Are Russian killers on the streets of Britain?
A jogger who collapsed and died in leafy Weybridge turns out to have been blowing the whistle on one of Russia’s biggest tax frauds. Mark Townsend reports on a crisis that has pitted the Kremlin against the US Senate and British police.
Shortly after 5.15pm on 10 November 2012, a jogger turned into Granville Road, Weybridge, running along the hedge-lined street of one of Britain’s wealthiest enclaves. Then, 50m from his home, he staggered into the road and died.
In the days that followed, Surrey police believed they were dealing with a natural, if unusual, death. Four months on, the passing of 44-year-old Alexander Perepilichnyy still remains a mystery. Two post-mortems have proved inconclusive, but the outcome of what Surrey police promise is their “full range” of toxicology tests is imminent.
To piece together Perepilichnyy’s final years is to drill down into the core of Russian criminality, according to one account.
What we know of Perepilichnyy is slight. In another age he might have been a rocket scientist. Peers called him a “genius”, a Ukranian whiz-kid with an uncanny knack for numbers. His favourite waste of time was, they say, discussing the theories behind cosmogony and Kondratiev waves – the long-term cycles of capitalism. However by the time Perepilichnyy arrived to study at the Moscow Institute of Physics and Technology – famous for supplying the brains behind the Soviet space race – Russia’s lunar ambitions had curdled with the collapse of communism. Instead Perepilichnyy applied his talents to the world of finance and was, until 2008, a star talent at an asset management firm in Moscow.
That year, on the other side of Moscow, across Red Square and the brown Moskva river, a rival investment fund to Perepilichnyy’s had become engulfed in crisis. Hermitage Capital was under the guidance of a man called Bill Browder, a naturalised Briton based in London who had built the investment firm into the largest foreign investor in Russia. But on Christmas Eve 2007, it had discovered itself to be the victim of a huge and sophisticated scam.
Browder hired Moscow-based lawyer Sergei Magnitsky, to investigate. In July 2008, Magnitsky revealed his findings detailing a web of corruption involving state tax officials and police. Magnitsky allegedly revealed how a gang of detectives, tax inspectors and convicted criminals had planned a 2007 police raid on Hermitage’s Moscow office in which officers stole paperwork relating to Browder’s companies. These documents were then used to secretly apply for a tax refund worth £144m.
Following the paper trail, Magnitsky found that the rebate, the largest in Russian history, had been approved at a Moscow tax office in just one day. The vast proceeds had disappeared into a shady network of accounts, according to Magnitsky. After reporting the crime to the authorities, instead of being lauded for his work, Magnitsky was arrested by police and accused of orchestrating the fraud himself. In jail, the 37-year-old was denied medical treatment, handcuffed and beaten by riot troops. He had been in prison awaiting trial for 358 days when on 16 November 2009 doctors found him dead on his cell floor in a pool of urine.
Perepilichnyy had paid close attention to Magnitsky’s fate. Among his client portfolio, he soon realised, were the same senior tax officials Magnitsky had accused of perpetrating the crime against Hermitage Capital. Worse still, Perepilichnyy suspected the vast proceeds of the crime were starting to wash through the foreign corporate bank and Credit Suisse accounts which he managed.
According to associates, Perepilichnyy was “properly scared” by the death of Magnitsky. Sources say the financier feared he might be implicated in the fraud or similarly victimised if he spoke out. At the end of 2009, Perepilichnyy fled to Britain with his family and what appears to have been a vast fortune, the provenance of which still remains opaque.
One friend in Moscow, who requested anonymity, said: “Most of all he was an outstanding father. He seemed to be thinking of them 80% of his time.”
Perepilichnyy believed the exclusive confines of St George’s Hill in Surrey would offer sufficient protection for himself, his wife and their two young children, and began renting the six-bedroom Coach House off Granville Road for around £15,000 a month. It was a fortified mansion in an area protected by round-the-clock guards and roadblocks. As one Surrey police source explained: Perepilichnyy lived where “even the security has security”.
Perepilichnyy adopted a deliberately low profile in the UK. All that changed during the summer of 2010, when he decided to follow the lead set by Magnitsky and handed over evidence and details of the Credit Suisse accounts. Hermitage in turn passed them to the Swiss police, sparking an ongoing international inquiry that has spread to six countries and resulted in the accounts of alleged Russian fraudsters being frozen.
Perepilichnyy’s act put him in grave danger. By the time he went for his final jog last November, the threats against him were mounting. One corrupt official allegedly involved in the fraud against Hermitage warned “the financial wizard” to stop running scared in England because he owed money to “scores of creditors”. Even the alleged killers of Litvinenko joined the long list of those with a potential motive. One of the suspects wanted for trial over the murder of the former KGB spy is among those understood to have launched legal action against Perepilichnyy, accusing him of failing to pay back debts. Perepilichnyy told business contacts in London that Moscow police agents had informed him his name was on the “hit list” of Chechen assassin groups for hire and that they had accumulated a dossier with details of his life in Surrey.
Rumours persist that he was part of the fraud against Hermitage, although his friends insist it was naivety, not greed, that brought him into danger. “He was a tragic hero,” says one. “He could have been a genius professor of maths at a different time and place. He became followed, threatened and put into a corner.”
Yet even at the end, Perepilichnyy had enough courage to flout the death threats and travel abroad. On the day he died, he had just returned from Paris after a three-day visit. During his sojourn in the French capital he’d booked two hotels, but it is unclear why he went to Paris or who he met there.
Investigators working for Hermitage claim the deaths of Magnitsky and Perepilichnyy are the latest in a series of suspicious deaths. They claim at least five other men who have died in strange circumstances had links to individuals they allege were involved in the fraud. The investigators paint a picture of a shadowy network of corrupt police, tax officials and criminals dubbed the Klyuev group, which is, they claim, headed by the bald, heavy-set figure of businessman Dmitry Klyuev. A spokesman for Klyuev, who is a convicted fraudster, describes the suggestion that such a group exists as a “fabrication and a lie”. The spokesman pours scorn on the idea of a string of suspicious deaths and adds that Browder, whom he describes as a “corporate blackmailer”, is running a highly defamatory PR campaign.
The first unusual death, according to the Hermitage investigators, came in 2005. Sergei Albaev, a former KGB officer, worked for Klyuev as a chauffeur. Documents from a Moscow court case record his wife’s worry: “He became more secretive, agitated, and kept saying he had problems at work.” Unknown to her, Albaev, along with his boss Klyuev, had been accused of helping orchestrate a £1.1bn fraud against Russia’s biggest iron-ore producer, a criminal act that Hermitage lawyers allege was a forerunner to the attack on them.
On 3 March 2005, before Albaev could plead his innocence in court, he went on a business trip. He called his wife, saying he was in the Rostov region, 700km south of Moscow. On 8 April she received a call from a man she did not recognise. Her husband had died, said the stranger. Albaev’s death certificate states he died from heart failure. Albaev was only 39. Although it was true Albaev liked a drink, smoked and weighed about 150kg, his family believes his death seemed sudden. Even now, his wife and child have no idea who he was with when he died or what he was doing.
Within weeks came another death. Alexei Alexanov had also been implicated as a key player in the attempted iron-ore fraud. Little is known about Alexanov other than, according to court transcripts, that he had known Klyuev since 1991. During a pre-trial interview, Alexanov insisted he would never sign fraudulent contracts, claiming that the implicating signatures looked nothing like his handwriting. Alexanov never had another chance to contest his innocence. Soon after, he too died in the Rostov region of heart failure. He was 46.
The next death wasn’t so much strange as mistimed, according to investigators. It occurred in the wake of the fraud against Hermitage Capital. In the period after Magnitsky uncovered the crime, and before his arrest, the Russian interior ministry launched an investigation into his claims that quickly yielded a culprit. On the face of it, Oktai Gasanov from Azerbaijan seemed an unusual criminal mastermind. The 58-year-old appears to have been little more than a lowly security guard at a Moscow trading centre. But it is Gasanov’s death certificate that raises the most questions. Gasanov died two months and 24 days before the actual fraud was committed. Had he been framed by police officers alleged to have been part of the syndicate that targeted Hermitage?
Then there was Valery Kurochkin – a bumbling alcoholic, according to police records, yet named by tax officials as the inheritor of Hermitage Capital. He never had time to indulge his new-found wealth: allegedly having taken a midnight train to Ukraine with five of the fraud suspects, the 48-year-old was found dead close to Boryspil international airport, near Kiev, on 30 April. His death certificate cites cirrhosis as the cause of death.
Then came Semyon Korobeinikov. Magnitsky had traced money from the Hermitage fraud to a Russian bank called USB which Klyuev had once owned but which had apparently been sold in 2006 to Korobeinikov. Before the 57-year-old could be questioned, Korobeinikov elected – according to the official report – to visit a Moscow construction site in September 2008 and climb a half-finished luxury penthouse. “Korobeinikov took himself to a big height,” says the police inquiry’s peculiar explanation. “His heart felt poorly, he fell down, obtaining injuries incompatible with life.”
Klyuev is robust in his rejection of the claims made by Hermitage, saying that the company, and Browder, is trying to frame him. “To completely fool the public, Browder hints at various ‘suspicious’ deaths, cynically describing them in the context of… Dmitry Klyuev,” says Klyuev’s spokesman. The “Klyuev group”, he says, was invented by Browder and the allegations are “unworthy and low”. The spokesman accuses Browder of extensive criminal activity himself and points out that Browder is facing charges in Russia, in a case that was due to start last week.
As diplomats in Moscow and London wait nervously for the outcome of the toxicology assessments on Perepilichnyy, many believe his name may join Magnitsky’s as a central source of friction between Russia and the west. In December the US Senate passed the Magnitsky Act, which imposes a visa ban and sanctions on 60 Russians implicated in the fraud and lawyer’s death. The act prompted Cold War-style posturing and tit-for-tat sanctions, including President Vladimir Putin’s ban on Americans adopting Russian children. Russia is pressing ahead with the posthumous prosecution of Magnitsky for tax evasion, the trial that also indicts Browder.
This prosecution has drawn widespread international condemnation and forced the European Parliament to describe it as a “violation of international and national laws”. The last precedent for the posthumous trial dates back to medieval times when, in 897, the then pope held a trial of his predecessor, whose body was dug up and propped up on a chair in the papal court.
Klyuev claims the case will ensure Browder’s “own crimes cannot remain hidden. [He] should honestly reveal all the accusations made against him and explain his behaviour in each specific instance.”
Whether the Klyuev group exists or not, many of its alleged members appear to like London. Lawyers for Hermitage claim that analysis of flight records reveal that 61 flights between Moscow and London have carried at least one member of the so-called group since Magnitsky exposed the fraud and have identified to the Serious Fraud Office individuals who they say have laundered the fraudulent money.
If suspicions about Perepilichnyy’s death were to be confirmed, the broader concern among the intelligence services is that Russian hitmen could be freely entering the UK. Hermitage employees have received at least 11 death threats, mainly text messages from phones traced to Russia. The firm’s London staff report being put under surveillance by strangers, and many now follow elaborate security routines.
Former foreign minister Chris Bryant, a Labour MP, is among those perturbed that elements of the Russian mafia may be able to move freely about in London. “Undoubtedly there is a security risk in Britain at the moment,” says Bryant. “There are a number of Russian operatives acting in the UK – the long arm of Russian vendettas seems to stretch over here.” Browder has no doubt that he is a marked man.
Publicly, at least, no one is any wiser as to why Perepilichnyy dropped dead at the end of his jog. The ongoing police investigation is liaising with MI5, and Swiss and Russian authorities – but the latter relationship has been particularly difficult since Alexander Litvinenko’s murder in 2006 in London. Perepilichnyy himself allegedly owed money to Dmitry Kovtun, one of the prime suspects wanted by British prosecutors over the poisoning. But senior Whitehall sources are keenly aware that the cause of Perepilichnyy’s death has potentially seismic ramifications. If it is proven that Perepilichnyy was murdered, then no one is safe.