BusinessWeek: Hermitage Claims Russian Bankers May Have Helped With Fraud

July 31, 2009

In a New York court fil­ing, Her­mitage alleges that exec­u­tives of Moscow invest­ment bank Renais­sance Cap­i­tal Hold­ings had pri­or knowl­edge of theft and tax fraud

By Paul Bar­rett and Bri­an Grow
The saga of Her­mitage Cap­i­tal Man­age­ment, once a major force in Moscow finan­cial cir­cles, has tak­en a new twist in the form of a poten­tial­ly explo­sive court fil­ing in New York.

Her­mitage, now locat­ed in Lon­don, has alleged that it was the vic­tim of Russ­ian cor­po­rate raiders and cor­rupt gov­ern­ment offi­cials who coop­er­at­ed to steal its assets, file bogus law suits, and reclaim $230 mil­lion in tax­es pre­vi­ous­ly paid by Her­mitage to the Russ­ian gov­ern­ment. In its fil­ing on July 28 in U.S. Dis­trict Court in Man­hat­tan, Her­mitage alleges pub­licly for the first time that exec­u­tives of anoth­er promi­nent Moscow finan­cial insti­tu­tion, invest­ment bank Renais­sance Cap­i­tal Hold­ings, may have helped defraud Hermitage.

The July 28 fil­ing is an appli­ca­tion for a court order per­mit­ting Her­mitage’s lawyers to seek doc­u­ments from Renais­sance’s New York unit. In par­tic­u­lar, Her­mitage alleges that “cer­tain cur­rent and for­mer exec­u­tives of Renais­sance and its affil­i­ates” had rela­tion­ships with a Russ­ian bank involved in the fraud. Her­mitage also sug­gests in its fil­ing that cer­tain top Renais­sance exec­u­tives had “knowl­edge of the fraud before it became pub­lic knowl­edge.” Renais­sance, the largest Russ­ian invest­ment bank, is one of the most active sell­ers of Russ­ian secu­ri­ties to West­ern investors.

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The Daily Telegraph: Hermitage points to RenCap in fraud case

July 31, 2009

By Philip Aldrick

Her­mitage Cap­i­tal Man­age­ment, the hedge fund bat­tling state cor­rup­tion in Rus­sia, has accused Renais­sance Cap­i­tal, one of Rus­si­a’s lead­ing invest­ment banks, of pos­si­ble involve­ment in two alleged frauds cost­ing the Russ­ian tax­pay­er $337m (£204m).

In a tes­ti­mo­ny filed by Her­mitage’s lawyer in a New York court, the hedge fund claims there is suf­fi­cient cir­cum­stan­tial evi­dence to sug­gest that Ren­Cap and its for­mer direc­tors, includ­ing Stephen Jen­nings, the “Kiwi oli­garch” who found­ed and is chief exec­u­tive of par­ent com­pa­ny Renais­sance Group, may be “impli­cat­ed in the tax rebate fraud”.

Her­mitage has been fight­ing the Russ­ian author­i­ties for two years to get them to acknowl­edge “a sophis­ti­cat­ed con­spir­a­cy” involv­ing “senior offi­cers in the Russ­ian Inte­ri­or Min­istry, the Russ­ian Fed­er­al Secu­ri­ty Ser­vice, senior offi­cers of the Russ­ian tax bureaux and cer­tain senior Russ­ian court judges”.

The hedge fund, once Rus­si­a’s largest for­eign investor, led by US nation­al Bill Brow­der, first uncov­ered the alleged fraud in 2007 after three of its sub­sidiaries were stolen in a com­pli­cat­ed scam fol­low­ing a police raid on its Moscow offices, when legal doc­u­ments and seals were confiscated.

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