Financial News

  • 11 July 2013, 18:49

Magnitsky Trial: Dead Lawyer Guilty Of Tax Fraud

A Moscow court has found the Russian lawyer Sergei Magnitsky guilty of tax evasion three years after his death.

The investment fund lawyer, who died while in pre-trial detention in 2009, was convicted in Russia's first ever posthumous trial - branded a "show trial" by his supporters.

The Tverskoy District Court also found Mr Magnitsky's former boss, the London-based investor William Browder, guilty of tax evasion. He was tried in absentia after declining to return to Russia and received a nine-year jail term.

But Russia's options for jailing US-born Mr Browder are limited since Interpol has refused to include him on its international search list after deciding that Russia's case against him was political.

Mr Browder has all along dismissed the trial as a politically motivated effort to discredit him and Mr Magnitsky.

Speaking to Sky News from New York after the verdicts, Mr Browder said it was "one of the most shameful moments in modern Russian history".

" ... They're prosecuting the dead man, what they should be doing is prosecuting the people who killed him. It's truly a travesty of justice."

He said he was "not too worried" about being pursued by the Russian authorities as long as he was in the West because Western governments and Interpol had rejected the allegations.

"It shows the desperation of Putin to cover up the crimes of his regime by going after the whistleblowers," he added.

An empty cage in the Moscow courthouse - where normally the defendant hears the verdict - symbolised the absence of the late Mr Magnitsky and his co-accused.

"I did not doubt that the decision would look like this," the lawyer for Mr Magnitsky's family Dmitry Kharitonov told the RAPSI legal news agency. "I know that he committed no crimes."

Mr Magnitsky was jailed in 2008 soon after accusing Russian law enforcement officers of corruption. The lawyer was held on charges of tax evasion after claiming officials conspired to claim $230m (150m) in tax rebates through Mr Browder's Hermitage Capital investment company.

A year later, the 37-year-old father died in prison of pancreatitis, after what supporters claim was a systematic torture campaign. A report by Russia's presidential human rights council found in July 2011 that he had been repeatedly beaten and deliberately denied medical treatment.

Campaigners say the fraud was committed by state officials who subsequently had him framed and arrested for the crime.

His death sparked widespread condemnation and a US law named after Mr Magnitsky imposing sanctions on Russians implicated in the lawyer's death.

The legislation infuriated Moscow, which in retaliation passed legislation prohibiting Americans from adopting Russian children.

Mr Browder, who is a British citizen and is campaigning for other governments to adopt the Magnitsky Act also told Sky News that Britain was acting "very shamefully" by not enforcing the sanctions, especially since his investment fund that sparked the case is based in the UK.

Mr Magnitsky had kept a diary in which he documented the conditions he was being held in and his deteriorating health.

Entries recorded in the months before he died describe excruciating pain from his untreated pancreatitis, raw sewage flooding prison cells and the sound of rats running through the prison at night.

Shortly before his death, the lawyer wrote: "I'm being subjected to punishment only for trying to defend the interests of my client and my country."

The Kremlin's own human rights council has said there was evidence suggesting Mr Magnitsky was beaten to death, but President Vladimir Putin has dismissed allegations of torture or foul play and told the nation last year that he died of heart failure.

Russian authorities closed the case against Mr Magnitsky after his death but reopened it in 2011, in a move former colleagues say was illegal because they did not have the consent of his relatives.

"This show trial confirms that Vladimir Putin is ready to sacrifice his international credibility to protect corrupt officials who murdered an innocent lawyer and stole $230m (150m) from the Russian state," Hermitage Capital said in a statement.