Born 1972, Sergei Leonidovich Magnitsky was a Russian lawyer and accountant. For much of his career, he worked at Firestone Duncan, a law and audit firm based out of Moscow, where Magnitsky served as a specialist for legal, tax, and accounting needs of foreign ventures doing business in Russia; one of the businesses he represented, was investment advisory firm Hermitage Capital Management.

Over the years, Hermitage Capital had supplied to periodic releases of press information related to corporate and governmental misconduct and corruption within state-owned Russian enterprises. By November 2005, the management firm’s co-founder, US national Bill Browder was expelled from Russia as a national threat and just two years later, the firm’s Moscow office was raided by officers from the Russian Ministry of Interior – the charge? Underpaying taxes.

An odd charge considering just months earlier, Russian tax authorities had just confirmed in writing that this company overpaid its taxes. If there was ever a time for a legal, tax and accounting specialist, this was it. Magnitsky went to work.

How Vladimir Putin might Secretly be the Richest Man in the World

Numbers can be misrepresented or even “fudged” but even then, they don’t lie. Eventually the audit trail painted a vast conspiracy which Magnitsky came to interpret as one of the biggest unsolved scandals in Russian history. The numbers painted a picture of raids perpetrated official police or sanctioned by officials to allow organised Russian crime syndicates to take over foreign-owned Russian companies. Among them, at least three of Hermitage’s Russian business units. They all followed a pattern – false accusations and charges to justify police raids and thus, access to materials required to hijack or undermine the companies and then reclaim refunds of previously paid taxes – In the case of Hermitage, US$230 million worth of previously paid taxes, issued on Christmas Eve of 2007, it was the largest tax rebate in Russian history; Viktor Markelov, the new owner of Hermitage’s Russian holdings, probably enjoyed the biggest gift on Christmas morning. Magnitsky’s testimony implicated police, the judiciary, tax officials, bankers, and the Russian mafia. But the growing evidence in defence of Hermitage would soon be Magnitsky’s undoing.

For Magnitsky’s dutiful service to Hermitage, his employers Firestone Duncan were also implicated and his offices were also raided. Keep in mind, that while information learned as an attorney affords one certain protections under attorney-client privilege, information gained from forensic accounting as an auditor offers no such protection.

In 2008, Magnitsky was arrested on alleged charges of for tax evasion on behalf of one of his clients, Hermitage Capital. What the world soon came to realise was that Magnitsky had uncovered evidence of large-scale theft and corruption sanctioned and carried out by Russian officials.

“Prisoners often try to pass themselves off as sick, in order to get better conditions.” – Butyrka Detention Center chief Ivan P. Prokopenko

In Russia, one can be legally held without trial for up to one year. Having served 358 days in Moscow’s Butyrka prison, Magnitsky developed gall stones, pancreatitis, and a blocked gall bladder, and was denied adequate medical care. Eventually, he died in prison seven days before the expiration of the one-year term.

How the Magnitsky Act came to be

According to [Magnitsky’s] heartbreaking prison diary, investigators repeatedly tried to persuade him to give testimony against Hermitage and drop the accusations against the police and tax authorities. When Magnitsky refused, he was moved to more and more horrible sections of the prison, and ultimately denied the medical treatment which could have saved his life. – Journalist Owen Matthews, The Spectator, 9 Jan 2010

His death just shy of 12 months in police custody generated international media attention. Officially, the Russian coroner certifies death by “closed cerebral cranial injury” but according to Ludmila Alekseeva, leader of the Moscow Helsinki Group, post-mortem examination, pre-existing medical conditions notwithstanding, showed numerous bruises and wounds on Magnitsky’s legs and hands – proof of physically trauma, if not torture. Magnitsky became an international cause célèbre and the face of Russian excess, fraud, theft, and human rights violations.

Faced with overwhelming international scrutiny, the wheels of Russian justice squeaked to punish the executors of the heinous crime but not its mastermind(s). Magnitsky was not yet a martyr and the best way to prevent that, was to continue to tar his character, in 2012, Magnitsky was tried posthumously (the first in Russian history) and his co-defendant Bill Browder was tried in absentia. Both were found guilty.

Browder brought the case to Senators Benjamin Cardin and John McCain who proceeded to propose legislation and by the end of 2012, the U.S. Congress and President Obama enacted the Magnitsky Act. Named for the auditor, the Act barred those Russian officials believed to be involved in the lawyer’s death from entering the United States or using its banking system. The 2012 Sergei Magnitsky Rule of Law Accountability Act passed by a vote of 92-4 and Russia was furious.

The New Nobility or How Some Russians came to be super-wealthy

Russia possesses a tremendous arsenal beyond the military but their was retaliatory response was to ban Americans from adopting Russian orphans. The Magnitsky Act, is not, contrary to popular belief, about adoptions but rather, about money. Specifically, targeting Russia’s most powerful oligarchs in the only way that really hurts them: finances and freedom of travel outside Russia.

Magnitsky’s client William Browder, whom friends called Bill, was once the largest foreign investor in Russia, until his expulsion. While the Russian state government didn’t nationalise Hermitage Capital, they might as well have – what Magnitsky uncovered was a scheme to systematically use forged Hermitage documents to claim ownership of Browder’s fund and then issue tax refunds to the new “owners” of Hermitage; these owners than “invested” the monies in luxury apartments both at home and abroad.

“The new nobility.” – Russian journalist Andrei Soldatov

According to The Atlantic’s Julia Ioffe: Russian journalists knew that there was really only one thing that could get you killed: exposing a powerful person’s corruption and thereby taking away his ill-gotten money. The first decade of Putin’s rule was a bonanza for state security structures. Using tactics similar to those used in the Browder-Magnitsky case, government officials, especially those in Putin’s native FSB, enriched themselves. The economic elite became those tied in some way to the government, which provided the easiest route to wealth.

This gave rise to “the new nobility”. They pillaged and nearly wiped out small and medium-sized businesses in Russia, jailing many of their owners in the process. Government programs and projects were dreamt up not to be built or actualised, but to allow their proponents to pocket parts of the state budget.

 

Trump – Putin – Browder: A press conference

On the late night circles, the jokes largely centre on Trump’s infamous performance and equally infamous retraction and clarification the day after. But what went largely and scarily under the radar was that Russian President Vladimir Putin mentioned Magnitsky’s client Bill Browder by name in Helsinki on Monday.

“For instance, we can bring up Mr. Browder in this particular case. Business associates of Mr. Browder have earned over $1.5 billion in Russia. They never paid any taxes, neither in Russia nor in the United States, and yet the money escaped the country. They were transferred to the United States. They sent a huge amount of money, $400 million as a contribution to the campaign of Hillary Clinton.” – Russian President Putin to reporters

Russian Opposition leader Alexey Navalny has made a name for himself exposing how civil servants rigged state tenders to buy themselves fur coats and gold watches and expensive cars – but these are the small guys. Browder, the financier behind the 2012 Magnitsky Act, threatens the big guns, government officials, the so-called “new nobility” and even Putin’s personal wealth, many of these assets in foreign holdings. On Monday, Putin offered an odd quid pro quo – allowing Robert Mueller’s investigators to interview the indicted Russians suspected of election interference in exchange for interviewing people close to Browder.

“Putin has investments in Gunvor and may have access to Gunvor funds,” – US Treasury in a 2014 statement announcing further Russian sanctions

In 2012, former mid-level Kremlin adviser Stanislav Belkovsky claimed that President Putin had a fortune worth at least US$70 billion, basing his estimates on the Russian president’s alleged stakes in oil company Surgutneftegaz, natural gas company Gazprom, and even holdings in Gunvor, a commodities trader. Despite US Treasury statements to the contrary, Gunvor has denied that Putin has ever had ownership in the company.

US$70 billion dollars puts President Putin in the rarefied circle of long time Forbe’s top lister, Bill Gates, with his estimated net worth of US$84 billion. And this is based on good estimates we can discern.

Putin’s wealth: A convergence of evidence

Whether it’s Patek Philippe Triple Complications in platinum or a $1 billion palace on the Black Sea with architectural styling of the palaces owned by 18th century Russian tsars, Putin is a man with all the trappings of unfathomable wealth. During a BBC expose, exiled Russian businessman Sergei Kolesnikov made allegations of a system which grants Putin access to Russia’s immense wealth but also a network of connections to Russian’s elite oligarchs.

“Putin can be compared with that of the monarchs of the Persian Gulf or the most outrageous oligarchs.” – Former Deputy Prime Minister Boris Nemstov’s report

Kolesnikov is not alone in his claims, just ask former Deputy Prime Minister Boris Nemstov. According Nemstov’s report – it is estimated that Putin has over 20 palaces, holiday retreats and 58 personal aircraft, among them, an Ilyushin jet with a £111.3 million cabin that includes a bathroom that has gold fittings and a £50,000 lavatory. The UK’s Telegraph chronicle’s Putin’s assets in greater detail but suffice to say, what good are private jets, yachts and upscale apartments in London, Paris and New York if one can’t travel freely and enjoy these luxurious comforts; no thanks to Browder’s Magnitsky Act.

Degrees of Separation: Trump – Putin – Browder

The electorate has notoriously bad memories and thoughts of the Magnitsky Act appear to have perished, that is until news emerged in 2017 that Russian lawyer Natalia Veselnitskaya controversially met with President Donald Trump’s son Donald Trump Jr and son-in-law Jared Kushner at Trump Tower in New York on 9 June 2016 to discuss dirt she claimed to have on rival presidential candidate Hillary Clinton. Veselnitskaya had long campaigned to have the act repealed. Her circle included Russian businessman Denis Katsyv, whom she represented but was eventually fined by the Justice Department over money laundering, was equally committed to overturning the Magnistsky Act.

The Magnitsky Act came to the fore once again during President Trump’s disastrous performance in Helsinki when Trump himself made comments at the join press conference of Russian offers of cooperation in exchange for interrogating Browder and his associates. According to the New York Times, Putin’s claim that Browder donated $400 million to Clinton’s campaign was baseless.

Since Magnitsky’s demise, the London-based financier has led a global human rights crusade against the Kremlin that has resulted in sanctions against numerous Russian elites. Moscow has responded in kind, issuing at least six requests to Interpol to arrest and extradite Browder. He was briefly detained in Madrid in May but the agency has routinely ignored these red notices in the past, largely a sign of unwarranted or baseless allegations.

Since the Magnitsky Act was passed into law, Putin has made it a foreign policy directive to have this repealed to little avail. The Act or variations of it have spread to six additional countries including the United Kingdom, Canada, the Baltic states and Gibraltar. UK’s own sanctions have deepened since the radiation poisoning of former former officer of the Russian Federal Security Service (FSB) and KGB, Alexander Litvinenko, on London soil where a 2016 UK public inquiry concluded with strong certainty that the assassins were acting under the direction of the FSB, sanctioned by both Nikolai Patrushev, Director of the FSB, and President Vladimir Putin.

Whatever the truth is and wherever the facts may lie, one thing is certain – President Putin’s clear animus against Browder and his efforts to curtail Russian elites from enjoying their immense wealth is evident. In criminal cases, investigators often reference a suspect’s motive and opportunity. President Putin has had both in clear abundance.

Eight other countries, Sweden, France, Germany, the Netherlands, Denmark, Australia, South Africa and Ukraine, are currently considering implementing the Magnitsky Act.

Mother Jones has a list of 49 of Putin’s closest associates and oligarchs impacted by the Act.

The post Vladimir Putin is Secretly the Richest Man in the World appeared first on LUXUO.