He may be dead but that doesn’t mean he can’t be found guilty – at least not in Russia.
A Moscow court has ruled Russian lawyer, Sergei Magnitsky, and Hermitage Capital Management founder William Browder guilty of tax fraud. Browder was handed down a nine-year sentence while Magnitsky won’t do any additional time: he died in prison in 2009.
The verdict will certainly further strain U.S.-Russian relations which have been under intense pressure since the scandal first made the news.
Browder founded Hermitage in 1996. Browder was considered the largest private foreign investor in Russia when he was forced to leave the country in 2006 – at the top of his game. While Hermitage was raking in profits (returns were as high as 82%), some inside the company had been making allegations, though mostly quietly, of government corruption for years. This clearly didn’t sit well with Moscow.
In 2007, Heritage’s Moscow office was raided on allegations of tax evasion despite a belief by the company that it had actually paid more than required. Magnitsky’s job was to audit the records and figure out what actually happened. While he was investigating the matter, Magnitsky came to believe that the tax fraud wasn’t happening at Hermitage but inside Russia’s own government. He accused a wide network of police, judges, corporate owners, and even the Russian mafia of contributing to, and in some instances, directing a series of corrupt activities. The transaction that stood out the most was a 7.4 billion rubles ($230 million U.S.) tax refund – the largest in Russian tax history – paid out to a company under the control of Hermitage. Magnitsky dug a little deeper and questioned how the refund happened.
As a result of his inquiries, Magnitsky found himself at the end of questions. He was accused of working with Browder to evade 522 million rubles ($16.3 million U.S.) in taxes by using companies in the little known Republic of Kalmykia, located on the northwestern shores of the Caspian Sea, to hire bogus employees solely for tax reasons and to shield assets from taxation. Kalmykia is considered one of the poorest and most undeveloped regions in Europe.
Magnitsky was thrown into a Moscow prison where he stayed for eleven months – just one month shy of the deadline for his release without a trial. While in prison, he eventually became very sick; allegations have been made that he was beaten with rubber batons while inside the prison. He was denied medical treatment and, as a result, died inside his cell. He was 37 years old.
An independent investigation found that Magnitsky had been neglected, or worse, while in prison. A Russian investigation found that Magnitsky died due to a lack of medical care; a further investigation by an independent committee found that prison doctors were pressured to deny treatment. In total, at least sixty officials were alleged to be involved in Magnitsky’s death.
The matter drew international scrutiny. A number of countries passed laws or resolutions banning those involved in the scandal and authorizing their assets to be seized. Officially, INTERPOL has agreed that the case had been politically motivated and as of May of this year, has “deleted all information in relation to William Browder” from its files and “has no further comment to make on this individual case.” The move was viewed as a public tweak to the Russians who have made repeated requests about the exact location of Browder.
The U.S stepped into the fray by passing the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012 which was signed into law in December 2012. The Act imposes financial and travel sanctions on those alleged to have committed human rights violations in conjunction with Magnitsky’s death. The same month, Russia passed a retaliatory bill banning American families from adopting Russian children.
In February 2012, Magnitsky was officially put on trial for tax fraud. He had been dead for nearly two and a half years when the trial began. The trial lasted nearly a year and a half. Browder was tried in absentia as a co-defendant: both were found guilty. Browder received jail time; Magnitsky was not sentenced but branded a tax evader.
Browder has vowed to appeal. He said, about the verdict, that it “will go down in history as one of the most shameful moments for Russia since the days of Joseph Stalin.” Now living in the U.K., Browder has been extremely vocal in his opposition of Russian leadership, claiming, “[i]nstead of Putin bringing justice, he exonerated all the officials involved and prosecuted the whistleblowers.
Posthumous trials, while rare in modern times, were “actually endemic in Europe” over the last 1,000 years. In the U.S., however, the Magnitsky verdict couldn’t have happened since you may not convict a deceased person. “Once a defendant in a criminal case dies in the United States their case is over upon presentation of a death certificate,” according to Brian Tannebaum, a Florida criminal defense attorney and current President of the Florida Association of Bar Defense Lawyers.
Russia, for its part, believes that the trial was justified. It has also ended its investigation into Magnitsky’s death. The findings? No indications of abuse. Russian President Vladimir Putin, who had previously promised to wipe out corruption in Russia, agreed with those findings, calling Magnitsky’s death merely “a tragedy.”
