Diplomatic row looms as Russia investigates UK hedge fund

Russian officers leading a discredited investigation into a British-based hedge fund have switched their inquiries to London, threatening to provoke a diplomatic row.

The case has been blamed for the death of an anti-corruption lawyer who was imprisoned after accusing Russian government officials and others of theft and tax fraud.

Sergei Magnitsky, 37, a lawyer commissioned by Hermitage Capital Management to defend allegations of tax evasion, was awaiting trial for alleged conspiracy when he died of heart failure last year at Matrosskaya Tishina detention centre in Moscow, after being denied access to medicine. This prompted an international outcry.

Now the Interior Ministry has won a court order to secure a search warrant of the London address of an unnamed senior Hermitage executive. It is also seeking help from Interpol to trace six Hermitage-linked lawyers who left Moscow and are now in London.

Hermitage said it had also received an order signed by Major Oleg Silchenko of the Russian Federal Interior Ministry seeking the arrest in absentia of senior Hermitage executive Ivan Cherkasov, who is also in London. Major Silchenko led the investigation and 12-month detention without trial of Mr Magnitsky, the firm said. Bill Browder, chief executive of Hermitage, said the Russian authorities are continuing their "attack" on his executives and lawyers in retaliation for the criminal complaints filed by Mr Magnitsky and Hermitage about the involvement of Russian government officials and others in tax fraud.

Last year, a damning report by the Council of Europe condemned the investigation. The Council, of which Russia is a permanent member, said the proceedings targeting Hermitage Capital executives represent an "emblematic case" of the politically motivated abuse of the criminal justice system, and called on all member states to deny any Russian Federation requests for mutual legal assistance targeting Hermitage Capital executives and lawyers.

Mr Browder said: "If Major Silchenko seriously thinks he can come to London and try the same thing here, he will find himself in a legal mess so large, he will need a very good lawyer for a very long time."

Oleg Sepelev, of the Russian embassy, said he could neither confirm nor deny the request to extend to the Hermitage investigation to London.

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