```

[Senate Report 112-191]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 469
112th Congress                                                   Report
                                 SENATE
 2d Session                                                     112-191
======================================================================
 
                      SERGEI MAGNITSKY RULE OF LAW
                       ACCOUNTABILITY ACT OF 2011

                                _______
                                

                 July 23, 2012.--Ordered to be printed

          Mr. Kerry, from the Committee on Foreign Relations,
                        submitted the following

                                 REPORT

                         [To accompany S. 1039]

    The Committee on Foreign Relations, having had under 
consideration the bill S. 1039, to impose sanctions on persons 
responsible for the detention, abuse, or death of Sergei 
Magnitsky, and for other purposes, reports favorably thereon, 
with an amendment in the nature of a substitute, and recommends 
that the bill do pass.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Committee Action.................................................1
III. Discussion.......................................................2
 IV. Cost Estimate....................................................5
  V. Evaluation of Regulatory Impact..................................6
 VI. Changes in Existing Law..........................................6

                               I. PURPOSE

    The purpose of this bill is to impose sanctions on persons 
that were responsible for or benefited financially from the 
detention, abuse, or death of Sergei Magnitsky, were involved 
in the criminal conspiracy uncovered by Sergei Magnitsky, or 
were responsible for extrajudicial killings, torture, or other 
gross violations of internationally recognized human rights 
committed against individuals seeking to expose illegal 
activity carried out by officials of the Government of the 
Russian Federation or to obtain, exercise, defend or promote 
internationally recognized human rights and freedoms anywhere 
in the world.

                          II. COMMITTEE ACTION

    S. 1039 was introduced on May 19, 2011, by Senator Cardin. 
On June 26, 2012, the committee considered S. 1039 and ordered 
it reported, with amendments, by voice vote.

                            III. DISCUSSION

Section 2--Findings

    Section 2 sets forth several findings, including that the 
United States supports the people of the Russian Federation to 
realize their full economic potential and to advance democracy, 
human rights, and the rule of law; that the Russian Federation 
is a member of several international organizations; that in 
becoming parties to human rights treaties, governments 
voluntarily undertake international obligations to respect and 
encourage certain fundamental rights and freedoms and this is 
an important objective of U.S. foreign policy; that good 
governance and anticorruption measures are instrumental in the 
protection of human rights, economic development, and the 
creation of open markets; that systemic corruption erodes trust 
and confidence in democratic institutions, the rule of law, and 
human rights protections; that the Russian nongovernmental 
organization INDEM has estimated that corruption amounts to 
hundreds of billions of dollars a year; that former President 
Medvedev of Russia often cited corruption as a serious problem 
in his public remarks; that Presidential Proclamation 7750 of 
January 12, 2004, allows the Secretary of State to suspend the 
entry into the United States of aliens who are suspected of 
participating in corrupt practices; that Sergei Magnitsky's 
repressive arrest and torture was carried out by Russian 
interior ministry officials that Mr. Magnitsky had implicated 
in the embezzlement of funds from the Russian treasury and the 
misappropriation of his client Hermitage; that the persecution 
of Mr. Magnitsky was politically motivated; that the Public 
Oversight Commission of the City of Moscow for the Control of 
the Observance of Human Rights in Places of Forced Detention 
concluded that ``the case of Sergei Magnitsky can be described 
as a breach of the right to life''; that the Russian 
President's Human Rights Council report indicated that 
Magnitsky was investigated by the very officials he had 
implicated in theft and fraud, that he was beaten by eight 
guards with rubber batons on the day he died, and that an 
ambulance crew was kept outside his cell until he was dead; 
that the second trial, verdict, and sentence against former 
Yukos executives Mikhail Khodorkovsky and Platon Lebedev evoke 
serious concerns about the right to a fair trial and the 
independence of the judiciary in the Russian Federation; that 
Mr. Magnitsky's experience appears to be emblematic of a 
broader pattern of disregard for the numerous domestic and 
international human rights commitments of the Russian 
Federation; that the deaths of a number of prominent Russians 
illustrate the grave danger of exposing the wrongdoing of 
officials of the Russian Federation or of seeking to obtain, 
exercise, defend, or promote internationally recognized human 
rights and freedoms; and that the people of the Russian 
Federation, like people everywhere, deserve to have their human 
rights and fundamental freedoms respected and that human rights 
and fundamental freedoms are inalienable and universal in 
character and thus bind all states.

Section 3--Definitions

    Section 3 of the Act defines the terms ``admitted'', 
``alien'', ``appropriate congressional committees'', 
``financial institution'', and ``United States Person.''

Section 4--Identification of Persons Responsible for the detention, 
        abuse and death of Sergei Magnitsky and other gross violations 
        of human rights

    Section 4(a) of the Act requires the Secretary of State, in 
consultation with the Secretary of the Treasury, to submit to 
the appropriate congressional committees a list of each person 
the Secretary of State determines meets one of the following 
categories of criteria:

          (1) Persons responsible for the detention, abuse, or 
        death of Mr. Magnitsky; persons who participated in 
        efforts to conceal the legal liability for the 
        detention, abuse or death of Mr. Magnitsky; persons who 
        benefited financially from the detention, abuse, or 
        death of Mr. Magnitsky; or persons involved in the 
        criminal conspiracy uncovered by Mr. Magnitsky; or
          (2) Persons responsible for extrajudicial killings, 
        torture, or other gross violations of internationally 
        recognized human rights committed against individuals 
        seeking: (A) to expose illegal activity carried out by 
        officials of the Russian Government; or (B) to obtain, 
        exercise, defend, or promote internationally recognized 
        human rights and freedoms, such as the freedoms of 
        religion, expression, association and assembly and the 
        rights to a fair trial and democratic elections, 
        anywhere in the world; or
          (3) Persons who acted as an agent of or on behalf of 
        a person in a matter relating to an activity described 
        in paragraphs (1) or (2).

    Section 4(b) of the Act requires the Secretary of State to 
update the list required by subsection 4(a) as more information 
becomes available.
    Section 4(c) states that a person shall be removed from the 
list required by section 4(a) if the Secretary of State 
determines that the person did not engage in the activity for 
which the person was added to the list.
    Section 4(d) describes the form the list will take and the 
extent of its public availability. It requires that, except as 
permitted by subsections 4(d)(2)-(3), the list shall be 
submitted in unclassified form and published in the Federal 
Register. Section 4(d)(2) permits information to be submitted 
in a classified annex if the Secretary of State determines that 
it is necessary for the national security interests of the 
United States to do so, and, prior to submitting a list 
including a classified annex, provides the appropriate 
congressional committees notice of and a justification for 
including each person in the classified annex. Section 4(d)(3) 
requires that, not later than 300 days after the date of 
enactment and annually thereafter, the Secretary review the 
classified annex and provide to the appropriate congressional 
committees a justification for continuing to include each 
person in such an annex.
    Section 4(e) requires the Secretary of State to provide a 
response not later than 120 days after receiving a written 
request from the chairperson and ranking member of one of the 
appropriate congressional committees concerning whether a 
specific person meets the criteria for being added to the list 
requires by subsection 4(a). The response may be submitted in 
classified form if the Secretary determines that it is 
necessary for the national security interests of the United 
States to do so.
    Section 4(f) clarifies that the Secretary of State shall 
publish the list required by subsection 4(a) without regard to 
the requirements of section 222(f) of the Immigration and 
Nationality Act (8 U.S.C. 1202(f)) with respect to 
confidentiality of records pertaining to the issuance or 
refusal of visas or permits to enter the United States.

Section 5--Inadmissibility of Certain Aliens

    This section provides that an alien is ineligible to 
receive a visa to enter the United States and ineligible to be 
admitted to the United States if the alien is on the list 
required by section 4(a), and that the Secretary of State shall 
revoke, in accordance with section 221(i) of the Immigration 
and Nationality Act (8 U.S.C. 1201(i)), the visa or other 
documentation of any alien who would be ineligible to receive 
such a visa or documentation under the Act. The application of 
this section may be waived by the Secretary of State if the 
Secretary determines that such a waiver is necessary to permit 
the United States to comply with the Agreement between the 
United Nations and the United States of America regarding the 
Headquarters of the United Nations, signed June 26, 1947, and 
entered into force November 21, 1947, or if the Secretary 
determines that a waiver is in the national security interests 
of the United States and provides, prior to granting such a 
waiver, notice of and a justification for the waiver to the 
appropriate congressional committees.

Section 6--Financial Measures

    This section requires the Secretary of Treasury to freeze 
and prohibit all transactions in property and interests in 
property of a person that the Secretary, in consultation with 
the Secretary of State, determines has engaged in an activity 
described in paragraph (1), (2), or (3) of section 4(a) if such 
property and interests in property are in the United States, 
come within the United States, or come within the possession or 
control of a United States person. The Secretary of the 
Treasury may waive the application of this section if the 
Secretary determines that such a waiver is in the national 
security interests of the United States and, prior to granting 
such a waiver, provides notice of and justification for the 
waiver to the appropriate congressional committees.

Section 7--Report to Congress

    This section requires the Secretary of State and Secretary 
of Treasury to submit a report one year after the date of 
enactment (and annually thereafter) to the appropriate 
congressional committees. The report must describe the actions 
taken to carry out the Act, including the number of times and 
circumstances in which persons described in section 4(a) have 
been added to the list during the year preceding the report and 
if few or no such persons have been added during that year, the 
reasons for not adding more persons to the list. The report 
must also describe efforts to encourage the governments of 
other countries to impose sanctions that are similar to the 
sanctions imposed under the Act.

                           IV. COST ESTIMATE

    In accordance with Rule XXVI, paragraph 11(a) of the 
Standing Rules of the Senate, the committee provides this 
estimate of the costs of this legislation prepared by the 
Congressional Budget Office.

                            United States Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 5, 2012.
Hon. John F. Kerry,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1039, the Sergei 
Magnitsky Rule of Law Accountability Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Sunita 
D'Monte and Matthew Pickford.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

S. 1039--Sergei Magnitsky Rule of Law Accountability Act of 2012

    S. 1039 would require the Departments of State and Treasury 
to compile, publish, and annually report on a list of persons 
responsible for the death of Sergei Magnitsky or human rights 
violations in foreign countries. Listed persons would be 
ineligible for entry into the United States, have any existing 
visas revoked, and have their assets frozen.
    Based on information from the Department of State, CBO 
expects the Department would hire seven additional staff to 
implement the bill's provisions at an annual cost of about 
$200,000 per person. CBO further estimates that the 
administrative costs to the Department of Treasury would be 
insignificant each year and over the 5-year period. On that 
basis, and adjusting for anticipated inflation, CBO estimates 
that implementing S. 1039 would cost $6 million over the 2013-
2017 period, assuming the appropriation of the necessary 
amounts.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending or revenues. Enacting S. 1039 would decrease 
revenues from visa fees and increase revenues from civil and 
criminal penalties imposed on those who violate the 
regulations. CBO estimates that the provisions would affect few 
people and that revenues deposited in the Treasury would not be 
significant in any year. The legislation also would increase 
direct spending from criminal penalties which are deposited in 
the Crime Victims Fund, and spent in subsequent years. However, 
CBO expects that any net effects associated with collecting and 
spending such penalties would not be significant in any year.
    S. 1039 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    On June 29, 2012, CBO transmitted a cost estimate for H.R. 
4405, the Sergei Magnitsky Rule of Law Accountability Act of 
2012, as ordered reported by the House Committee on Foreign 
Affairs on June 7, 2012. The House bill has some similarities 
to S. 1039 but is restricted to human rights violations in 
Russia, and thus, the estimate of H.R. 4405's cost is 
correspondingly lower.
    The CBO staff contacts for this estimate are Sunita D'Monte 
and Matthew Pickford. The estimate was approved by Peter H. 
Fontaine, Assistant Director for Budget Analysis.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to Rule XXVI, paragraph 11(b) of the Standing 
Rules of the Senate, the committee has determined that it is 
unable to fully anticipate the regulatory impact resulting from 
this legislation because the number of persons determined to 
have committed the conduct set forth in section 4(a) of the Act 
is not known at this time.

                      VI. CHANGES IN EXISTING LAW

    In compliance with Rule XXVI, paragraph 12 of the Standing 
Rules of the Senate, the committee has determined that there 
are no changes in existing legislation as a result of this 
bill.

                                  

```