Russia to Try Browder With Dead Hermitage Lawyer for Tax Evasion

Source: AP Photo/Alexander Zemlianichenko)

A portrait of lawyer Sergei Magnitsky who died in jail, held by his mother Nataliya Magnitskay. The 37-year-old had been arrested by the same Interior Ministry officials whom he had accused of using false tax papers to steal $230 million from the state. Close

A portrait of lawyer Sergei Magnitsky who died in jail, held by his mother... Read More

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Source: AP Photo/Alexander Zemlianichenko)

A portrait of lawyer Sergei Magnitsky who died in jail, held by his mother Nataliya Magnitskay. The 37-year-old had been arrested by the same Interior Ministry officials whom he had accused of using false tax papers to steal $230 million from the state.

Russia plans to try William Browder, head of London-based Hermitage Capital Management Ltd., for tax evasion, along with Sergei Magnitsky, the fund’s lawyer who died in custody in 2009, RIA Novosti said.

“Magnitsky and Browder are both accused of severe crimes, which deprived the state of several hundred million rubles,” Alexander Yagodin, a senior Interior Ministry official, said in an interview with RIA Novosti, published today on the state- controlled news service’s website. Calls by Bloomberg to the ministry’s investigative branch weren’t answered today.

Yagodin denied that Magnitsky, who President Dmitry Medvedev’s human rights commission said was facing fabricated charges when he was beaten to death, had uncovered corruption by Interior Ministry officials. The Hermitage lawyer said he was abused and denied medical care in an effort to force him to drop fraud allegations against officials before his death in November 2009 after almost a year in pre-trial detention.

International pressure is increasing over the Magnitsky case, which has reinforced concerns about corruption and the lack of rule of law in Russia. U.K. lawmakers on March 7 approved a cross-party motion urging the government to bar entry to 60 officials allegedly involved in the lawyer’s death. The U.S. imposed a similar visa ban on a number of Russian officials in July.

‘False Promises’

Medvedev, who’s set to hand over the presidency to Vladimir Putin in May after the Russian prime minister was elected to a new six-year term in the Kremlin, made the fight against corruption and “legal nihilism” the hallmark of his four years in office. Putin, who served as president from 2000 to 2008, pledged during his election campaign this year to combat graft.

“If this is how Putin is dealing with the most well- documented corruption case in modern Russian history, it lays bare how false and insincere his campaign promises were,” Browder, who denies tax evasion, said today by e-mail. “Before, the Russian government covered up Magnitsky’s false arrest, torture and murder. Now they are going so far as covering up the corruption scandal he uncovered.”

Browder, a U.S.-born British citizen, said he hasn’t yet received details of the prosecutors’ case against him. The biggest foreign investor in Russia when authorities stripped him of his visa in 2005, citing national security concerns, Browder has been campaigning for the prosecution of Russian officials he blames for the death of Magnitsky.

Rubber Batons

Relatives of the lawyer, who was 37 when he died of heart failure, found broken bones in some of his fingers and bruising on his body, according to a report last year by the presidential human rights commission. Instead of receiving urgent medical treatment on the day of his death, Magnitsky was handcuffed, hauled away by psychiatric nurses and bludgeoned with rubber batons, the council said.

Investigators have charged two prison medical officials with negligence for failing to provide care to Magnitsky, while exonerating officials involved in prosecuting the lawyer.

In 2009, Russia put Browder on its international wanted list, seeking to question the investor on suspicion of conspiring with Magnitsky to evade 500 million rubles ($17 million) of taxes.

Hermitage says Interior Ministry officials seized documents from its Moscow offices in June 2007 that enabled them to re- register ownership of three Russian units and fraudulently claim $230 million in tax rebates in December 2007.

‘No Reason’

Alexander Bastrykin, who heads the federal Investigative Committee, said in a September 2010 interview with the official Rossiiskaya Gazeta newspaper that there was “no reason” to believe Magnitsky’s death was connected to those prosecuting the criminal case against him.

“President Medvedev would have us believe that Russia is now a country of the rule of law, but we know very well that in practice that is sadly not the case,” Malcolm Rifkind, the former Conservative U.K. foreign secretary, said in parliament on March 7. “Russia is moving toward being a society that might very well be tolerating a relationship between the Russian state and organized crime that is deep and serious, and which extends to the highest levels of Russian society.”

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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