SPECIAL BRIEFING ON THE SERGEI MAGNITSKY RULE OF LAW ACCOUNTABILITY ACT OF 2012

FROM: U.S. STATE DEPARTMENT

Background Brieing on the Administration's Implementation of the Sergei Magnitsky Rule of Law Accountability Act of 2012

Special Briefing
Senior State Department Officials
Via Teleconference
Washington, DC
April 12, 2013

MODERATOR: Good afternoon, everybody, on this Friday afternoon. This call is on background. I have three Senior State Department Officials with me here. From here on, they will be attributed as Senior State Department Officials, but they are [Senior State Department Official One], [Senior State Department Official Two], and [Senior State Department Official Three]. So they will be Senior State Department Officials One, Two, and Three, respectively.

Having said that, I will now turn it over to Senior State Department Official Number One for some opening comments, followed by Q&A. Thank you very much.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Good afternoon, everyone. As you know by now, the State Department, consulting with the Treasury Department and other departments, has submitted to Congress the first list of persons under the Magnitsky Act who met the criteria described in that act. That list contains 18 people, 16 of whom were put on the list because of their association with the persecution and ultimately death of Sergei Magnitsky. There are two others on that list associated with other events: One was associated with the shooting in Vienna of Israilov, a Chechen; the other was associated with the murder of Paul Klebnikov.

Those 18 people were placed on the list following a thorough process of collecting information, including from NGOs, from Congress, and from our own sources, and then a process by which agencies of the U.S. Government, including especially OFAC from the Treasury Department, reviewed the information about them to determine whether we had met a reasonable standard to include them on this list.

As of today, the people on this list will have any assets in the United States blocked – that’s as of now – and they will not be able to receive a visa.

Putting a name on this list is a serious undertaking. It has legal ramifications. Whenever you are freezing the assets of individuals, you better know what you’re doing and why, and you better have a reasonable, demonstrable basis for doing so. We believe we have that basis. We think that the purposes of the Magnitsky Act are the support of human rights. We applaud those purposes. Human rights is part of our relationship with the Russians. It is sometimes a difficult part, but we have implemented this law in a fair spirit and diligently.

We have notified the Congress both in writing and in person. We are going to be notifying the Russians, although the list is now public and I’m sure the Russian blogosphere is lit up with discussion of the names.

The names include six persons who were placed there because of their position in the initial investigation and arrest of Magnitsky. They were senior investigators, supervisorial, and other personnel of the Interior Ministry; one from the General Prosecutors Office; four judges from the Tverskoy court; two prison officials, one from the Matrosskaya Tishina prison, the head of the pre-trial prison detention facility there, the other the head of the pre-trial detention facility at Butyrka prison; plus two heads of tax authority offices. They were associated – these people – with various stages of the campaign against Sergei Magnitsky.

The standard that applied to the review of these and the determination under the Magnitsky Act is the same standard that applies to other economic sanctions determinations of individuals. And for those of you interested, the relevant standard is spelled out in the Administrative Procedures Act. It is an across-the-government standard and it’s important that that standard be maintained.

There’ll be plenty of opportunity to take questions, but that is an overview of what has happened today. I’ll let my colleagues add, and then we’ll have some time for questions.

MODERATOR: Over to our second official. Do we have any other before going to Q&A?

SENIOR STATE DEPARTMENT OFFICIAL TWO: I think we’re good.

MODERATOR: Okay. Operator, we’re ready for Q&A.

OPERATOR: Thank you. And ladies and gentlemen, if you wish to ask a question, please press * then 1 on your touchtone phone. You will hear a tone indicating that you’ve been placed in queue. You may remove yourself from the queue at any time by pressing the # key. If you are using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press *1 at this time. And it will be just one moment.

And our first question comes from the line of Peter Baker with The New York Times. Please go ahead.

QUESTION: Thanks, guys, for doing the call. I appreciate it. A couple of questions: One, we were told there’s also a classified list of other people. Is that correct, and can we – even if we don’t know the names, can we get some sense of numbers and types of people on it? And then secondly, do we have any evidence any of the people, at least on the unclassified list, have any assets in the United States?

SENIOR STATE DEPARTMENT OFFICIAL ONE: I can confirm that there was a classified list as provided under the law. I can say that we briefed congressional staff of both houses of Congress this morning and early this afternoon about both contents of that list and the reason why we believe that the people we put on that list belonged on that list under the Act’s standards. We went into some detail.

Because it’s classified, I’m not going to get into either numbers, names, except to say that we felt obligated to brief the Congress in detail, and we have done so.

QUESTION: And then the assets of at least publicly known people?

SENIOR STATE DEPARTMENT OFFICIAL TWO: Peter, that question’s probably best directed to OFAC and Treasury, who are the experts. But I can tell you, in general in these cases what happens is they put out a notice to banks and other financial institutions and wait for them to report back.

QUESTION: So we don’t – we haven’t done that – so as far as you know we haven’t done that sort of research at this point.

SENIOR STATE DEPARTMENT OFFICIAL TWO: We don’t normally do that in these cases.

QUESTION: Right.

SENIOR STATE DEPARTMENT OFFICIAL TWO*: The procedure I described is OFAC’s standard operating procedure.

QUESTION: Right. Thank you.

MODERATOR: Operator, next question.

OPERATOR: Our next question comes from the line of Desmond Butler with Associated Press. Please go ahead.

QUESTION: Thank you all for doing this call. Some of the folks up on the Hill are already complaining that the list was soft-pedaled, that some of the bigger names of Russian officials they wanted to see on the list were not on the list. Were there political considerations? Did you take into account the effect that this would have on relations with Russia?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Political considerations were not a factor. The principal factor was the stage of the information about these – about people and whether or not we felt the U.S. government’s standards for the freezing of assets of individuals were met. It is one thing to think of general political responsibility for human rights problems in Russia generally or in any country generally. It is quite another thing to target an individual for the freezing of personal assets. There are very good reasons why you want to follow the rule of law, particularly – I find it particularly ironic that in a case – the case of – involving Sergei Magnitsky, who was persecuted because he was blowing the whistle of confiscation of private assets and misuse of private assets, that there would be any question about following the rule of law and proper procedures for any such – for any freezing of private assets. And the people that are on the list are not – are of supervisorial rank. They are responsible officials – officials of a responsible rank. This is serious business. And I think that the list was put together with diligence and seriousness.

MODERATOR: Operator, next question.

OPERATOR: Our next question comes from the line of Michele Kelemen with NPR. Please go ahead.

QUESTION: Yeah, hi. Thanks for doing this. One, I’m curious how many of these people were already on the visa ban list, because I know there was a list that just was not made public before. How did you decide to add the Klebnikov and the Chechen case into this? And on the question of the classified list, does it really make sense to have a classified list? Doesn’t that really fuel suspicions in Russia more?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Well – separate questions. The law provides – in fact the law calls on us to go beyond simply the case of Sergei Magnitsky. I’m pleased – I’m glad that we were able to do so in this initial list. It was important to do something more, and the basic criteria we had was: Do we have information about individuals involved in non-Magnitsky problems that will stand up and meet our standards? And the answer is yes, so we have done so. As I said, somebody from the Izrailov murder and somebody from the Klebnikov murder.

The classified list is something the Congress put in. There are various reasons why it would be in our interest to put people on that list. The standard was vital to the national security, we explained to the Congressional staff why the people on that list were there. You’re right, Michele; it may fuel speculation in Russia, but there – we expected, in any event, a strong Russian reaction.

By the way, I should point out that this is not a one-time only act. The law makes clear that additional names should be added as new information becomes available. The law also provides for an annual report to Congress about names that have been added, and we intend to follow the law.

QUESTION: Okay, and just one just clarification. The classified list is not – it’s not – it’s just for visa bans and not asset freezes or --

SENIOR STATE DEPARTMENT OFFICIAL ONE: That is correct. You can’t do an asset freeze in secret. Therefore, if it’s – if there is someone on the classified list, the asset freeze does not apply. This was made very – during the discussions – in the drafting process of the Magnitsky Act, this was made clear to the Congress, that they put this in. So that’s what we’re dealing with.

QUESTION: Okay. And then how many of these people were on the previous visa bans, is my final question.

SENIOR STATE DEPARTMENT OFFICIAL ONE: We don’t usually go public with people that are on that list, but let me say that there has been for some time a process of putting people on visa watch lists for reasons of human rights. And long before the Magnitsky Act was contemplated, the Russia desk and the Human Rights Bureau were working to put people on the list. And without saying who was and who wasn’t on it, that list was extensive and predated the Magnitsky list.

QUESTION: Thank you.

OPERATOR: Our next question comes from the line of Elise Labott from CNN. Please go ahead.

QUESTION: I think I’m good. I think my questions have already been asked. But I’m just wondering if you could – to drill down --

SENIOR STATE DEPARTMENT OFFICIAL ONE: So happy, Elise. That’s great.

QUESTION: Thank you.

SENIOR STATE DEPARTMENT OFFICIAL ONE: That’s great.

QUESTION: But about the classified, I just don’t – still don’t understand why it has – their names have to be classified.

SENIOR STATE DEPARTMENT OFFICIAL ONE: The trouble that I find myself in is that if I were to explain it, I would also be explaining who they are. We did – all I can tell you is that we – when we were able to talk to the Congressional staff this morning, we could explain it fairly simply, fairly cleanly because we had simple and clean explanations. And although it’s dangerous to characterize a meeting of which you were only half, I didn’t sense a lot of pushback. I may be tempting fate, but we had easily, simply explained reasons that I can’t share with you because it’s, well, a classified list.

QUESTION: Okay.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Sorry.

QUESTION: I mean, I think – isn’t it kind of – I mean, just to Michele’s point, the fact that these names are meant to show an example, right, of people that were human rights’ abusers? So doesn’t that kind of negate the fact that – isn’t that kind of besides the point?

SENIOR STATE DEPARTMENT OFFICIAL ONE: I take that point. And there is in the human rights community, has been a discussion of exactly that point. Is the act advanced by having everybody public or having some people private? We discussed what the standard should be, that is how to interpret the standard that exists in the law. We came to a decision, and you have the advantage of me because you can ask anything you want, but I have to be careful about the answer. Sorry.

QUESTION: Okay.

SENIOR STATE DEPARTMENT OFFICIAL ONE: I know that’s inadequate but that’s because it is a classified list, and to explain the reasons would be to reveal who’s on it.

MODERATOR: Operator, we’ve got time for a couple more questions.

OPERATOR: Our next question comes from the line of Paul Eckert with Reuters. Please go ahead.

QUESTION: Hi, and thank you. Turning to one of the initial responses from Moscow, a senior Russian lawmaker, the head of the State Duma’s international affairs committee, called the list minimal, and he said it showed that the Obama Administration did not want to heighten tensions between Washington and Moscow. How do you take that? Do you take that as acceptance of the U.S. – the list decision, or sort of, they’re not being chastened enough or – what does that – how do you respond to what – how they’re taking it there?

SENIOR STATE DEPARTMENT OFFICIAL ONE: We will hear various things from the Russians. The – I’ve learned not to try to take action based on what you think the Russian reaction might be. You –it’s – I think it’s better to do what’s in the law and what’s right and what reflects American interests and American values. And on human rights, then you let the chips fall where they may. We’ve played this one straight; we haven’t tried to game it.

Of course we have a lot – we have a complicated relationship with Russia, strong areas of cooperation, strong areas of difference. Human rights is an area of difference, has been for some time. We – this is the first list to come out under the Magnitsky Act. I hope there is never an occasion for future lists, but we are prepared to do it, and we will be looking at the human rights situation in the future.

OPERATOR: Thank you. Our next question comes from the line of Nicole Gaouette with Bloomberg News. Please go ahead.

MODERATOR: Thanks, Operator.

QUESTION: Hi. Thanks for doing this. My question actually has already been asked as well, but I just wanted to ask one more about the classified list. And that is if you can tell us how many people are on it.

SENIOR STATE DEPARTMENT OFFICIAL ONE: That’s a very reasonable question. I can’t answer it.

QUESTION: You can’t even be that reasonable?

SENIOR STATE DEPARTMENT OFFICIAL ONE: I can’t be – even be that reasonable. I will let other – I’ll let people push that – push the boundaries of that one, but I can’t.

QUESTION: Okay. Thanks.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Sure.

MODERATOR: Operator, we have time for just one more question.

OPERATOR: Our last question comes from the line of Ali Weinberg with NBC News. Please go ahead.

QUESTION: Hi there. And forgive me; I did not hear the last question, so if I’m being repetitive, I apologize. But if I understand correctly, it sounds like the classified list was included in your – in this action because it was required by the law. So if it had not been required by the law, is it fair to say that the classified list would not have been included or even made up?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Well, the law provided for a classified list. If it did not provide for a classified list, I suppose there wouldn’t have been a classified list. But it did provide for one. Now there is one. The previous question was how many people were on it, and Senior State Official Number One said: Fair question; can’t answer it.

QUESTION: Thank you.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Okay.

MODERATOR: Thank you all for joining the call this afternoon, and have a good weekend. Bye-bye.

TREASURY NAMES GUATEMALAN NATIONAL AS "SPECIALLY DESIGNATED NARCOTICS TRAFFICKER"

FROM:  DEPARTMENT OF THE TRESURY

WASHINGTON – The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced the designation of Guatemalan national Horst Walter Overdick Mejia, a critical link in the drug trade between Colombian producers and the violent Mexican drug cartel Los Zetas, as a specially designated narcotics trafficker. Today’s action, taken pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), prohibits U.S. persons from conducting financial or commercial transactions with this individual and freezes any assets the designee may have under U.S. jurisdiction.

 

Last week, the U.S. Attorney’s Office for the Southern District of New York unsealed an indictment of Overdick Mejia for his narcotics trafficking and related firearms activities. On April 3, Guatemalan authorities arrested Overdick Mejia, the head of a major drug trafficking and money laundering organization based in Guatemala. A veteran spice buyer, he used his local contacts and his business acumen to smuggle thousands of kilograms of cocaine to Mexico and on into the United States. It is widely believed that Overdick Mejia is responsible for bringing Los Zetas into Guatemala in 2008 in order to eliminate a competing trafficker and who later became their most important ally in Guatemala. He also laundered millions of U.S. dollars in narcotics proceeds generated by both his own organization as well as Los Zetas. 

 

“Overdick Mejia’s drug trafficking activities and close ties to the Los Zetas makes him a dangerous and critical figure in the Central American narcotics trade,” said OFAC Director Adam J. Szubin. “By designating Overdick Mejia, OFAC is demonstrating its support for the Guatemalan government in its struggle against the threats and violence posed by these international drug gangs.”

 

OFAC coordinated this designation action with the Drug Enforcement Administration and the U.S. Attorney’s Office for the Southern District of New York. Today’s action is part of ongoing efforts pursuant to the Kingpin Act to apply financial measures against significant foreign narcotics traffickers and their organizations worldwide. The Treasury Department has designated more than 1,000 individuals and entities pursuant to the Kingpin Act since June 2000. 

 

“These are necessary tools we use to ensure that we put dangerous drug trafficking organizations out of business and ensure they cannot exploit the U.S. financial system,” said DEA Chief of Financial Operations John Arvanitis. “Overdick Mejia was a vital link between Colombian drug producers and Mexican cartels such as Los Zetas. This case is yet another example of the united front that law enforcement and regulators must utilize to ensure that organizations such as this one are put out of business forever.”

 

Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.