Kasparov

The Story of One Laundromat: A Place of Unprecedented Generosity

5.31.2013

new law is in the works in the Russian State Duma. Introduced this past March by three United Russia deputies, the benign-sounding bill “On the introduction of changes to the Federal Law ‘On the compensation for violation of the right to judicial proceedings within a reasonable time frame or the right to the fulfillment of a judicial act within a reasonable time frame’” testifies to the extent of the Putin regime’s fear of the newly-passed US Magnitsky Act. The Russian law would provide compensation from the federal budget to any Russian citizen whose foreign-held assets were frozen abroad if Russia deems the seizure to have been unlawful. Essentially, it would transform the Russian Treasury into the world’s largest money laundering machine.

Journalist Sergei Parkhomenko commented at length on the law on his Ekho Moskvy blog this week:

In recent weeks, everyone I talk to about this law has the following to say: give it up, seriously, it is impossible. Regardless, they will not pass it. I mean, it is excessive. A failure of the system. A release of adrenaline. A kind of localized mini-hysteria. Done out of fear. Or, conversely, out of boldness. In general, it is unreal: ultimately, nobody is going to allow a bill like that to pass. You would need to be…

“Well, who?” I ask in response.

And indeed – who would you need to be to pass such a bill? So that tomorrow, you properly voted for it in the Duma in its first, second, and third readings, whether you felt like it or, more likely, if you have been ordered to. Then to pass it by Matviyenko, have Putin sign it, and publish it in Rossiyskaya Gazeta. What special kind of person would do that – and do we lack such people in our current Duma, our current Senate, or our current presidential administration? Well, there you have it. They will take it and pass it. There is no question about it. What are they afraid of? There is nowhere to appeal it, certainly not to the UN…

We are talking about a law that was immediately met with a deluge of mocking comments when it was first reported on, and thus has now been christened the law “On the large laundry room of the Russian Federation.” It has also been dubbed the law “On the all-Russian laundering of dirty money with the use of the state budget of the Russian Federation” as well as “On the cloaking of the global mafia with court decisions of the Russian Federation.”

In fact, it has a much more inconspicuous and forgettable name: “On the introduction of changes to the Federal Law ‘On the compensation for violation of the right to judicial proceedings within a reasonable time frame or the right to the fulfillment of a judicial act within a reasonable time frame.’” Have you heard of it?

[…]

Meanwhile, the text of this bill has actually been introduced to the State Duma – not as a joke, but completely seriously – and contains an explanatory note that honestly and openly reads:

In the case of a verdict by a foreign court on compulsory confiscation of the property of Russian citizens or organizations, compensation for these payouts will be provided to them, meaning recompense for losses they have incurred through the fault of a foreign court. Compensation will be paid with funds from the federal budget. But the Russian Federation may demand compensation in the amount that it has paid to a Russian citizen suffering from an unjust verdict of a foreign court from that foreign state (recourse claim).

This legislation stipulates that if a foreign state does not fulfill the demand of a Russian court to return the amount of compensation, the property of that state located on the territory of the Russia may be confiscated and transferred to the ownership of the Russian Federation…

[…]

The text of the bill directly states:

…2. The size of compensation for a violation of the right to consideration of a case by a competent court of the Russian Federation, as a rule, is equal to the sum of losses that a Russian individual incurred or could incur as a result of the compulsory fulfillment of a judicial act (cost of lost property, sum of paid sanctions, unreceived income, other losses).

3. Court verdicts on the awarding of compensation for the violation of the right to the consideration of a case by a competent court of the Russian Federation are to be immediately executed.

4. Compensation for the violation of the right to the consideration of a case by a competent court of the Russian Federation will be awarded with funds from the federal budget…

[…]

I once heard these quotations over the radio. But psychologists say that a person inherently trusts information more that is seen rather than that which is heard – or, let us say, smelled. So if at first you did not believe your ears – that would have been completely natural. Nobody would have believed it. But now look with your eyes. All of it is written there.

As Parkomenko points out, the consequences of the law could be truly epic in scale. As the bill itself is farcical to the extreme, the line between consequences that are fantastical and those that are plausible becomes blurred.

Normally, people look and begin to fool around. They start to playfully fantasize about how such a law could be played with if it is actually passed one day. They think up various funny stories about how Russian scammers could get themselves convicted in a Swiss court, have their own assets in the basements of Zurich frozen, and then see their losses neatly materialize right in their Sberbank accounts, transferred directly from the Federal Treasury, and quickly leave for Zurich itself to gleefully show the local spiteful, cantankerous gnomes first their tongues, and then their shiny new gold credit cards.

They weave crafty stories about Columbian drug traffickers who fly into Pulkovo, fall on their knees at passport control, beg for political asylum, then get right onto the Sapsan bullet train and sit down next to the necessary man with a tie, grind him over the questions, and then it is smooth sailing: get a Russian civilian passport, file charges in a Russian court, a quick and easy trial, compensation from the State bank, one cut to the man from the Sapsan, a short trip to Sochi, a second cut to a completely different address, transfer of the remaining sum to the Virgin Islands, and only then – Sheremetevo, Rome, Porto Cervo, Ibiza, Antibes, Amsterdam, the Bahamas, Rio, Fiji, Dubai, Mykonos, again Porto Cervo, and finally Belgravia, Miami, Belgravia, Miami, Belgravia, forever and ever…

I also thought up a few such side-splitting stories, about how this law transforms the Russian state budget into the planet’s foremost laundromat and how mobsters from all over the world come here to wash their loot.

If the bill passes, only time will tell how many criminals will make use of it. One thing, however, is beyond dispute: such a law would grossly violate well-established international norms of diplomatic immunity by threatening to confiscate the property of a foreign state that refuses to pay up. This provision ensures that no additional budget money would need to be allocated to put the law into practice:

The passing of the federal law “On the introduction of changes to the Federal Law ‘On the compensation for violation of the right to judicial proceedings within a reasonable time frame or the right to the fulfillment of a judicial act within a reasonable time frame” will not require additional expenditures from the federal budget.

It turns out that this bill has two layers, as it were. On top – some sort of tough-guy legislative gag meant for particular, simple people who are chomping at the bit to jump on the free loot from the state budget. And they are counting precisely on this kind of pure, reflex reaction from lawmakers to give the authors a scheme to hope for an easy, joyful approval of the entire rest of the scheme.

But a bit deeper is a serious demand to initiate a new world “war of sovereignties,” as the coming outlook has already been christened by analysts who pay careful attention to judicial subtleties. By passing and adopting such a document, Russia is addressing the surrounding world with an unambiguous warning: “don’t come close, I will break you” – meaning we will skin you alive, tear off pieces of your immunity-protected property, and no convention or sense of propriety is ever going to stop us again.

The full text of Parkhomenko’s article is available in Russian here.

Translation by Kasparov.com

 

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