Sources of Power: What War in Ukraine and EVs from China have in Common

Those attending the TRACE London Forum last week enjoyed captivating talks including “Taking on Putin” by Sir William Browder (“Bill”), an accomplished investment banker and the author of Red Notice and Freezing Order, and “EVs, Energy & Microchips: How China’s Emerging Supply Chain Dominance Has the West Scrambling” by Sandy Garossino, a reporter for Canada’s National Observer. Although their topics may seem far apart, a common theme resonated across them. With mesmerizing real-life stories and eye-popping statistics, they left the audience with a better understanding of how corrupt regimes preserve their power by creating and funding distractions that stoke human rights abuses.

Bill captivated the audience with a heartfelt story of his continuing pursuit of justice for Sergei Magnitsky, his former lawyer in Russia who, while gravely ill and imprisoned without access to medical treatment, was beaten to death by several Russian Police for his investigation of corruption by Russian President Vladimir Putin and his henchmen. Largely through the efforts of Bill, 35 countries have enacted Magnitsky Acts, which empower enforcement officials to freeze the assets of kleptocrats and human rights violators.

These laws have angered, not restrained Putin. Funded by enormous sums tithed by Russian Oligarchs who fear him, Putin maintains a tight grip on power to avoid the cruel fate that he imposed on Magnitsky, Navalny, and so many others. As Bill explained, Putin’s professed motivation for invading Ukraine out of historical and patriotic necessity is a laughable ruse. Rather, Putin simply seeks to remain the apex predator in Russia’s kleptocratic food chain to avoid the alternative – ending up on the menu. Putin preserves his power by using the national treasury to fund the war in Ukraine as a distraction, so the focus and blame are on others rather than on him and his corrupt regime.

Sandy Garossino spoke of a different sort of power – electric – and used mind-boggling graphs to depict how China is a generation ahead of the West in Electric Vehicle (EV) technology, production, and supply chain fundamentals. EV batteries and solar power are the new oil, and geopolitically they could power China to essentially become OPEC 2.0. Some Western countries have blocked or slowed imports of Chinese EVs in hopes their national industries will catch up. But as Garossino points out, given the opportunity to buy a very inexpensive EV from China, consumers in the West will quickly and even happily forget that their purchase will assist in China’s human rights abuses.

Specifically, success in the global EV market will result in a continuous stream of funds for China’s government that will reinforce its confidence and its treasury, helping to fund its continuing systematic abuse and destruction of the cultures of Uigurs, Tibetans, and other minorities within China, as well as funding China’s aggression towards Taiwan and in the South China and Philippine Seas.

Like Putin, China’s leadership understands that engaging in human rights abuses are a self-preservation tactic in that they distract the people from the real challenges to be resolved. Success in the EV market also will help China’s leadership to distract the people from problems created by weak sectors in the country’s economy, especially real property and banking, and serve as a point of nationalistic pride for Chinese – all to the benefit of the current regime.

Attending the Forum last week to hear from experts how corrupt regimes maintain their grip on power was daunting but also invigorating. On the bright side, the Forum’s audience of skilled corporate compliance officers are to a person actively engaged in the struggle against human rights abuses. By ensuring their companies and colleagues comply with law and company shared values, and through their anti-bribery, anti-money laundering, sanctions, and other efforts day in and day out, compliance officers are continually working to keep resources out of the hands of those who would use or contribute them toward abusing human rights.  

Lee Nelson

Independent Compliance and Ethics Attorney