Hermitage Capital Sues Russian Ministry Over Tax Investigation

Bloomberg

Hermitage Capital Management, the $1.2 billion hedge fund run by William Browder, sued Russia’s Interior Ministry, accusing it of opening an improper tax investigation that defrauded the government out of $230 million.

Hermitage filed a lawsuit at Russia’s Constitutional Court last month that says the ministry had no justification for opening a 2007 tax probe into a company the hedge fund advised on investments in the country. The probe allowed the ministry to obtain Hermitage documents that were used to steal taxes the London-based hedge fund had paid to the Russian government, Hermitage said in a statement released today.

“This lawsuit aims to strike a major blow against those government officials who blatantly misuse their position and status,” Browder said in the statement. “Thousands of businesses have been targeted by corrupt interior ministry officials in Russia who use fabricated tax claims to extort money, terrorize people and falsely arrest them.”

At its peak, Hermitage managed $4 billion and was one of the biggest foreign investors in gas export monopoly OAO Gazprom before Russia banned Browder from entering the country in 2005. Hermitage’s suit aims to overturn a 2003 presidential decree that gave the ministry power to open criminal tax probes.

Pavel Klimovsky, a spokesman for the ministry, didn’t return a telephone call seeking comment.

Sergei Magnitsky

The ministry, which oversees Russian law-enforcement agencies, began investigating Moscow-based OOO Kameya in 2007 on suspicion it had underpaid taxes by about $40 million, according to Hermitage. Russian investigators then raided the Moscow offices of a unit of Hermitage and the law firm Firestone Duncan in the wake of the Kameya probe, according to the hedge fund. Hermitage said it had advised Kameya on investments and both firms were represented by Firestone Duncan.

The raid and allegations by Hermitage that the probe was used to misappropriate taxes it paid to the government prompted Sergei Magnitsky, a Firestone Duncan attorney, to complain to Russia’s State Investigative Committee in October 2008. Magnitsky was arrested a month later. He spent 358 days in pre- trial detention before dying in prison in November 2009 at the age of 37.

Russia put Browder, 46, on its international wanted list in 2009, saying he and Magnitsky participated in a tax evasion that deprived the government of more than 500 million rubles ($16.2 million). Russian investigators said Browder was using Magnitsky’s death to distract from the case against him. Browder denies the allegations. онлайн займ займ на карту без отказов круглосуточно https://zp-pdl.com/get-a-next-business-day-payday-loan.php https://zp-pdl.com/best-payday-loans.php займы онлайн на карту срочно