Magnitsky case police officials seek London arrest

Jerome Taylor
Tuesday 03 May 2011 17:35 BST

Russian police officials accused of running an extortion racket want to arrest a London-based businessman on tax evasion charges.

Hermitage Capital, a British investment fund which used to be the largest portfolio investor in Russia until it was hit by a major tax scam, said today that Interior Ministry officials in Moscow were seeking an arrest warrant for Ivan Cherkasov, 41, a senior executive at the company’s UK offices.

Similar charges were brought against Sergei Magnitsky, a whistle-blowing Moscow lawyer who was hired by Hermitage Capital to investigate corrupt state officials. He ended up dying in custody in a case that has become an international cause celebre for those campaigning against official corruption inside Russia.

Hermitage claims it was the victim of a fraudulent £140m tax refund scam orchestrated by a consortium of corrupt officials who then oversaw the arrest and death of Mr Magnitsky when he named those involved.

The US, Europe and Canada have moved to place sanctions on the movements and overseas holdings of 60 officials who are alleged to be behind the scam. Last week a commission appointed by Russian president Dmitri Medvedev found that the charges against Mr Magnitsky had been entirely fabricated, although no arrests of the corrupt officials have yet been made.

Instead those named as being behind the tax scam appear to be using the Russian judicial system to hit back by issuing their own arrest warrants.

In a statement released this morning, Hermitage Capital said Lieutenant Oleg Silchenko, the interior ministry investigator who oversaw Mr Magnitsky’s incarceration, was planning to file an arrest warrant application for Mr Chersakov at a Moscow district court today. According to petition papers the arrest is sought for tax evasion charges.

The move comes two weeks after friends of Mr Magnitsky and Hermitage Capital published a 45-minute documentary on the internet detailing the alleged scam and naming individuals thought to be behind it.

The documentary, which has been watched more than 350,000 times on YouTube, also alleged that at least £26m of the money siphoned from Hermitage Capital has since been laundered through real estate deals in Russia, Montenegro and Dubai. Swiss prosecutors have since opened their own investigation into the deals after it emerged that many of the transactions took place through Credit Suisse accounts.

Speaking to The Independent yesterday, Hermitage Capital’s founder William Browder said he believed the arrest warrant for Mr Chersakov was retaliation for their decision to publish their own indictment online.

"Clearly our expose has caused significant upset within the ranks of this criminal syndicate to the extent that we've shocked them into retaliation," he said. “This is an escalation in the attack on us. The next logical step would be for the same corrupt officers to misuse the Interpol system or the extradition process in an attempt to further deflect attention away from the government corruption which we exposed. It shows that no-one is in control of Russia’s judicial system.”

In a statement released yesterday, Mr Chersakov, who says he has been unable to travel to Russia for the past three years, denied the allegations against him and said they were proof that Russia’s judiciary is routinely exploited by corrupt officials to hit back at those who expose corruption.

"The highest levels of law enforcement in Russia have been abusing their offices for political, criminal and retaliatory purposes since this whole saga began,” he said. “It is being done shamelessly, and the whole world watches on in amazement. Either the Russian President and Prime Minister are powerless to fight officials who are stealing enormous amounts of state money, or they are direct beneficiaries. Either way, it is a terrible condemnation of what is happening in my country."

Hermitage Capital initially made millions from the economic boom in Russia during the early half of the last decade as Moscow opened up to foreign investors. But Mr Browder’s propensity to publicly highlight official corruption earned his company powerful enemies.

In 2007 police raided two subsidiaries of Hermitage Capital and seized corporate records and stamps. The following year Mr Magnitsky uncovered that control of the companies had been transferred – Mr Browder says stolen – and that they were applying for a £140m tax refund. The refund was granted within the space of a day at a small court outside of the capital and deposited in a Russian bank that has since gone out of business.

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