Interior Ministry Officer Responsible for Torture of Sergei Magnitsky Seeks the Arrest of Hermitage Executive

March 29, 2010

Russian Interior Ministry Officer Responsible for Torture in Custody of Lawyer Sergei Magnitsky Seeks the Arrest of Hermitage Executive

29 March 2010 – Recently, Hermitage Capital’s lawyers received a decree signed by Major Oleg Silchenko of the Russian Federal Interior Ministry seeking the arrest in absentia of Ivan Cherkasov, a senior executive of Hermitage Capital.

Major Silchenko is the same Interior Ministry officer who was responsible for the investigation and 12-month detention without trial of anti-corruption lawyer Sergei Magnitsky. Silchenko detained Sergey Magnitsky, after Sergey testified that Interior Ministry officers were involved in the theft of $230 million from the Russian government. In detention, Major Silchenko fabricated evidence in the investigation files, and ignored over 450 complaints regarding gross breaches of Magnitsky’s legal and human rights. He denied Magnitsky medical treatment for the pancreatitis and gallstones he developed in detention, and subjected him to torturous conditions to force a false testimony. Sergei Magnitsky died in custody on 16 November 2009 at the age of 37.

An independent Moscow prison watchdog established in their December 2009 report that:
“The case of Sergei Magnitsky can be described as a breach of the right to live.. Magnitsky had been experiencing both psychological and physical pressure in detention, and the conditions… can be justifiably called torturous.”

The action against Hermitage began in June 2007 when Lt Col Artem Kuznetsov of the Moscow Interior Ministry raided the offices of Hermitage and its law firm, Firestone Duncan. The pretext of the search was a report by Lt Col Kuznetsov that OOO Kameya, of which Mr Cherkasov was General Director, had allegedly underpaid dividend withholding taxes. During the raids, all the statutory documents and seals for Hermitage Fund Russian entities were seized without a warrant. Following the raids, those documents and seals were used to fraudulently re-register three Hermitage Fund companies into the name of a convicted felon, and then used to fraudulently obtain a $230 million tax refund, the largest in Russian history, which was granted by the tax authorities in one day.

Sergei Magnitsky – the lawyer working for Hemritage, investigated the fraud, uncovered the complicity of Russian Interior Ministry officers and testified against Lt Col Kuznetsov and his associate Major Pavel Karpov on 7 October 2008. He was arrested by the subordinates of Lt Col Kuznetsov on 24 November 2008.

Following Magnitsky’s arrest, Major Silchenko as the lead investigator, pressured Magnitsky to withdraw his testimony against the officers and to falsely testify against himself and his client. Sergei Magnitsky refused and instead provided further detailed evidence against Lt Col Kuznetsov and Major Pavel Karpov and three of their subordinates, in particular exposing the fabrication of the case against Kameya and Ivan Cherkasov. Sergei Magnitsky testified, in a statement to the Investigative Protocol on 13 October 2009:

“In spring 2007 Mr. Kuznetsov, an operative official of the Tax Crime Department of the Moscow Branch of the Interior Ministry,… organized the fabricated criminal case [against Kameya] on non-existent grounds, initiated searches of the office of Hermitage and Firestone Duncan. I believe that the fabricated criminal case, which was initiated by Kuznetsov made it possible to confiscate the statutory documents and the registration documents of the stolen companies and it made it possible to deprive the legal owners of their control over the said companies.”

On 22 January and 1 February 2010, lawyers representing Hermitage Capital and Mr Cherkasov wrote complaints to both the Russian General Prosecutor office and Federal Tax Service.  The complaints exposed the involvement of officers of the Silchenko’s team, in the theft of 11.2 billion rubles (~US$ 500 million) from the Russian government. They also accused investigators of fabricating evidence in order to raid Hermitage’s offices and arrest and detain Sergei Magnitsky, who was subsequently tortured and killed with the complicity of those investigators. Major Silchenko was additionally accused covering up of the massive theft of government funds, of absolving Interior Ministry officials for their responsibility and instead laying the blame for the largest fraud in Russian history solely on a sawmill foreman, previously convicted for manslaughter.

A month after receipt of the complaints, on 5 March 2010, Major Silchenko issued a decree seeking the arrest of Ivan Cherkasov. On 24 March, two other colleagues of Lt Col Kuznetsov visited Mr Cherkasov’s home as part of the operation behind issuing the domestic arrest warrant for Mr Cherkasov.

A Hermitage Capital spokesman said: “The officers responsible for Sergei’s death  are now trying to find another hostage.”

The criminal case being brought against Mr Cherkasov by Russian Interior Ministry for alleged underpayment of dividend withholding taxes at Kameya is in direct contradiction to the multiple audits conducted by the Russian Federal Tax Service, which found Kameya’s tax affairs to be completely in order and that no taxes were owed but had in fact been overpaid.

In response to the death of Sergei Magnistky, President Medevedev signed a package of laws to prevent Russian police officers from raising tax claims in circumvention of the tax authorities, and from arresting the innocent victims of police corruption and attacks by “raiders”. This news came 12 weeks after the President’s statement. It directly disregards the President and contradicts the new law.

For more information, please contact:
+ 44 20 7440 1777

info@hermitagefund.com
info@lawandorderinrussia.org
http://lawandorderinrussia.org

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