Deception (6 page)

Between
3
and
11
December
2007
Hermitage had submitted no fewer than six lengthy complaints detailing the theft of the companies. Two went to the chief prosecutor – who promptly passed them to Major Karpov. Unsurprisingly, no action followed. Two went to the department of the Interior Ministry that deals with internal corruption issues. It declined to take action, with the Kafkaesque justification: ‘We are unable to open an inquiry into an investigator when such an inquiry is requested by the target of the investigator's current work.' One went to the St Petersburg branch of the Russian State Investigative Committee, which replied that it could find nothing amiss. The sixth went to the same body's federal offices, which opened a low-level inquiry on
5
February. That delay cost the Russian taxpayer $
230
m.

The robbers now had their loot. But they were still at risk of being found out. The fraud was not an elegant one. Whether from carelessness or complacency, the phoney documentation was littered with mistakes. Moreover Hermitage was firing salvoes of official complaints inside Russia, and was running an effective PR campaign abroad. It was time for a criminal case against the pesky foreigners to scare them into silence.

The authorities had to try to prove that Hermitage had done something wrong. If the evidence did not exist, it must be invented. On
26
February, Karpov, Kuvaldin and two of Kuznetsov's other subordinates flew to the provincial city of Elista, capital of Kalmykia. This republic is one of the poorest and oddest places in Russia, Buddhist by religion and long ruled by a chess-mad despot called Kirsan Ilyumzhinov. Like many investors in Russia, for tax purposes Hermitage had established its investment subsidiaries there.
ⁿ
As a ‘Free Economic Zone' – one of eleven in Russia – the republic was an onshore tax haven, with an
11
per cent tax rate on corporate profits, against
35
per cent in Moscow. Hermitage also used another tax break aimed at promoting the employment of disabled people. In
1996
it had hired four such staff, nominated by the Kalmykian authorities, for the undemanding task of sending press clippings on a monthly basis.
⁹
Investigators in Elista had on several occasions, most recently in
2004
, started looking at Hermitage's tax affairs, each time ruling that no crime had taken place. The law offered little scope for further pursuit: the deadline for collecting tax debts had expired. But in
2008
the visitors from Moscow had little difficulty in persuading their Elista colleagues to reopen a case and to transfer the investigation to the Russian capital. They summoned a local investigating officer back from vacation. Witnesses interviewed in the FSB office in Elista readily agreed to change their story, saying that Hermitage had never actually paid them. (Hermitage has produced payment orders to support its position.)

Whether or not Hermitage's conduct in all this was flawless, average, or questionable is not the point here. Nothing in its activities, in any legal system imaginable, would carry sanctions including the criminal prosecution, arbitrary imprisonment, or physical abuse leading to death of one of its lawyers. Yet that is just what happened. On
5
May
2008
Kuznetsov initiated a criminal case against not Hermitage itself, but its lawyers, claiming they did not have genuine powers of attorney to represent their client: in effect, he was saying that the only person who could legally represent the company was the person who stole it. That marked a grim step to lawlessness. A lawyer is an officer of the court, bound to do his professional best to make his client's case clearly and convincingly. It is a sure sign of a rotten legal and political system when lawyers are punished for the crime of representing their clients. When I tried to explain this case to a friend, he asked in innocent puzzlement: ‘Why didn't they call the police?' That question highlights the gulf between the way Russia works and the standards expected in the West. In this case, the criminals were the police, as Mr Magnitsky discovered when he tried to find out what had happened to his complaints against Kuznetsov and Karpov. Far from being independently investigated, these had been forwarded to the men themselves. On attending the Investigative Committee offices in Moscow to give a deposition, he was surprised to see Kuznetsov there – officials explained this by saying that he was ‘assisting' them.

Meanwhile Hermitage lawyers filed fifteen more complaints, with every relevant law enforcement and regulatory agency. Mr Browder and his colleagues were sure that the episode would be dealt with properly once higher authorities became aware of it. As ardent advocates of the rule of law in Russia, Prime Minister Putin and President Dmitri Medvedev surely could not ignore evidence that their officials had defrauded taxpayers of $
230
m? But Mr Magnitsky's work had the opposite effect. Having already threatened Hermitage lawyers with criminal charges in May, in August
2008
the fraudsters ordered a police raid on the offices of four law firms working for Hermitage.
^o
The lawyers at the firms also received summonses, in violation of a Russian law that specifically prohibits lawyers being subject to questioning by the criminal justice authorities for anything relating to their dealings with clients. Undeterred, Mr Magnitsky in October
2008
filed a comprehensive dossier to the State Investigative Committee. If Mr Putin's claim to have created a ‘dictatorship of law' in Russia counted for anything, it should make it possible to challenge abuses such as this. But the truth is that the law in Russia is a trap for the brave, not a weapon for the weak. By challenging the authorities in court, you leave yourself open to their retribution. The idealistic Mr Magnitsky was about to learn this the hard way.

The next stage of intimidation came when the authorities opened criminal cases against the two Hermitage Fund lawyers who had reported the police involvement in the $
230
m theft. These men, Eduard Khairetdinov and Vladimir Pastukhov, and some colleagues, promptly went abroad. Had Mr Magnitsky followed suit he would be alive today. On
12
November
2008
Kuznetsov and his three subordinates were instructed to investigate possible criminal conduct by Hermitage's lawyers. On
24
November
2008
four law enforcement officers came to Mr Magnitsky's home and arrested him in front of his wife and two children. All applications for bail were peremptorily turned down. Russian media have reported that he was planning to go abroad, citing plane tickets to Kiev reserved in his name. But these were booked only by phone, by an unidentified male voice, and never collected. Booking bogus tickets is a tactic commonly used by Russian criminal justice authorities wanting to plant ‘evidence' that a suspect is planning to flee. The FSB statement said Mr Magnitsky had applied for a visa for the UK. The British consulate in Moscow denies that any such application was made.

The denial of bail meant that Mr Magnitsky never saw his children again; indeed he never heard their voices, as telephone calls to his family were denied. His contact with his loved ones was limited to snatched glimpses at brief and farcically unfair court hearings. Only once, a month before his death, was he allowed a brief meeting with his wife and mother. He died in jail just under a year after he was arrested, eight days before the expiry of the maximum limit for pre-trial detention.

The initial reason given was ‘rupture to the abdominal membrane', which was later replaced with ‘heart failure'. A fairer assessment would have been death by torture. Mr Magnitsky had been kept in abominable conditions.
¹⁰
The authorities ignored his complaints and repeatedly denied him medical attention, even when he was in great pain with life-threatening ailments. His body showed signs of direct physical abuse in the final hours of his life. Squeamish readers may wish to skip what follows.
¹¹

Mr Magnitsky was initially locked up in a detention centre, in an unheated cell with an unglazed window, and with just four beds for the eight prisoners. The lights burned round the clock. He was shifted from cell to cell sixteen times, with his belongings often going ‘missing' amid the move. Here he describes life after court hearings for those in custody:

 

Prisoners [arriving back] are not taken to their cells immediately and are instead held in a prison box for
3
–
3
.
5
hours. Not once have I been returned to my cell earlier than
23
:
00
. This prison box is
20
–
22
m
2
, it has no windows or ventilation and may hold up to seventy people at the same time and this means that there is neither any room to sit nor even to stand. Many of the prisoners smoke in the prison box and this makes it very difficult to breathe . . . the time in between hot meals can be up to
38
hours (from
18
:
00
the day before the visit to court when a prisoner receives a hot meal to
8
:
00
when breakfast is served on the day after the visit to court).

 

This is a standard tactic in the Russian (and before that the Soviet) jail system, to weaken a prisoner's resistance. Later he was put in a cell that was flooded with sewage – this extract is from his prison diary on
9
September
2009
:

 

At about midday, in the cell, sewage started to rise from the drain under the sink, and half of the cell floor was flooded straight away. We asked for a plumber to be called, but he only arrived at
22
:
00
and could not repair the fault. We requested to be transferred to a different cell but were told that we had to stay put until the next morning. On the morning of the following day the plumber did not arrive and by the evening the whole floor was covered in a layer of sewage. It was impossible to walk on the floor and we were forced to move around the cell by climbing on the beds like monkeys.

 

Throughout his ordeal, Mr Magnitsky made complaints and requests – over
450
in total – on everything from the denial of hot water for washing to demands to meet his family, phone his children, and have medical attention. That is more than one for each day of his imprisonment. They, and his jail diary, make poignant reading.

The reason for the ill-treatment was simple. The authorities wanted Mr Magnitsky to switch sides. If he would retract his testimony against the police officers, and instead give evidence confessing that he was responsible for the fraud and implicating Mr Browder, he could go free. Such tactics were familiar in the Soviet era, when political prisoners were told that they would never see their families again, or that their children would be sent to orphanages, if they did not incriminate their fellow-dissidents. It is shocking to find the same approach in
2009
in a country that is a signatory to the European Convention on Human Rights and is a member of the Council of Europe.

Each time Mr Magnitsky refused to cooperate, the authorities worsened his conditions. By June he had lost
40
lb (
18
kg). He began to experience severe abdominal pain. After an initial stay in an overcrowded and squalid detention centre, Mr Magnitsky had been transferred to the ‘Sailor's Rest' prison (
Matrosskaya tishina
in Russian) where conditions were marginally less bad, with a mere three prisoners to a
16
m
²
cell. Medical services were better there too. On
1
July an ultrasound examination diagnosed ‘calculous cholecystitis', an illness caused by untreated gallstones (choleliths, in medical terminology). The symptoms include pain, anorexia, nausea, vomiting and fever. The prison doctors prescribed a further examination and surgery in a month's time. But a week before that treatment, Mr Magnitsky was transferred to the notorious Butyrka prison, which has no ultrasound machine and none of the surgical or medical facilities required for his treatment. The ostensible reason for his move was renovation works, though an independent investigation later established that these never took place. In any case it is unclear why Mr Magnitsky, already seriously ill, should be one of the handful of inmates needing to be moved. Questioned later by independent investigators, the prison director, Ivan Prokopenko, said he did not consider Magnitsky sick, remarking: ‘Prisoners often try to pass themselves off as sick in order to get better conditions. We are all sick. I, for instance, have osteochondrosis.'
¹²

On
9
August Mr Magnitsky demanded a meeting with Mr Prokopenko, complaining that his health was at risk because of ill treatment. On
11
August he followed it up with a second complaint demanding immediate medical attention. On
19
August his lawyers complained again, both to Mr Prokopenko and to the chief investigator in the case, Oleg Silchenko, demanding an ultrasound examination. On
25
August, after Mr Magnitsky had spent a sleepless night in agony, the lawyers made an urgent complaint demanding a medical examination and surgery for cholecystitis and pancreatitis – the latter disease resulting from lack of treatment of the former. Following a meeting with Silchenko, on
13
October
2009
, Mr Magnitsky wrote the following witness statement: