Oct. 19 (Bloomberg) -- Hermitage Capital Management, the $1 billion U.K. hedge-fund firm run by William Browder, is asking Russian prosecutors and government officials to probe a string of what it says are “fraudulent” tax refunds.

The Russian authorities should conduct an investigation into the “theft” of as much as 11.2 billion rubles ($381 million) of taxes paid to the Russian budget, Hermitage lawyers wrote in an Oct. 13 letter to Russian government agencies, including the Audit Chamber and Prosecutor General’s Office, as well as to news organizations. The money has been stolen by a “criminal group” comprising Russian businessmen and state officials since November 2006, according to the letter.

Hermitage, founded in 1996, was once the largest foreign owner of Russian stock. Browder, 45, has been barred from the country since 2005 for threatening “the security of the state, public order or public health.” The Interior Ministry said Oct. 9 that it is seeking Browder’s arrest abroad on charges that he evaded taxes worth more than 500 million rubles.

The charges are “fabricated” and a response to Hermitage implicating “certain Interior Ministry officials” in the theft of budget money, the fund, which posted a video on YouTube presenting Browder’s position, said on Oct. 9.

In an earlier refund case, Hermitage lawyers alleged that a complex series of transactions and legal cases were used to siphon a 5.4 billion-ruble refund in the second half of 2007, on taxes Hermitage had paid.

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“Hermitage has discovered that those involved in the complex fraud against them may also be behind earlier, additional, large-scale frauds that resulted in a further 5.8 billion-ruble theft from the Russian Treasury,” bringing total losses of the Russian budget to 11.2 billion rubles, Brown Rudnick LLP lawyer Neil Micklethwaite wrote in the letter.

Spokesmen for the Audit Chamber, central bank, Tax Service and Finance Ministry, which were sent the letter last week, declined to comment when reached by Bloomberg News on Oct. 16. Calls to their offices yesterday weren’t answered.

The case involved filing “fraudulent tax refund requests,” which, following approval by Moscow tax authorities, were paid into Universal Savings Bank, a Moscow-based commercial lender which filed for voluntary liquidation in June 2008, Micklethwaite wrote in the letter.

To contact the reporters on this story: Alexander Nicholson in Moscow at anicholson6@bloomberg.net; Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

Last Updated: October 18, 2009 18:59 EDT