking for state secrets”, Parliament House is where the “crown jewels” were.
When the Australian Bureau of Statistics’ census website collapsed on August 9, 2016, the ABC repeatedly reported the crash was due to a foreign “denial of service” cyber attack, despite reliable information that no attack had occurred. The head of the Australian Strategic Policy Institute, Peter Jennings, told the ABC’s 7.30 program that the Chinese government was most likely responsible. The next day the then prime minister, Malcolm Turnbull, said the crash was due to the failure of the ABS’s computer storage.
When discussing the new laws in 2021, the Australian media failed to note that respected overseas publications and courts have serious doubts about some of Bill Browder’s claims about his employee, Sergei Magnitsky, who died in jail in Russia on November 16, 2009. For example, in an article headlined “Questions cloud story behind US sanctions” in the German weekly magazine Der Spiegel, Benjamin Bidder states that Magnitsky was a victim of a terrible injustice in the “sadistic, cold-hearted Russian prison system”. But there was more to it.
Der Spiegel reported Browder and a partner started a company in the mid-1990s called Hermitage Capital Management to make financial investments in Russia while government corporations were being disposed of at bargain prices. Many Russian oligarchs became billionaires. Der Spiegel said, “According to its own calculations, Hermitage Capital Management generated a 1500 per cent return on investment within just a few years … One way or another, Browder’s business model was lucrative. Hermitage bought cheap shares in Russian state corporations such as Gazprom from the late ’90s onwards. Hermitage held many shares through shell companies.” In 1998, Gazprom was worth $3.5 billion. Within seven years that had jumped to $160 billion.
Der Spiegel says that according to Russian investigators, a company in Browder’s fund structure had underpaid its taxes. Browder denies this. The magazine says the investigators came across Magnitsky, who was helping Browder with his tax-saving models. Browder later claimed Magnitsky became aware of a $230 million tax fraud run by two Moscow police officers and other officials who allegedly requested the payment of $230 million in taxes that Browder’s company had previously paid.
Der Spiegel says Browder accused one of the police investigators, Pavel Karpov, of working with another to have Magnitsky arrested and killed. Karpov filed a defamation suit against Browder in London that the British High Court heard in 2013. The court ruled that Britain had no jurisdiction over the matter. In his written finding, Judge Peregrine Simon said Browder had not come close to “pleading facts which, if proved, would come close to justify the sting of the libel”. The judge also said Karpov had achieved “a measure of vindication from the views I have expressed”– that Browder was “not in a position to justify the allegations that Karpov caused, or was party to, the torture and death of Magnitsky”.
After the Australian act was passed, the ABC speculated that it could be used to sanction some “cronies” of the Russian president, Vladimir Putin. This seems unlikely, as few have assets to freeze here. The reality is that the US will do most of the sanctioning of Russia, perhaps in conjunction with Britain, where some Russian billionaires have assets. The Australian law is likely to be aimed primarily at China but not India.
This article was first published in the print edition of The Saturday Paper on January 22, 2022 as "Bad reaction ".
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