Posts Tagged ‘yelnikov’

April 2012

Dead Men Tell No Tales


Russia is about to put a dead man on trial, the whistle-blower Sergei Magnitsky who died in the custody of the police officials he’d earlier accused of taking part in what Magnitsky said was a huge 2007 Russian tax fraud. The $230 million swindle involved stealing the corporate identity of Hermitage Capital, a Western-run hedge fund and a legal client of Magnitsky’s firm (see “Crime and Punishment in Putin’s Russia,” April 16, 2011). When Magnitsky told Russian authorities in 2008 that corrupt tax and police officials seemed to have victimized Hermitage, it was him they arrested. Several weeks ago, Russian prosecutors set in motion a case that will blame Hermitage and Magnitsky for the frauds he alleged.

The prosecution may have trouble reconciling its theory of Magnitsky as mastermind with a newly-published investigation in Russia’s Novaya Gazeta. The newspaper reports that the same tax offices Magnitsky had fingered were the loci of apparent tax fraud even after the lawyer’s arrest and 2009 death in prison. Barron’s has reviewed prosecution documents that show the involvement of the FSB – successor to the KGB – in the activities that victimized Magnitsky and Hermitage, including the 2007 confiscation of Hermitage records and the 2008 arrest of Magnitsky.

“My investigation shows that after [Magnitsky’s] death, the very same tax office workers were continuing to steal from the people in the same exact way,” said Roman Anin, the reporter who wrote the Novaya Gazeta piece, in an interview with Barron’s. “This has to do with every single Russian citizen. If you add up the fraud from 2007 to 2010 committed by these tax officers, you would see that they stole the equivalent amount to the pensions of 20 million Russian citizens.” Barron’s tried, without success, to reach Russian tax officials responsible for what’s now alleged to have been a total of more than $700 million in fraudulent refunds.

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