Power to Truth: The Fight for Financial Justice with Sir William Browder and Anat Admati

Introduction and Background

• Bill Browder is the founder of the Magnitsky Global Justice Campaign, which aims to fight human rights violations and corruption, and has led to the creation of laws in the US, European Union, Canada, and other countries bearing the name Magnitsky. (30s)
• The Magnitsky laws are a result of the tragic circumstances surrounding the death of Sergey Magnitsky, a Russian lawyer who died in jail after uncovering a massive corruption scheme. (50s)
• Bill Browder has written two books, "Red Notice" and "Freezing Order", with the latter focusing on the details of the stories and specifically some of the corporations involved in the corruption scheme. (1m7s)
• The corporate form and its integration with societal rules and law enforcement are key aspects of the discussion, with a focus on how corporations can uphold the rule of law. (1m40s)
• Two corporations mentioned in Bill Browder's book are Prevezon, a Russian corporation that played a significant role in the story, and another corporation that appeared towards the end of the book. (1m57s)
• Prevezon was involved in a trial in the Southern District of New York, and Bill Browder will discuss the details of the trial and the corporation's involvement in the corruption scheme. (2m23s)
• Bill Browder's mission is to get justice for Sergey Magnitsky and fight corruption, which he believes is essential to bring into a business school context to educate people about the importance of fighting corruption. (2m52s)

The Magnitsky Act and its Impact

• Sergey Magnitsky was Bill Browder's lawyer in Russia, who discovered a massive corruption scheme involving Russian government officials stealing $230 million in taxes, and was subsequently arrested, tortured, and murdered in Russian police custody. (3m55s)
• Bill Browder has dedicated his life to going after the people who killed Sergey Magnitsky, using his time, resources, and energy to campaign for justice and get laws passed to impose asset freezes and visa sanctions on those involved. (4m17s)
• The Magnitsky Act is a law that targets human rights violators and kleptocrats from Russia and other countries, and it has been a game-changer in the world of international law and law enforcement (4m25s).
• The law was created in response to the killing of Sergey Magnitsky, who was murdered for exposing a $230 million tax refund scheme in Russia (4m30s).
• The Magnitsky Act allows rule of law countries to put the assets of kleptocrats at risk, making it harder for them to commit crimes and then hide their assets in other countries (4m54s).
• Anti-money laundering laws are also related to the Magnitsky Act, as they aim to prevent the perpetrators of crimes from using the proceeds of their crimes to buy assets or launder their money (5m12s).

Tracking the Stolen Money and Key Players

• The campaign to bring justice to Sergey Magnitsky's killers has two parts: the first is to get the people sanctioned, and the second is to track down the $230 million that was stolen and punish everyone involved in the crime (5m49s).
• The campaign has been ongoing for 15 years, and a full-time team has been working to track down the money and identify those involved in the crime (6m10s).
• Whistleblowers, including a man named Alexander Perepilichny, have come forward to provide information about the crime and help track down the stolen money (7m13s).
• Perepilichny was a member of the criminal group that stole the money, but he fell out with them and fled to the UK, where he provided information about the crime (7m22s).
• The campaign has been successful in part because of its tenacity and willingness to keep pushing for justice, even in the face of resistance from those involved in the crime (6m47s).
• A former money launderer approached with documents that were used to discover some of the people who received the money, leading to the identification of $20 million in Switzerland (8m0s).
• The documents, including bank account statements, were handed over to the Swiss prosecutor, who froze the money and opened a major international criminal investigation (8m14s).
• As a complainant, access was gained to the investigation files, which provided information on where the money came from and where it went afterwards (8m36s).
• A second data leak came from the Organized Crime and Corruption Reporting Project, a nonprofit organization that obtained a criminal case file from Moldova involving a bank that was laundering money from Russia (9m2s).
• The case file revealed that the money came from Russia through Russian banks, went through a Moldovan bank, and then to Switzerland, with one of the recipients being a Cypriot company called Prevezon Holdings Inc (9m54s).
• The company had accounts in Switzerland and Cyprus, and the beneficial owner was identified as Denis Katsyv, a Russian national and the son of a high-ranking official in the Moscow region (10m43s).
• The investigation found a direct connection between the $230 million that Sergei Magnitsky was killed over, Russian banks, a Moldovan bank, and the Cypriot company (10m28s).
• The corporate registry in Cyprus allowed for the identification of the beneficial owner, which is not possible in the US (11m1s).

Uncovering the Prevezon Holdings Connection

• Whistleblowers, data leaks, law enforcement investigations, and journalists play a crucial role in accessing case files and uncovering information, as seen in the collaboration with the Organized Crime and Corruption Reporting Project (OCCRP) (11m44s).
• The OCCRP is a loose confederation of journalists from different countries, including Bill Albert from Barron's in New York, who worked on uncovering information about Prevezon (12m7s).
• Bill Albert, a diligent and instinctive journalist, spent countless hours researching and discovered that Prevezon owned several high-end properties in New York, including a building on Pine Street (13m25s).
• Albert's report was initially shut down by Barron's, but it was later published by the OCCRP, leading to the Swiss authorities freezing Prevezon's accounts in Switzerland (13m58s).
• The information from Albert's report was also used in New York, where the authorities took action, and the New York State Attorney General's office became involved (14m11s).
• A meeting at the Cambridge Crime Conference led to a collaboration between the New York State Attorney General's office and the investigators, who were looking for a New York nexus to prosecute the case (14m27s).
• The discovery of a New York nexus, thanks to Bill Albert's research, led to the decision to pass the case to the US Department of Justice, specifically the Southern District of New York (15m17s).
• The Southern District of New York, also known as the "Sovereign District," has a reputation for being a formidable force in prosecuting cases, and the decision to involve them marked a significant step in the investigation (15m24s).
• A federal forfeiture order was filed against all properties of PrivatZone, as it was difficult to go after the corporation's owners, and the order aimed to seize all properties and bank accounts belonging to PrivatZone (16m0s).
• The case involved many twists and turns, but ultimately led to the filing of the federal forfeiture order, which was a significant development in the case (15m51s).

Legal Battles and Settlement

• A lawyer named John Moscow, a former New York district attorney who prosecuted organized crime and money laundering, was hired to help figure out how to go after the bad guys (17m12s).
• Moscow discovered that even when money is sent from one Russian bank to another in dollars, it passes through the US Fed wire system, and a money clearing bank, such as JP Morgan or City Bank, has access to these transactions (18m1s).
• Moscow used this knowledge to file a 1782 subpoena to get access to JP Morgan's files and show the movement of money from one bank to another (18m38s).
• However, Moscow suddenly disappeared and stopped returning calls, reportedly due to his firm receiving a lucrative mandate that made working with the client no longer worth it (19m11s).
• Another lawyer was eventually found to file the necessary documents and continue the case (19m25s).
• A subpoena was issued by John Ashcroft's law firm, which succeeded in obtaining documents that helped figure out the details of a case involving Prevezon Holdings, a company linked to the Russian government (19m28s).
• The US Federal authorities filed a forfeiture order against Prevezon Holdings, which was considered powerful and damning, and it was expected that the company would not defend themselves against it (19m47s).
• However, Prevezon Holdings came fully lawyered up, with John Moscow as their lawyer, who had previously worked for the plaintiff and had warned them about the dangers of the Russian government (20m26s).
• John Moscow issued a subpoena to the plaintiff, asking for their security arrangements and travel information, which was seen as an attempt by the Russian government to gather information to harm the plaintiff (20m31s).
• The plaintiff had previously been warned by John Moscow about the dangers of the Russian government, which made his actions as a lawyer for Prevezon Holdings seem conflicted (20m50s).
• The case went on for two years, with multiple motions and counter-motions, and the plaintiff tried to get John Moscow disqualified due to his conflict of interest (21m14s).
• The judge in the case, Judge Thomas Griesa, was in his mid-80s and had difficulty following the details of the case, which led the plaintiff to file a writ of mandamus to have him removed from the case (21m40s).
• The writ of mandamus is a rare legal filing that claims the judge has lost the ability to preside over the case, and it was used in an attempt to have Judge Griesa removed due to his inability to understand the case (22m37s).
• A decision made in a case was deemed outrageous, and an appeal was made to the Second Circuit in New York, which led to the disqualification of John Moscow and the replacement of Judge Grus (22m53s).
• The case involved $20 million in frozen assets, with the defendants spending between $15 and $20 million on defense, before conceding to a settlement with the US Department of Justice and paying an additional $6 million (23m17s).
• The settlement was a plea bargain, with the defendants neither admitting nor denying guilt, and the case was resolved without a trial, which is a common outcome in corporate enforcement cases (23m40s).
• The lack of transparency in these cases often means that the public is not well-informed about the details, with only the amount of the fine being publicly disclosed, as seen in the case of JP Morgan Chase's $13 billion fine for mortgage-related issues (24m11s).
• In this particular case, the filings of both the government and the defense were made public, providing a detailed understanding of the case, but the settlement meant that the trial did not proceed as hoped (24m29s).
• The case involved the US government prosecuting Russian money laundering in the Southern District of New York, but the settlement meant that the trial did not go ahead as planned (24m52s).
• Part of the frozen assets included a $3 million receivable owed to Prevezon by a Dutch company, which was unfrozen by the US authorities but then frozen again by the Dutch prosecutors, and has since been confiscated by the Dutch authorities in their own criminal case against Prevezon (25m10s).

Danske Bank and Large-Scale Money Laundering

• The case highlights the issue of misconduct and fraud in banking, and the importance of transparency and accountability in corporate enforcement cases (25m56s).
• The case also illustrates the complexity of international financial transactions and the challenges of tracking and prosecuting financial crimes across borders (26m16s).
• An employee of Danske Bank, a British citizen, played a key role in uncovering the money laundering scheme by investigating the activities of companies registered in the UK (26m25s).
• Estonia is one of the least corrupt countries in the world, but it was involved in a money laundering case through Danske Bank's Estonian branch, where $200 million of the $230 million laundered money from Moldova was transferred (27m18s).
• A criminal complaint was filed in Estonia and Denmark, and due to public pressure, Estonia opened a criminal investigation, while Denmark did not (28m20s).
• The case was publicized, and a Danish newspaper, Berlingske, contacted the complainant after receiving a data leak from Danske Bank, which led to a joint investigation (28m32s).
• The investigation found that $8.3 billion of dirty money was laundered through Danske Bank, not just $200 million, and the story became one of the most well-read in the history of Berlingske (29m34s).
• The CEO of Danske Bank hired external law and accounting firms to investigate the matter, and they found that the actual amount of laundered money was $20 billion (30m11s).
• The case involved a long-term money laundering system that was profitable and persisted over time, and it was not a one-off incident (26m50s).
• The complainant works with journalists worldwide, including Bill Browder, and they provided background documents to Berlingske to aid in their investigation (29m8s).
• The data leak from Danske Bank revealed a large-scale money laundering operation involving Russian companies and accounts (28m50s).
• A significant amount of dirty money, $232 billion, was laundered through JY bank, but some of it was internally reported to the bank's leadership by an employee who chose not to go public, and no action was taken (30m17s).
• Dany bank, a mid-sized Danish bank with an Estonian branch, had a 44% return on equity, which is unusually high compared to a normal bank's 1% return on equity (31m3s).
• The Estonian authorities were concerned about the bank's activities but were unable to take action due to regulatory issues and a lack of cooperation from other countries (31m18s).
• A Russian regulator, Kosloff, who was the Central Bank governor, discovered money laundering through the Estonian bank and reported it to the Estonian authorities, but was shot dead after walking out of a soccer game in Moscow (31m34s).

Challenges and Future of Anti-Money Laundering

• Money laundering is a significant problem worldwide, and despite laws being in place, compliance and enforcement are not effective, particularly in Western developed countries (32m12s).
• It takes a relatively short time to launder money, around four days, but it can take up to 14 years to prosecute and recreate the money laundering trail (32m48s).
• The main challenge in enforcing anti-money laundering laws is the need for collaboration between countries, which can be cumbersome and time-consuming, with mutual legal assistance requests taking up to six months to respond to (33m4s).
• The use of AI and a centralized database could potentially solve the problem of money laundering in a much shorter time frame (33m13s).
• The difficulty in enforcing anti-money laundering laws is a personal issue for some individuals, including those who have lost loved ones to money laundering, such as Sergey Magnitsky, a lawyer who was murdered (33m41s).
• The counterfactual scenario highlights the passion and resources required to trace money, indicating that governments are not able to effectively track money laundering, but technology could change this overnight if governments had the political will (33m54s).
• In a democracy, pressure is needed to drive change, but it's unlikely to happen soon, and Russia's exposure has limited its money laundering options through countries like Estonia, Latvia, and Cyprus (34m24s).
• As a result, Russia is likely turning to cryptocurrency to launder money, which is a new challenge, particularly for those who have been investigating traditional banking money laundering (34m51s).
• Cryptocurrency is seen as a money laundering tool, and the challenge lies in crime enforcement, laws, and regulations that aim to prevent underlying crimes and the movement of money (35m15s).
• The conversation highlights the need to start with the basics of what is not allowed in society and how to prevent it from happening, with a focus on law enforcement and preventing people from benefiting from illicit activities (35m47s).
• The discussion concludes with an invitation for further conversations and engagement on the topic of financial justice and the fight against money laundering (36m2s).