Russia Moves Forward with the First Posthumous Trial in Russian History in the Magnitsky Case

November 29, 2012

Today, the Russian General Prosecutor’s Office announced that they sent to court the case against Hermitage Fund’s deceased lawyer Sergei Magnitsky, and against William Browder, CEO of Hermitage Capital Management, in absentia.

This will be the first posthumous trial in the Russian legal history and the third known trial against a foreign citizen in absentia in Russia.
“This smacks of desperation and is clearly a retaliatory move by the Russian government against our quest to get justice for Sergei Magnitsky. We are back to the show trials of 1937,” said a Hermitage Capital representative.

The criminal case against Magnitsky and Browder is a direct retaliation for the Hermitage’s criminal complaints against Russian law enforcement for their involvement with other officials and criminals in the unlawful expropriation of Hermitage Fund’s Russian subsidiaries, which were then used to steal $230 million of taxes that the subsidiaries had paid to the Russian government in 2006.

In June of 2007, the Interior Ministry raided the offices of Hermitage and its law firm Firestone Duncan in Moscow. The documents seized by the police during the raids were used to steal Hermitage’s Russian investment holding companies and create approximately $1 billion of fraudulent liabilities against them.

In December 2007, Hermitage wrote criminal complaints naming Major Pavel Karpov and Lt. Colonel Artem Kuznetzov of the Russian Interior Ministry for being involved in abetting the theft of the companies and the fraudulent liabilities. Shortly after that, Major Karpov, two subordinates of Kuznetzov and FSB officer Alexander Kuvaldin travelled to Kalmykia to open the current tax case against William Browder which was originally initiated by FSB in 2004 but closed in 2005 for lack of merit.

In June and October 2008, Sergei Magnitsky testified about the role of Major Karpov and Lt. Colonel Kuznetzov in the theft of the Hermitage Fund companies and the theft of $230 million of taxes. Shortly after that, two of Lt. Colonel Kuznetzov’s associates arrested Sergei Magnitsky in the same criminal case where they accused Mr. Browder. Magnitsky was tortured in custody during 358 days to force him to change his testimony against the officers and to falsely implicate himself and Browder. Sergei Magnitsky refused to perjure himself. He was found dead on a cell floor on 16 November 2009 with signs of bruises and lacerations on his arms and legs. The Russian government declared he had died of heart failure.

“Having failed to break Sergei Magnitsky, who was held hostage for a year and remained true to his integrity, the Russian authorities now want to use the fact that he can’t answer, to defame him after his death,” said a Hermitage Capital spokesperson.

Magnitsky relatives have refused to participate in the posthumous trial calling it a “sacrilege”.

The posthumous criminal case against Sergei Magnitsky and in absentia against Browder, accuses them of corporate tax underpayments in 2001, 11 years after the alleged tax underpayment and one year past the 10 year statute of limitations. The case has been filed in the absence of tax claims from tax authorities who audited the companies nine years ago. Additionally, Sergei Magnitsky had no role with these companies in 2001.

The posthumous proceeding against Magnitsky has been ordered by the Deputy General Prosecutor of Russia, Victor Grin, who was personally responsible for the oversight of the case under which Magnitsky was arrested and tortured in custody. Prosecutor Grin also played a key role in the cover-up of officials implicated in the frauds against Hermitage by assigning the blame of the $230 million theft on a “sawmill employee” and transferring the investigation of the fraud against Hermitage to the Interior Ministry, whose officers were implicated in the fraud.

In 2009, while Sergei Magnitsky was still alive, the Parliamentary Assembly of the Council of Europe called this case an “emblematic example of the politically-motivated abuse of the criminal justice system” and recommended that member states refuse the Russian Federation mutual legal assistance in this case. The British government has already rejected various requests for mutual legal assistance from the Russian authorities on this case

“The United Kingdom of Great Britain and Northern Ireland, of which [Mr Browder] is subject, has refused mutual legal assistance on this matter,” said the Russian General Prosecutor’s Office in their announcement.

In 2010, Sergei Magnitsky was posthumously awarded Integrity Award by Transparency International for his fight against Russian corruption.

A global campaign seeking justice has been launched around the world given the impunity of the officials involved in the arrest, torture and death of Magnitsky and the massive corruption he had uncovered in Russia.


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