A retired Russian police officer accused of complicity in a massive tax fraud and the murder of whistleblowing lawyer Sergei Magnitsky was claimed to be receiving Kremlin help in bringing a multi-million pound libel case in London.
Lieutenant Colonel Pavel Karpov, an unemployed former interior ministry investigator who lives in a luxury Moscow flat, is suing British businessman William Browder, a millionaire hedge fund investor who employed Mr Magnitsky and is leading a campaign against corruption in the Russian government, for substantial damages in the High Court.
A pre-trial hearing was told yesterday that the case is likely to cost a minimum of £6m and that Mr Karpov has admitted he cannot afford to fund the proceedings himself. He is refusing to name a businessman friend who he insists is guaranteeing bank loans to fund the case and he says has no connection with the Russian state.
Mr Browder is seeking to have the libel suit, which arises from a series of internet postings made on his behalf about the Magnitsky scandal, thrown out as an abuse of the legal system on grounds including the claim that Mr Karpov has no links with Britain. In turn, Mr Karpov is seeking to have elements of Mr Browder’s defence struck out, including any suggestion that he could have had a hand in or responsibility for Mr Magnitsky’s death.
The case is likely to raise fresh debate about the use of the English courts for so-called “libel tourism”. Mr Karpov has said he is justified in bringing his proceedings in part because the website used to post the material he claims is defamatory is based in the United Kingdom.
Antony White QC, for Mr Browder and his company, Hermitage Capital Management, told the court there was “evidence” that previous libel proceedings brought by Mr Karpov in Russia linked to the Magnitsky case had been instigated from within the Kremlin, adding there were grounds to suspect that a similar arrangement was in place in the London case.
Describing Mr Karpov’s evidence on his funding as “opaque and unsatisfactory”, Mr White said: “The court cannot be satisfied that the Russian state is not behind the claims in some way - perhaps by agreeing to indemnify the friend of [Mr Karpov] who is maintaining the claims.”
The court heard that Mr Karpov, who retired from the Interior Ministry police last year, has “substantial assets” which allegedly cannot be reconciled with his modest income of around £320 a month while an investigator. They include a succession of luxury cars and a $930,000 apartment in Moscow previously owned by his mother. He is also claimed to have led an “upmarket lifestyle” by attending “Moscow’s finest restaurants and nightclubs” and, in an unusual move, arranging for a friend’s wedding to be held at a state detention centre.
Lawyers for the officer say his assets are legitimately owned, funded for example from interior design and property projects he undertook with his mother, and were acquired prior to the alleged tax fraud in 2007.
The court heard that one of the purposes of bringing the claim against Mr Browder was to challenge the presence of Mr Karpov’s name on - and therefore the wider validity of - America’s so-called Magnitsky Act, which authorises sanctions against a list of 18 Russian officials allegedly implicated in the 37-year-old lawyer’s death in 2009.
Mr Magnitsky died in a Moscow prison after being deprived of medical treatment and allegedly suffering torture and beatings related to his refusal to retract claims against Russian investigators and officials he said were involved in a $230m (£140m) tax fraud against the Russian state. The lawyer was working for Mr Browder in Moscow when he blew the whistle on the alleged corruption, which involved the illegal expropriation of two Hermitage Capital subsidiaries.
Mr Karpov has strongly denied any knowledge of Mr Magnitsky’s arrest in 2008 or involvement in the events which led to his death.
Andrew Caldecott QC, for the police officer, said any claim that his client was bringing his defamation suit on behalf of the Russian state was “groundless”.
In his witness statement, Mr Karpov, who claims the outstanding claims against him are preventing him from getting a job, said: “I am not bringing these claims to defend the position of anyone else and neither am I trying to protect the interests of the Russian state.”
The Magnitsky affair has provided President Vladimir Putin with one of the most damaging diplomatic and human rights rows of his 13 years occupying the highest offices of the Russian state. Campaigners earlier this month attacked as "sinister" a ruling by Moscow court which tried Mr Magnitsky posthumously and convicted him of tax evasion. Mr Browder was sentenced in absentia to nine years' imprisonment by the same court.
The hearing continues.