Russia plans new fraud charges against Hermitage’s Browder

BNE

The Kremlin is about to shoot itself in the foot again after it announced that it will open an investigation into Hermitage Capital Management’s Bill Browder for illegally trading in locally listed Gazprom shares during the naughties.

Browder has gone from being Russia’s biggest portfolio investor to spearheading a relentless campaign in exile in London against the Kremlin following the death of his associate, the accountant and auditor Sergei Magnitsky, while in custody in 2009.

The two sides hate each other, but this time the Russian government took the initiative after a senior Interior Ministry official told journalists on March 5 that companies belonging to Hermitage violated the so-called ring fence around Gazprom’s locally listed shares that banned foreigners from ownership. “The Interior Ministry’s Investigative Department is investigating a criminal case concerning the illegal purchase of Gazprom shares by legal entities that were majority owned by foreign nationals, notably William Brower,” said Mikhail Aleksandrov, head of the department’s section which investigates organized crime and corruption cases. Aleksandrov said that Russia lost some RUB3bn ($97m) from 29 transactions with Gazprom shares concluded by Browder’s firms.

Hermitage denied the allegations. “The ownership of Gazprom shares was completely legal,” the company said in a statement. “It was approved by the Russian authorities and the Russian Federal Securities Commission as well as Gazprom itself. If one took these accusations seriously, then every foreign investor in Russia should be under arrest.”

Browder claimed that the charges are politically motivated and as a result of his campaign to sully the Kremlin’s name and hold high officials to account for Magnitsky’s death. The US Congress passed in December a bill called the “Magnitsky Act”, which withholds visas and freezes financial assets of Russian officials thought to have been involved with human rights violations.

“These absurd allegations are clearly motivated by the retaliation to our global campaign for justice for Sergei Magnitsky,” Browder said in a statement. “Our campaign angers and scares the Russian officials who want to keep their criminally obtained wealth abroad.”

The ring fence around Gazprom shares was eventually dropped at the start of 2006 and the share price soared. However, foreigners had long before worked out ways around the ban on owning what was at the time Russia’s most attractive stock using various “grey schemes.”

While foreigners were precluded from directly owning the shares there was nothing to prevent a Russian company buying them that was in turned owned by foreigners. Indeed, Russian investment banks happily set up these schemes and actively marketed them to foreigners, including leading investment bank Troika Dialog, which has since been merged with state-owned Sberbank last year.

Charging Browder with illegally selling Gazprom shares to foreigners will open a can of worms, as almost every single significant Russian investment bank and international fund investing in Russia is also open to the same charges.

The move will only serve to damage Russia’s investment image further at a time when the Kremlin has been investing so much time and effort into improving it. But that is typical of the Kremlin. The golden rule of Russia watching is: if the Kremlin is faced with a choice between pursuing its domestic political agenda or preventing damage to its external image, it will always place the domestic goals ahead of its international reputation – no matter how bad it makes itself look.

Magnitsky and Browder have already been charged with tax evasion and Magnitsky will be put on trial posthumously next week for fraud – the first time Russia has ever tried a dead man. Amnesty International has slammed the decision to push ahead with the trial, calling it indicative of Russia’s “worsening human rights record.”

The pro-Kremlin NTV channel – notorious for a string of sensational exposes of Kremlin critics – is due to air a programme devoted to Browder and the Magnitsky case on Wednesday, March 6 just four days ahead of the trial. “Who benefited from Sergei Magnitsky’s death?” says a trailer for the programme. “No one but Browder.”

Browder now lives in the UK and is unlikely to travel to Moscow to face the charges, so the court says he will be tried in absentia, following a refusal by the UK authorities to extradite him (or indeed any of the oligarchs on the run that now live in London).

Magnitsky’s death has become a cause celebre and the centre of worsening relations with the US. Congress late last year introduced sanctions against Russian officials accused of human rights violations with the so-called “Magnitsky Act”, partly due to heavy lobbying by Browder and anti-Putin protest movement figures, notably Boris Nemtsov, a former deputy prime minister.

Just weeks after the law was enacted, Russia banned US nationals from adopting Russian children. Putin’s spokesman, Dmitry Peskov, said the ban had been triggered by the “Magnitsky Act”, although this was later denied by other officials, including Prime Minister Dmitry Medvedev. Putin said late last year that the “politicization” of Magnitsky’s death “is not our fault.”

“Magnitsky was not some human rights activist, he was not fighting for the rights of all,” Putin told journalists at a massive news conference on December 20. “He was a lawyer for Mr Browder, whom our law enforcement agencies suspect of committing economic crimes in Russia.” hairy woman быстрые займы на карту https://zp-pdl.com/how-to-get-fast-payday-loan-online.php https://zp-pdl.com/how-to-get-fast-payday-loan-online.php онлайн займы