Russian prosecutors have charged Bill Browder with money laundering and say it is likely the former fund manager poisoned the tax lawyer whose death Browder invoked in convincing Western governments to impose sanctions on Russians.
Prosecutors held a press conference on November 19 during which they accused Browder of heading an organized criminal group that laundered “tens and hundreds of millions of dollars.” Nikolai Atmonyev, who works for the prosecutors’ office, said Russia will place Browder’s name on a list of wanted persons under the U.N. Convention Against Transnational Organized Crime, according to a report in Sputnik News, a government-owned website. Atmonyev said the criminal organization allegedly headed by Browder used companies in Cyprus, Latvia, and Switzerland to launder the illegal funds.
Atmonyev also said that Browder “had a lot to gain” from the death of Sergei Magnitsky, who worked for Browder’s Hermitage Capital Management. The company, which was based in Moscow, managed one of the world’s most profitable funds in the years following the breakup of the Soviet Union. Browder was deported in 2005 as a national security risk and he quickly moved to liquidate his company’s assets after being alerted to the possibility that the fund was being targeted by politically connected individuals. In 2007 Hermitage’s offices were searched and key documents and corporate seals were seized. A short while later, the fund’s companies were re-registered under the names of new and unknown owners, with documents backdated to indicate that the fund had liabilities of $973 million. That was almost exactly the amount of taxable income reported by a group of Hermitage companies for 2006, and on which they had paid $230 million in Russian taxes.
When Magnitsky filed a criminal complaint about the fraudulent ownership transfer of the fund’s companies, Russian authorities opened a tax evasion case against Browder. In July 2008 Magnitsky released evidence that $230 million in refunds had been paid to the companies that were previously controlled by Hermitage. Magnitsky was jailed for a year, during which he refused to either incriminate Browder or withdraw allegations he had made against Russian authorities he had implicated in the affair. The lawyer died in prison in late 2009 after reportedly being tortured and denied medical treatment for serious health issues.
Magnitsky’s death prompted Browder to launch an often-successful crusade to convince Western countries to impose sanctions on the people he claimed were responsible. In 2013 the Russian government put Browder and Magnitsky on trial for tax evasion, the former in absentia and the latter posthumously. They were found guilty in August of that year, with Browder sentenced to nine years in prison.
Russian authorities have supported their suspicions about Browder’s alleged involvement in Magnitsky’s death with a claim made by a journalist, Oleg Lurie, who they say shared a jail cell with the tax lawyer. Lurie reportedly said that Magnitsky claimed Browder’s lawyers had put pressure on him to sign a false statement about uncovering a conspiracy by Russian officials to embezzle taxpayer funds.
“Based on the documents that were shown, an obvious conclusion can be made that, having received a false statement from Magnitsky . . . Browder was interested in Sergei Magnitsky’s death more than anyone else in order to avoid exposure,” Atmonyev said, according to Sputnik News.
Prosecutors said that Magnitsky “and other accomplices of Browder” might have been poisoned. “[It] could be assumed with a high degree of probability [that three men] had been killed as a way to get rid of accomplices who may have given testimony exposing Browder,” said Mikhail Aleksandrov, an official with the prosecutors’ office, according to Sputnik News.
Intrigue at Interpol
The latest accusations against Browder come amidst pending elections for the new president of Interpol, the French-based agency that facilitates cooperation between national police agencies. In an opinion piece published in the November 19 edition of The Washington Post, Browder said the choice is between Alexander Prokopchuk, a Russian interior ministry officer, and the agency’s interim president, Kim Jong Yang of South Korea. Citing allegations that Russia had killed one of its former spies with a nerve agent in the United Kingdom, the downing of an Indonesian plane over the Ukraine, and interference with U.S. elections, Browder said he is worried about the outcome of the voting. “No one should want to see a Russian elevated to this post, but I have a particular personal interest in seeing that it doesn’t happen,” he said.
In May Browder was briefly detained by Spanish police, who were responding to a Russian Interpol arrest warrant. He was quickly released after Interpol’s general secretary advised the Spanish authorities not to honor a Russian red notice, which is the document issued by Interpol to inform member countries that the named person is wanted based on an arrest warrant issued by a country or an international tribunal.
Browder told Tax Notes at the time that Russian authorities had tried to used Interpol to capture him on several previous occasions. “I’m most surprised how Interpol has allowed itself to be abused by Russia six times in my case,” Browder said in the May email interview. “Interpol is an organization designed to catch dangerous criminals, not help [Russian President Vladimir] Putin persecute his enemies. I would hope that this high-profile blunder leads to some reform at Interpol.”
Browder said in the Washington Post op-ed piece that he is working with lawyers and “other victims” on an initiative to suspend Russia from using the Interpol system. “Its serial abuse is well documented and undeniable,” he said. “It would be an absurd and Kafkaesque scenario if — rather than Russia being suspended — one of Putin’s henchmen were to become the leader of one of the world’s most important law enforcement institutions.”
‘Stupid and Unbelievable’ Accusations
Jamison Firestone, who represented Hermitage Capital in Moscow and was the managing partner of the law firm that employed Magnitsky, told Tax Notes that the prosecutors’ claims are “so stupid and unbelievable that it’s almost not worth responding to the Russians.”
”There were no unpaid taxes nor was there any money laundering by anyone other than the Russians who stole the tax payment,” Firestone said. “And, of course, it’s ridiculous to claim that Bill killed Sergei. Bill provided my firm with over €700,000 to hire outside counsel to defend Sergei and was devastated when Sergei was killed.”
Firestone said that when his office reported the theft of the Hermitage companies and the debts that their new owners admitted were owed, the authorities reopened a tax review that he said had previously been closed. “And, in one day, [they] changed the finding from ‘no crime’ to ‘crime’ and indicted Bill,” according to Firestone.
When Magnitsky and Browder reported the illegal tax refund in July 2008, Firestone said the Russian authorities ignored their findings. Three months later, when Magnitsky revealed who was responsible for the tax refunds, the authorities joined the lawyer to the case that had been brought against Browder and arrested him, Firestone said. “As we revealed more and more [details], the Russians had to keep changing their story to pin the tax theft on us,” he said. “Essentially, their modus operandi became blaming aspects of the crime on dead people — including Sergei — and now it’s moved a step past to blaming us for killing them.”
Firestone said it wasn’t surprising that Magnitsky and Browder had been found guilty of tax evasion in Russia because neither was represented at their trial, Magnitsky was tried posthumously and couldn’t defend himself, and all of the evidence used by authorities was compiled by people Magnitsky had testified against. “The outcome was never in doubt as Russia really needed to declare Bill and Sergei tax cheats to turn attention away from the stolen money and where it went,” he said.
Some of the evidence cited by the Russian prosecutors had been submitted by Natalia Veselnitskaya, who in a 2016 meeting at Trump Tower in Manhattan tried to convince Donald Trump Jr. and other members of his father’s presidential campaign team to drop the Magnitsky Act sanctions passed by the U.S. Congress in late 2012. Veselnitskaya was also a key participant in the defense of Cyprus-based real estate company Prevezon Holdings Ltd. against allegations by the U.S. government that Prevezon laundered proceeds from the Russian treasury fraud.
Firestone was dismissive of the evidence reportedly provided by Veselnitskaya. “She was given the task by the Russian government of derailing the global Magnitsky sanctions and killing the sanctions in general,” Firestone said. “That was the purpose of the Trump Tower meeting. It appears that the Russian government essentially deputized Veselnitskaya and she has been running [its] attack against Bill to the extent of being able to draft the letters that come out of the Russian Ministry of Justice. So basically this means that the person now in charge of killing sanctions and carrying on the war against Bill and fabricating the evidence against Bill is Veselnitskaya.”