The Russian lawyers to Hermitage fund management company have been raided and key documents removed, Bill Browder, chairman of Hermitage Capital alleges. He claims that these documents have been used to steal the firm’s identity to perpetrate two frauds against it.
The first fraud, Hermitage alleges, involved obtaining court orders against the firm to perpetrate a massive theft. However, the alleged thieves found that the kitty was bare as Browder had sold out its Russian investments.
The thieves took another tack. Browder purports that they used the claims against the company in a book-keeping exercise to offset Hermitage profits. This allowed them to claim back the corporation tax Hermitage had paid in 2006. This amounted to $230 million. The Russian Tax Ministry believed the crooks’ tale, and paid it back, Hermitage claims.
Now Browder needs to protect his Russian companies and lawyers who he claims were raided and physically attacked.“They have raided and are trying to arrest the lawyers who are fighting the liquidation of the Russian companies. We filed a criminal complaint at the end of July,” he says.
Browder claims the Russian law enforcement and legal system has been incompetent at best. “We tipped off the law enforcement community in Russia. We filed [complaints] about the fraud and fake claims. It gave the police three weeks to freeze the companies’ accounts to make sure the tax crime never got committed. But they didn’t act.”
The alleged attack on Hermitage has persuaded Browder to revise his trenchant views on Russia’s Prime Minister and former President Vladimir Putin. “Between 2002 and 2004, Putin was fighting with the same guys who were stealing money from me. The oligarchs were stealing power from him and they were stealing money from me as a shareholder. When I complained to the government about the oligarchs stealing money, they responded favourably and cracked down on the stealing. How could I not think that was a good thing?”
Browder has equally revised his views of the oligarchs, whom he criticised for their mistreatment of shareholders. “I was critical of Mikhail Khodorkovsky (he was convicted for fraud and tax evasion and received an eight-year sentence) because he mistreated minority shareholders when he controlled Yukos and we were a shareholder in his subsidiaries. I now have huge sympathy for him. I think he has had a bum deal. He has paid any dues he could ever possibly pay for anything that he did to us as minority shareholders a long time ago.”
Browder has little hope of returning to Russia, where he is the subject of an arrest warrant. He now travels regularly to the Gulf region to manage an investment portfolio of some $2.8 billion. “It is an absolute delight to do business outside Russia. The UAE is my favourite location for doing business today,” he says.
End of part three
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