Posts Tagged ‘Hermitage’
Companies Linked To Ousted Ukrainian President Connected To Magnitsky Investigation
Documents found at Viktor Yanukovych’s country residence link his business activities to Russian corruption uncovered by lawyer Sergei Magnitsky.
Newly found documents show that three companies with links to ousted Ukrainian president Viktor Yanukovych are also connected to the money-laundering scandal uncovered by Sergei Magnitsky, the Russian lawyer who died in prison after exposing high-level fraud and embezzlement among Russian officials.
An investigation by Hermitage Capital Management, the investment firm for which Magnitsky was employed, shows the companies named in the documents uncovered at Yanukovych’s presidential palace are registered at the same United Kingdom address, and share the same offshore shell companies and Latvian directors as were found in Magnitsky’s investigation.
An employee of Hermitage, Vadim Kleiner, sifted through the documents uncovered by Ukrainian journalists after Yanukovych’s flight from Kiev and posted his findings to YanukovychLeaks.org, a website created to compile the nearly 200 folders of documents found at the estate. He found that three companies mentioned in the documents as holding some of Yanukovych’s assets or being otherwise tied to the president — Navimax Ventures, Roadfield Capital LLP, and Fineroad Business LLP — had strong links to entities exposed in Magnitsky’s investigation into $230 million in tax revenues which were stolen by Russian officials from Hermitage holding companies. The results of Kleiner’s inquiry were provided to BuzzFeed by Kleiner and William Browder, the head of Hermitage.
In his investigation, Magnitsky followed $40 million to a Latvian bank account for Technomark Business Ltd., a U.K.-registered company with an ownership in Nevis. Technomark shared the same registering address as Navimax, and the names of its Latvian directors also appear in documents relating to the other two companies.
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Fraud and the City: Russia’s Manhattan Money Laundering
Pussy Riot goes to prison while a gang accused of murder and mugging in Mother Russia gets luxury apartments in lower Manhattan. One federal prosecutor is calling Putin out.
Even as the United States and Russia were nearing an agreement over Syria’s chemical weapons, a federal prosecutor was filing papers that effectively accuse the Putin regime of tolerating, if not abetting, an organized gang of government officials and criminals who looted $250 million from the Russian treasury.
The immediate intent of the official complaint filed by U.S. Attorney Preet Bharara on September 10 was to seize several high-end Manhattan properties. The two multimillion-dollar commercial spaces as well as four luxury apartments—these across from where George Washington was inaugurated as our first president—were allegedly purchased to launder proceeds from the Russian gang’s diabolically brilliant scheme involving corporate identity theft and a fraudulent tax refund.
The prosecutor’s effort can be seen as at least a small measure of justice for the 37-year-old Moscow lawyer who died in horrific circumstances after uncovering the massive fraud. The lawyer, Sergei Magnitsky, reported the theft imagining that his government would be sure to act when the victim was the Russian people themselves, even if the crooks allegedly included senor law-enforcement and tax officials.
Instead, Russian authorities put those same law enforcement officials in charge of the investigation. Magnitsky was arrested in November 2008 by some of the very men he had accused. He resolutely resisted all efforts to make him withdraw his allegations against them and their alleged co-conspirators. He had been held without legal proceedings for just short of a year when he died in an isolation cell from causes that were subsequently listed as untreated pancreatitis, rupture of the abdominal membrane, and toxic shock.
“He was beaten by eight guards with rubber batons on the last day of his life,” the main prosecutor’s complaint says. “And the ambulance crew that was called to treat him as he was dying was deliberately kept outside of his cell for one hour and 18 minutes until he was dead.”
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U.S. Seeks Ritzy NY Properties in Russian Money Laundering Case
Federal prosecutors Tuesday sought the forfeiture of $24 million worth of Manhattan real estate they say was purchased in part with funds connected to the notorious theft of $230 million from Russia’s Treasury in 2007. The crime assumed international importance when lawyer Sergei Magnitsky later died in the custody of Russian police he’d accused of complicity in the theft. Magnitsky was representing a Western-backed hedge fund that was victimized in the massive tax fraud.
“A Russian criminal enterprise sought to launder some of its billions in ill-gotten rubles through the purchase of pricey Manhattan real estate,” said Preet Bharara, the U.S. Attorney for the Southern District of New York, in a statement. “While New York is a world financial capital, it is not a safe haven for criminals seeking to hide their loot.”
The government’s complaint is the first U.S. law-enforcement response to the 2007 seizure of the Russian subsidiaries of Hermitage Capital, once the largest foreign investor in Russia. The complaint states that criminals stole the corporate identities of the money manager and used them to falsely claim the refund of $230 million for taxes that Hermitage had paid in prior years. When Moscow attorney Magnitsky presented evidence that he believed showed the involvement of police and tax officials, the complaint continues, Magnitsky was himself arrested and died in prison a year later under suspicious circumstances (as reported in “Crime and Punishment in Putin’s Russia,” Barron’s, April 18, 2011).
The luxury apartments and fancy retail spaces that are subject to Tuesday’s civil forfeiture complaint were discovered last summer by Barron’s as part of a journalism collaboration that included Russia’s Novaya Gayzeta and an Eastern European not-for-profit journalism group known as the Organized Crime and Corruption Reporting Project. The Manhattan properties are owned by U.S. entities associated with a Cyprus corporation, Prevezon Holding, whose name had turned up in Eastern European bank transfers after the Russian Treasury heist. The forfeiture complaint alleges that these funds were laundered proceeds from the tax scam, and names both the U.S. and Cyprus corporations as defendants.
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London ‘rolls out the red carpet’ for money launderers
THE head of a hedge fund that was the victim of a £144m fraud in Russia has complained that Britain has “rolled out the red carpet” for money launderers.
Bill Browder, founder and chief executive officer of Hermitage Capital Management, said British authorities had failed to investigate the fraud against his firm despite evidence showing the involvement of UK companies.
In 2007, Hermitage’s offices in Moscow were raided by police who seized corporate records, company seals and tax certificates.
The documents were used by a criminal gang to fraudulently claim a tax refund from the Russian government.
A lawyer who tried to expose the crime, Sergei Magnitsky, was arrested and died in custody in 2009.
Browder and his team have since traced some of the stolen funds around the world. Investigations have begun in Switzerland, Latvia, Lithuania, Estonia, Moldova and Cyprus. In America, a law, the Magnitsky Act, was passed to deny visas to and freeze assets of those implicated in his death.
Yet Browder, whose firm is based in London, says the UK authorities have taken no action despite the involvement of British companies receiving funds or acting as agents for those involved in the crime.
In a letter to HM Revenue & Customs (HMRC) last month, lawyers acting for Hermitage said a company services firm, GSL Law & Consulting, with offices in London, had acted as an agent for some of the companies involved in the fraud. The letter said GSL’s role meant it should not meet HMRC’s “fit and proper” test for companies providing offshore company services.
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Moscow Recruits Interpol
The Russian authorities have requested an Interpol Red Notice against William Browder, head of the Hermitage Capital Management investment fund and a key architect of the Magnitsky Act. Author and analyst Alexander Podrabinek notes that Interpol has a history of honoring the Kremlin’s politically motivated requests.
At the end of April, Moscow’s Tverskoy District Court issued an arrest warrant in absentia for British citizen William Browder. The Russian justice system is accusing him and the late Sergei Magnitsky of purchasing Gazprom shares between 1999 and 2004. Browder could only be arrested in absentia because he is not willing to appear in the Tverskoy District Court, rightly believing that “justice” there is nothing but fiction. Sergei Magnitsky is not in the courtroom either. In 2009, he was killed in the Matrosskaya Tishina prison to prevent him from publicly exposing the crimes of a gang of police investigators and tax officials.
According to a statement by the Russian Interior Ministry, Browder “acquired more than 130 million Gazprom shares worth at least 2 billion Rubles at domestic-market prices, which caused large-scale damages to the Russian Federation.” The nature of the crime is unclear. The point is that at the time it was forbidden for foreign investors to buy Gazprom shares on the market. On Browder’s initiative, Russian citizens and Russian legal entities founded dozens of companies, which then purchased Gazprom shares (for the market price) and waited for the day when they would be able to sell them for a higher price on the international market. This is a normal speculation, with its risks and its investments. There is nothing illegal here. Apart from an understandable resentment of someone who bought something cheaply and intends to sell it at a higher price, there is nothing objectionable in these actions. According to the Russian “justice” system, however, this is a crime.
The case does not have any prospects in court. It will be impossible to carry out the sentence. Magnitsky is dead, and Browder is beyond the reach of Russia’s authorities. The fact that a dead man is being tried posthumously makes the trial not only pointless but also immoral. Nevertheless, the regime decided to take this shameful step, and the reason is clear. The international scandal that resulted from Sergei Magnitsky’s death, and US sanctions that followed with regard to those connected with this crime motivate the Kremlin to prove its innocence by accusing the deceased of committing a crime, along with his colleague William Browder.
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Browder Placed on International Wanted List
A Moscow court revealed Wednesday that Bill Browder, head of the Hermitage Capital investment fund, has been placed on an international wanted list in connection with an investigation into the embezzlement of Gazprom shares.
But in an embarrassment to prosecutors, the court refused to issue a warrant for his arrest in absentia, saying they had failed to make a reasonable effort to notify Browder about the court proceedings.
The decision to place Browder on the wanted list, made April 8, was disclosed by the Tverskoi District Court as it started hearings into a request by prosecutors to arrest Browder in absentia.
Under Russian law, a suspect cannot be arrested in absentia unless he is first put on an international wanted list. After an arrest warrant is issued, Russian investigators pass the materials for the case over to Interpol.
But the likelihood of Browder facing actual arrest appears slim. Browder, who heads what was once the biggest foreign investment fund in Russia, is at loggerheads with the Russian government amid his successful campaign to blacklist Russian officials implicated in the death of Hermitage lawyer Sergei Magnitsky in 2009.
The U.S. announced Friday that several of those officials had been banned from entry into the U.S., and several European countries are looking to create blacklists of their own.
“This is a pure vendetta and everyone knows it,” said Jamison Firestone, Magnitsky’s former boss and a close associate of Browder in lobbying for the blacklists.
“If it was really illegal to buy Gazprom, every Western hedge fund manager in Moscow would already be on the way to the airport,” he said Wednesday by e-mail.
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The tax haven shell game
Frederic Zalac has the details about a company run by a Toronto businessman and its role in a multi-million dollar scam that turned in to an international murder mystery.
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Trailer of the Week: Political Trial Against a Dead Man
In what might well be the most macabre act in the already appalling human rights record of the current Russian government, the deceased lawyer Sergei Magnitsky is about to be put on trial in Moscow this Friday, although he was tortured to death in a Russian jail over three years ago.
In 2008, when Sergei Magnitsky was defending his client Hermitage Capital Management on a case of alleged tax evasion, he discovered a huge tax fraud of $230 million conducted by Russian authorities, tax officials, police and elements of organized crime. While investigating this massive theft of public money, he was arrested for allegedly colluding with Hermitage and jailed to wait for trial. This trial never came — Magnitsky died in his cell 8 days before the one-year-limit of custody without trial expired, having been denied medical care that he desperately needed after repeated beatings and torture, as was confirmed by a later independent inquiry.
Sergei Magnitsky is the first person to be tried posthumously in Russia after the laws were changed in 2011 to allow that. Magnitsky’s widow, Natalia Zharikova, has condemned the proceedings as “blasphemy” and urged those involved to refuse to take part.
Until this day, all those responsible for the death of Sergei Magnitsky have been cleared, and on March 19th the Russian officials announced that they are ending the investigation without finding any signs of crime. Yet on a global level, Bill Browder, the CEO of Hermitage Capital Management, has been successfully campaigning to end the impunity through the so-called “Sergei Magnitsky Act” which seeks to impose international visa restrictions and asset freezes on Russian government officials that are thought to be involved in the death of Sergei Magnitsky. In the US, this act was passed into law by President Obama on December 14th, 2012. Russia retaliated by banning US citizens from adopting Russian orphans as well as placing restrictions on NGOs if they have “foreign agents” supporting them. Russian officials are reportedly currently doing wide-ranging checks of NGOs with foreign support in order to limit Western influence and silence dissidents.
Bill Browder, a recipient of the Cinema for Peace Award for Justice 2012 as well as presenter of the International Human Rights Film Award at Cinema for Peace Berlin 2013, now also campaigns to pass the act in the EU and elsewhere in the world. All this campaigning against Russian officials is a very dangerous task considering the harsh Russian tactics: Browder’s life has been threatened and one of the key witnesses in the tax fraud case died suspiciously in London a few months ago after giving information to Browder, reminiscent of the 2006 poisoning of the former KGB agent and Putin critic Alexander Litvinenko.
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Russia drops Magnitsky prison death probe
Russian detectives are dropping their investigation into the death in prison of the lawyer, Sergei Magnitsky.
The Investigative Committee said no crime was committed against him. He was detained in 2008 after revealing alleged an embezzlement scam by interior ministry officials.
His family and the Presidential Human Rights Council say he was badly beaten and denied medical treatment.
Despite his death, he is himself being put on trial for fraud.
The Investigative Committee, the Russian equivalent of the FBI in the US, said Magnitsky had been legally arrested and legally detained and that he had not been tortured.
“Based on the preliminary investigation’s results, a decision was taken to end the criminal case due to a lack of evidence of a crime,” the Committee said.
Magnitsky, who died at the age of 37 in pre-trial detention after developing pancreatitis, was arrested after testifying that interior ministry officials, with organised criminals, had used the UK-based investment fund Hermitage Capital to embezzle $230m (£150m) by filing false corporate tax returns.
In December, a Moscow court acquitted a prison doctor accused of negligence over the lawyer’s death. Dmitry Kratov had argued that he was unable to ensure medical care because of a shortage of staff.
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