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Whatever happened to the Magnitsky money?

Efforts to track down hundreds of millions of stolen dollars from one of Russia’s loudest scandals suggest it’s just the tip of the iceberg.

companies. The firm bought high-priced real estate around the time of the tax fraud, including two Manhattan condominiums in December 2009, according to Novaya Gazeta.

A spokesperson for Katsyv confirmed Prevezon did receive the money, and that it was invested in New York real estate. However, Katsyv had no knowledge of the funds' source until Novaya Gazeta asked him about it, and said his family has been the victim of a negative public relations campaign, the spokesperson added.

To date, prosecutors have taken no legal action to recuperate the millions stolen from the state budget (although $22.4 million in Krainy Sever's correspondent account were frozen in an unrelated investigation), and it’s unlikely the NGO’s report will change that.

Despite a Russian presidential commission’s conclusion that Magnitsky had been tortured by the same police officials he’d named as complicit in the fraud, the authorities have taken no action against them. Instead those who arrested him were promoted and decorated.

In 2009 and 2011, two low-level ex-convicts pled guilty to organizing the tax scam and were given the minimum-allowed sentences of five years.

As for what happened to Magnitsky, last month a court acquitted the only official to have been charged with his death, a doctor accused of negligence.

At the same time, another court opened a trial against Magnitsky accusing him of involvement in the very tax fraud he’d uncovered, over his lawyers’ protests that it’s illegal to try a dead man.

However, moves to punish those involved in some way are gaining steam abroad. Last month, President Barack Obama signed the Magnitsky Act, which establishes permanent normal trade relations with Russia while placing visa bans and asset freezes on a list of Russians suspected of human rights abuses, including officials connected to the Magnitsky affair.

Putin retaliated in late December by signing a law that bans Americans from adopting Russian children.

In October, a European Parliament resolution recommended EU member states adopt similar visa bans and asset freezes.

The U.S. legislation came about largely because of the efforts of Hermitage Capital founder Bill Browder, who was the largest foreign investor in Russia until his expulsion from the country in 2005. He says the growing body of documents connected to Magnitsky’s case has made it “the face of what's going on in Russia today.”

The embezzlement appears to fit a pervasive pattern of official fraud that’s estimated to have cost the Russian treasury more than $800 million from 2006 to 2010, according to the Financial Times.

Browder believes the affair is helping to reveal the inner workings of a government that allows its officials to steal from the state in exchange for their political loyalty.

“The entire regime is built on this type of corruption,” he said in an interview. “If they show that they're publicly going to take down people who are integral in [the $230 million fraud], then they wouldn't be able to execute other such crimes.”

Browder believes the Magnitsky Act will end absolute impunity for crooked Russian officials and their associates.

“If you look at the nature of this regime, it's all about stealing money in Russia and keeping it in the West,” he said. “If we create a huge uncertainty about their ability to keep their money in the West, then perhaps we've created a disincentive for them to commit such gross crimes in Russia.”

Drawing on some of the Novaya Gazeta investigation's findings, Hermitage recently filed criminal complaints against the Russian government in Austria, Switzerland, Cyprus, and five other countries where stolen money was allegedly traced, requesting relevant bank accounts be frozen and criminal investigations be launched.

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Hermitage is also helping gather evidence for a complaint by the Open Society Justice Initiative on behalf of Magnitsky's mother, Natalya Magnitskaya, in the European Court of Human Rights. It would declare the Russian government’s tax fraud case against Magnitsky illegal.

As such efforts continue, the Magnitsky affair appears to have claimed it latest victim: Alexander Perepilichny, a Russian emigre businessman who was assisting Swiss prosecutors investigate laundering of the Magnistky money dropped dead outside his home in Surrey in November. Evidence he gave included bank documents showing that Stepanov — who purchased the luxury apartments in Dubai — had used a Credit Suisse account.

He’s the fourth person linked to the Magnitsky affair to have died under mysterious circumstances.

Britain’s Independent newspaper reported one of his acquaintances as saying he was warned a year earlier that his name was one of many on a Russian hit list. 

http://www.globalpost.com/dispatch/news/regions/europe/russia/121213/russia-magnitsky-money-corruption-putin-hermitage-browder