Jus­tice is put to sword by Moscow's cor­rup­tion

The Pak Banker - - OPINION - Boris John­son

IN Moscow to­day (Mon­day), there be­gins the trial of a 37-year-old ac­coun­tant by the name of Sergei Mag­nit­sky. Mag­nit­sky is ac­cused of tax of­fences dat­ing back per­haps 10 years. What is as­tound­ing about this case is that Mag­nit­sky is not only in­no­cent of all charges. He is also dead. He died in prison in Novem­ber 2009, af­ter al­most a year in which he was kept in squalor, de­nied fam­ily con­tact and de­prived of med­i­cal treat­ment - de­ten­tion that cul­mi­nated in a sav­age and fa­tal beat­ing by his cap­tors. It says some­thing about the Rus­sian state that it should now put this ghost on trial, in what must be the most grotesque par­ody of le­gal pro­ceed- ings since the an­i­mal tri­als of the Mid­dle Ages.

It says some­thing about Rus­sian jus­tice that Mag­nit­sky - and his fam­ily - are now be­ing per­se­cuted by the very le­gal es­tab­lish­ment whose cor­rup­tion he ex­posed. And that mes­sage is that there are no lengths to which the Rus­sian klep­to­crats will not go to pro­tect them­selves and their ill-got­ten loot, and to grind the faces of their en­e­mies.

Mag­nit­sky was a whistle­blower. He un­cov­ered a scam, a gi­gan­tic crim­i­nal con­spir­acy by which the Rus­sian po­lice and tax of­fi­cials col­luded with the ju­di­ciary and mafia to steal mil­lions from the Rus­sian state. When he re­fused to change his ev­i­dence and give in to his in­ter­roga­tors, they killed him - only eight days be­fore they would have been legally obliged to bring him to trial or let him go. Mag­nit­sky's tragedy was to be hired by a US-born Bri­tish cit­i­zen called Bill Brow­der, who runs Her­mitage Cap­i­tal Man­age­ment - a fund that used to be one of the big­gest in­vestors in Rus­sia. Bill Brow­der's mis­for­tune was to fall out with Vladimir Putin, and in a big way.

To un­der­stand the Mag­nit­sky af­fair, you have to go back to the col­lapse of com­mu­nism and the de­ci­sion of a semi-ine­bri­ated Boris Yeltsin to al­low the as­sets of the Rus­sian peo­ple, and in­cal­cu­la­ble wealth, to fall into the hands of about two dozen more or less cun­ning and op­por­tunis­tic busi­ness­men - the oli­garchs. Back in the 1990s, Moscow was a kind of Wild West. Busi­ness deals would be ter­mi­nated in restau­rant mas­sacres.

It was a world of eye-pop­ping swin­dles and bribes, and for a while Brow­der's fund pros­pered. With a team of ace fi­nan­cial in­ves­ti­ga­tors, Her­mitage Cap­i­tal would dig up the pil­fer­ing and spec­u­la­tion that was rife in Rus­sian cap­i­tal­ism, and ex­pose it to the me­dia. As the firms were cleaned up, the share prices rose, and so did the prof­its of Brow­der's fund. All went well, as long as this had the tacit sup­port of Putin, who seemed ini­tially con­tent to al­low dodgy Rus­sian busi­ness prac­tices to be laid bare. The turn­ing point came in Oc­to­ber 2003, with the Krem­lin's as­ton­ish­ing de­ci­sion to ar­rest Mikhail Khodor­kovsky, then the rich­est man in Rus­sia and the clever­est oli­garch of them all.

As Brow­der puts it: "Imag­ine you are one of the lesser oli­garchs, and you are on your yacht at the Cap d'An­tibes, and you have just fin­ished mak­ing love to your mis­tress and you turn on the TV and you see the num­ber one oli­garch in a cage. What do you do? You go to Putin, and you say, Vladimir Vladimirovich, what can I do to help you? And he says, 50 per cent. Not 50 per cent to the Rus­sian government, but 50 per cent to me, Vladimir Putin."

From that moment on, it was no longer cool for Brow­der to lift up the big flat rocks of Rus­sian busi­ness. It was no longer safe to tweak the tails of peo­ple who had Putin's pro­tec­tion. In 2005, he was stopped at the air­port and de­ported. Brow­der liq­ui­dated his Rus­sian busi­nesses, paid his taxes - of about $230 mil­lion - and quit Moscow, leav­ing just an of­fice and a sec­re­tary. He counted him­self lucky to have es­caped. But some­one im­por­tant had been hacked off by Brow­der and Her­mitage, and that some­one be­gan a bizarre re­venge.

First, the po­lice raided his of­fices and seized all doc­u­men­ta­tion re­lat­ing to his now dor­mant com­pa­nies. Next, they se­cretly and fraud­u­lently re-reg­is­tered the com­pa­nies in the name of a former sawmill worker from Tatarstan - a man who had been con­victed of manslaugh­ter and was re­leased two years early from prison in ex­change for his help. Then they hired lawyers - un­be­knownst to Brow­der - to rep­re­sent th­ese com­pa­nies, and sent them to court to claim that th­ese com­pa­nies were in fact mas­sively in debt at the time that Brow­der had liq­ui­dated them and that the com­pa­nies - now ef­fec­tively owned by the tax po­lice, the tax of­fi­cials and their ac­com­plices - should be re­im­bursed the taxes Brow­der had paid be­fore he left. In­cred­i­bly, the court agreed - though I sup­pose they had no one be­fore them to dis­pute what the lawyers were say­ing. On Christ­mas Eve 2007, Brow­der's ex-com­pa­nies re­ceived a stag­ger­ing $230 mil­lion tax re­bate - thought to be the high­est ever. No one would ever have known, had it not been for Sergei Mag­nit­sky, who was hired by Brow­der to find out why his shell com­pa­nies seemed to be in court. Mag­nit­sky went to the au­thor­i­ties - of course he did: the very au­thor­i­ties that were in­volved in the fraud; and in Oc­to­ber 2008, they im­pris­oned him and threat­ened him un­til he even­tu­ally died of a "rup­tured ab­dom­i­nal mem­brane" or a "heart at­tack" or - ac­cord­ing to the Moscow Helsinki Group - from be­ing beaten and tor­tured by sev­eral in­te­rior min­istry of­fi­cers.

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