24
June

London ‘rolls out the red carpet’ for money launderers

Sunday Times

THE head of a hedge fund that was the victim of a £144m fraud in Russia has complained that Britain has “rolled out the red carpet” for money launderers.

Bill Browder, founder and chief executive officer of Hermitage Capital Management, said British authorities had failed to investigate the fraud against his firm despite evidence showing the involvement of UK companies.

In 2007, Hermitage’s offices in Moscow were raided by police who seized corporate records, company seals and tax certificates.

The documents were used by a criminal gang to fraudulently claim a tax refund from the Russian government.

A lawyer who tried to expose the crime, Sergei Magnitsky, was arrested and died in custody in 2009.

Browder and his team have since traced some of the stolen funds around the world. Investigations have begun in Switzerland, Latvia, Lithuania, Estonia, Moldova and Cyprus. In America, a law, the Magnitsky Act, was passed to deny visas to and freeze assets of those implicated in his death.

Yet Browder, whose firm is based in London, says the UK authorities have taken no action despite the involvement of British companies receiving funds or acting as agents for those involved in the crime.

In a letter to HM Revenue & Customs (HMRC) last month, lawyers acting for Hermitage said a company services firm, GSL Law & Consulting, with offices in London, had acted as an agent for some of the companies involved in the fraud. The letter said GSL’s role meant it should not meet HMRC’s “fit and proper” test for companies providing offshore company services.

Alexander Alexeev, managing partner of GSL, said his firm dealt only with the formation of companies and was not involved in their business or other operations.

However, Browder said the UK authorities’ failure to act made a “mockery” of David Cameron’s call at last week’s G8 summit for a crackdown on tax evasion. “The UK has rolled out the red carpet for money launderers, who it appears can come to this country and act with impunity,” he said.

HMRC said it was unable to discuss individual cases “for legal reasons”.

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