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Death of lawyer raises new questions in Russian scandal

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You might think that the scandal involving Hermitage Capital in Russia couldn’t get any more perturbing. If you have been following the case, you’ll be aware that the British investment fund, managed by American-born financier William Browder, has repeatedly accused Russian criminals and corrupt officials of stealing $230 million in funds from the Russian budget.

 

Now there are more serious questions for the Russian authorities. Today the Russian Interior Ministry revealed that Sergei Magnitsky, a lawyer acting for Hermitage who was arrested a year ago, has died in prison at the age of 37. They say that he died from “toxic shock and a heart attack”.

 

Over recent weeks Hermitage has complained that Magnitsky was kept in inhumane conditions and denied medical treatment despite deteriorating health. A copy of an official complaint by Magnitsky, submitted in September, was published by Hermitage immediately after his death. The Interior Ministry, however, stated today that Magnitsky had never complained about his health.

 

The news of Magnitsky’s death is a personal shock, because I met with him just a few weeks before his arrest last year. I was working on a Business Week story about suspicious financial dealings at two Russian companies, which had extraordinary similarities with the case publicized by Hermitage. Magnitsky was helpful but declined to comment for my story, citing fears for his personal safety.

A new twist in a Russian scandal

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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.

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