Posts Tagged ‘Time’
Sanctions refused against Russians
Sweden has refused to grant safety guarantees to a London-based businessman who has been lobbying Stockholm and other European capitals to impose sanctions and an asset freeze against some 60 Russian officials.
William Browder, co-founder of the investment fund Hermitage Capital, has been leading a campaign to punish the Russian officials for their part in the arrest, and death in custody in 2009 of his former associate Sergei Magnitsky.
The Russian lawyer blew the whistle on a $230 million embezzlement fraud. After his death, the Russian authorities bizarrely put Mr Magnitsky on posthumous trial and found him guilty of embezzlement. Mr Browder was also sentenced to jailed in absentia at the same trial.
Moscow promptly activated an Interpol arrest warrant against Mr Browder — hence his nervousness about travelling abroad and exposing himself to a possible extradition request. Britain has rejected Russia’s attempts to have Mr Browder brought to Moscow to serve his nine-year sentence.
“The Swedes say it is a police matter and the Government has no right to interfere,” said Mr Browder, who has been successfully persuading European Union governments to freeze the foreign assets of the Russian officials. “But this is a straightforward political decision to ensure that I don’t get arrested at Russian behest. The Germans and the Netherlands gave guarantees. This suggests that the Swedes are afraid of upsetting Russia.”
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The Magnitsky Trial: Russia Places a Dead Man in the Dock
At Moscow’s Tverskoy District Court on Monday morning, there was a great deal of confusion among the journalists about what exactly was meant to happen in Courtroom No. 17. On the roster, a preliminary hearing was slated for the case of Sergei Magnitsky, who is accused of tax evasion. The court’s press secretary, Alexandra Berezina, explained that the defendant would learn, among other things, whether he would be granted bail or forced to await trial in prison. But like so much about Russia’s latest adventure in judicial folly, it was not clear how the issue of bail could matter. Magnitsky has been dead for more than two years. When this fact was pointed out to Berezina, she gave a look of exasperation. “I’m just telling you what would normally happen,” she snapped. And hardly anything is normal about this case.
For the first time in Russia’s history, a dead man has been placed in the dock, and it will not be easy for the court to parse all of the cryptic corollaries of that lurid fact. How, for instance, is the defense attorney supposed to consult with his client? A Ouija board? Some kind of voodoo mediation? And what about the issue of habeas corpus — literally, “show me the body” — the bedrock principle of common law that requires the accused to be brought before a judge? Are we to expect an exhumation? “It is a self-evident absurdity,” says William Browder, Magnitsky’s former employer and now his co-defendant in the case. “There’s no way in the world that a lawyer can represent him.” But with a trial as steeped as this one in Russian politics, nothing should seem too far-fetched.
The saga that led to Magnitsky’s death — and subsequently his trial — began in 2009, when Browder hired the young tax attorney to keep the books of Hermitage Capital, Browder’s investment fund in Moscow. While digging into some of the fund’s corporate documents, which Russian police had seized during a raid, Magnitsky uncovered the largest known tax fraud in Russian history. A gang of detectives, tax inspectors and other bureaucrats had allegedly used the fund’s corporate seals and documents to file for a tax refund worth $230 million. Following the paper trail, Magnitsky found that this refund — also the largest in Russian history — had been rubber-stamped at a Moscow tax office in just one day. After that, the money vanished into various offshore accounts. Magnitsky immediately blew the whistle, even offering to give testimony against the officials in court, including agents of the FSB secret police, which Vladimir Putin led before becoming Russia’s President in 2000.
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Why Has Moscow Passed a Bill to Ban U.S. Adoption of Russian Orphans?
Passing a new bill in Russia has never presented much of a problem for President Vladimir Putin. With perpetual control of both houses of parliament and a couple of loyalist “opposition” parties to boot, legislation backed by Putin generally amounts to a Kremlin fiat. The hard part this week was in explaining his newest initiative to the public. Intended as a political strike against Washington, the bill does some shocking collateral damage. In effect, it will doom the chances of thousands of Russian orphans, many of them handicapped and emotionally scarred, from being adopted by families in the U.S. How do you justify that?
On Thursday, Putin tried to explain himself in front of a hall full of Russian and foreign journalists, many of whom were clearly outraged by the adoption bill passed the previous day. The first question asked Putin why he had made “the most destitute and helpless children into instruments of political battle.” The second was even more blunt, calling the bill “cannibalistic.” Live on Russian television, Putin mounted a strange defense: How could the journalists stand idly by while the U.S. “humiliates” Russia? “You think that’s normal?” Putin demanded. “What’s normal about being humiliated? You like that? What are you, a sadomasochist? The country will not be humiliated.”
The humiliation Putin had in mind was the U.S. Magnitsky Act, which was passed this month by a huge bipartisan majority in both the House and the Senate. The act seeks to punish a group of Russian officials who have been implicated in the torture and death of a Russian lawyer named Sergei Magnitsky. In 2008, Magnitsky discovered that a group of Russian officials had stolen $230 million from the Russian treasury. When he blew the whistle on their scheme, some of those same officials allegedly conspired to get him arrested, and he died in a prison cell a year later, having been reportedly beaten and denied medical treatment.
Three years since his death, all of his alleged tormentors are still free. Nearly all of them have either kept their government jobs or been promoted. As a last resort, Magnitsky’s friends and colleagues took their pleas for justice to Western capitals, and Washington has now banned the implicated officials from traveling to the U.S., owning property in the U.S., or holding U.S. bank accounts. Putin called the act “unfriendly” and pledged that it would get an “adequate” response from Russian lawmakers.
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One (Rich) American vs. Moscow: The Quest of William Browder
In October, Harvard Business School began teaching a new case study about Russia, which, in the words of one of its authors, “reads like a potboiler.” In 20 pages, it lays out one of the most tragic experiences a foreign investor in Russia has ever had — the case of the American fund manager William Browder, who was banned from entering the country in 2005, and his lawyer, Sergei Magnitsky, who died in a Russian prison four years later. It is meant to impress a number of lessons on Harvard’s latest crop of geniuses. For example, Exhibit 9, as the text goes, offers a “price list” of “bribes,” including the cost of getting a competitor’s license revoked (allegedly as little as $1 million). But the broader message lines up nicely with what seems to be Browder’s creed: Kids, if you know what’s good for you, stay the hell away from Russia.
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State-Run Shakedown
Alex Shifrin thought he found a surefire way to profit from Moscow’s new consumers with an old Russian tradition: soup. Russians can’t get enough of the stuff, slurping down an incredible 32 billion bowls each year. But with the city’s emerging middle class increasingly adopting Westernized, on-the-go lifestyles, soup fans have less time to boil it for themselves. Shifrin, an advertising executive, and three partners smelled an opportunity. Why not cook it for them? They pooled their personal savings and in April 2010 launched Soupchik, a chain of takeaway outlets serving up borscht, chicken noodle and other local favorites to upwardly mobile Muscovites.
The investors, however, learned that nothing in Russia is a sure thing, thanks to the unpredictable and predatory government. A steady stream of corrupt tax officials, police officers and other security agents began harassing them for payoffs. Within weeks of Soupchik’s opening, two tax inspectors claimed the start-up was violating an obscure retailing regulation. Shifrin protested, and amid the negotiations, a tax administrator suggested that some $1,000 in cash would resolve the matter. (Shifrin refused to ante up, and the tax office eventually dropped its case.)
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Doing business in Russia is like playing roulette
Russia looks attractive for investment and business development, but the problem of possible risks still remains.
As says CBS Interactive Business Network, due to poor law enforcement, the proliferation of weapons and corruption, Russia suffers from a wide variety of crime. According to the Time, in country exists a thing, “known as reiderstvo, or “raiding,” a term that describes an array of illegal tactics — including identity theft, forgery, bribery and physical intimidation — used by corrupt policemen, tax officials, lawyers and financiers to seize a person’s business or property”. According to the Time, businessmen not only risk losing their assets, but they can also end up in jail on trumped-up charges brought by corrupt law enforcement officials and prosecutors.
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The Khodorkovsky Verdict: Scaring Off Investment in Russia
It must have been an awkward meeting for Russian President Dmitri Medvedev. On Dec. 29, he convened a session with his economic aides to talk about attracting talented businessmen to Moscow. No one mentioned that across the river from where they were sitting, a judge was reading out the guilty verdict of one of Russia’s most successful businessmen, oil tycoon Mikhail Khodorkovsky, whose case has scared off a lot of capital from the country. But when the subject turned to Russia’s appeal for investors, Medvedev’s tone became forlorn: “The investment climate in our country is bad. It’s very bad.” And everyone understood why.
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