The Magnitsky Act is on the march. In 2012, the United States adopted the law in response to the death of a Russian whistleblower, Sergei Magnitsky, and then expanded its scope beyond Russia in 2016. Now Canada has adopted a Magnitsky Act of its own. By its terms, the Magnitsky Act imposes sanctions on foreign governments, individuals, and institutions that engage in human rights abuses.
The Magnitsky Act, however, was not designed to become a sword and shield for those alleged to have committed crimes in systems that afford due process. Rather, in the words of our State Department, the law is intended to “identify and hold accountable persons responsible for gross violations of human rights and acts of significant corruption.”
Unfortunately, things don’t always work out as planned. As The Hill reported this past summer, Tzvetan Vassilev, a fugitive indicted Bulgarian businessman, is seeking to invoke the Magnitsky Act, here in the United States, in a gambit to avoid prosecution back home. There, Vassilev is accused of embezzlement and money laundering in connection with the failure of Bulgaria’s fourth largest bank, Corporate Commercial Bank, in which Vassilev was the main shareholder.
More than $1.5 billion was purportedly looted from the bank by Vassilev and his associates. As the Bulgarian prosecutor put it, the bank’s model was in essence “a mechanism through which a group of people led by Tzvetan Vassilev managed to appropriate the public funds attracted and entrusted to them for management in the bank.”
Criminal charges were also bolstered by a 2014 audit prepared by Ernst & Young and Deloitte Bulgaria, which concluded that the bank’s loans had defied standard banking practices and responsible risk assessment. Only 13 percent of the loans on the bank’s books were backed by sufficient collateral.
Taking to heart the old adage that the best defense is a good offense, Vassilev has pointed a finger at Delyan Peevski, a Bulgarian media owner, and Sotir Tsatsarov, Bulgaria’s chief prosecutor. Vassilev is asking the U.S. government to place economic sanctions on these two men using the new Magnitsky Act. Both deny his claims.
As to be expected, Vassilev has friends here in the United States, including Bill Richardson, the former governor of New Mexico and U.N. ambassador during the Clinton administration. In his view, Vassilev is being railroaded by a corrupt system that should be brought to heel. As far as American law and interests go, the position of Richard and Vassilev is problematic to say the least. It also defies reality.
For starters, Bulgaria is rated as a “free” country by Freedom House, on a scale of one to seven, with a one being the highest rating. Whatever corruption may exist there, was not enough to undermine Bulgaria’s rating as a free nation. As Freedom House observed, Bulgaria holds free elections, and its press is pluralistic.
Beyond that, “despite funding shortages and other obstacles, civil society groups have been active and influential.” That does not sound like a country that should be lumped together with the likes of Russia, Iran, Libya, and North Korea, countries sanctioned by the United States for human rights abuses and wholesale corruption.
Indeed, Bulgaria’s courts have already passed the test in the United States, where a federal court sitting in Chicago has rejected the contention that Bulgaria is so “corrupt” that it cannot give a defendant a fair shake or administer justice. The court observed that to gain admission to the European Union, Bulgaria was required to demonstrate its adherence to the “rule of law” and that its judicial system was stable. To put things even more sharply, NATO conducted military drills in Bulgaria in the last few months.
Yes, Vassilev has denied culpability and has fought extradition from Serbia, claiming innocence. But ultimately, Vassilev’s innocence should remain with the purview of Bulgarian courts, as opposed to the U.S. State Department or U.S. Treasury Department. The Magnitsky Act should not be allowed to become a cudgel wielded by non-citizens as they seek to beat our allies into submission.
Lloyd Green was the opposition research counsel to the George H.W. Bush campaign in 1988 and later served in the U.S. Department of Justice.