Almost two years ago, Sergei Magnitsky, a Russian lawyer who was working for a Moscow based law firm and was acting for Hermitage Capital, a London based investment fund, died in state custody, apparently on trumped up charges.

This story is still shocking, even though it has been widely reported in the Western media over the last two years both in newspapers and on television. The continued presence of the story  in the media is largely thanks to the tireless efforts of Mr Magnitsky’s former client, Hermitage Capital, and the law firm for which he worked, who together have worked hard to ensure that this story stays in the media and in front of the US and UK governments, and that they in turn maintain diplomatic and political pressure on the Russian government to pursue justice for the Magnitsky family.

Today, 22nd October 2001, The Sunday Times, a British newspaper ran another article on the story, this time told from the viewpoint of Mr Magnitsky’s mother Natalia, who says she has utter disbelief that the prosecutors have re-opened the investigation. Apparently they wish to question her, but she says she wants to have no part in it, presumably fearing that the investigation will turn out to be a whitewash. She is reported as saying that she fears the questioning is intended to put pressure on her and her family to stop complaining through the Western media. Instead she has requested that an independent medical commission examine the circumstances in which her son died. This request, which seems perfectly reasonable, has been refused.

In brief, for those not familiar with the story, in the words of the Sunday Times article – no hyperlink, I am afraid, as The Sunday Times is available by subsription only, but it is on page 34:

“The Lawyer, who worked for Hermitage Capital, a London based investment fund, reported to prosecutors that a group  of corrupt policemen and tax officials had embezzled £140m by obtaining a fraudulent tax rebate. However, officials at the interior ministry who had been accused by Magnitsky of being invloved arrested him on charges of committing the crime he had uncovered. In jail Magnitsky, 37, who had two children, developed pancreatitis. In what his mother and widow says was an attempt to coerce him into retracting his accusations against the police, he was denied medical help. During his year long detention, he complained about his treatment more than 450 times…………..Magnitsky was transferred to another Moscow jail 18 days later, supposedly for treatment. In a version of events  that has since been confirmed by an official report, [his mother] said that instead of  being admitted to the prison clinic her son was kept in isolation and savagely beaten by eight guards with batons, and put in a strait jacket.”

The story continues with how the Russian authorities have attempted to deal with the story by sacking some prison guards since then but no-one has gone to jail for what happened to Mr Magnitsky and the fraudsters have been able to enjoy the fruits of the fraud, the very thing which Mr Magnitsky reported to the Russian authorities.

It is difficult to see other whistleblowers coming forward in Russia when such terrible consequences may follow.

Now no-one is suggesting that such awful things go on in every country when a person with real moral courage tries to stop legal wrongs taking place, but the fate of the whistleblower is often unpleasant, even in countries like the US and the UK where the rule of law is, mostly, strictly upheld. Frequently, whistleblowers lose their jobs, even their careers, and the impact on their family life and financial well being can be harsh, due to their loss of income. But what price moral courage? Shouldn’t we as a fair and open society compensate such people?

In the ongoing UK based investigation by the Serious Fraud Office into alleged corruption by EADS/GPT which I have already blogged on twice previously (and which could turn into a really nasty story for the coalition government) there are not one but two whistleblowers, one of whom has allegedly done a deal with GPT in  order to stop him talking further, an irony given the primary allegations, wouldn’t you have thought? There was a further story in The Sunday Times on 23rd October on page 22 which I will blog on again very soon. It seems that the UK Ministry of Defence is trying to scare the first whistleblower, Lt Col Ian Foxley, into silence by threatening him with prosecution under the Official Secrets Act. I make no comment here as to whether there has been a breach but the government seems to be walking a very difficult line in making such threats at the moment. It risks getting itself into a real soup by using such threats when there is already a high profile investigation by the Serious Fraud Office underway.

As I will develop in my next blog, there are significant risks that commercial parties and/or organs of government around the world will very often try to stymie whistleblowers, which is why the US SEC whistleblowers reward programme under the Dodd-Frank Act should in my view be adopted in large measure here in the UK to give people an incentive to come forward and to compensate them for their losses.  Only by doing this can you make serious steps in anticorruption to stop crimes from taking place or to prevent their further commission, without fear of these people being punished financially in the loss of their job or career.  Large rewards are needed if you will no longer have a career to pursue.

I invite other  past or present whistleblowers to contact me with their own stories. I would be happy to blog on them and share their experiences with those reading this blog. This will help develop a narrative and an argument to the UK’s lawmakers for developing both better incentives and better protections for them in the future.