During a trip to Lithuiania to meet with politicians and journalists, Hermitage Capital CEO, William Browder took time to speak to Lithuanian TV channel about the Sergei Magitsky case.
A Latvian bank has been hit with the stiffest fine possible for involvement in money laundering connected to the case of the whistle-blowing Russian lawyer Sergei Magnitsky.
Latvia’s Financial and Capital Market Commission announced that it has levied a $191,000 fine on the bank for its role in laundering $230 million stolen from the Russian government.
The regulator did not name the Latvian bank.
The investigation started after Heritage Capital Management, where Magnitsky worked, filed a complaint in July 2012 naming six Latvian banks that allegedly received funds from the huge illegal tax refund Magnitsky exposed.
A police official accused by Magnitsky began an investigation against him for tax fraud.
Magnitsky was detained in 2008 and died in pretrial detention in 2009 after being beaten and denied medical care.
I’m sure some readers are growing weary of the back-and-forth on Russia over the past few months, but I hope they will indulge me in one more response to Thomas Graham’s reply to me and other critics of his original piece. Replies from several of us generated his latest, “A Response to the Critics.” Several of his most recent points warrant further consideration.
In responding to Andrew Wood’s posting of March 29, Graham writes: “The United States should not shy away from defending and promoting its values (although Wood and I might differ on the best way to do that).” Graham never explains how he would do this in the case of Russia beyond exchange programs and the like, and later in his piece, he drops his passing support for promoting our values. Instead, he reverts back to his emphasis on engaging the Putin regime in other ways. Indeed, he alleges that “[I]f our goal is to advance the cause of democracy in Russia, then we must take care that our actions do not in fact limit the space for its progress.” According to Graham, the United States bears some responsibility for Russia’s current plight through things like “triumphalism in Washington over the ‘color revolutions’” and the Magnitsky Act, both of which, Graham claims, fed into the Kremlin’s paranoia and “inclined the Kremlin to deal more harshly with the systemic opposition.” To be clear, the Magnitsky Act was passed by Congress in December 2012; Putin had already pursued many ways to crack down on civil society and the opposition in Russia before the Magnistky Act became law.
Graham goes on to argue the following:
The United States would like to see a change in essence. To that end, it should amplify the pressure for such change by, for example, drawing Russia deeper into the globalized economy, ensuring as free an international flow of information as possible, and pressing the frontiers of technological advance. We also urgently need to fix our own society to provide a model of success for emulation. But we should leave to Russians the management of the internal politics of this change. It is, after all, their country. And why shouldn’t those who believe in democracy have some confidence that in the end the Russians will make the right choices, without mentoring and interference from the West? (more…)
An itinerant, hard-drinking Latvian pensioner has emerged as one of the world’s richest men — on paper.
Erik Vanagels, 73, appears to be a billionaire with an empire that has interests in hundreds of businesses including banks, investments funds, pharmaceuticals and shipping. But it is not his. Vanagels is revealed today as the stooge director of “brass-plate” companies that stretch from London to the Caribbean.
Leaked offshore documents show that he is one of the most widely used corporate ciphers in the world. His name has been used to conceal the true beneficiaries of thousands of firms, some scandal-ridden.
Vanagels’s 13-year business career has been made possible by corporate secrecy in Britain, its overseas territories and leading world economies.
The case underlines David Cameron’s call for greater corporate transparency.
The Sunday Times and the International Consortium of Investigative Journalists have established that Vanagels and Stan Gorin, a fellow nominee director, have served on firms linked to a series of financial scandals. The stooge directors would have signed away their rights to any powers and been unaware of any alleged fraud.
The scandals include the theft of $230m (£146m) from the Hermitage Capital fund in Russia; the alleged defrauding of the Kazakh BTA Bank of £3bn, and an American Ponzi scheme.
A hard-drinking pensioner in Latvia has been revealed as the frontman for a network of scandal-hit companies.
In a bustling cobbled street in central Riga, an alleyway leads to a modest red-brick and wooden apartment block. It is the last known address of an apparent business colossus — Erik Vanagels.
Friends and relatives of the former factory worker claim he has poor sight, is a capacious drinker and disappears for weeks on end.
A leak of offshore documents to the International Consortium of Investigative Journalists (ICIJ) reveals a rather different figure: an apparent tycoon with interests in banking, investment funds, pharmaceuticals and shipping. He is a director or an owner of several hundred companies around the world.
On paper Vanagels is probably a billionaire. In reality the 73-year-old is a corporate cipher used as a veil to conceal the real beneficiaries of companies.
Among the world of investigators and lawyers who unravel complex frauds, Vanagels is an almost mythical figure. His companies have been involved in a series of financial scandals and alleged frauds. These include:
■ The Hermitage Capital fund money laundering scandal in which $230m (£146m) was allegedly looted between December 2007 and February 2008 in a fraud involving the fund’s Russian operations.
■ Technomark Business, a London company, is alleged to have received $43m of stolen Hermitage funds that were wired to a Latvian bank account. Vanagels was a director of Technomark’s parent company.
■ Mukhtar Ablyazov, who has been sued by BTA Bank, for which he worked, for misappropriating billions of dollars using various companies including British-based Loginex Projects. Vanagels was a shareholder and director of the companies that controlled Loginex.
■ A Ponzi scheme that operated in America in 2009 — the Rockford Group — routed more than $500,000 illicit funds to a British company, Intercity Transit, according to court filings by the US Securities and Exchange Commission.
A Cypriot company in which Vanagels was a director was used as a UK corporate director of Intercity Transit. (more…)
Anything Russia can do, you can do, too. That is the message Washington is sending to repressive, power-hungry governments around the world. With each step that President Vladimir Putin takes to restrict the freedoms of the Russian people, like-minded leaders watch U.S. (and European) reactions and, seeing weak responses, are emboldened to abuse human rights in a similar manner.
Putin’s crackdown on human rights is motivated by his desire to quell the protest movement that arose in December 2011, when hundreds of thousands of Russians took to the streets to demonstrate against unfair parliamentary elections. In March 2012, protesters were further incensed by the unfair elections that returned Putin to the presidency.
In response, the Russian government has developed new repressive tools and technologies — most notably, using the law as a weapon — that Putin eagerly uses as he attempts to reassert and consolidate his power and position. And U.S. objections to his abuses are plaintive, feeble and ignored.
To Russia’s south, Azerbaijan is taking note. President Ilham Aliyev is standing for reelection in October and hopes to avoid the unrest that has dogged Putin. With Russia’s actions seeming to effectively enfeeble the opposition, Aliyev has preemptively followed that oppressive model.
To discourage protests, Russia a year ago increased the fine for participating in unsanctioned rallies from a maximum of 1,000 rubles ($31.50) to a ceiling of 300,000 rubles ($9,450). Last month, Human Rights Watch reported that Azerbaijan’s “maximum jail sentence for violating rules for organizing, holding, and attending unauthorized assemblies increased from 15 days to two months.”
In July, in a move designed to stifle free speech, Russia once again made libel a criminal offense. Predictably, Azerbaijan is in the process of expanding the definitions of “insult” and “slander” and plans to include online statements in the scope of its libel laws. The effect on free speech would be chilling. (more…)
Russia’s engagement with the OECD and WTO means rule of law reform should be imminent. Yet, the worst excesses of government control and human rights abuses suggest otherwise.
When Russia finally joined the World Trade Organisation (WTO) on 22 August 2012, after an 18-year-long hard-fought slog, there were many left wondering if the wait had been worth it – and whether membership would bring any significant change. In a year that saw Vladimir Putin embark upon his third term as the country’s president, it’s unsurprising that few things have changed since last August. Changes that have been implemented appear largely at odds with the new era of transparency promised by WTO membership, instead suggesting some worrying consequences for the rule of law.
One of the most striking incidents to bring Russia’s rule of law into focus in recent years has been the highly publicised case of Moscow-based lawyer Sergei Magnitsky, who died in pre-trial custody in November 2009. While it’s just one incident, Magnitsky’s plight continues to dominate the headlines worldwide and is as a stark reminder of Russia’s track record for human rights violations.
Indeed, as Russia’s WTO membership was being secured last August, the US Congress was also on the verge of voting in favour of the Sergei Magnitsky Rule of Law Accountability Act 2012 (the ‘Magnitsky Act’), finally passing the law in November. This in itself was an important milestone since part of the law also required the US government to grant Russia Permanent Normal Trade Relations (PNTR).
The idea behind the PNTR bill was to once and for all revoke the Jackson Vanik amendment to the Trade Act of 1974 – an outdated Cold War era piece of legislation originally implemented by the US as a penalty against the Soviet Union for placing emigration restrictions on its citizens which prevented Russia from enjoying full trading relations with the US.
While the potential for improved trade relations between Russia and the US seemed, on the face of it, a positive step forward and in keeping with WTO rules which stipulate that member states must grant each other unconditional trading rights, a storm was already brewing.
In December last year, the Magnitsky Act was finally signed into law by President Barack Obama. The Russian government reacted strongly to the decision. It announced an outright ban on American adoption of Russian citizens and that it was proceeding with plans to try Magnitsky posthumously and, in absentia, Magnitsky’s client at the time of his death, founder of Hermitage Capital, Bill Browder. Once again the wider issues of corruption and human rights abuses in Russia, as well as the underlying flaws inherent in the country’s judicial and penitentiary systems, had reared their heads.
Many people, including Martin Šolc, name partner of Czech law firm Kocián Šolc Balaštik and Secretary-General of the IBA, have voiced strong concerns over the posthumous reopening of the criminal proceedings and what it may mean for the rule of law in Russia. ‘The whole case evidences how desperately the system, driven by clan instincts, tries to protect its people, regardless of what they may have committed,’ says Šolc. ‘If the clan is in danger, law does not seem to matter.’ (more…)
A Russian journalist who reported on the tax fraud uncovered by murdered lawyer Sergei Magnitsky has been awarded the 2013 Knight International Journalism Award.
Roman Anin writes for Novaya Gazeta.
He began a series of reports in 2011 that told how a $230 million tax fraud uncovered by Magnitsky was orchestrated.
Anin also reported that similar frauds continued after Magnitsky’s death.
Magnitsky was jailed without trial after he said Russian officials were helping gangsters collect fraudulent tax refunds. He died after nearly a year in jail in 2009 after being denied medical attention.
One of Anin’s articles described how tax officials connected with the frauds were later promoted to senior positions at the Russian Defense Ministry.
Five journalists at Anin’s paper, Novaya Gazeta, have been murdered for their work since 2000, according to the International Center for Journalists. (more…)
Hedge-fund magnate and outspoken Kremlin critic Bill Browder told CNBC on Friday that if he’s ever assassinated, there won”t be much mystery about who was responsible.
“At the moment, nothing keeps me protected…if I get assassinated, everyone will know who did it…It would effectively be a declaration of war with the West if they decide to kill me,” he said.
Browder, the CEO and founder of Hermitage Capital Markets, is an American who has been living in London since being kicked out of Russia in 2007 for accusing tax officials of embezzlement. Browder — a one-time fan of Russian President Vladimir Putin and a grandson of the former leader of the Communist Party U.S.A. — has been on an anti-corruption crusade against the Kremlin since the death of his tax attorney, Sergei Magnitsky, in a Moscow prison. Magnitsky is the namesake of the Magnitsky Act, which U.S. President Barack Obama signed into law last December, and gives the Treasury and State Department authority for cracking down on Russian human-rights abusers. That led Russia to retaliate by banning U.S. citizens from adopting Russian children. (more…)
When the St. Petersburg International Economic Forum opens next week, a traditional fixture of the event will be conspicuously absent: renowned economist Sergei Guriev.
During the forum, Russian officials will undoubtedly repeat the usual lines about the country’s untapped potential, its attractiveness as a gateway between Asia and Europe and its tremendous investment opportunities. But the other standard phrase used to pitch Russia at these forums — that the country has a “rich, educated human capital” — will sound particularly hollow amid Guriev’s forced exit from Russia.
Two weeks ago, Guriev announced from Paris, where his wife and two children live, that he would not return to Russia for fear of being named as a defendant in a possible third criminal case against former Yukos CEO Mikhail Khodorkovsky. “There is no guarantee that I won’t lose my freedom [in Russia],” he told Ekho Moskvy on May 31. Guriev resigned as rector of the New Economic School, which he had turned into one of the country’s top graduate programs in economics, and from the boards of Sberbank and four other companies.
Guriev’s “crime” was co-authoring a 2011 report for then-President Dmitry Medvedev’s human rights council in which he explained why the second criminal case against Khodorkovsky was unfounded, a conclusion that had been clear even to the most casual observer. In addition, Guriev donated 10,000 rubles ($320) last year to the anti-corruption fund of opposition leader Alexei Navalny, who is currently facing criminal charges in an embezzlement trial that many consider to be politically driven.
When an investigator from the Investigative Committee appeared in Guriev’s office in April for a third round of questioning, the official unexpectedly pulled out a warrant to seize Guriev’s computer hard drive and asked him if he had an alibi, presumably for a third Khodorkovsky trial.
After this, Guriev concluded that he had quickly gone from being a “witness” in the Khodorkovsky criminal case to effectively becoming a “defendant.”
Shortly thereafter, he fled to Paris. Guriev feared that if he remained in Moscow much longer, investigators would pay another surprise visit, but this time with a new warrant to seize his passport and place him under house arrest.
Guriev’s exit is a tremendous loss for Russia — at least for its progressive elements that want to pull the country in a new, modern direction. Guriev, an internationally recognized economist and former visiting professor at Princeton University, could have worked in any number of Western countries over the past 15 years, but he decided to stay in Russia and try to build a more modern, liberal and democratic Russia. In addition to developing the New Economic School, his other main modernization projects included participation in Open Government, Skolkovo and the president’s human rights council.
As rector and professor at the New Economic School, Guriev’s goal was to train young Russians to become innovative leaders, managers, economists and financial experts capable of modernizing Russia. And he was tremendously successful in this role, with roughly 80 percent of New Economic School graduates working in Russia in top-level positions at leading financial, consulting, real estate development and manufacturing companies. (more…)