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Cybersecurity has never been more important to Russian companies

As the digital world and the commercial realm of bricks and mortar industry inexorably grow together through e-Commerce as well as the many paths opened via blockchain, the responsibilities of business management are rapidly changing through this evolution.

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Russia has only recently finally codified and set out standards for corporate governance, transparency and paths to market trust. These past several years has also added a further fast developing area of concern, which is cyber risk, that today has become a major board responsibility and issue for both public and private companies.

Serving on and advising several Russian boards of directors over the years this has become ever more urgent, especially in the boardrooms. Business risk(s) are obviously a key factor to try to manage wherever on the planet one does business. One clear indication of how seriously this is taken is the rapid growth of budget allocations specific to getting a managed grip on cyber risks and cyber security.

Some companies place these responsibilities in the hands of risk management departments or similar, usually within the purview of an IT department, and that box was thereby ticked for better or for worse. Others push money at the challenge by retaining the services of a Dr. Web, Kaspersky, the Secret Studio and similar. Others may buy all sorts of cyber insurance mistakenly believing this will keep risks at bay, as insurers should/will recommend actions needed to qualify for comprehensive cover. The easy attitudes have changed, and ticking boxes, like passing the buck, will no longer suffice.

One of the challenges, among several, is the distance and differences in the understanding of the digital world and its language as opposed to the understanding of business, industry and the language of commerce. It was and to varying degrees still is a digital cultural divide at the general management and board level. With the blockchain and outgrowth applications in Fintech and elsewhere firmly gaining broad acceptance, the blending of these cultures is inevitable.

I have witnessed a real core change in the attitudes of Russian boards concerning cybersecurity and the increasing responsibility many directors are taking in addressing this area. Despite the reputation Russia has of being “hacker heaven” and able to leap tall buildings in a single bound, or alter foreign national elections. The fact is that cyber risks affect Russian businesses every bit as much as business in every corner of the world. These are equal opportunity risks knowing no national borders, or geopolitical dissonances as these threats are globally equal.

The development of means and measures to confront cyber risks in many businesses throughout Russia have been mixed at best, just like the rest of the world. Some are now at the cutting edge of cybersecurity, and some are still avoiding the issue aside from tasking IT departments to “handle it”.

For any company anywhere in the world cyber-risks are the same, and the threats do not come from some shadowy “evil empire”, but across the entire digital realm of the planet in equal measure. The juicier and more developed the target, the more hungry and aggressive are the risks, be it in Silicon Valley, Vladivostok, Dubai, Beijing or Durban. Like in any other risk sphere, the lower the fruit, the easier the target of opportunity.

Some of the better-prepared boards here have taken some proactive steps, which may be of interest to overview and I have attempted to collect them into a narrative. These observations are nothing more than applied common sense, not rocket science. Many of these positions have become part of the operational fabric of several companies, both public and private in Russia, and globally as well. What makes them valuable is that they are now being woven into the mindsets and views of more and more personnel, their management and boards of directors.

Several boards have prioritized into their operational mandates the task of identifying those key assets that may be open to cyber-attack, which cyber risks to avoid, accept, or simply observe, and to develop specific plans associated with each approach.

The corporate culture of many boards has changed to view cybersecurity as a strategic and managerial issue and to hold management accountable for recommending and implementing overall cyber-risk management strategy and polices. This had led to concepts and policies of defensive response, and then intelligently adapting by continually gathering updated intelligence in this fast changing risk environment.

There is a far greater emphasis undertaken by the board and management to understand the company’s exposure to third-party linkages and vendors. This in many cases has been shown to be a poorly secured backdoor.

Most importantly, quite a few are actively budgeting to augment the development of a corporate and HR culture that places a high value on cybersecurity, and educating all employees in this risk reality.

The one thing shareholders remember when it comes to a cyber crisis and the subsequent board/management judgement calls is the outcome achieved. A positive outcome is usually the result of a well- considered, disciplined process that demonstrates responsible planning and a commitment to creating and implementing corrective results. Therefore, CYA does play an incentive role in this area.

Board meetings have become a vital time for corporate directors to reassess how they exercise their governance responsibilities with regard to the management of cybersecurity risk. In today’s global cyber minefield, it is essential that boards of directors not just monitor performance, but reward through incentives excellence achieved in this area.

Boards must lead by defining to management their vision and behavior for cybersecurity and then clearly demonstrate the priority the organization places upon strict adherence. After all, a risk culture gathers all aspects of risk-taking and risk management together through shared corporate values, beliefs, and attitudes.

Cybersecurity is no exception; establishing a strong cybersecurity culture is an essential component of any program, given that the vast majority of cyber risk can be initially traced to people and related behaviors, not technology. There are no offensive strategies in cybersecurity, only defensive ones.

The reality is that most employees are not interested in their personal digital security, much less that of their company. In consequence, changing a company’s culture to strengthen security is especially difficult and requires a top to bottom commitment “with teeth” to keep pace with evolving threats. Historically, anything to do with IT security was kept separate from users by IT teams. Little wonder that users show no or little interest in the company’s digital security.

The simple fact of the cyber risk issue is that the employees/users should be the first line of defense. They are the ones who create and handle the information, and they are in the best position to understand its value. Boards of directors worldwide, not only in Russia are more frequently demanding that management develop interactive training and accountability programs that work with users. In some cases, modern game based training is used and can then monitor how staff apply this training to help transform a company’s culture into one where cybersecurity is in everybody’s interests to enhance.

Without a strong risk culture, even the best cybersecurity management framework would be vulnerable to weaknesses and failures. Given the continuously changing and quickly evolving cyber environment, engendering a strong cyber risk culture provides employees with principles and values to guide activities while policies are still in the process of being drafted or updated. It also strongly narrows the divide between analog and digital thinking, which yields benefits to users on a personal level as well.

No longer is it a question of whether a company will be attacked but more a question of when this will happen, and how a company is going to prevent it or at least control damage. Smart network surveillance, early warning indicators, multiple layers of defense, and lessons from past events are all critical components of cyber resilience. When things go wrong, whether in a major or minor way, the ability to quickly identify and respond to a problem will determine the company’s ultimate recovery and ability to continue conducting business.

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Nicole Temple

Here is an interesting look at how WiFi can be used to actually track every keystroke that an individual makes:

https://viableopposition.blogspot.ca/2017/07/wifi-and-keystroke-recognition.html

It is only a matter of time before this technology is widely used by the world’s intelligence networks, prying even further into what little remains of our privacy.

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Russia’s Economy Little Harmed by West’s Sanctions

Putin has been succeeding despite what the US aristocracy (and its allied aristocracies in Europe and Arabia) have been throwing to weaken Russia.

Eric Zuesse

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Originally posted at strategic-culture.org:


Despite Barack Obama’s economic sanctions against Russia, and the plunge in oil prices that King Saud agreed to with Obama’s Secretary of State John Kerry on 11 September 2014, the economic damages that the US and Saudis have aimed against a particular oil-and-gas giant, Russia, have hit mostly elsewhere — at least till now.

This has been happening while simultaneously Obama’s violent February 2014 coup overthrowing Ukraine’s democratically elected pro-Russian President Viktor Yanukovych (and the head of the ‘private CIA’ firm Stratfor calls it “the most blatant coup in history”) has caused Ukraine’s economy to plunge even further than Russia’s, and corruption in Ukraine to soar even higher than it was before America’s overthrow of that country’s final freely elected nationwide government, so that Ukraine’s economy has actually been harmed far more than Russia’s was by Obama’s coup in Ukraine and Obama’s subsequent economic sanctions against Russia (sanctions that are based on clear and demonstrable Obama lies but that continue and even get worse under Trump).

Bloomberg News headlined on February 4th of 2016, “These Are the World’s Most Miserable Economies” and reported the “misery index” rankings of 63 national economies as projected in 2016 and 60 as actual in 2015 — a standard ranking-system that calculates “misery” as being the sum of the unemployment-rate and the inflation-rate. They also compared the 2016 projected rankings to the 2015 actual rankings.

Top rank, #1 both years — the most miserable economy in the world during 2015 and 2016 — was Venezuela, because of that country’s 95% dependence upon oil-export earnings (which crashed when oil-prices plunged). The US-Saudi agreement to flood the global oil market destroyed Venezuela’s economy.

#2 most-miserable in 2015 was Ukraine, at 57.8. But Ukraine started bouncing back so that as projected in 2016 it ranked #5, at 26.3. Russia in 2015 was #7 most-miserable in 2015, at 21.1, but bounced back so that as projected in 2016 it became #14 at 14.5.

Bloomberg hadn’t reported misery-index rankings for 2014 showing economic performances during 2013, but economist Steve H. Hanke of Johns Hopkins University did, in his “Measuring Misery Around the World, May 2014,” in the May 2014 GlobeAsia, ranking 90 countries; and, during 2013 (Yanukovych’s final year as Ukraine’s President before his being forced out by Obama’s coup), Ukraine’s rank was #23 and its misery-index was 24.4. Russia’s was #36 and its misery index was 19.9. So: those can be considered to be the baseline-figures, from which any subsequent economic progress or decline (after Obama’s 2014 Ukrainian coup) may reasonably be calculated. Hanke’s figures during the following year, 2014, were reported by him at Huffington Post, “The World Misery Index: 108 Countries”, and by UAE’s Khaleej Times, “List of Most Miserable Countries” (the latter falsely attributing that ranking to Cato Institute, which had merely republished Hanke’s article). In 2014, Ukraine’s misery-index, as calculated by Hanke, was #4, at 51.8. That year had 8 countries above 40 in Hanke’s ranking. Russia was #42 at 21.42. So: Russia’s rank had improved, but, because of the globally bad economy, Russia’s absolute number was slightly worse (higher) than it had been before Obama’s coup in Ukraine and subsequent sanctions against Russia. By contrast, Ukraine’s rank had suddenly gotten far worse, #4 at 51.80 in 2014, after having been #23 at 24.4 in 2013.

The figures in Bloomberg for Russia were: during 2015, #7 with a misery-index of 21.1; and projected during 2016, #14 with a misery-index of 14.5; so, Bloomberg too showed a 2015-2016 improvement for Russia, and not only for Ukraine (where in the 2016 projection it ranked #5, at 26.3, a sharp improvement after the horrendous 2015 actual numbers).

“Hanke’s Annual Misery Index — 2017” in Forbes, showed 98 countries, and Venezuela was still #1, the worst; Ukraine was now #9 at 36.9; and Russia was #36 at 18.1.

Thus: whereas Russia was economically sunningly stable at #36 from start to finish throughout the entire five-year period 2013-2017, starting with a misery-index of 19.9 in 2013 and ending with 18.1 in 2017, Ukraine went from a misery-index of 24.4 in 2013 to 36.9 in 2017 — and worsening its rank from #23 to #9. During that five-year period Ukraine’s figure peaked in the year of Obama’s coup at 57.8. So, at least Ukraine’s misery seems to be heading back downward in the coup’s aftermath, though it’s still considerably worse than before the coup. But, meanwhile, Russia went from 19.9 to 18.1 — and had no year that was as bad as Ukraine’s best year was during that period of time. And, yet: that coup and the economic sanctions and the US-Saudi oil-agreement were targeted against Russia — not against Ukraine.

If the US were trying to punish the people of Ukraine, then the US coup in Ukraine would have been a raving success; but actually Obama didn’t care at all about Ukrainians. He cared about the owners of America’s weapons-making firms and of America’s extractive firms. Trump likewise.

During that same period (also using Hanke’s numbers) the United States went from #71 at 11.0 in 2013, to #69 at 8.2 in 2017. US was stable.

Saudi Arabia started with #40 18.9 during 2013, to #30 at 20.2 in 2017. That’s improvement, because the Kingdom outperformed the global economy.

During the interim, and even in the years leading up to 2014, Russia had been (and still is) refocusing its economy away from Russia’s natural resources and toward a broad sector of high technology: military R&D and production.

On 15 December 2014, the Stockholm International Peace Research Institute headlined, “Sales by Largest Arms Companies Fell Again in 2013, but Russian Firms’ Sales Continued Rising,” and reported, “Sales by companies headquartered in the United States and Canada have continued to moderately decrease, while sales by Russian-based companies increased by 20 per cent in 2013.”

The following year, SIPRI bannered, on 14 December 2015, “Global Arms Industry: West Still Dominant Despite Decline,” and reported that, “Despite difficult national economic conditions, the Russian arms industry’s sales continued to rise in 2014. … ‘Russian companies are riding the wave of increasing national military spending and exports. There are now 11 Russian companies in the Top 100 and their combined revenue growth over 2013–14 was 48.4 per cent,’ says SIPRI Senior Researcher Siemon Wezeman. In contrast, arms sales of Ukrainian companies have substantially declined. … US companies’ arms sales decreased by 4.1 per cent between 2013 and 2014, which is similar to the rate of decline seen in 2012–13. … Western European companies’ arms sales decreased by 7.4 per cent in 2014.”

This is a redirection of the Russian economy that Vladimir Putin was preparing even prior to Obama’s war against Russia. Perhaps it was because of the entire thrust of the US aristocracy’s post-Soviet determination to conquer Russia whenever the time would be right for NATO to strike and grab it. Obama’s public ambivalence about Russia never persuaded Putin that the US would finally put the Cold War behind it and end its NATO alliance as Russia had ended its Warsaw Pact back in 1991. Instead, Obama continued to endorse expanding NATO, right up to Russia’s borders (now even into Ukraine) — an extremely hostile act.

By building the world’s most cost-effective designers and producers of weaponry, Russia wouldn’t only be responding to America’s ongoing hostility — or at least responding to the determination of America’s aristocracy to take over Russia, which is the world’s largest trove of natural resources — but would also expand Russia’s export-earnings and international influence by selling to other countries weaponry that’s less-burdened with the costs of sheer corruption than are the armaments that are being produced in what is perhaps the world’s most corrupt military-industrial complex: America’s. Whereas Putin has tolerated corruption in other areas of Russia’s economic production (figuring that those areas are less crucial for Russia’s future), he has rigorously excluded it in the R&D and production and sales of weaponry. Ever since he first came into office in 2000, he has transformed post-Soviet Russia from being an unlimitedly corrupt satellite of the United States under Boris Yeltsin, to becoming truly an independent nation; and this infuriates America’s aristocrats (who gushed over Yeltsin).

The Russian government-monopoly marketing company for Russia’s weapons-manufacturers, Rosoboronexport, presents itself to nations around the world by saying: “Today, armaments and military equipment bearing the Made in Russia label protect independence, sovereignty and territorial integrity of dozens of countries. Owing to their efficiency and reliability, Russian defense products enjoy strong demand on the global market and maintain our nation’s leading positions among the world’s arms exporters. For the past several years, Russia has consistently ranked second behind the United States as regards arms exports.” That’s second-and-rising, as opposed to America’s first-and-falling.

The American aristocracy’s ever-growing war against Russia posed and poses to Putin two simultaneous challenges: both to reorient away from Russia’s natural resources, which the global aristocracy wants to grab, and also to reorient toward the area of hi-tech in which the Soviets had built a basis from which Russia could become truly cost-effective in international commerce, so as to, simultaneously, increase Russia’s defensive capability against an expanding NATO, while also replacing some of Russia’s dependence upon the natural resources that the West’s aristocrats want to steal.

In other words: Putin designed a plan to meet two challenges simultaneously — military and economic. His primary aim is to protect Russia from being grabbed by the American and Saudi aristocrats, via America’s NATO and the Sauds’ Gulf Cooperation Council and other alliances (which are trying to take over Russia’s ally Syria — Syria being a crucial location for pipelining Arab royals’ oil-and-gas into Europe, the world’s largest energy-market).

In addition, the hit to Russia’s economic growth-rate from the dual-onslaught of Obama’s sanctions and the plunging oil prices hasn’t been too bad. The World Bank’s April 2015 “Russia Economic Report” predicted: “Growth prospects for 2015-2016 are negative. It is likely that when the full effects of the two shocks become evident in 2015, they will push the Russian economy into recession. The World Bank baseline scenario sees a contraction of 3.8 percent in 2015 and a modest decline of 0.3 percent in 2016. The growth spectrum presented has two alternative scenarios that largely reflect differences in how oil prices are expected to affect the main macro variables.”

The current (as of 15 February 2016) “Russia GDP Annual Growth Rate” at Trading Economics says: “The Russian economy shrank 3.8 percent year-on-year in the fourth quarter of 2015, following a 4.1 percent contraction in the previous period, according to preliminary estimates from the Economic Development Minister Alexey Ulyukayev. It is the worst performance since 2009 [George W. Bush’s global economic crash], as Western sanctions and lower oil prices hurt external trade and public revenues.” The current percentage as of today, 17 September 2018, is 1.9%, after having plunged down from 2.2% in late 2017, to 0.9% in late 2017; so, it is rebounding.

The World Bank’s April 2015 “Russia Economic Report” went on to describe “The Government Anti-Crisis Plan”:

On January 27, 2014, the government adopted an anti-crisis plan with the goal to ensure sustainable economic development and social stability in an unfavorable global economic and political environment.

It announced that in 2015–2016 it will take steps to advance structural changes in the Russian economy, provide support to systemic entities and the labor market, lower inflation, and help vulnerable households adjust to price increases. To achieve the objectives of positive growth and sustainable medium-term macroeconomic development the following measures are planned:

• Provide support for import substitution and non-mineral exports;

• Support small and medium enterprises by lowering financing and administrative costs;

• Create opportunities for raising financial resources at reasonable cost in key economic sectors;

• Compensate vulnerable households (e.g., pensioners) for the costs of inflation;

• Cushion the impact on the labor market (e.g. provide training and increase public works);

• Optimize budget expenditures; and

• Enhance banking sector stability and create a mechanism for reorganizing systemic companies.

So: Russia’s anti-crisis plan was drawn up and announced on 27 January 2014, already before Yanukovych was overthrown, even before Obama’s agent Victoria Nuland on 4 February 2014 instructed the US Ambassador in Ukraine whom to have appointed to run the government when the coup would be completed (“Yats,” who did get appointed). Perhaps, in drawing up this plan, Putin was responding to scenes from Ukraine like this. He could see that what was happening in Ukraine was an operation financed by the US CIA. He could recognize what Obama had in mind for Russia.

The “Russia Economic Report, May 2018: Modest Growth Ahead” says:

Global growth continued its 2017 momentum in early 2018. Global growth reached a stronger than- expected 3 percent in 2017 — a notable recovery from a post-crisis low of 2.4 percent in 2016. It is currently expected to peak at 3.1 percent in 2018. Recoveries in investment, manufacturing, and trade continue as commodity-exporting developing economies benefit from firming commodity prices (Figure 1a). The improvement reflects a broad-based recovery in advanced economies, robust growth in commodity-importing Emerging Markets and Developing Economies (EMDEs), and an ongoing rebound in commodity exporters. Growth in China – and important trading partner for Russia – is expected to continue its gradual slowdown in 2018 following a stronger than-expected 6.9 percent in 2017.

Putin’s economic plan has softened the economic blow upon the masses, even while it has re-oriented the economy toward what would be the future growth-areas.

The country that Putin in 2000 had taken over and inherited from the drunkard Yeltsin (so beloved by Western aristocrats because he permitted them to skim off so much from it) was a wreck even worse than it had been when the Soviet Union ended. Putin immediately set to work to turn it around, in a way that could meet those two demands.

Apparently, Putin has been succeeding — now even despite what the US aristocracy (and its allied aristocracies in Europe and Arabia) have been throwing to weaken Russia. And the Russian people know it.

PS: The present reporter is an American, and used to be a Democrat, not inclined to condemn Democratic politicians, but Obama’s grab for Russia was not merely exceedingly dangerous for the entire world, it is profoundly unjust, it is also based on his (and most Republicans’) neoconservative lies, and so I don’t support it, and I no longer support Obama or his and the Clintons’ Democratic Party, at all. But this certainly doesn’t mean that I support the Republican Party, which is typically even worse on this (and other matters) than Democratic politicians are. On almost all issues, I support Bernie Sanders, but I am not a part of anyone’s political campaign, in any way

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Viktor Orban strikes back at EU. Visits Moscow to do business with Putin (Video)

The Duran – News in Review – Episode 117.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss Viktor Orban’s recent trip to Moscow following a contentious EU Parliament session where the Hungarian PM was punished by MEPs with an Article 7 sanctioning of Hungary, for daring to take on the George Soros globalist paymaster.

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Authored by John Laughland via The Ron Paul Institute for Peace & Prosperity:


The “salon des refusés” of political dissidents in the EU is getting bigger by the day. Less than a week after his government was condemned in a vote in the European parliament, Orban is in Moscow for talks about energy with Putin. His visit to Russia is the political equivalent of giving the EU the finger following last week’s humiliation.

Orban is not alone. In his battle with the EU over immigration and the rule of law, he is supported by Poland and the Czech Republic. Poland, which is also facing an Article 7 procedure against it by the European Commission, has vowed to protect Hungary, just as Hungary has vowed to protect Poland. So there is no way that the voting rights of either country can be removed, since the ultimate vote to do so requires unanimity. Orban also recently received the support of Czech Prime Minister Andrej Babis and of the Italian Minister of the Interior, Matteo Salvini.

These politicians have voiced support for Orban’s stance against immigration. But they also support his pragmatic approach to Russia. Salvini is a well-known critic of the Russia sanctions, and Italy has said they should end. Parts of the Austrian government agree, the Austrian Foreign Minister Karin Kneissl having recently had Putin as a personal guest of honor at her wedding, while the Vice-Chancellor, Heinz-Christian Strache, is well known for his pro-Russian and pro-Putin views. On the other hand, Chancellor Sebastian Kurz has reassured critics that Austria is rooted in the EU and shares its stance towards Russia.

The striking thing about Orban, and about his Central European allies (who incidentally include the Czech President Milos Zeman), is that they are from countries which, as Orban puts it, suffered greatly “under Russia” in the past. He is referring to the countries’ membership of the Warsaw Pact, and their subjection to communist rule, after World War II. In Hungary’s case, the suffering was especially violent because of the suppression of the 1956 revolution in Budapest by Soviet troops. Yet it is precisely these countries who today advocate a pragmatic relationship with Russia, while countries such as Britain, and even Germany, treat Russia as if it were still a communist dictatorship with the Cold War in full swing.

The irony is all the greater because Orban personally played a key role – but one which is often forgotten by historians – in bringing about the end of Soviet rule in Central Europe. His speech in Heroes’ Square in Budapest on June 16, 1989 on the occasion of the re-burial of the leader of the 1956 uprising, Imre Nagy, was the first time anyone in the Warsaw Pact had publicly called for the withdrawal of Soviet troops. The very making of this speech showed that the old taboos – and, with them, the power of the communist dictatorship – had collapsed. This was two months before the Hungarian government opened its border with Austria, allowing tens of thousands of East Germans to cross into West Germany, and five months before the Berlin wall came down. Orban’s contribution to the chain reaction which led to these later events was therefore decisive.

There is only one explanation for this apparent paradox that some former anti-communist Central European leaders are now pro-Russian. Unlike their Western colleagues, who were never directly affected by communist rule, the states of the former Warsaw Pact understand not only that Russia is no longer the old USSR, having abandoned communism, but also that national identity, and pride in national identity, were the key to undoing communist rule in Central Europe and then in Russia itself. Orban’s 1989 speech was a patriotic appeal to Hungarians: it traced their battle for national freedom back to 1848. Freedom and national pride went hand in hand.

As in Poland, where not only national identity but also religion played a key role in the downfall of communism, Hungarians (and Czechs and many others) now see with dismay that same national identity which freed them from communism under attack from the new commissars in Brussels. This is because the approach in Western Europe is directly the opposite. Pride in one’s nation is considered backward and dangerous, largely because national pride was irredeemably damaged during the war.

The fact is that all the early member states of the EU were defeated in the war, whether by the Germans or by the Allies. During the process of defeat, national pride was ruined, either through the barbarism of Nazism and fascism or through various forms of nationalist collaboration with it. All these stain the national record. Only in Britain was national pride the key to victory; for everyone else it was the key to defeat. (The only partial exception to this rule is France, which retained some sense of national pride after the war. But, in later decades, the memory of the Gaullist resistance was effaced by a stronger memory of the national shame of Vichy.)

Because of this, Western European states have adopted the EU ideology, according to which European history before the creation of the EU was nothing but wars between nation-states. Indeed, national rivalry was the key to these wars. In order for there to be peace, it is argued, Europe’s nation-states must be dissolved in a supranational entity. Germany has accomplished the task of making a clean slate of its national history in a more complete manner than any other European state but the other countries share parts, sometimes large parts, of this same German historiographical and political model.

To be sure, the states of Central Europe have skeletons in their own cupboards concerning the war. Hungary was an ally of Nazi Germany throughout it. But the more recent memory of national victory over communism has rekindled national pride, whereas the Western European states have not enjoyed any comparable victory and so they instead put all their faith in the post-national and post-modern European project. Moreover, whereas Communism was largely rejected as an ideology by the people living under it – including in Soviet Russia – the ideology of liberalism has penetrated very deeply into the Western European consciousness, to the extent even of extinguishing national sentiment. Liberalism has been more successful in this regard than communism was, even though orthodox Marxism also called for an end to the nation-state.

This East-West fracture is a major ideological dividing line inside the European Union. The vote in the European Parliament last week, in which over two thirds of MEPs ganged up on a member state in the name of their biased interpretation of “the rule of law,” was a historic moment which brought into the open the depth of this radically different approach to politics and history. Opposite attitudes to Russia are also part of this division. As Marx said, history repeats itself, first as tragedy and then as farce, as we saw in Strasbourg last week: the European Union, like the Soviet Union, will in due course discover that national identity is stronger even than its political ideology.

Laughland is a Member of the RPI Board of Advisors.

Reprinted with permission from RT.

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The Magnitsky affair: the confession of a hustled hack

A Cypriot journalist’s confession of how he too fell for the wrong account of the Magnitsky Affair

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Before getting down to brass tacks, let me say that I loathe penning articles like this; loathe writing about myself or in the first person, because a reporter should report the news, not be the news. Yet I grudgingly make this exception because, ironically, it happens to be newsworthy. To cut to the chase, it concerns Anglo-American financier Bill Browder and the Sergei Magnitsky affair. I, like others in the news business I’d venture to guess, feel led astray by Browder.

This is no excuse. I didn’t do my due diligence, and take full responsibility for erroneous information printed under my name. For that, I apologize to readers. I refer to two articles of mine published in a Cypriot publication, dated December 25, 2015 and January 6, 2016.

Browder’s basic story, as he has told it time and again, goes like this: in June 2007, Russian police officers raided the Moscow offices of Browder’s firm Hermitage, confiscating company seals, certificates of incorporation, and computers.

Browder says the owners and directors of Hermitage-owned companies were subsequently changed, using these seized documents. Corrupt courts were used to create fake debts for these companies, which allowed for the taxes they had previously paid to the Russian Treasury to be refunded to what were now re-registered companies. The funds stolen from the Russian state were then laundered through banks and shell companies.

The scheme is said to have been planned earlier in Cyprus by Russian law enforcement and tax officials in cahoots with criminal elements. All this was supposedly discovered by Magnitsky, whom Browder had tasked with investigating what happened. When Magnitsky reported the fraud, some of the nefarious characters involved had him arrested and jailed. He refused to retract, and died while in pre-trial detention.

In my first article, I wrote: “Magnitsky, a 37-year-old Russian accountant, died in jail in 2009 after he exposed huge tax embezzlement…”

False. Contrary to the above story that has been rehashed countless times, Magnitsky did not expose any tax fraud, did not blow the whistle.

The interrogation reports show that Magnitsky had in fact been summoned by Russian authorities as a witness to an already ongoing investigation into Hermitage. Nor he did he accuse Russian investigators Karpov and/or Kuznetsov of committing the $230 million treasury fraud, as Browder claims.

Magnitsky did not disclose the theft. He first mentioned it in testimony in October 2008. But it had already been reported in the New York Times on July 24, 2008.

In reality, the whistleblower was a certain Rimma Starova. She worked for one of the implicated shell companies and, having read in the papers that authorities were investigating, went to police to give testimony in April 2008 – six months before Magnitsky spoke of the scam for the first time (see here and here).

Why, then, did I report that about Magnitsky? Because at the time my sole source for the story was Team Browder, who had reached out to the Cyprus Mail and with whom I communicated via email. I was provided with ‘information’, flow charts and so on. All looking very professional and compelling.

At the time of the first article, I knew next to nothing about the Magnitsky/Browder affair. I had to go through media reports to get the gist, and then get up to speed with Browder’s latest claims that a Cypriot law firm, which counted the Hermitage Fund among its clients, had just been ‘raided’ by Cypriot police.

The article had to be written and delivered on the same day. In retrospect I should have asked for more time – a lot more time – and Devil take the deadlines.

For the second article, I conversed briefly on the phone with the soft-spoken Browder himself, who handed down the gospel on the Magnitsky affair. Under the time constraints, and trusting that my sources could at least be relied upon for basic information which they presented as facts, I went along with it.

I was played. But let’s be clear: I let myself down too.

In the ensuing weeks and months, I didn’t follow up on the story as my gut told me something was wrong: villains and malign actors operating in a Wild West Russia, and at the centre of it all, a heroic Magnitsky who paid with his life – the kind of script that Hollywood execs would kill for.

Subsequently I mentally filed away the Browder story, while being aware it was in the news.

But the real red pill was a documentary by Russian filmmaker Andrei Nekrasov, which came to my attention a few weeks ago.

Titled ‘The Magnitsky Act – Behind The Scenes’, it does a magisterial job of depicting how the director initially took Browder’s story on faith, only to end up questioning everything.

The docudrama dissects, disassembles and dismantles Browder’s narrative, as Nekrasov – by no means a Putin apologist – delves deeper down into the rabbit hole.

The director had set out to make a poignant film about Magnitsky’s tragedy, but became increasingly troubled as the facts he uncovered didn’t stack up with Browder’s account, he claims.

The ‘aha’ moment arrives when Nekrasov appears to show solid proof that Magnitsky blew no whistle.

Not only that, but in his depositions – the first one dating to 2006, well before Hermitage’s offices were raided – Magnitsky did not accuse any police officers of being part of the ‘theft’ of Browder’s companies and the subsequent alleged $230m tax rebate fraud.

The point can’t be stressed enough, as this very claim is the lynchpin of Browder’s account. In his bestseller Red Notice, Browder alleges that Magnitsky was arrested because he exposed two corrupt police officers, and that he was jailed and tortured because he wouldn’t retract.

We are meant to take Browder’s word for it.

It gets worse for Nekrasov, as he goes on to discover that Magnitsky was no lawyer. He did not have a lawyer’s license. Rather, he was an accountant/auditor who worked for Moscow law firm Firestone Duncan.

Yet every chance he gets, Browder still refers to Magnitsky as ‘a lawyer’ or ‘my lawyer’.

The clincher comes late in the film, with footage from Browder’s April 15, 2015 deposition in a US federal court, in the Prevezon case. The case, brought by the US Justice Department at Browder’s instigation, targeted a Russian national who Browder said had received $1.9m of the $230m tax fraud.

In the deposition, Browder is asked if Magnitsky had a law degree in Russia. “I’m not aware that he did,” he replies.

The full deposition, some six hours long, is (still) available on Youtube. As penance for past transgressions, I watched it in its entirety. While refraining from using adjectives to describe it, I shall simply cite some examples and let readers decide on Browder’s credibility.

Browder seems to suffer an almost total memory blackout as a lawyer begins firing questions at him. He cannot recall, or does not know, where he or his team got the information concerning the alleged illicit transfer of funds from Hermitage-owned companies.

This is despite the fact that the now-famous Powerpoint presentations – hosted on so many ‘anti-corruption’ websites and recited by ‘human rights’ NGOs – were prepared by Browder’s own team.

Nor does he recall where, or how, he and his team obtained information on the amounts of the ‘stolen’ funds funnelled into companies. When it’s pointed out that in any case this information would be privileged – banking secrecy and so forth – Browder appears to be at a loss.

According to Team Browder, in 2007 the ‘Klyuev gang’ together with Russian interior ministry officials travelled to Cyprus, ostensibly to set up the tax rebate scam using shell companies.

But in his deposition, the Anglo-American businessman cannot remember, or does not know, how his team obtained the travel information of the conspirators.

He can’t explain how they acquired the flight records and dates, doesn’t have any documentation at hand, and isn’t aware if any such documentation exists.

Browder claims his ‘Justice for Magnitsky’ campaign, which among other things has led to US sanctions on Russian persons, is all about vindicating the young man. Were that true, one would have expected Browder to go out of his way to aid Magnitsky in his hour of need.

The deposition does not bear that out.

Lawyer: “Did anyone coordinate on your behalf with Firestone Duncan about the defence of Mr Magnitsky?”

Browder: “I don’t know. I don’t remember.”

Going back to Nekrasov’s film, a standout segment is where the filmmaker looks at a briefing document prepared by Team Browder concerning the June 2007 raid by Russian police officers. In it, Browder claims the cops beat up Victor Poryugin, a lawyer with the firm.

The lawyer was then “hospitalized for two weeks,” according to Browder’s presentation, which includes a photo of the beaten-up lawyer. Except, it turns out the man pictured is not Poryugin at all. Rather, the photo is actually of Jim Zwerg, an American human rights activist beaten up during a street protest in 1961 (see here and here).

Nekrasov sits down with German politician Marieluise Beck. She was a member of the Parliamentary Assembly of the Council of Europe (Pace), which compiled a report that made Magnitsky a cause celebre.

You can see Beck’s jaw drop when Nekrasov informs her that Magnitsky did not report the fraud, that he was in fact under investigation.

It transpires that Pace, as well as human rights activists, were getting their information from one source – Browder. Later, the Council of Europe’s Andreas Gross admits on camera that their entire investigation into the Magnitsky affair was based on Browder’s info and that they relied on translations of Russian documents provided by Browder’s team because, as Gross puts it, “I don’t speak Russian myself.”

That hit home – I, too, had been fed information from a single source, not bothering to verify it. I, too, initially went with the assumption that because Russia is said to be a land of endemic corruption, then Browder’s story sounded plausible if not entirely credible.

For me, the takeaway is this gem from Nekrasov’s narration: “I was regularly overcome by deep unease. Was I defending a system that killed Magnitsky, even if I’d found no proof that he’d been murdered?”

Bull’s-eye. Nekrasov has arrived at a crossroads, the moment where one’s mettle is tested: do I pursue the facts wherever they may lead, even if they take me out of my comfort zone? What is more important: the truth, or the narrative? Nekrasov chose the former. As do I.

Like with everything else, specific allegations must be assessed independently of one’s general opinion of the Russian state. They are two distinct issues. Say Browder never existed; does that make Russia a paradise?

I suspect Team Browder may scrub me from their mailing list; one can live with that.

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