Continuing my discussion of Russian court cases, the second case that has attracted massive international attention is that of the lawyer Sergei Magnitsky.

It should be said at the outset that the Magnitsky case presents problems that the Khodorkovsky case does not.  This is because a large number of allegations have been made in this case that have never been properly tested or shown to be either true or untrue.  It is therefore a much more difficult case in which to come to any definite conclusions.

The essential facts are these.  Sergei Magnitsky was a Russian lawyer working for a US law firm but based in Moscow.  He was the lawyer and auditor of a western investment fund known as Hermitage Capital that was investing in Russia.  At some point the Russian authorities launched an investigation of Hermitage Capital alleging that it had evaded payment of taxes.  This led to a police raid of Hermitage Capital’s offices in Moscow in 2007.  As Hermitage Capital’s auditor Sergei Magnitsky was in the frame and he in turn was arrested in 2008 and held in detention in a Moscow prison whilst the case was being investigated and prepared for trial. 

I ought to say that though it would be unusual in Britain for someone in Magnitsky’s position to be denied bail it would not be a foregone conclusion that he would be granted bail given the seriousness of the charges against him and possible fears that because of Hermitage Capital’s international connections he might abscond abroad.  In the United States, which has a tougher system than Britain’s, I think it unlikely that someone in Magnitsky’s position would be granted bail or would be treated more leniently than Magnitsky was treated in Russia.

The actual CEO of Hermitage Capital is an American called Bill Browder who was at this time outside the country and was therefore beyond the reach of the Russian authorities.  As I will try to show in this post it is he rather than Magnitsky who in my opinion is the true central character of this story. 

The response of Browder and Magnitsky to the Russian authorities’ investigation of Hermitage Capital was to allege that Hermitage Capital was the victim of a corporate raid instigated by the Russian mafia and carried out by corrupt police officials in their pay.  The intention supposedly was to seize various companies belonging to Hermitage Capital and to use them to perpetrate a tax fraud.  In other words Browder and Magnitsky were admitting that a tax fraud had been committed through companies that Hermitage Capital owned but despite their own role in Hermitage Capital as respectively its CEO and auditor were claiming to be innocent of it.  Instead they were saying that the fraud was being carried out at least in part by the very same police officers who were investigating them.

It is important to say that no alllegation made by any party in this affair has so far been proved to be true.  No Russian court has found Browder, Magnitsky or Hermitage Capital guilty of tax evasion since the Russian authorities have never brought the case to trial.  The latest indications (which I will discuss below) are that the case against Hermitage Capital is going to be dropped.  As for Browder’s and Magnitsky’s allegations, these too contrary to what is being repeatedly said by Browder, by the western media and on the internet (for example in Magnitsky’s Wikipedia entry) have also never been proved to be true. I have to say that to me at least they seem farfetched.  I wonder whether if they had been made in any other country they would have been taken so seriously.  No western commentator so far as I know has ever considered the possibility that they might have been made as a tactic to smear the investigators and discredit the police investigation.

The investigation of Hermitage Capital, the raid on its offices and the allegations by and against it caused a furore. This was in large measure due to a noisy publicity campaign against the Russian authorities orchestrated by Browder from abroad. However what has raised this affair to the level of an international scandal is that after spending a year in prison in pre trial detention Magnitsky was found dead in his cell. The outcry has been deafening with the European Parliament talking of imposing a travel ban on Russian officials involved in the case, various other European parliaments including especially the Dutch parliament passing resolutions about it and the US Congress debating the imposition of sanctions because of it.  The implication throughout has been that Magnitsky was murdered in his cell in order to silence him and prevent him from providing information exposing the corrupt police officials he and Browder were alleging had perpetrated the fraud.  Predictably the western media has taken up the case with the usual flood of angry articles condemning the corrupt and barbaric behaviour of the Russian authorities whilst Transparency International, the agency which publishes a list of countries according to their corruption levels (in which Russia comes close to the bottom) has awarded Magnitsky its prize.

There seems no doubt that Magnitsky’s death was due to negligence on the part of the prison authorities in whose custody he was being kept.  He appears to have been in poor health before he went to prison and it is clear that his death was caused by the failure of the prison authorities to ensure that he received the medical care he needed.  A reporter on Medvedev’s Human Rights Council has suggested that he may have been deliberately mistreated or even tortured.  At the moment this is unproven and since the various prison officials responsible for his conditions of detention are now the subject of criminal charges it is inappropriate to rush to any conclusions until their case comes to trial.

Having said this it is difficult to understand why on the face of it Magnitsky’s case should be attracting the attention that it has.  Anywhere in the world prison conditions are harsh and conditions in pre trial detention centres especially so.  Even in the most advanced countries many people die in prisons.  In Britain the number of people who die in prison in any one year averages around 600 of whom a substantial number are preventable suicides.  In the United States the average in any one year is around 3,000 of which around 50 are murders carried out by prisoners against each other.  I have not been able to find the statistics for Russia but I have no doubt that they are bad and probably worse. 

Nor is Magnitsky the only prominent prisoner to have died in prison in recent years because he was denied proper medical treatment.  The former Serb President Slobodan Milosevic, by any measure a much more prominent prisoner than Magnitsky, also died in prison because the War Crimes Tribunal, which was trying him denied him the medical treatment he needed for a heart condition.  Milosevic’s death as I remember did not provoke the sort of international outcry that Magnitsky’s case has done.

What is it therefore about Magnitsky that merits according his death in prison so much importance?  The short answer is that his case involves a western businessman, namely Browder, who the Russian authorities have accused of corrupt practices.  In any dispute between a western businessman and the Russian authorities the automatic response in the west is to prefer the word of the western businessman to that of the Russian authorities.  From the moment the Russian authorities opened their case against Browder and Hermitage Capital the western media and the western political and business establishment rushed to embrace his story.  In doing so they have found a predictable echo from within Russia’s liberal opposition, which can be relied upon to support the west against the Russian authorities on any question.  In the overheated atmosphere this has created it becomes easy to believe that Magnitsky was murdered to silence him and to prevent him from telling the truth though after a year in prison and with the Hermitage Capital case already something of a cause celebre it is difficult to see what more Magnitsky could have known or said, which he had not said already.

The result is that though we will probably now learn the truth about the circumstances in which Magnitsky met his end we are now very unlikely to learn the truth about what Hermitage Capital was up to or whether any of the allegations of tax fraud made by any of the parties is true.  In the welter of angry denunciations and criticisms made of them the Russian authorities have found it impossible to continue their investigation of Hermitage Capital and Browder.  Their attempts to interview Browder and pursue their investigations against him and Hermitage Capital have got nowhere as they are being denied the cooperation they need from the western countries where Browder and Hermitage Capital are now based.  Their investigation has therefore hit a brick wall and with all the attention now focused on Magnitsky’s death the latest indications are that the case against Browder and Hermitage Capital is going to be quietly dropped.

Some will no doubt see this as a proper outcome to this case.  I do not share this view but then I do not share the universal western assumption that the original allegations against Browder and Hermitage Capital were axiomatically untrue.  It seems to me that at the very least there was a serious case to answer but because of the way the west has meddled in the case answered it will not now be.

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