Biziness and justice, Russian style: The cost to our society could be far worse than the wealth these men bring

Daily Mail

William Browder is head of Hermitage Capital in London’s Golden Square. He is a naturalized British citizen, the grandson, as it happens, of Earl Browder, the head of the US Communist Party in the 1940s. That link did neither him nor his mathematician father no favours in life.

In the last year he has received 11 death threats – a text message quoted the Godfather about history showing that ‘there is no one so powerful they cannot be killed’. The calls were traced back to Russia. They probably did not come from gangsters, but from the senior figures in the Russian police, or more worryingly the FSB secret police. They are the ones who poisoned the late Mr Litvinienko with polonium in the middle of London.

In the 1990s Browder was one of the biggest foreign investors in Russia. He found doing business there increasingly impossible, because of endemic corruption and the absence of commercial law. He complained so much about this that in 2005 he was denied re-entry to Russia after flying in from London, despite the fact that the following year his firm paid $230 million tax on $1 billion profits. One might imagine the Russians were glad to have him.

Shortly after the taxes were paid, 50 tax police raided Hermitage’s Moscow offices. His staff were assaulted when they asked to see warrants. The police stole company seals and headed company paper before they left.

Within months, the company’s lawyers began to notice that several judgements had been awarded in several obscure commercial courts hundreds of miles from Moscow against Hermitage, although they had never been sued. His lawyers, who included a young man called Sergei Magnitsky, began to smell rats.

Magnitsky discovered what in Russia (and other former Soviet republics) is a tried and tested scam. He realised that ownership of Hermitage had been illegally assumed, like a false identity, by three shell companies, whose ‘directors’ included Victor Markelov, a convicted murderer. That ‘transfer’ had been achieved, with the aid of the the company seals and paper stolen by the police in the raid.

The three fake ‘Hermitages’ next eagerly admitted various commercial offences, whose effect was to turn the real company’s $1 billion profits into a $1 billion paper loss. That meant that the fake Hermitages were due a tax rebate: of exactly $230 million, the sum Browder’s company had actually paid to the Russian government. Very oddly the court allowed the same lawyer to represent both sets of litigants, without establishng that both parties were fake.

Although it was Christmas Eve 2007, the Russian tax authorities paid out the $230 million tax rebate within the space of twelve hours. Of course, everything shuts down over Christmas, except this vast sum of money, which went down the fibre optic cables to Credit Suisse bank, from where it whizzed off to obscure tax havens in the Caribbean and on a Pacific island called Vanuatu. It was the biggest tax fraud in Russian history. The beneficiary shell companies were also connected to Mexican drug cartels and arms dealers trading in weapons from North Korea to Iran. Such front companies come and go overnight.

Mr Magnitsky alleged that not only the police, in the shape of Major Pavel Karpov and Lt Colonel Artem Kuznetsov, but the tax office concerned, led by one Olga Stepanova, were in on this massive fraud. With the help of Credit Suisse, he investigated where the money had gone. The result was shocking.

Two young police officers who earned salaries of under $1200 a month, seemed to have assets worth between $3 and $4 million. Except that many of the assets were registered in the names of their elderly parents, who therefore technically owned luxury apartments and Landrovers and Porsche Cayennes, the latter an odd choice of vehicle for an 85 year old woman who could not drive.The parents were pensioners. Magnitsky established that it would have taken them 4000 years to accumulate a fraction of the assets registered in their name.

The story at the tax office was even worse. The chief tax officer and her husband earned a combined total of $50,000 a year. Yet they owned $40 million worth of assets. These included a $20 million luxury house in a plush Moscow suburb, built by one of Russia’s leading architects, as well as properties in the Palms complex in Dubai and a marina in Montenegro, all more befitting a rich British footballer than a lowly tax official. They also had fleets of top of the range SUVs and sports cars. The tax officer’s three underlings were also multi millionaires.

One might have thought that the Russian government would have been interested in the theft of $230 million of its revenues. For it is important to note that this fraud was perpetuated against the Russian state, or rather the Russian people.

Instead, the same two police officers who had stolen the company records to give to criminals, arrested Magnitsky and accused him of being in on the crime. He was held in pre-trial investigative custody, where conditions are worse than regular jails, because the aim is to so depress and wreck a suspect that they freely confess. This meant Magnitsk shared cells with 50 others, in which because beds were so limited, that people slept in shifts or stood on one leg when awake to conserve floor space. There was no glass in the windows; the sewers were (deliberately) blocked; and the place was rife with insects and vermin.

Meanwhile, it was time for the bit part players and the evidence to disappear. While the murderer Markelov was already in jail – which did not stop him directing further crimes with the aid of $2 million assets and $1 million a year income which were never blocked or confiscated- his accomplices began to be hit and killed by cars or fell off tall buildings. All the records of the crime were destroyed too when a van taking them to court was blown up with a bomb.

Magnitsky made the mistake of repeatedly complaining to the prison authorities about his mistreatment, as he was entitled to do under Russian law. After 11 months he was ill with gall stones and peritonitis, and had dropped 40 pounds in weight. In 2009 he was transferred to the maximum security Butyrka prison, where on arrival he was put in a straitjacket and clubbed by 8 guards; he died alone and on the floor a few hours later on 16 November 2009. Photos of the 37 year old’s body, taken by the naive first doctor and detective on the scene, show massive bruising to his hands and legs.

However, the police and prison authorities denied he had been murdered – he had allegedly died of ‘heart failure’. They began to wipe out evidence of this crime, by switching off the mortuary refrigerator, they were able to prevent an autopsy, on the grounds of swift decomposition. Although an independent human rights panel, appointed by President Dmitri Medvedev, averred that Magnitsky had been murdered, nothing was done to discover who might have done it, and more importantly why.

The police officers in this case have since been promoted, from dealing with taxes to the FSB, Russia’s sinister secret service, which under Vladimir Putin has supplied most of the inner core of Russia’s government. They were also awarded National Police medals, though not presumably, for allegedly murdering Magnitsky.

They enjoy a lifestyle inconceivable on their official salaries, including constant travel to luxury destinations. According to travel records, they come to Britain too, for we are apparently not so fussy about who we let come and go. By contrast, the US Congress has recently banned around 60 named individuals connected to this case from entering the US, a sanction which some European countries are about to emulate. But not here, apparently, lest this upset wider Anglo-Russian relations.

Britain has become the haven of choice for extremely rich Russians. They keep the central London housing bubble alive, and spend huge amounts of money in luxury West End shops. You can spot them in Selfridges; the ones with hard faces and bulging shoulders crammed into leather coats, usually accompanied by wives young enough to be their daughters. Some of them have even bigger bodyguards.

The commercial division of the High Court is where they thrash out their past biziness differences, as we have just seen in the grotesque spectacle of Boris Berezovsky versus Roman Abramovich, a minor warm up act for the forthcoming clash between Oleg Deripaska (whose homes here are like an overnight hotel) and Mikhail Cherney, currently resident in Israel, who will be testifying from there under the sort of arrangements laid on by our courts for film director Roman Polanski, since he is subject to European arrest warrants. This trial involves who swindled who out of around $4 or $5 billion, in the course of the so-called aluminium wars, in which 400 people were murdered before Deripaska’s Rusal smelting conglomerate came out on top. The sums of money involved are truly mind boggling.

Preposterously, British lawyers claim that such trials are a testiment to the repute British justice enjoys in the wider world. In fact, they are a very nice earner for top QCs, who spend months determining who promised what to who a few decades ago, without anything being written down or recorded, and all expressed in the colourfully gutteral Russian argot used by imprisoned mafia members. The word ‘protection’ (khrysty) recurs a lot.

One begins to wonder about the impact of these Russians in our own society. These are vastly rich men, who need prominent people to lend respectability to the boards of companies they register in Britain, partly so as to get access to the bottomless funds of the City of London. That prospect has a dampening effect too on those prominent people who would like to be on the boards of these companies, provided they don’t enquire too closely where these fortunes originated, or what relationships these oligarchs have with a Russian government run by former secret policemen. For British biziness is still collaborating with a culture where corruption is so bad that Russia is on a par with places like Upper Volta in terms of lawlessness and fraud.

Instead of being awestruck by the mere fact of great wealth – which like Scott Fitzgerald’s Jay Gatsby’s probably originates in organised crime – we should be asking about the cost to our society of allowing these men to do what they like in our country. That is what the story of Sergei Magnitsky really tells us. онлайн займ быстрые займы на карту https://zp-pdl.com/how-to-get-fast-payday-loan-online.php https://zp-pdl.com/best-payday-loans.php hairy woman