Impudence and Impunity

Russia Profile.org

As Russia prepares for this year’s Economic Forum in St. Petersburg, the long-running saga of the Hermitage Capital Management will loom large in the minds of potential investors and could cast a shadow of uncertainty over Russia’s shaky investment climate. Last week, one of the individuals accused by the British hedge-fund firm of involvement in a $230 million tax scam, finally broke what looked like a sacred vow of silence.

In an interview with the Vedomosti business daily published on Friday, Vladlen Stepanov, the husband of a Russian tax official who allegedly embezzled millions through the tax rebate scam, denied any connection between his wealth and the fraud. He announced that he had filed a lawsuit to protect his honor, dignity and business reputation against the Echo of Moscow radio station, which aired the allegations, and against Jamison Firestone, a managing partner at Firestone Duncan who voiced them.

For the third year running, Hermitage Capital’s founder William Browder has been campaigning for the prosecution of Russian officials he blames for the death of Sergei Magnitsky, the Hermitage lawyer who died in November 2009 after almost a year in pre-trial detention. Before his death, Magnitsky said he was abused and denied medical care in an effort to force him to drop fraud allegations against two senior detectives, Lieutenant Colonel Artyom Kuznetsov and Major Pavel Karpov, whom he accused of facilitating the largest tax fraud in Russian history. The case generated front-page headlines and shook investor confidence in Russia, even drawing criticism from Western organizations and governments. President Dmitry Medvedev ordered Russia’s chief prosecutor and justice minister to investigate the case in November 2009, and since then several officials at Butyrskaya Prison where Magnitsky died have been fired. But Browder says the main culprits remain unpunished. One of the officers Browder named is Lieutenant Colonel Oleg Silchenko, a senior Russian policeman, who Browder claims has been promoted, along with other police officers that Magnitsky accused. Silchenko now leads the investigation into the lawyer’s death on the orders of President Dmitry Medvedev, RIA Novosti reported.

Chicago-born Browder, who was once Russia’s largest foreign investor, has vowed to continue his one-man crusade to persuade foreign investors to steer clear of Russia. “What we’re doing is we are going around the world and we are putting in place visa sanctions and assets freezes, so that the guys who killed Sergei can’t get away with it,” Browder told Russia Profile. At this year’s World Economic Forum in Davos, Browder dealt a blow to Russia’s attempts to present itself as a modernizing force and a good place for business by challenging Russian First Deputy Prime Minister Igor Shuvalov over the Kremlin’s mishandling of the Sergei Magnitsky murder. “The president of the country called for an investigation into the people who killed my lawyer,” Browder told a panel chaired by Shuvalov and a hall packed with Western executives, Reuters reported. “One year after the investigation people who killed the lawyer have been promoted higher by state orders… My question to you, Igor, is what will prevent other investors to have the same experience after my experience in Russia,” he said at the discussion, entitled “Russia’s Next Steps to Modernization.”

Influential Deputy Prime Minister Igor Sechin has dismissed such calls as unnecessary grandstanding by suggesting that Browder’s experience should “attract investors,” because of the “fantastic” returns Hermitage made in Russia before its problems arose. Sechin asserted that the controversies involving Yukos, Hermitage Capital Management and BP and its partners actually prove that Russia is a safe bet for investors. “What matters to an investor? That there be an economic result,” Sechin told Wall Street Journal in a rare interview. “Among the offerings that are on the market, we satisfy investors fully,” he said.

While Browder’s campaign for justice has not deterred multinationals like Pepsi Co or British Petroleum from doing business with Russia, it is surely undercutting President Medvedev’s efforts to attract investors to Russia. Browder, a former Kremlin cheerleader turned its most virulent critic, was banned from Russia as a “threat to national security” in 2005. Last week, U.S. politicians backed new legislation called “The Sergei Magnitsky Rule of Law Accountability Act of 2011” that will freeze the assets of implicated Russian officials in America. “The European Parliament passed a resolution in December 15 to freeze their assets and ban their visas,” Browder said. “The Canadian Parliament is doing the same thing.”

Last month, an independent commission investigating Magnitsky’s death in Russia found that he was illegally jailed and deprived of medical care. The commission, which was set up by the Kremlin, also found that the 500 million-ruble tax evasion charges were fabricated by officials from the Interior Ministry and the Federal Security Service, the Vedomosti newspaper reported on 16 April, citing a copy of the council’s preliminary findings. Despite such findings and the high-level attention the case attracted, Alexander Bastrykin, who heads the Federal Investigative Committee, said in a September 2010 interview with Rossiskaya Gazeta, the government’s official newspaper, that there was “no reason” to believe Magnitsky’s death was connected to those prosecuting the criminal case against him.

Russian law enforcement are also not letting up in their struggle to fight against allegations of corruption and miscarriages of justice. Earlier this month, Moscow’s Tverskoy District Court sanctioned a warrant to arrest Hermitage Capital Management Executive Ivan Cherkasov in absentia in connection with the same tax evasion case that led to Magnitsky’s arrest in 2008. Silchenko, who was implicated in Magnitsky’s death, has asked the court for the warrant claiming that a company called Kameya, which was owned by an unidentified Hermitage client and managed by Cherkasov, underpaid an unspecified amount in taxes in 2006. Silchenko also issued a summons to question Hermitage Capital CEO Bill Browder in Moscow. Browder said the warrant was revenge for a recent online video which showed how top Russian tax officials had conspired with corrupt policemen and judges to defraud the Russian state of $230 million at Hermitage’s expense.

Some political observers have said that the way the case is being pursued by Russian law enforcers is hurting President Medvedev’s efforts to reform the country. “The president’s resolve to eradicate corruption and change Russia’s investment climate is as real as to be unshakeable,” said Kirill Kabanov, the head of the nongovernmental National Anti-Corruption Committee. “But the determination of Russian bureaucrats who feed at the public trough to hold on to their booty is also unshakeable.” Kabanov said Russia’s Security Service (FSB) has not been cooperating with his committee and cited instances when they have refused to allow implicated employees to be interviewed. “They are afraid to let them reveal crucial information,” Kabanov said. “This is either because there is so much money at stake, or they are simply arrogant.”

Even without the likes of Browder, investors curious about the Russian story have a sure enough reference point in Russia’s tale of corruption and political arm-twisting, which Kabanov says is both long and sleazy.

“To grasp the enormity of the challenges facing President Dmitry Medvedev in his effort to improve Russia’s investment climate, one need look no further than the culture of impudence and impunity by the country’s law enforcement agencies,” Kabanov said. Vladimir Nekrasov, the founder and former owner of the decimated cosmetics retailer Arbat Prestige, spent two years behind bars while investigators tried unsuccessfully to find conclusive evidence of his guilt. Like Browder before him, Nekrasov appealed to president Medvedev in 2009 to intervene in the criminal investigation against him, saying investigators are trying to blackmail him into giving evidence against a suspected organized crime boss. Last month, investigators dropped criminal charges against him but not before his cosmetics empire was destroyed.

Another recent case is that of telecoms tycoon Yevgeny Chichvarkin, who fled Russia to Britain in 2008 to escape what he called persistent attempts to take over his business. Russia issued an extradition warrant for him in 2009 to face charges of extortion and kidnapping. Russian prosecutors dropped kidnapping charges against him in January but the mobile phone entrepreneur has said that he is unlikely to return to Russia, and might look at setting up a new business in London, where he currently lives. And these are just the tip of the iceberg, Browder said. “For everyone we know about, there are possibly 15 we don’t know about. It is a criminal investment climate out there. There is not a single person that can go there unscathed,” he said.

Three years into president Medvedev’s reforms, the country’s risk level is so high that the Share Placement Prospectus of major investment banks now routinely includes warnings that prospective buyers of Russian securities are exposed to the risks of expropriation and nationalization of their property, Vedomosti wrote in an opinion piece recently. Investors, the paper says, would rather believe the likes of Bill Browder, Yevgeny Chichvarkin or Vladimir Nekrasov, than president Medvedev’s beautiful presentation at any forum. unshaven girls payday loan https://zp-pdl.com/online-payday-loans-in-america.php https://zp-pdl.com/online-payday-loans-cash-advances.php быстрые займы на карту