Russia: Bribery on the beat

Financial Times

3 Nov 2010: Until Ekaterina Mikheeva saw her husband Fedor led away in chains to an Arctic prison camp, she did not think the Russian criminal justice system could sink so low.

Mr Mikheev had taken a risk that few others dared take, and it cost him 11 years of freedom: he had pressed charges against a group of high-ranking policemen, claiming they had kidnapped him in 2006.

The case is one of several that illustrate the fearsome reach of Russia’s security services. Once feared for their efficient repression of ideological dissidents, their reputation now inspires just as much dread as before, for what Russians call reiderstvo, or raiding. Corrupt police nowadays often work hand in glove with organised crime gangs, targeting vulnerable businessmen with investigations and arrests as a way to shake them down for money or take over their assets.

Events in Moscow this week dramatically demonstrated the extent to which law enforcement has been politicised. Mikhail Khodorkovsky, the former billionaire and arch-enemy of the Kremlin who was jailed in 2003, gave a final plea before being sentenced in a second trial, decrying “police lawlessness” and “raiders in epaulettes”. He added: “When people collide with the system they have no rights at all.”

Police also raided the bank belonging to Alexander Lebedev, owner of London-based newspapers The Independent and the Evening Standard, who is a noted critic of the government. The reasons for the raid were not immediately clear.

“The police are nothing more than a big gang, a separate corporation,” says Ms Mikheeva, a Moscow travel agent and mother of two who struggles to make ends meet with her husband in prison. “They used to enforce an ideology, now they are just out to make money – and no one can get in their way.”

Russians seem to agree they are increasingly hostage to their law enforcement agencies, whose powers have grown exponentially in the last decade under the rule of Vladimir Putin, former president and now prime minister, who himself was a KGB spy. A June poll by the Levada Center, a research organisation, asked: “Do you feel protected against arbitrary actions by the police, tax inspectors, courts, and other government structures?” In response, 43 per cent said “not really” and 29 per cent said “definitely not”.

But while President Dmitry Medvedev fired 15 police generals this year and announced a wholesale reform of the police by 2012, the limits of the Kremlin’s ability, or desire, to rein in the security services have nonetheless been graphically demonstrated. Authorities have failed to tackle dramatic miscarriages of justice similar to Mr Mikheev’s, in spite of numerous legal appeals.

In 2008 Sergei Magnitsky, a lawyer, testified against police for allegedly participating in a tax fraud worth $230m, the largest ever recorded in Russia, using companies belonging to clients of his that they had in effect confiscated. Soon after this testimony he was accused of tax evasion, imprisoned without trial for 11 months and died in custody a year ago as a result of medical complications. The Moscow Helsinki Commission, the influential Russian human rights group, said the death was tantamount to torture and murder by the police.

An investigation ordered by Mr Medvedev 11 months ago into the death of Magnitsky has gone nowhere; no arrests have been made. Oleg Silchenko, the interior ministry officer who signed the orders detaining Magnitsky without trial for nearly a year until his death, was even promoted in July to lieutenant colonel.

Some of the circumstances surrounding the $230m tax fraud make Magnitsky’s allegations of police corruption striking. Stamps and documents used in the tax fraud had been confiscated during a raid in June 2007 on the offices of his law firm and on those of a client, Hermitage Capital Management, an investment fund run by the US-born Bill Browder, who is now London-based. The items were in the possession of the police at the time the fraud was committed that December, using those documents.

The Moscow City Bar Association said in July that Magnitsky’s death represented the systematic persecution of lawyers in Russia, adding that “the perpetrators of the theft of budget funds have remained unpunished, while the lawyers who have attempted to report them have been subjected to criminal prosecution”.

But the officials involved seem to be beyond the power of the justice system. One of the officers involved in securing Magnitsky’s arrest in 2008, Lt Col Artyom Kuznetsov, was also accused by Mr Mikheev of kidnapping him and arresting him on false charges in 2006. Col Kuznetsov declined numerous requests for comment from the Financial Times.

Both cases focus attention on a group of interior ministry operatives who seemingly have wide powers of arrest. Both also ended in a similar way – with the policemen free and the men who accused them of abusing their office behind bars.

The odyssey of Mr Mikheev, formerly deputy general director of a midsized fertiliser company, began in August 2006, when he was met at his workplace by Col Kuznetsov, who brought him to police headquarters for questioning.

The company, called UkrAgroKhimPromHolding, had taken out a $100m loan from the state-controlled VTB, Russia’s second largest bank. VTB initiated a complaint with police in July, alleging that the loan had been used fraudulently, though Mr Mikheev and Alexander Bessonov, his boss and head of the company, insist they can prove the funds were used for their stated purpose of buying equipment.

Mr Mikheev testified to police later that the case against them was an attempt by VTB employees to extort a cut of the loan for themselves. Mr Bessonov claimed to investigators that he had been threatened by VTB’s chief of security with “destruction” if he did not pay a bribe of at least $10m to VTB employees in return for the loan. The security chief denied under police interrogation in June 2007 that he had made any such threat.

Mr Mikheev was kept in police custody for two days and was not charged with any crime. But the strange part of the story comes after his release – he claims he was escorted out of police headquarters and forced into a car where two men drove him to a country house where he was held for 11 days. He says his captors were described by his interrogator, Capt Anton Golyshev, as “non-staff” police agents, though in fact they were two convicted criminals, Viktor Markelov and Sergei Orlov.

According to a transcript seen by the FT of a cross-examination by internal affairs investigators following Mr Mikheev’s complaint, Capt Golyshev denied Mr Mikheev had been kidnapped, asserting rather that he had requested “temporary accommodation” for his own safety. In captivity Mr Mikheev claimed his life was threatened if he did not disclose Mr Bessonov’s whereabouts, according to his own later testimony to police. “I believe that the purpose of my kidnapping was to understand how rich was my boss and where he kept money,” he told investigators in September 2006. He also testified that while in captivity Mr Orlov informed him that he had been kidnapped on the orders of VTB employees in order to extort $20m from Mr Bessonov.

VTB rejected requests to contact its security chief, who apparently still works for the company, saying: “VTB has never been a participant in any legal process dealing with the kidnapping of Mr Mikheev. Thus we cannot comment on such questions.” Sergei Sokolov, editor of the opposition-oriented Novaya Gazeta, says he does not believe VTB as an organisation was involved in the conflict with Mr Mikheev, but “it was probably just some mid-level employees from the security department”.

Mr Mikheev was eventually freed by a police Swat team after his wife Ekaterina, despite threats to her life, finally informed police. He decided to press charges against the policemen, including Capt Golyshev and Col Kuznetsov, whom he alleged had organised his kidnapping. But he was arrested again a few days later and charged with fraudulent use of the $100m VTB loan.

According to Mrs Mikheeva, the couple were pressed by Col Kuznetsov to withdraw their testimony against him and two other investigators accused of taking part in the kidnapping, in exchange for the charges against Mr Mikheev being dropped. “They said, we will do you a favour if you do us a favour,” she says. Neither Col Kuznetsov nor the interior ministry responded to questions from the FT seeking to clarify his role.

Despite that fact that neither Mr Mikheev nor his wife withdrew their testimony against the group of officers, the case against the latter was dropped in November 2006 and two prosecutors who had signed the order to investigate the Mikheev kidnapping received reprimands. “They just drowned it,” says one former policeman with knowledge of the case. “They created obstacles. No one ever said anything to us directly, but it was clear that if we pressed ahead with this, our careers would suffer.”

Ultimately Mr Orlov, and a partner, Viktor Markelov, were arrested for the kidnapping of Mr Mikheev and spent six months in jail before being freed. But the policemen who detained Mr Mikheev and allegedly forced him into Mr Orlov’s car were freed. Capt Golyshev received a simple reprimand “for violations of the law in the course of the investigation”, according to a letter from the prosecutor’s office in September 2006, though it was not clear from the letter what the actions referred to were. Col Kuznetsov received no punishment.

Mr Mikheev was sentenced to 11 years in a penal colony, where he is to this day.

Ayear later, Col Kuznetsov led the police raid on the offices of Hermitage Capital in which the materials used to create what may be the largest tax fraud in Russia’s history were seized.

After Hermitage filed a complaint over the fraud, the lawyer Magnitsky testified that police officers including Col Kuznetsov were involved. Col Kuznetsov and three subordinates were then included on the team who investigated Magnitsky for tax evasion, according to a police directive from November 2008. Magnitsky was jailed pending trial, where he died.

Col Kuznetsov has asked police to launch a criminal defamation investigation against Hermitage’s Mr Browder and Jamison Firestone, Magnitsky’s former boss, whom he claims have falsely accused him of being involved in Magnitsky’s death.

Mrs Mikheeva acknowledges the risks of going public with the story of her husband, but says she seeks justice: “My husband was a hostage in an extremely dirty game. We’re not just talking about theft – we’re talking about destroyed lives.”

Fund manager at the centre of the saga

Bill Browder (left), head of the Hermitage Capital Management investment fund, is central to the saga of police corruption that has engulfed Russia’s interior ministry. American-born, he has adopted British citizenship and is today based in London following his expulsion from Russia in 2005.

Hermitage, which he created in 1996, used to be the largest portfolio investor in the country and pioneered the trading of Russian shares by western companies. Its legal problems began with Mr Browder’s expulsion and culminated in the arrest of its lawyer, Sergei Magnitsky, in 2008 followed by his death in 2009. It is thought the problems stemmed from offence caused to vested interests by Mr Browder’s criticism of management practices at companies such as Gazprom, the gas monopoly, in which Hermitage had invested heavily. займ на карту займы на карту без отказа https://zp-pdl.com/best-payday-loans.php https://zp-pdl.com/fast-and-easy-payday-loans-online.php займ на карту онлайн