Friday, 12 September 2008

Hermitage cries foul in Russia

Posted by Nick Kochan

Bill Browder, the boss of Hermitage Capital had his visa to enter Russia refused. He claims Hermitage was persecuted as part of an alleged scam to defraud the Russian Tax Ministry of $230 million.

Browder claims that Hermitage’s lawyers were raided by police from the Russian Interior Ministry. He alleges that their computers, servers and files containing information were removed. The homes of other lawyers also working for Hermitage were raided at around the same time, he claims.

Browder alleged that one of the lawyers was seriously beaten and hospitalised for two weeks. “It wasn’t good to be a lawyer for us at that time,” he says. “All four of our law firms were raided again by the police. They invited all of the lawyers for questioning as witnesses.”

Hermitage alleges that these raids gave members of the Interior Ministry the means to steal its identity. So when a company unknown to Browder said that Hermitage had reneged on a sale of Gazprom shares and owed millions, Browder said he was helpless to resist it. Using the lawyers’ documents, Hermitage alleges that people from the Interior Ministry removed the legitimate managers and replaced them with their own cronies.

Hermitage alleges that liabilities were created by this scam to extract from the Russian Government $230 million worth of tax paid a year earlier by Hermitage. Browder claims that the scam’s perpetrators created “fake losses” exactly equal to that to create a new net profit of zero. “We paid $230 million of taxes and they filed amended tax returns and asked for the money back,” he said. Browder claims that the $230 million has been pocketed by the crooks.

The scam has yet to run its course. Browder says a package, packed with sensitive documents, was sent by DHL from London to the offices of Hermitage’s Moscow lawyers. The return address on the back of the envelope was given as Hermitage’s offices in Soho and the name attached to the address had been made up.

According to Browder, an investigation of the name found that it belonged to someone whose passport had been stolen. “We didn’t send the package,” he claims. “Two Eastern European-looking gentlemen paid cash to DHL at the Lambeth depot. We have them on close circuit television.”

Two hours after the package arrived at the lawyer’s office, Browder claims Russian police raided it and took away the package. Mere coincidence? Not so, alleges Browder, for whom this was merely another piece of evidence that he was targeted by a well-organised gang. “The obvious intention,” Browder claims, “is to create a trail from us to our lawyers. This stuff was going to be used to blame us and our lawyers.”

End of part two

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