After Swiss Freeze Millions, Stepanov Swings Back

Barron’s

An abbreviated version of this story ran in May 28 edition of Barron’s Magazine.

Swiss prosecutors have frozen Eur. 8 million in Credit Suisse bank accounts of Vladlen Stepanov, a subject of our story about a $230 million tax scam in Russia that victimized the hedge fund firm Hermitage Capital and led to the death in police custody of Hermitage’s whistle blowing lawyer Sergei Magnitsky (“Crime and Punishment in Putin’s Russia,” April 16).

Stepanov isn’t taking the Swiss action lying down. Last week he placed a self-justifying advertisement in a Russian newspaper, and this week he appeared for a video-taped interview at the Russian financial daily Vedomosti. In both forums, Stepanov denies that the Swiss bank money, and other riches detailed in our article, were illicitly obtained or derived from the hundreds of millions in dubious Russian tax refunds doled out by Olga Stepanova, a former tax official from whom Stepanov says he’s been divorced since 1992.

The evidence of corruption amongst police and other officials involved in the Magnitsky case has created enough of a stink that President Dmitry Medvedev called a press conference last week to discuss an independent inquiry into the scandal.

“I do not want to be a wood chip,” is the headline of Stepanov’s May 17th ad in the RBK Daily newspaper – an allusion to a Russian proverb suggesting that he sees himself as an innocent victim who’s been ground up in the chainsawing of a forest. He dismisses as “recreational arithmetic,” the estimates of his wealth presented in “horror videos” about the Magnitsky case produced by Hermitage Capital’s founder William F. Browder (see www.russian-untouchables.com).

Stepanov addresses his ad’s “open letter” to Alexey Navalny, a celebrated Russian anti-corruption blogger who’s commented on the recently leaked Swiss bank records that seem to show inexplicable wealth accumulated by Olga Stepanova and others in her tax office, despite income declarations by both Olga and Vladlen that show meager incomes. Stepanov’s open letter doesn’t explain the apparent discrepancy between his wealth and his income declarations – other than saying that the declarations aren’t the same as tax returns, and grumbling that leaked documents are an invasion of privacy.

Vladlen Stepanov’s open letter (see translation below) says that he opened his Credit Suisse account in 1995 and filled it with earnings from his honest work in tunnel construction. He explains his dozens of recorded border-crossings with Olga since their divorce as trips abroad to get her treatment for cancer, which he says was in “an advanced stage” back in 1995, as well as trips taken together with their son. His award-winning avant-garde mansion outside Moscow isn’t so fabulous, he insists, because it’s near power lines. It doesn’t appear in property records, he says, because he’s waiting for an amnesty from taxes on such country houses.

Stepanov blames his unsought “stardom” and financial exposure on a former financial advisor named Aleksandr Perepilichny, who Stepanov says is hiding in London and owes money to Stepanov and others. It was Perepilichny who got Stepanov to invest in properties on Dubai’s sensational Palm Island, says Vladlen, and who knows that Stepanov’s assets had nothing to do with Olga’s command of Moscow Tax Office No. 28.

Barron’s could not reach Perepilichny for comment, but an Aleksandr Perepilichny shows up among the Cyprus shell companies used to make payments from Credit Suisse bank records to Valdlen Stepanov. Perepilichny had been a director of The Ukraine Opportunity Trust, according to that investment fund’s listing documents on London’s AIM exchange, where he was described as a private equity investor in Ukraine-based food enterprises. He resigned in March 2007 amid a dispute on how the AIM-listed fund was operated, according to a shareholder letter lamenting the loss of Perepilichny, written by that fund’s founder Fabien Pictet – the scion of a fabled French banking family.

Whether or not Vladlen Stepanov’s rebuttal evidence successfully persuades Swiss authorities to release his funds, the freezing of his accounts has surely sent shudders through the ranks of Russia’s wealthy.

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Translation of Stepanov’s advertisement in RBK Daily newspaper May 17, 2011:

I DO NOT WANT TO BE A CHIP FLYING WHEN WOOD IS CHOPPED

An open letter to Alexey Navalny

Dear Alexey! This letter comes to you from the “untouchable” Vladlen Stepanov. Willing or not, you have contributed to my “stardom” which I never sought. In your blog posted last April, you wrote about the need to “repost” the information about my alleged involvement in the fraudulent tax return of 135 million dollars. The involvement which in the public mind is associated with Sergey Magnitsky’s death.

I deliberately chose you as my addressee because I greatly appreciate and respect your crusade against corruption in Russia. As you wrote in your blog, one cannot watch the video devoted to my ex (I’ll address this later) wife and myself without getting emotional. It made you “clench your hands into fists.” I would not call myself faint-hearted but even I shudder at the thought of what the monsters shown in the video did. At the same time, when I look at myself in the mirror every morning, no fear goes through me. Then I look back at my own life and do not see anything that would make me shudder. I am a serious businessman active in this capacity since 1991. Yet this video masterpiece instantly turned me into a thievish husband of my wife. Meanwhile no word was said that Olga Stepanova and I have been divorced since 1992…

On April 27, I received a letter from an eastern branch of the Credit Suisse bank notifying me that my accounts with the bank have been frozen as demanded by Lausanne’s prosecutor. Incidentally, my personal account with the bank goes as far back as 1995 (way before all these headline-making corruption stories)… What sets Swiss justice system apart is a similar knee-jerk response to any case “even indirectly tainted with blood”. The coincidence of the last names (Stepanov-Stepanova) and a mention of Sergey Magnitsky were enough to trigger this response. At one stroke, eight million euros on my companies’ accounts ended up being so much dead ballast, at least for a while. As I learned a little later, the office of Lausanne’s prosecutor was contacted by Mr. William Browder through his representatives. It took information from just one person to initiate this stroke.

Let us now talk about Aleksandr Perepilichny. This man owes me a lot of money. As a matter of fact, not only to me but also to scores of other creditors. He cheated me by pocketing my money and assets. Currently, he is hiding in London. We became acquainted in the mid nineties. By that time, I was already quite prosperous, taking advantage of my professional skills in the mining business. And that is when this “financial wizard” showed up in my life. Since 1995, Perepilichny had been in charge of my money. In the early 00s, I even notarized a power of attorney which allowed Perepilichny to withdraw money from my personal account in Switzerland. He was multiplying my capital on the stock exchange. Both of us were also involved in investment business by putting money, for example, into lucrative real estate in the United Arab Emirates. However, the “financial wizard” had failed to see the financial bubble burst coming and was responsible for my money and property losses.

Browder and Perepilichny made a perfect match cooking up a scheme in which the “Stepanov spouses” were the chief villains. I am confident in the role Perepilichny played in notching up my “notoriety” because of some details known only to him and nobody else.

He is well aware of the fact that all of my property belongs only to me and that Olga and I have been divorced for quite some time. In late 1995, however, Olga was diagnosed with advanced cancer. No hospital in Russia agreed to perform the necessary operation and only I was in a position to pay for her treatment abroad. We traveled together for consultations and treatment. Together we went through the radiation and chemotherapy ordeals. Otherwise, we often traveled abroad together for the benefit of our growing son. I feel responsible for my ex-wife and son. Yet each of us lives her and his own life. We live in separate apartments. The owners of the apartment mentioned in the “incriminating evidence” are my son and my ex mother-in-law. (Alexey, what’s your take on getting information which is confidential by definition and should not be given for free?). To call us the “Stepanov spouses” is odd, to say the least. And of course the fact that Olga was head of Moscow Tax Office No. 28 (a place that I have never visited, by the way) is a bait too good to be true for this “arithmetic combination”.

The “facts” disclosed in this “horror video” fit themselves perfectly into a “recreational arithmetic” tract. There is a sum total that the villains – i. e. my ex-wife and I – must resolve and there is the answer at the end of the book, which must tally, by all means.

Thus, let us start with the Rublyovka mansion in “modern style” estimated, I believe, at more than twenty million dollars with me paying more than eight million dollars to build. Incidentally, I had hired the famous architect Alexey Kozyr. Except that nobody mentions the fact that the plot of land on which the mansion was built is contiguous with a power transmission line right-of-way and part of a wooded gully. Moreover, it is not on the Rublyovka but on the Novaya Riga highway. I still have hard time trying to formalize the land purchase, waiting for the “dacha amnesty”. And the price I paid for this plot in 2002 does not exceed what one would pay for a one-bedroom apartment in Moscow. It took five years to build the mansion and the financing was stretched accordingly. There is no way we could have dished out a million euros or even dollars at once.

Now let is turn to the real estate owned by the “Stepanov spouses” in the United Arab Emirates, which includes villa No. 48 and two apartments in the Kempinski Project. By the way, the villa number was known only to Perepelichny. As a matter of fact, his own villa No. 88 is right next door and three times as big. The villas are part of our joint investment project. And the money I paid was not for the villa. It was for bare sand. And the amount was quite substantial – as much as 750 thousand dollars, which something one pays for a two-bedroom apartment in Moscow outside the Garden Ring. In the video, the mansion was presented as a nine million dollar deal, without mentioning that the deal was closed in February of 2006, whereas the “blood tainted” money appeared only in late 2007. January of 2007 is when the payment for the Kempinski apartments was “closed – no way it can be associated with the “blood tainted” money. According to the video, each of the Kempinski apartments was bought to the tune of two million dollars, without any word being said that it was an investment project and that the construction work is yet to be completed.

Finally, the juiciest part of the “recreational arithmetic” as presented in the video – the villa in Montenegro with a 750 million dollar price tag slapped on it by its authors. I did spend some time vacationing in Montenegro in the past but have no property whatsoever in that country. Apparently, the answer at the end of the book did not tally with the solution and the shortfall had to be made up.

As a man of law, dear Aleksey, you are the first person to know that any bank always asks the question – on what basis is the payment made? Why is it, then, that the truckful of incriminating evidence dumped on the Web does not contain a single contract? Would that not be more convincing? Apparently, such contracts simply do not exist. Why are statements issued by the Moscow Tax Office called tax returns and nobody feels uncomfortable with it? And, finally, why are company names in the payment documents blacked out? What is there to hide if you are unmasking a corrupt person?

I do not know what you think about this case but I have a strong feeling that these snippets of information taken out of context are used by the authors of this forgery as corroboration of the hoax with which they have come up.

One more thing. I consider private property and confidentiality of commercial transactions to be as precious assets of civilization as the freedom of speech. And your word, Alexey, is worth a million – I know this first hand. Personally, I have a great deal of respect for you, but as to the scam artists who have filched my money, inflicted tangible financial damage upon me and, on top of everything, smeared my reputation, I shall seek redress.

Sincerely yours,

Vladlen Stepanov займ на карту unshaven girl https://www.zp-pdl.com www.zp-pdl.com срочный займ