A new twist in a Russian scandal

October 8, 2009

The Russian Interior Ministry is about to seek the arrest of William Browder, the chief executive of Hermitage Capital Management, for illegally evading taxes. That’s according to a front-page article in the Russian newspaper Kommersant, a leading political-economic daily.

Browder, a British and US citizen who resides in London, has been denied entry into Russia ever since 2005, when his visa was annulled for obscure reasons. His Hermitage Fund, managed by the British bank HSBC, was once the largest portfolio investor in Russia, but has more recently been embroiled in a series of interconnected scandals.

Today’s newspaper article, based on anonymous sources within the Russian police, is evidently the latest shot in a long-running media war that has pitched Hermitage against elements of the Russian police. Over the last year and a half, the British investment fund has made a series of sensational allegations, claiming that senior Russian police officers were involved in a corruption scam designed to fleece the Russian budget of hundreds of millions of dollars.

Following these claims, Russian authorities have been busy upping the pressure against the Fund. A lawyer working for Hermitage in Russia, Sergei Magnitsky, was arrested last November, and his trial in Moscow is due to begin shortly. Today’s Kommersant article lays out the case that the police intend to bring against Magnitsky, which relates to alleged underpayment of taxes by two Hermitage subsidiaries several years ago.

According to the sources cited in the newspaper, Browder is also implicated, and investigators now intend to approach Interpol with a request to place him on the international wanted list. The paper quotes Hermitage’s view that the case is fabricated “to discredit Hermitage Capital”.

Given the circumstances, the latest allegations against Browder will command little credibility outside Russia. According to court documents recently submitted by Hermitage in the US, the criminal case against Magnitsky was initiated by the same police officers previously accused by Hermitage.

If Russia does request Browder’s arrest and extradition, legal authorities in Britain are also likely to consider the findings of a recent report into the case by the Parliamentary Assembly of the Council of Europe, which slams Russia’s criminal justice system. The report states that Hermitage was “the victim of the corruption and collusion of senior police officials and organised criminals.”

In any case, this isn’t the first time that anonymous police sources have made similar claims about Browder in Kommersant. In April last year, the newspaper ran an article that alleged that a Russian arrest warrant had already been issued for the British fund manager, and an international one would be requested shortly. However, a Moscow police spokeswoman subsequently denied that any such warrant had been issued, and nothing more was heard about it.


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http://www.youtube.com/watch?v=ok6ljV-Wf Rw

Today, October 8, 2009, investigators from the Russian Interior Ministry announced charges against Hermitage Capital Management’s legal adviser, Sergey Magnitskiy, and allegations against Hermitage’s CEO, William Browder.
These charges and allegations have been fabricated and brought directly in response to Hermitage and Magnitskiy implicating certain Interior Ministry officials in the theft of $230 million from the Russian budget.

Due to the high level of corruption in the Russian Interior Ministry, along with the arbitrary powers they posses, many Russian newspapers have been afraid to write about the Interior Ministry’s role in this fraud. In an environment like this, where the freedom of the press is compromised, it is necessary to use new channels of communication to fight corruption in Russia. In order to avoid putting Russian journalists at risk, we are, therefore, releasing the following YouTube video to lay out story in full.

Sounds to me like, Putin’s government is just as corrupt as it was 20 years ago..

This reminds me of the same rethoric Iran is taking, anti West,accuse west in everything, trying to gin up his profile right?

Posted by Ian | Report as abusive

Very thought oriented article from this writer.
Due to open,some reliable sources, we are able to get some semi-real news of corruptions are widely spread across Russia in recent years.
This is because of getting more wealth from indirect means to live very comfortable ways.Then, it leads to spread these bad methods of getting more and more wealth generation from corrupted elements for what?
For only luxurious ways.
Still, total freedom of expressions ,and freedom of writing and freedom of speech are longer way to go ,that practiced in America and other western countries.
Once so called ex-communists started to get silken ways of living, these sorts are happening.
Better to find real law breaker and amassing of ill wealth and brought to trial at the earliest for Russians.

When at last will the Russians get their legislation on economic and business issues in proper order? This cannot last forever!
Russia did spend hundreds of millions of dollars on consultants form USA and the West – a.o. from Harvard. Unfortunately thes boys and girls produces a set of laws that would fit very well in the USA (and UK)anglo-saxon, but not in the Russian continental law system. It did not work for a centimeter. It all had to be redrafted. As far as I know Dutch civil servants – legislators are now working on it. I’d like to emphasise to VVP: please, please, please, speed it up! and sue the bastards!

Posted by Koutstaal | Report as abusive

Somebody financially rapes and pillages Russia’s hinterlands, turning eleven time zones into a cross between Gary Indiana and Hiroshima, then the culprits all start blaming each other until nobody knows who did what?

Sorry, I must have missed the bit about there being something new in this.

Posted by The Bell | Report as abusive

“The penalty good men pay for indifference to public affairs is to be ruled by evil men.” – Plato attributed….
Mr Browder is a good , honest, decent man, who is brave enough to speak out, and to those who say ” vulture capitalist cannot steal anymore from Russian people”, should know, Mr Browder made his money from investors, and felt he had a legal and moral duty towards them. We should be proud to know that their are men like him, standing up for justice.

Posted by annabelle | Report as abusive

Why doesn’t Russia just do what it always does?

The old political trick known as “Police arrest the dissenter followed by him somehow getting accidently shot by a police handgun in the car, and then accidently falling out of the car and then somehow falling from a second story building onto pavement”.

Seriously. The Soviet Union may have collapsed. But the same people are in charge. They have no issue with cronyism or corruption, because these are the things the Russian government use to control the nation.

Posted by Anon | Report as abusive