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Covering up the thieves



June 09, 2010 – Comments (2)

Fresh news reports emerge about the Hermitage case (in which $230 M was stolen by a gang of Interior Ministry officers and a lawyer died in jail after refusing to change his testimony against the thieves). The articles below are rather long, but here is the gist of it. It appears that when puppet president Medvedev ordered his officials to investigate the lawyer's death, he thought carefully which one of the thousands of officials available is best fit to handle the case, and concluded that the leader of the gang was the best man for the job. The gang leader took on the investigation and soon found that the gang was right and its accusers were wrong. Then again, this outcome looks somewhat predictable, does it not?


"Oleg Logunov, a department head at the Prosecutor General’s Office, yesterday claimed that Sergei Magnitsky, who died of heart failure in custody last November, had not filed any official complaints about heart trouble, and that he simply died “suddenly.” Logunov also made a string of detailed accusations against Magnitsky, and Hermitage Capital Management CEO Bill Browder. As Hermitage representatives today rubbished the claims and fired accusations back at Logunov, the conflict between the company and high-profile government officials seems as fresh as ever. Justice in the Magnitsky case, however, remains elusive.

In an exclusive interview with Business FM, later posted on his Web site, Oleg Logunov claimed that Sergei Magnitsky’s death in pretrial detention was “sudden” and that the former Hermitage lawyer had never complained about having a life-threatening heart condition. 


Firestone said Logunov had deliberately chosen his words yesterday to obscure what had really happened to Magnitsky. “When Mr. Logunov said that Sergei never complained about his heart, he was telling the truth. But he was intentionally trying to create the false impression that Sergei didn't complain about his medical conditions and the intentional denial of medical care which killed him,” said Firestone. “Sergei didn't have a heart problem, but he did complain hundreds of times (and we have copies of all his complaints) about needing medical care for the serious, painful, and completely treatable medical problem that he did develop in prison, and not getting it.”

Firestone said that Logunov had a vested interest in the case. Logunov’s “colleagues” are the Interior Ministry’s Lt. Col. Artem Kuznetsov and Pavel Karpov, both of whom were involved in corporate raids on Hermitage in 2007, he said. In February 2008 Hermitage finally got a case opened against Kuznetsov and Karpov when the two immediately reopened (illegally) the tax evasion case against Hermitage. Magnitsky subsequently testified against Kuznetsov and Karpov in October 2008.

“These officers then fabricated evidence, made Magnitsky a suspect, and accused him of organizing tax avoidance in Kalmykia seven years prior. That is clearly retaliatory and also ridiculous considering that the entire case, including Sergei's recent inclusion in it as a suspect, had been fabricated by the men Sergei had testified against,” said Firestone.

Firestone said that Logunov was trying to hide his personal involvement in the case. “Sergei was indicted under the fabricated case that was reopened in Kalmykia under Logunov's supervision. He was then detained in prison because [an] investigator [] claimed he had applied for a UK visa and might run away. The UK Embassy wrote a letter confirming that Sergei had never applied for a visa and therefore Sergei's lawyers asked for his release. Mr. Logunov then made a completely unlawful decision to keep Sergei in detention when there were no facts which justified this,” said Firestone. 

Some background: 

"He was ultimately punished for his outspokenness when Hermitage and two subsidiaries were put under the control of Victor Markelov, whom Browder accuses of being a former sawmill employee and convicted murderer.

Markelov entered the picture after Hermitage's lawyers, including Firestone Duncan, were caught up in the drama. The decisive event: a 2007 raid on Firestone's Moscow office staged by police from Russia's Interior Ministry. Sergei Magnitsky, the head of the firm's tax practice, later accused two officers who led the raid of stealing Hermitage documents in the process. Russian authorities, Jamison Firestone claims, subsequently used those documents as the basis for seizing the three Hermitage funds, handing them over to Markelov, and, later,collecting a questionable $230 million tax refund". 

"Tell us how you believe these alleged schemes involving Anrider and Hermitage worked.

Think of it this way: there's a guy in a criminal group who understands how to steal taxes back from the government. He's the mastermind. And he says if you have a company that paid a lot of taxes and you create a lot of fake liabilities, you can submit an application for a refund that his buddies in the tax inspector's office can push through lightening fast.

How, in your opinion, is that accomplished?

You need some muscle to steal the companies with the taxes--that's the police. They come in and steal the company. Now you need to put them under criminal control. So you take some stupid, fall-guy criminal that doesn't have an education-- a sawmill foreman like Markelov, say--and you make him the managing director of a company with $4.3 billion in assets.

What comes next in this scenario?

You create the liability through a bunch of bogus court cases that claim the company owes the plaintiffs the exact amount of profits it declared. So if the company made $1 billion in profits, you sue the company for $1 billion to create a $1 billion liability. Then you get crooked lawyers and crooked judges involved. And the crooked lawyers bring suits against these companies that they know are completely bogus for the amount of money that the companies had previously earned. And then you get other crooked lawyers to represent the companies in court. And in court they say, 'Oh, you've got a $1 billion claim against our client, no contest!' And the crooked judge enters a judgment immediately in favor of the plaintiffs.

What makes you think all these individuals are corrupt?

Because this didn't happen once--it happened ten times with different companies, three of which belonged to Hermitage. And the same lawyers are involved in all of these cases, except sometimes they represent the plaintiffs and sometimes they represent the defendants. And the same judges are involved too. It's a classic cookie-cutter scheme with the same contracts and no contests.

Is there still a struggle between the old and the new?

No, I think the struggle deals more with the complete breakdown of authority in Russia. [Outsiders] think the Kremlin is in complete control of stuff, but it isn't really. Everyone basically has their own game and is stealing from everyone else. There is no authority. The people that you're supposed to get help from if you're attacked are almost always the same people that are involved in the theft. Things aren't just bad for foreign investors--they're also bad for Russians.

Medvedev has said he plans to take on Russia's 'legal nihilism.' What's your view of that?

Medvedev says the right things, but if you look at the Hermitage case, some of the corrupt police officers that stole the money are in plain sight and you can't get them investigated. Maybe Medvedev can't do it by himself." 


And another Kafkaesque twist worthy of "The Trial": 

"A Russian sawmill foreman convicted of a $230m (£150m) tax fraud is suing his victim, Bill Browder, founder of hedge fund Hermitage Capital Management, for allegedly defaming his “honour and dignity” by claiming he acted in collusion with the police.


2 Comments – Post Your Own

#1) On June 09, 2010 at 10:20 PM, russiangambit (28.97) wrote:

In Russia the police are the criminals. It is pretty scary. Average people avoid the police at all costs.

And it is not the first case of people dying in jail either.

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#2) On June 10, 2010 at 1:45 PM, lemoneater (59.13) wrote:

Evil deeds do not always catch up to people in this life, but God is watching.

I wouldn't be Logunov for anything.

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