A huge fraud, $230M, was committed in Russia against the Hermitage group. Jerome Taylor, The Independent:
What [auditor Sergei] Magnitsky uncovered was as follows. In late 2007 Russian police raided the offices of Hermitage Capital Management, a multi-billion pound investment fund set up by the British businessman Bill Browder, ostensibly looking for information on an investor. During that raid company seals and corporate certificates were taken into evidence. Over the following months those seals were used, with the complicity of corrupt court and tax officials, to transfer ownership of a Hermitage subsidiary and apply for a tax rebate. On December 24th 2007, tax officials signed off on a 5.4 billion rouble ($230m) rebate. The money was wired to Universal Savings Bank, a little known bank that was quickly liquidated following the transfer.
The Russian police admit that the crime took place but they have pinned the blame on a retired sawmill worker, a burglar and two others who died suddenly in the immediate months following the fraud.
Russia’s unwillingness to prosecute the real perpetrators of the scam has not stopped Mr Browder from using his own tenacity, resources and a team of disaffected Russian business experts to uncover new details through their own investigations. The results are published regularly on the website RussianUntouchables.com, a prominent gathering point for Russians who are angered by corruption in their homeland.
Today, Jerome Taylor and Cahal Milmo report that another witness has died suddenly:
A Russian supergrass who was helping Swiss prosecutors uncover a multi-million pound money laundering scheme used by corrupt Russian officials has died in mysterious circumstances outside his Surrey home, The Independent can reveal.
Alexander Perepilichnyy, a wealthy businessman who sought sanctuary in Britain three years ago after falling out with a powerful crime syndicate, collapsed outside his mansion on a luxury private estate on the outskirts of Weybridge. He was 44-years-old and was in seemingly good health.
The Independent has learned that Mr Perepilichnyy was a key witness against the “Klyuev Group”, an opaque network of corrupt Russian officials and underworld figures implicated in a series of multi-million pound tax frauds and the death in custody of the whistle-blowing Moscow lawyer Sergei Magnitsky. He is the fourth person to be linked to the scandal who has died suddenly.
One of the companies involved in the scandal was set up by Geoffrey Taylor/GT Group (the original article, from Barrons, is here, but most of it is behind a paywall):
The business magazine Barron’s reported that late last month documents emerged out of London that linked a shell company called Bristoll Export, registered in New Zealand by GT Group, to a scandal that some commentators claim has the potential to be Russia’s Watergate.
It centres on Russia’s largest tax fraud, which occurred on Christmas Eve, 2007, when Moscow tax officials approved a same-day refund of $US230 million to a gang masquerading as representatives of Hermitage Capital, once the largest portfolio investor in Russia.
The money was funnelled through accounts at Citibank, JPMorgan Chase and Credit Suisse via a series of shell companies, one of which was allegedly Bristoll Export.
One of our posters, X, has drawn attention to a post over on by Richard Smith on Naked Capitalism that discusses how the GT Group is involved in half of the shell companies unearthed by the Guardian in its expose on offshore havens, which I mentioned a couple of days ago (here and here).
My question is what does it mean? Creating these shell companies is legal. If I suddenly had a brainstorm and wanted to incorporate in a hurry, I might use one. They are just tools. Knocking out a busy beaver like Geoff Taylor might inconvenience the crime figures, arms smugglers, and former Massachusetts governors/presidential candidates who use these tools, but someone else would take their place very quickly. What would seriously inconvenience these people would be a requirement that companies actually follow the rules of incorporation, like for example, having one person serve as the head of no more than, say, half a dozen companies, that the companies have annual meetings and file annual reports. Even so, there are a lot of legitimate businesses that might scream about that (don’t ask me to explain, but there are small businessmen who have complex business structures to protect themselves from liability).
This is one of those situations which excites the conspiratorially-minded, since it’s very likely that the owners of these shell companies include arms smugglers, Russian mafia, porn site operators, offshore poker sites, drug cartels, and the CIA. But that’s like saying that burglars and locksmiths both have lockpicks.