The Daily Telegraph: Law society warning over Russia’s ‘state-sponsored intimidation’

September 11, 2008

 
By Philip Aldrick

A lead­ing inter­na­tion­al law soci­ety has con­demned Rus­sia for the “state-spon­sored intim­i­da­tion” of lawyers rep­re­sent­ing HSBC and the hedge fund Her­mitage Cap­i­tal Man­age­ment after they uncov­ered a large alleged tax fraud.

In com­ments that will add to grow­ing unease about oper­at­ing in Rus­sia, the Inter­na­tion­al Bar Asso­ci­a­tion warned of a “dete­ri­o­ra­tion in the rule of law” after offi­cers at the Inte­ri­or Min­istry raid­ed the offices of lawyers work­ing for Her­mitage and HSBC and issued sum­mons for them to appear as wit­ness­es on cas­es in which they are acting.

Mark Ellis, exec­u­tive direc­tor of the IBA, said: “Respect for the role of lawyers and the inde­pen­dence of the judi­cia­ry rep­re­sent an essen­tial fea­ture of the rule of law. When gov­ern­ment agents inter­fere with the work of lawyers, it is not only the legal pro­fes­sion that is threat­ened, but the over­all legal order in the state.”

Her­mitage claims to have been under attack by sophis­ti­cat­ed crim­i­nals with con­nec­tions in Rus­si­a’s Inte­ri­or Min­istry. The Min­istry last month raid­ed four law firms in Moscow, includ­ing Fire­stone Dun­can of the US.

Her­mitage believes the tar­gets were lawyers work­ing to recov­er three invest­ment com­pa­nies owned by HSBC on behalf of Her­mitage that were alleged­ly stolen in a com­plex fraud last year. The stolen com­pa­nies were used to false­ly reclaim from the state $230m of tax paid by Her­mitage in 2006.

William Brow­der, Her­mitage chief exec­u­tive, said: “These recent acts of egre­gious intim­i­da­tion against the four law firms act­ing for us in Rus­sia under­score the degree to which legal nihilism has now over­whelmed the last ves­tiges of the rule of law in Russia.”

Her­mitage’s prob­lems are like­ly to add to pres­sure on Rus­sia after appar­ent polit­i­cal inter­fer­ence at TNK-BP and Roy­al Dutch Shel­l’s Sakhalin 2 gas project.

Min­istry offi­cers raid­ed the four law firms on August 20, seiz­ing con­fi­den­tial client files and pow­ers of attor­ney as well as “a sus­pi­cious pack­age that had been deliv­ered to one of the offices short­ly before the raids”, Her­mitage said. Three lawyers were sub­se­quent­ly ordered to appear for ques­tion­ing over the com­pa­nies Her­mitage alleges were stolen and “used to steal $230m from the Russ­ian government”.

The Min­istry claimed the lawyers need­ed to be ques­tioned because “they had active­ly com­plained about the fraud and had tak­en legal actions to defend the HSBC com­pa­nies”, accord­ing to Her­mitage. How­ev­er, Her­mitage alleged that “the sum­mons were not sanc­tioned by any Russ­ian court, as required under Russ­ian law”.

Orig­i­nal was pub­lished in The Dai­ly Tele­graph.

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