Bill Browder and the European Court of Human Rights
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Three days ago, on 27 August, the European Court of Human Rights found the state of Russia guilty for the death of Sergei Magnitsky, whose name is known from the USA's "Magnitsky Act". The document can currently be downloaded here:
Newspapers reported the verdict as follows:
Describing Magnitsky as a "whistleblower", the BBC article suggests that he was put in prison for that. However, the article admits: "the court rejected a complaint that his arrest and detention were ill-founded".
Similarly, Aljazeera calls Magnitsky 'an anti-fraud lawyer and accountant', but also admits that "Europe's top rights court said that it did not find evidence to back up claims of arbitrary arrest and detention, noting the investigation into tax fraud was opened before Magnitsky went public alleging that he had uncovered alleged tax fraud by Russian officials' - even though 'Magnitsky went public with details of an alleged $230m fraud by Russian state officials before being arrested in November 2008'.
Both articles clarify how Bill Browder, who was the manager of the largest investment fund in Russia at the time, has been crusading in favour of Magnitsky for years. As a matter of fact, he wrote a book called "Red notice - How I became Putin's no.1 enemy", and he also has a website on that matter. Aljazeera quotes Browder as commenting: 'the court's ruling was a "resounding victory" that "completely destroys the lies and propaganda about Sergei Magnitsky" '.
Now isn't that interesting! The verdict was a condemnation of Russia for sure, and it may well be true that "lies and propaganda about Magnisky" were "destroyed" by the verdict, but what lies exactly? At first impression one is bound to think that Russia's lies are destroyed by the verdict. However, it looks to me that Browder is bluffing - read on!
As it happens, I had read the book "Red Notice" a couple of years ago, and I have to say, it's very well written. It reads like an amazing thriller, and very convincingly (at least to me and many others at first reading) it spells out how a slightly naive and honest multi-billion investor in Russia was the victim of a government conspiracy trying to steal all his invested money, and how he nevertheless escaped with most of the investor's money, regretfully without being able to save one of his Russian collaborators - Magnitsky. A very impressive and touching story that led to increased tensions between the USA and Russia.
However, as one says, the "devil is in the details". One convincing detail of the book is that Magnitsky was a "tax lawyer", hired by Browder when in June 2007 one of their companies, Kameya, had been accused of tax fraud. Then company offices were raided and materials confiscated. Browder writes:
"The first thing I did was to retain the best tax lawyer I knew in Moscow, [..] Sergei Magnitsky. [..] Once Sergei was on board, [etc.]"
Magnitsky started his own investigation, and after some time he made a shocking discovery:
"'Sergei checked the [Mahaon] company-ownership database.' 'And?' I asked with a sinking feeling. Ivan sighed. 'Mahaon's been stolen, Bill.' 'What do you mean stolen? How do you steal a company?' [..] 'It's not simple. But basically a company's owners can illegally be changed without you knowing if the person taking control of the company has the company's original seals, certificates of ownership and registration files.' This hit me hard. 'Those were the documents that were seized by the police', I said quietly. 'When they raided Jaimie's office.' "
In December 2007 the stolen companies committed tax fraud and managed to obtain hundreds of millions Euros from the Russian tax authorities. The money was quickly transferred away through bank transactions. And, so the story goes, this was discovered by Magnitsky and Browder.
"Sergei set up an appointment with the investigative committee for 5 June 2008. He 'provided the evidence and gave his witness statement, explicitly naming Kuznetsov and Karpov. [..] What he hadn't expected was to find the very man he was giving evidence against to be part of the investigation team."
And in November 2008 Magnitsky was arrested.
Thus the reader is made to believe that Magnitsky was an outsider, a lawyer who was brought in to prepare the defence of people working for Browder's companies; that in the course of his investigation he contacted the police in order to report the theft of companies, but that he got himself arrested as a result of that, because the police were allied with the criminals. Later it appears that the criminals received support from high up, perhaps even protected by Putin.
Although those matters are not central to the judgment, the human rights court does discuss the background. The court makes a number of statements supporting Browder, confirming the 'allegations' of Browder and associates that three subsidiaries had been stolen in order to embezzle taxes paid in 2006; and that they lodged further complaints with the authorities, naming those they claimed were responsible for the embezzlement. Further, in June 2008, in an interview with the special investigator, Magnitsky made statements pertaining to the change of ownership and the tax refund in relation to the three subsidiaries, including the alleged criminal misconduct and abuse of office by named police officers. Those allegations were made public and Magnitsky discussed the complaints with representatives of the mass media. Further,the Russian police started an investigation in that matter [sections 26-29].
However, the court also made statements that are in disaccord with Browder's story. In particular, the court states in its verdict that already in 2004 a tax audit of two other companies belonging to Browder had been started, revealing 'sham employment of disabled persons to obtain a 50% income tax discount'. And in 2008 Magnitsky was questioned about his role in THAT fraud, as he was suspected of involvement. One disabled person had 'testified that he had been in contact with Mr Magnitskiy, had received money from him and had assisted him in finding other sham employees' [sections 31-36].
Further, the judgment reiterates the Russian investigation's findings (section 118):
'On 19 March 2013 the investigation into the [Magnitsky's] death was closed for “lack of any crime”. The investigators found it implausible that Mr Magnitskiy had been prosecuted in revenge for having exposed fraud by State officials. Neither Mr Kar. nor Mr Kuz. had been involved in the alleged fraud. They had neither opened criminal case no. 151231 into the tax evasion allegedly committed by the head of the Kameya company, nor had they participated in the search and seizure of the corporate documents and company seals. According to an expert report, fraudulent financial documents had been sealed by seals other than those seized by the police during the search on 4 June 2007. No connections between the police officers and alleged perpetrators of the tax fraud had been established.'
And concludes about this matter (section 202):
'The Court observes that the inquiry into alleged tax evasion, resulting in the criminal proceedings against Mr Magnitskiy, started in 2004, long before he complained that prosecuting officials had been involved in fraudulent acts [..]. The decision to arrest him was only made after the investigating authority had learned of his application for an entry visa to the United Kingdom, and of his having booked tickets to Kyiv, and after it had been unable to find him at his place of residence [..]. 203. The Court further observes that the first applicant was arrested on suspicion of having been involved in two episodes of tax evasion. The suspicion was based on documentary evidence and statements by several witnesses.'
Clearly, contrary to the US Senate and some western newspapers, the court does NOT buy Browder's story. The judges don't portray Magnitsky as a 'whistleblower' or 'an anti-fraud lawyer'.
Putin may be guilty of many crimes, but perhaps he's not involved in this one!
Further documentation, all accessible on Internet:
Bill Browder's book Red Notice and his website http://www.billbrowder.com/sergei-magnitsky.
THE MAGNITSKY ACT - BEHIND THE SCENES (mp4, 2h) Andrei Nekrasov, Piraya film
The Killing of William Browder (pdf, 218p.) Alex Krainer, EQUILIBRIUM