Council of Europe’s Rapporteur Presents Explosive 41-Page Report on the Magnitsky Affair Completely Rubbishing the Russian Government’s Version of Events

June 25, 2013

Today, the Coun­cil of Europe’s Rap­por­teur, Andreas Gross MP, pre­sent­ed the results of a detailed six-month review of the tor­ture and death of Sergei Mag­nit­sky in Russ­ian state cus­tody and the state sanc­tioned cov­er-up which fol­lowed. His 41-page report enti­tled, “Refus­ing Impuni­ty for the Killers of Sergei Mag­nit­sky,” was pre­sent­ed to the Human Rights and Legal Affairs Com­mit­tee of the Coun­cil of Europe this morning.
The report labels as “unac­cept­able” the ongo­ing impuni­ty of those respon­si­ble for Mr Magnitsky’s death and for the largest known theft of pub­lic funds in Russ­ian his­to­ry that Mag­nit­sky had exposed.

The Rap­por­teur con­demns in strong terms the fail­ure of the Russ­ian author­i­ties to con­duct a prop­er inves­ti­ga­tion into Sergei Magnitsky’s tor­ture and beat­ing in cus­tody, and calls the Russ­ian government’s efforts “belat­ed, slug­gish and con­tra­dic­to­ry.” He describes as “legal­ly unfound­ed” the tax eva­sion claims lev­elled posthu­mous­ly against Sergei Mag­nit­sky and against William Brow­der in absen­tia. He describes the Russ­ian government’s lat­est alle­ga­tions against Her­mitage of the “theft” of Gazprom shares as “selec­tive jus­tice” and “polit­i­cal­ly moti­vat­ed,” and final­ly he con­demns the “cov­er-up” in this case orga­nized at a “high level.” 

“Sergei Mag­nit­sky had denounced a gigan­tic rob­bery whose vic­tim was Rus­sia her­self. He died because he refused to give in to the pres­sure that cor­rupt mid-lev­el offi­cials had put on him in order to get away with their crimes. Why, then, does the Russ­ian state, and at such a high lev­el, try so hard to cov­er up this crime?” asks the Rap­por­teur in his report. 

Fol­low­ing fact-find­ing mis­sions to Rus­sia, Cyprus, Switzer­land and the UK, the Rap­por­teur dis­miss­es as “uncon­vinc­ing” and “doubt­ful” the expla­na­tions offered by the Russ­ian gov­ern­ment author­i­ties who exon­er­at­ed offi­cials for their role in the thefts and then blamed Sergei Mag­nit­sky him­self, after his death, for the crimes that he had uncovered. 

The report cites evi­dence that the same per­sons and offi­cials were involved in a series of thefts from the Russ­ian bud­get dur­ing a long peri­od of time, both before and after the $230 mil­lion theft, using the same Moscow tax offices.

“Thanks to the above-men­tioned inves­ti­ga­tions of the “mon­ey trail,” it has been shown that the same sus­pects (the so-called “Klyuev group”), using the same modus operan­di (annulling a fraud­u­lent­ly re-reg­is­tered company’s prof­its of the pre­vi­ous year through sham dam­ages claims…) [did so] using the same Moscow tax offices No 25 and 28 and the same mon­ey-laun­der­ing paths… In my view, all these sim­i­lar­i­ties can­not be mere coincidences.”
The Rap­por­teur relies on this evi­dence to reject the Russ­ian government’s posthu­mous alle­ga­tions that Sergei Mag­nit­sky orches­trat­ed the $230 mil­lion tax theft.

“A very strong argu­ment against blam­ing the USD 230 mil­lion tax reim­burse­ment fraud on Sergei Mag­nit­sky him­self is the fact that sim­i­lar tax reim­burse­ment frauds were com­mit­ted before and after Mr Mag­nit­sky was tak­en into cus­tody, and even after his death,” said the Rapporteur.
The Rap­por­teur also points out the lack of cred­i­bil­i­ty of the Russ­ian government’s ver­sion of the $230 mil­lion theft giv­en that it relies on the alleged involve­ment of a per­son who died before the theft took place.
“The con­clu­sions of the accu­sa­tion [signed by Russ­ian Deputy Gen­er­al Pros­e­cu­tor Grin] appear to believe Mr Markelov’s tes­ti­mo­ny that he opened a new bank account for Par­fe­nion with Inter­com­merz Bank in mid-Decem­ber on an instruc­tion from a Mr Gasanov, who had been dead since 1 Octo­ber 2007. Such incon­sis­ten­cies tend to under­mine the cred­i­bil­i­ty of Mr Markelov’s new tes­ti­mo­ny that Sergei Mag­nit­sky was the one who gave him his instruc­tions,” notes the Rapporteur.

The Rap­por­teur concludes:
“I am per­son­al­ly con­vinced that this crime was not com­mit­ted or in any way aid­ed or abet­ted by Mr Mag­nit­sky, but by a group of crim­i­nals, includ­ing the per­sons he had accused before these per­sons took him into cus­tody, where he died.”

The Rap­por­teur crit­i­cizes the Russ­ian gov­ern­ment for their eva­sive and uncon­vinc­ing responses.

“In light of this infor­ma­tion [mon­ey trail], the atti­tude shown by the Russ­ian author­i­ties so far is not real­ly con­vinc­ing. …The spokesper­son of the Min­istry of the Inte­ri­or, Ms Duduk­i­na, pub­licly stat­ed that the where­abouts of the tax mon­ey fraud­u­lent­ly paid into Uni­ver­sal Sav­ings Bank could no longer be estab­lished because a truck trans­port­ing the bank’s doc­u­men­ta­tion had acci­den­tal­ly burnt. My inter­locu­tors at the Min­istry of Inte­ri­or and at the Inves­tiga­tive Com­mit­tee evad­ed my ques­tion when I enquired about the cred­i­bil­i­ty of this state­ment. Regard­ing the trea­sury funds end­ing up in Mr Stepanov’s account, I was told that this had been ver­i­fied and that the funds…could be explained by his suc­cess­ful busi­ness activ­i­ties, includ­ing build­ing tun­nels in Russia…But in my view, this does not explain that the same trea­sury funds, whose dis­burse­ment had been autho­rized by Ms Stepano­va, end­ed up in her husband’s or ex-husband’s account, via the com­pli­cat­ed path described above,” says the Rapporteur.

Con­cern­ing the case opened by the Russ­ian Inte­ri­or Min­istry against Her­mitage Capital’s client, Kameya, used to seize doc­u­ments for Her­mitage Fund’s com­pa­nies and steal their $230 mil­lion tax pay­ments, the Rap­por­teur finds that it was not a bona fide investigation:
“The Russ­ian author­i­ties did not deny to us any of the infor­ma­tion on the Kameya case, they mere­ly stat­ed, with­out sub­stan­ti­at­ing, that the search and seizure actions on 4 June 2007 were moti­vat­ed by a bona fide crim­i­nal case con­cern­ing under­pay­ment of tax­es by Kameya. In view of the pre­cise, sub­stan­ti­at­ed and well-doc­u­ment­ed pre­sen­ta­tion of the facts on the Kameya case by the rep­re­sen­ta­tives of Her­mitage, I con­clude that the crim­i­nal case must have been opened for oth­er rea­sons than the bona fide pur­suit of crim­i­nal justice.”

Con­cern­ing the tax eva­sion accu­sa­tion made dur­ing the posthu­mous tri­al of Mr Mag­nit­sky and in absen­tia against Mr Brow­der, CEO of Her­mitage Cap­i­tal Man­age­ment, the Rap­por­teur finds the claims by the Russ­ian gov­ern­ment to be legal­ly unfounded:
“The Kalmyk law requir­ing an addi­tion­al agree­ment came into force only in July 2002 and did not apply to the year 2001, dur­ing which the under­pay­ment in ques­tion is alleged to have occurred. It would there­fore appear that the accu­sa­tion in ques­tion is legal­ly unfounded.”
“The detailed and well-doc­u­ment­ed replies received have gone a long way to con­vince us that Her­mitage did not vio­late the law. This was also con­firmed by an audit car­ried out by the com­pe­tent tax author­i­ties… The tax eva­sion accu­sa­tions are sus­pect also in light of the pecu­liar cir­cum­stances of the (re)-opening of the crim­i­nal case, which had been opened in 2004 on the basis of an FSB report and closed for “lack of any crime…”
“Legal pur­suits for any tax under­pay­ments con­cern­ing 2001 would also appear to be time-barred…Consequently, the for­mal indict­ments dat­ed 22 March 2013 and the posthu­mous tri­al against Sergei Mag­nit­sky and the tri­al in absen­tia against Bill Brow­der appear to vio­late Russ­ian law.”

Con­cern­ing the new case opened by the Russ­ian gov­ern­ment and accus­ing Her­mitage Cap­i­tal of “steal­ing” Gazprom shares, the Rap­por­teur finds it to be exem­plary of “selec­tive jus­tice” and “indica­tive of polit­i­cal­ly-moti­vat­ed cases”:
“The ret­ro­spec­tive pros­e­cu­tion of the Her­mitage exec­u­tives for any vio­la­tion of this decree would appear to vio­late the principle…enshrined in Arti­cle 7 ECHR…In my view, the author­i­ties can­not now change their minds retroac­tive­ly, in addi­tion sole­ly to the detri­ment of one of the “grey mar­ket” par­tic­i­pants and not the oth­ers: this would be a case of selec­tive jus­tice, which in the prac­tice of the Assem­bly is often seen as an indi­ca­tion for the “polit­i­cal” moti­va­tion of crim­i­nal prosecutions.”

The Rap­por­teur exam­ines the fail­ure of the Russ­ian author­i­ties to inves­ti­gate Sergei Magnitsky’s killing in cus­tody and the sub­se­quent cov­er-up, issu­ing a damn­ing verdict:
“The belat­ed, slug­gish, and con­tra­dic­to­ry inves­ti­ga­tions lead only to indict­ment of two Butyr­ka doc­tors, one of them for neg­li­gent­ly fail­ing to diag­nose dis­eases that Mr Mag­nit­sky nev­er actu­al­ly had, whilst exon­er­at­ing all oth­ers – includ­ing all those who were present when Mr Mag­nit­sky died at Matrosskaya Tishi­na, those respon­si­ble for the fail­ure to treat his actu­al, diag­nosed dis­eases, those respon­si­ble for the beat­ings and for the numer­ous cover-ups.”

The Rap­por­teur finds that Mag­nit­sky was beat­en short­ly before his death and brands “doubt­ful” the expla­na­tions pre­sent­ed by the Russ­ian author­i­ties to the contrary.
“I was told by sev­er­al rep­re­sen­ta­tives of the author­i­ties that Mr Mag­nit­sky was not beat­en upon his arrival at MT prison…I am not con­vinced by the expla­na­tions giv­en to me dur­ing my sec­ond vis­it in Moscow that this doc­u­ment [the report about the use of rub­ber batons] is “out of con­text” and that the men­tion­ing of rub­ber batons as part of the spe­cial mea­sures used against Mr Mag­nit­sky was pure­ly “auto­mat­ic.”… In addi­tion, the autop­sy, the tes­ti­mo­ny of Mr Magnitsky’s moth­er and pho­tographs tak­en by fam­i­ly mem­bers when they were first per­mit­ted to see the body con­firms that Mr Mag­nit­sky had vis­i­ble injuries on his body that had nev­er been explained…It is there­fore clear for me that Sergei was indeed beat­en short­ly after his arrival at MT prison, where­as the rea­son men­tioned in the offi­cial report about the use of batons – a ner­vous break­down – is doubt­ful both for legal and fac­tu­al rea­sons,” con­cludes the Rapporteur.

“In my view, the manip­u­la­tion of the ini­tial “death act” [with ref­er­ence to a sus­pect­ed cere­bral injury removed in one ver­sion] is a strong indi­ca­tion for an offi­cial cov­er-up. So is the rejec­tion of the two requests for an inde­pen­dent autop­sy made by Mr Magnitsky’s fam­i­ly on 17 and 19 Novem­ber 2009,” says the Rapporteur.

The Rap­por­teur con­demns as “cyn­i­cal” the cov­er up by Russ­ian author­i­ties of Sergei Magnitsky’s com­plaints from cus­tody detail­ing his ill-treat­ment and cites a litany of com­plaints and their refusals by Russ­ian author­i­ties, includ­ing the deci­sion by Inte­ri­or Min­istry offi­cials to “archive” the com­plaint with­out any consideration.

“Offi­cials in Moscow…told me that Sergei Mag­nit­sky had nei­ther com­plained about his deten­tion con­di­tions, nor about lack of health care pro­vid­ed to him in deten­tion. …Mr Magnitsky’s moth­er and Her­mitage pro­vid­ed me with a long list of the com­plaints.. The replies speak for them­selves… The com­plaint was assigned for review to Major Silchenko who rec­om­mend­ed it to be archived as this com­plaint was “not with­in our com­pe­tence”. Mr Silchenko’s rec­om­men­da­tion was approved by his supe­ri­or, Colonel Karlov,” writes the Rapporteur.
“In light of the well-doc­u­ment­ed, spe­cif­ic com­plaints repro­duced above, I find it down­right cyn­i­cal that the author­i­ties now say that Sergei Mag­nit­sky nev­er actu­al­ly com­plained about his treat­ment in deten­tion and the lack of med­ical treatment…In my view this is unac­cept­able,” says the Rapporteur.
The Rap­por­teur points out that the objec­tive of his report is to “con­tribute to a bet­ter pro­tec­tion of indi­vid­u­als against law­less behav­iour of state offi­cials in future.”

The Rap­por­teur states that the impuni­ty of Mag­nit­sky killers must be unac­cept­able for both the Russ­ian peo­ple and the inter­na­tion­al community.
“This result – com­plete “impuni­ty of the killers of Sergei Mag­nit­sky,” as it is for­mu­lat­ed in the title of the motion under­ly­ing this report – is sim­ply unac­cept­able… This result should first and fore­most be unac­cept­able for the Russ­ian peo­ple and the Russ­ian state,” says the Rapporteur.
“The inter­na­tion­al com­mu­ni­ty must not accept the out­come of this case so far. In the inter­est of the Russ­ian peo­ple them­selves and of their state, cor­rupt offi­cials must not be allowed to plun­der state prop­er­ty whilst bru­tal­ly silenc­ing those stand­ing in their way, with impuni­ty,” says the Rapporteur. 

Dur­ing the course of the prepa­ra­tion of the report, Rap­por­teur Gross met with Magnitsky’s fam­i­ly, his clients at Her­mitage Cap­i­tal, Hermitage’s lawyers, as well as with Russ­ian offi­cials, includ­ing offi­cials in the Russ­ian Prosecutor’s Office, Inte­ri­or Min­istry, Inves­tiga­tive Com­mit­tee, and Chair of the Russ­ian Cen­tral Bank Mr Ignatiev. 

In his report, the Coun­cil of Europe’s Rap­por­teur states that he had asked for meet­ings in Rus­sia with many more wit­ness­es and offi­cials but these meet­ings did not materialize.

“I would have liked to speak with the prison doc­tors, guards, the mem­bers of the civil­ian psy­chi­atric emer­gency team and oth­ers whose tes­ti­mo­ny I could only refer to through writ­ten sources…I had pro­vid­ed a detailed list of these per­sons to the Russ­ian author­i­ties already before my first vis­it in Feb­ru­ary 2013, and again before my sec­ond vis­it, in May. These meet­ings nev­er mate­ri­al­ized,” says the Coun­cil of Europe’s Rap­por­teur in the draft report pre­sent­ed to the Legal and Human Rights Committee.

Andreas Gross (http://assembly.coe.int/ASP/AssemblyList/AL_MemberDetails.asp?memberID=3498) is a Swiss MP, chair of the Social­ist Group of the Par­lia­men­tary Assem­bly of the Coun­cil of Europe, and a co-author of the 2012 report “The hon­our­ing of oblig­a­tions and com­mit­ments by the Russ­ian Fed­er­a­tion” (http://assembly.coe.int/ASP/XRef/X2H-DW-XSL.asp?fileid=18998&lang=EN).
The report on the Mag­nit­sky case will be dis­cussed at the forth­com­ing meet­ing of the Coun­cil of Europe’s Human Rights and Legal Affairs Com­mit­tee in the fall and used by the Par­lia­men­tary Assem­bly of the Coun­cil of Europe to decide on a res­o­lu­tion about how the Coun­cil of Europe should react to the impuni­ty of offi­cials in this case. The report will also be used by the gov­ern­ments of mem­ber states of the Coun­cil of Europe as they con­sid­er their own pol­i­cy on sanc­tions, and oth­er responses. 

Back­ground:
The report “Refus­ing Impuni­ty for the Killers of Sergei Mag­nit­sky” was man­dat­ed by the Coun­cil of Europe last Octo­ber (http://assembly.coe.int/CommitteeDocs/2012/AS_Inf_2012_E.pdf) fol­low­ing a spe­cial motion signed by del­e­gates to the Coun­cil of Europe (http://assembly.coe.int/ASP/Doc/XrefDocDetails_E.asp?FileID=18232).

Swiss MP Andreas Gross was appoint­ed Rap­por­teur on the Mag­nit­sky case in Novem­ber 2012 (http://www.assembly.coe.int/Committee/JUR/2012/JUR008E.pdf).

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