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Browder Sentenced, Dead Adviser Guilty in Russian Tax Case

Hermitage Capital Management Founder William Browder
Hermitage Capital Management founder William Browder has denied any wrongdoing by either himself or Magnitsky. He successfully lobbied for U.S. legislation targeting 60 Russian officials he says are responsible for Magnitsky’s death with visa bans and asset freezes. Photographer: Chris Ratcliffe/Bloomberg

July 11 (Bloomberg) -- A Moscow court declared Hermitage Capital Management founder William Browder and the late Sergei Magnitsky, his tax and legal adviser, guilty of tax evasion, in a case that raised tensions between Russia and the U.S.

Browder was sentenced to nine years in absentia, Judge Igor Alisov said at the Tverskoi District Court. The court closed the case against Magnitsky, which Amnesty International had called “Kafkaesque,” while maintaining the guilty verdict.

An appeal will be filed, Browder’s lawyer Kirill Goncharov said at the court. The investor, a U.S.-born U.K. citizen, has been barred from Russia since 2005, the year his Hermitage fund, once the largest foreign owner of Russian shares, peaked at more than $4 billion. Magnitsky died in November 2009 at age 37 in a Moscow prison.

Browder has denied any wrongdoing by either himself or Magnitsky. He successfully lobbied for U.S. legislation targeting 60 Russian officials he says are responsible for Magnitsky’s death with visa bans and asset freezes.

“The worst part of today’s verdict is the malicious pain that the Russian government is ready to inflict on the grieving family of a man who was killed for standing up to government corruption and police abuse,” Browder said in a statement distributed after the sentence was read.

Magnitsky was in pretrial detention after alleging a $230-million tax fraud by Russian officials. The case sparked a diplomatic row, with the U.S. imposing sanctions on officials accused of playing a role in his death and Moscow retaliating by barring American citizens from adopting Russian orphans.

Seeking Justice

“The trial was a discredit to those who seek justice in his case,” U.S. State Department spokeswoman Jen Psaki told reporters today. Psaki said Russian authorities have failed to prosecute “those responsible” for Magnitsky’s death. The U.S. will continue to support groups pursuing Magnitsky’s vindication, she said.

The U.K. has also banned the 60 Russian officials from entering the country, British media reported earlier this week. Russia hasn’t been officially notified of any such move, Foreign Minister Sergei Lavrov said July 9.

In 2011, a human-rights council under then-President Dmitry Medvedev called for officials to be prosecuted for Magnitsky’s death. The council said he was bludgeoned with rubber batons after being denied medical care during almost a year of pretrial detention on trumped-up tax evasion charges.

Abuse Allegation

Russia ended its investigation in March into Magnitsky’s death, saying it found no sign he’d suffered physical abuse while he was detained.

Magnitsky was “not a truth-seeker,” Medvedev said in a Bloomberg Television in January. “He was a corporate lawyer or accountant, and defended the interests of the people who hired him.”

Magnitsky and Browder are accused of evading 522 million rubles ($16 million) of taxes, the Prosecutor General’s Office said in November.

Russia was the lowest-ranked Group of Eight nation in Berlin-based Transparency International 2012 Corruption Perceptions Index. Net capital outflows reached $54 billion last year and exceeded $38 billion in the first six months of 2013, preliminary central bank data show.

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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