Posts Tagged ‘Hermitage’
Trial of dead lawyer Sergei Magnitsky may shine light on UK investigators
There were two empty chairs in Room 17 of Tverskoi court in Moscow yesterday. The defendants were indisposed.
One, Sergei Magnitsky, a whistleblowing lawyer, died more than three years ago in his prison cell. The other, the millionaire US businessman Bill Browder, expelled from Russia, was sitting in his office in Soho, Central London, fuming about a case that is worthy of the absurdist 19th-century Russian novelist Nikolai Gogol.
“We’re not going to dignify a Stalinist show trial by our presence,” said the head of the investment fund Hermitage Capital, a campaigner for sanctions against 60 officials who he claims were complicit in the torture and death of his associate.
He argues that the officials defrauded some $230 million from the Russian state using documentation stolen from Hermitage offices in Moscow. When he and Mr Magnitsky uncovered the conspiracy, the authorities turned the tables on the two whistleblowers, accusing them of a $17.5 million tax evasion.
The trial has given Mr Browder a chance to prod European investigators — including in Britain — into tackling those involved in the Magnitsky affair, which he describes as “potentially the Watergate of the Putin era”.
In mid-April, the US Government will publish the names and that should, Mr Browder says, galvanise Britain into action. The list include senior officials from the Interior Ministry, tax and customs officials and prison functionaries.
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Russia central banker slams vast criminal cash export
Russia’s central bank chief complained on Wednesday that some 2.5 percent of the national income was illegally siphoned abroad last year – a revelation critics said showed the extent of corruption under Vladimir Putin.
Bank of Russia chairman Sergei Ignatyev, who is about to retire, reckoned much of that sum, close to $50 billion, was controlled by a single group of people; he did not identify them but many saw it as an indictment of the “Kremlin capitalism” which has taken hold since Putin first became president in 2000.
One prominent critic called it “state money-laundering”.
“You get the impression that they are all controlled by one well organized group of people,” Ignatyev told Vedomosti newspaper in a front-page interview after a Bank study found more than half the flows involved firms linked to each other.
“With a serious concentration of efforts by law enforcement agencies, I think it is possible to find these people,” added Ignatyev, 65, who will retire in June after 11 years running an institution which has won widespread respect for integrity.
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Sergei Magnitsky: How a dead man was put on trial
THE court calls Russian lawyer Sergei Magnitsky. He’s a bit slow to take the stand. He’s a bit quiet. This is because Sergei Magnitsky is dead. He died in a Russian prison from pancreatitis. He’s buried at Moscow’s Preobrazhensky cemetery.
Mr Magnitsky was first arrested in 2008. The lawyer with US firm Firestone Duncan had been working for London-based Hermitage Capital Management. He claimed to have uncovered a massive fraud worth £125m. He told all to officials. He was then arrested for alleged tax evasion and sent to prison, where he was beaten and denied medical help. He was had been held for a year without charge. Well, just under a year. In Russia, you can be held for anything up a year without charge. That time would have lapsed on November 24. He died on Monday, November 16. Such was his misfortune.
He was kept in squalor. In his affidavit, Magnitsky noted:
“…sewage started to rise from the drain under the sink [the] floor was covered with sewage several centimetres thick … for the 10 months I have been under arrest, the investigator has not let me meet with my wife, mother or any other relative”. “Isolation from the outside world exceeds all reasonable limits …
In July 2009, Magnitsky was diagnosed with “gall bladder stones, pancreatitis and calculous cholecystitis“. He blamed that on his confinement:
“Prior to confinement, I didn’t have these illnesses or at least there were no symptoms.”
Irina Dudukina, spokesman for the prosecutors’ investigative committee, said in November 2009:
“He was a key witness and his evidence was very important. The tragic news about his death came as a complete surprise. He had complained about the conditions of his detention but never his health.”
Spokeswoman for the Interior Ministry’s Investigative Committee Irina Dudukina speaks at a news conference on the death of lawyer Sergei Magnitsky in Moscow, Wednesday, Nov. 25, 2009.
Bill Browder of Hermitage Capital said Sergei Magnitsky, had in effect been “held hostage and they killed their hostage”. He had hired Magnitsky to search for fraud against his company. The Russian elite were not willing to play fair:
In 2005, Mr Browder was banned from Russia as a threat to national security after allegations that his firms had evaded tax, but Mr Browder says his company was targeted by criminals trying to seize millions of pounds worth of his assets. Mr Browder says he was punished for being a threat to corrupt politicians and bureaucrats. Since then, a number of Mr Browder’s associates in Russia – as well as lawyers acting for his company – have been detained, beaten or robbed.
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Arraigning a corpse
Part 1 “Russian Justice”
A judge at Moscow’s Tverskoi District Court, stopped the trial of Sergei Magnitsky (above) yesterday – but not because the defendant was dead. Magnitsky’s demise was of no concern to the judge. It did not bother him in the slightest. The court merely postponed proceedings until 4 March when the world will see something rarely seen since the Middle Ages: a prosecutor arraigning a corpse.
The Putin regime – that mixture of autocracy and gangsterism – is desperate to discredit the late Mr Magnitsky and his employer, Bill Browder of Hermitage Capital. If you don’t know the story, I’ll explain why.
Browder exposed corruption in Russian companies. The Russian authorities did not approve. Interior Ministry police raided Hermitage’s offices after Browder and most of his employees had fled the country.
Magnitsky stayed and claimed that the Interior Ministry police had stolen the seals to its Russian subsidiaries and passed them to a crime gang. The gang re-registered the companies and claimed to be Hermitage’s rightful owners. They told the Russian authorities they owed Hermitage a tax rebate. Within a day, corrupt officials handed over £143m of public money.
Magnitsky complained to the Russian equivalent of the FBI. Russia being the way it is, the Interior Ministry arrested him for speaking out. The state held him for a year in wretched prisons. In June 2009, Magnitsky developed pancreatitis and cholecystitis. The prison authorities denied him treatment. They probably tortured him, too. When civilian doctors finally came to see him on the day of his death, the guards would not let them into his cell for an hour. The doctors found his body lying in a pool of urine. He died rather than retract his testimony.
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Billion Dollar Hedge Fund Mgr Goes After Putin And Russia, This Time In Europe
Bill Browder, the founder of Hermitage Capital Management in London, is doing his best to embarrass Russian leader Vladimir Putin and the Russian government once again.
After successfully and single-handedly lobbying for the passing of the Magnitsky Act in the U.S. Senate in November, Browder seems to have convinced European governments to go after alleged Russian criminals in the same way: by banning travel and access to bank accounts in their respective countries.
Browder’s colleague and friend, Sergei Magnitsky, a lawyer with the Moscow-based law firm Firestone Duncan, was arrested in 2009 for tax fraud affiliated with Hermitage. The billion dollar hedge fund was subsequently kicked out of Russia, and Magnitsky died in prison, a victim, it is widely believed, of poor treatment.
Late last year, Congress passed two laws that make life increasingly difficult for Russians currently on a “black list” at the U.S. State Department for their involvement in Magnitsky’s death. Under the so-called Magnitsky Act, both houses of Congress now have access to that list of Russians the State House had been inclined to keep under wraps out of concern of embarrassing The Kremlin.
Washington and Moscow are going through a revamp, or a reset, of bilateral relations and the current human rights scandals had put a strain in that relationship. Under the new law, Congress now knows which Russians to ban from traveling or having any type of financial business in the United States.
Immediately after its passing, Pavel Khodorkovsky, director of the Khodorkovsky Center in New York, told me that the idea was for some countries in Europe to pass similar legislation.
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Russian money streams through Cyprus
A new parking scheme appeared late last year in some congested Moscow neighbourhoods. Street signs advised Muscovites either to buy a ticket at a nearby machine or text their licence plate details to a number: 7757.
Evgeny Schultz, a Moscow blogger, took a closer look. It turned out that the number 7757 had been bought by a company registered just six months previously, which itself had been founded by two Cyprus-registered companies whose ownership was unclear.
One of the names on the registration documents was the same as that of a senior adviser to the city’s department of transport and communications, which oversees the parking programme.
“This could just be a massive coincidence, of course,” Mr Schulz said, with an unmistakable note of sarcasm.
The city has defended the scheme, saying “every kopek” goes into its budget. But the episode underlines the unique, pervasive and dubious role that Cyprus plays in Russia’s economy.
In June, Cyprus became the fifth country in the eurozone to request an international bailout after lenders got caught up in the debt restructuring of Greece’s banks. Seven months later, the island is still waiting for funding amid EU fears that the island is a haven for Russian dirty money. Such fears are particularly strong in Germany and will need to be assuaged if Berlin is to back a bailout.
Estimates of the size of Russia’s deposits in Cyprus range from €8bn, according to some experts, to up to €35bn, according to a German intelligence report cited in Der Spiegel magazine.
In 2011, Cyprus was the number-one destination for Russian money being sent abroad and the number-one direct investor in Russia, with more than $13bn in investments, according to Russia’s Central Bank.
“From an economic perspective, Russia and Cyprus are so intertwined, Cyprus could almost be another region of the Russian Federation,” said Steven Dashevsky, founder of Dashevsky & Partners, a Moscow investment company.
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A Russian Lawyer’s Death Triggers a Global Money Hunt
In 2009, a lawyer named Sergei Magnitsky died in a Moscow jail after uncovering the biggest known tax fraud in Russian history—a theft of $230 million from the national treasury. The case has touched off a diplomatic row, with the U.S. imposing sanctions on Russian officials accused of having a role in Magnitsky’s death and Moscow retaliating on Dec. 28 by barring Americans from adopting Russian orphans.
Now about that $230 million. Russian authorities said it couldn’t be found because essential records were destroyed in a truck crash. A sawmill worker and a convicted burglar pleaded guilty to masterminding the heist, which involved filing bogus tax-refund claims. Both got five-year sentences.
Magnitsky’s associates, though, keep looking for the cash. An investigation spearheaded by his former client, Hermitage Capital Management, a London-based investment fund, has traced $134 million through bank accounts and shell companies in at least 17 countries. Banking records obtained by Hermitage and reviewed by Bloomberg Businessweek show that millions wound up in offshore accounts and real estate owned by Russian officials, their relatives, and the former owner of a Russian bank. Authorities in four of these countries confirm that they have opened money-laundering investigations.
In the Magnitsky case, Hermitage accuses government officials of stealing from taxpayers, and the Kremlin has made no apparent effort to recover the money. “That’s the most awful thing—it is our money,” says Roman Anin, a reporter at the Moscow newspaper Novaya Gazeta who has worked with Hermitage on its investigation. Russia’s Interior Ministry did not respond to repeated requests for comment.
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Death threats in fraud case ‘ignored’
The Times. The British authorities were accused last night of ignoring evidence about death threats and intimidation linked to a multimillion-pound Russian fraud, months before a “whistleblower” in the case was found dead outside his Surrey home.
10 December 2012
Fiona Hamilton Crime Correspondent
Alexander Perepilichny, 44, whose cause of death is described as “unexplained”, had passed documents to campaigners fighting to expose the huge tax fraud in Russia that had led to the death of an anti-corruption lawyer, Sergei Magnitsky.
The alleged fraudsters are said to have stolen three companies from a British-based investment firm, Hermitage Capital, and used them to perpetrate the fraud.
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Magnitsky fund boss says staff received death threats
Agence France Presse
The head of the investment fund at the centre of the Magnitsky fraud scandal said Friday staff had received death threats, as British police probed the unexplained death of a Russian involved in the case.
The chief executive of investment fund Hermitage Capital, William Browder, would not say whether he believed that Alexander Perepilichnyy, 44, who died on November 10 near his home in Surrey outside London, had been murdered.
But he confirmed the Russian businessman had since 2010 been passing evidence to Hermitage of the involvement of Russian officials in a scheme to embezzle $230 million (177 million euros) by obtaining false tax returns on payments made by the fund.
Hermitage’s lawyer, Sergei Magnitsky, died in a Russian jail in 2009 after he went public with allegations about the conspiracy and was in turn taken into custody accused of tax violations.
Browder said Perepilichnyy was the fourth person linked to the Magnitsky affair to have died in unexplained circumstances.
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