Con?dential

In December 2012. Sergei Magnitsky Rule of Law Accountability Act of 2012 was signed by
US President Obarna. The adoption of this Act was preceded by a three-year lobbying campaign of
its supporters, which began even before the streets deseribed in the Act.

The last drop that prompted Congress to pass the act, was the testimony to the Committee on
Foreign Affairs of a former US citizen? William Browder, Who was the initiator of the adoption of
that Act which had an extremely negative impact on the interstate relations bemoan Russia and the
US.

Available documentary evidence and testimony, ineluding those collected in a civil case
before the Federal Coort of the Southern District of New York, con?rmed that the ?Tacts? reported
by Browder to the US Congress, put down into the text of the act from his hearsay, were either
deliberately distorted or contrary to the truth However, the same story has been put as the basis of
the Global Magnitsky Act currently considered 111 the Congr ess,

Goa ernmental and legal investigations revealed that William Browder, CEO of Hermitage
Capital Management (Guernsey) and a financial advisor to Hermitage hedge fund (which existed
until 2013 under the control of HSBC Group), a Bntish citizen, who renounced his US citizenship
in 1998 for tax reasons had for 10 years lived 111 Russia on a tourist visa, in the period from 19.99 to
2006 implemented 111 the territory of Russia an illegal scheme of buyhig. up Gaaprom shares by
foreign companies to bypass the ban on foreign direct investments into Gazprorn shares without
permission of the Government of Russia

The applied share purchase scheme not only allowed buying the shares at a price 1.5 times
lower than through the American depositary receipts, but also allowed investors and their adsiScrs
avoid government centrol and monitoring of capital sources, its movement and taxation in US and
Roasia corresponding to the investment activities.

In addition to Hermitage Fund, one of Browder?s largest investing customers was a US
Group? Ziff Brothers Investments.

In the period of late 1999 to 200,4 two companies .1 Speedwagon Investors 1 and 2,
registered in New York, and owned by the said US investors, acing through three Cypriot
companies, Giggs Enterprises Limited, Zhoda Limited, Peninsular Heights Limited illegally
acquired more than 133 million Gasprom shares 1121 the 21111011111 exceeding USD 80 1111111011111 the
name of the Russian companies Kameya, Lori, Excalibur, Shading Investments.

Once Browde'r 3 activities drew the attention of the Russian law enforcement autho1ities,
and he Was not allowed any more to visit Russia on a tourist visa, in January 2006 all the assets
controlled by Ziff Brothers Investments were removed from the jurisdiction of the Russian
Federation In 2006 US owners of the chain of Companies mentioned above gained an income of
over USD 800 million, including 66 million Gazprorn shares received as dividends Acco1 diner to
preliminary estimates, the damage to the Russian budget to the form of unpaid taxes from those
activities exceeded RUB 1 billion. There 13 every reason to believe that the investment activity was
not declared and was not included in the reports to the US Securities Committee and US tax
authorities and no taxes were paid by US companies on the. 1ncon1e received as a result of the
turnover of the shares of the Russian companies.

In 2007, realizing the realistic threat of exposure by both the Russian and US law
enforcement authorities, Browder accomplished an egregious scheme of embezzlement of funds
from the Russian Treasury, the main element of it being to create an alibi of him having nothing to
do with the embezzlement, by Way of simulation of theft of three RuaSiart portfolio companies
from Hermitage Fund (HSBC). Later on the death in detention of one of Browder?s ?nancial
advisers - Sergei who was arrested on a completely different 1111111121611 a criminal case
brought in 2004 against Browder and his accomplices on tax evasion) was used by Browder in
creating an image of an anti- -corruption crusader? politically persecuted by Russia turning
Magnitsky into? a lawyer who disclosed the theft of budget funds, was tortured and murdered, and
consequently posthumously convicted because he defended Browder. There is not a lot of truth 111
Browder 3 story, but this IS the doct?n 111 11531-11106: of the stor' known as the' ?Magnitsky case" put in
as a basis for the US Act that caused the most severe damage to the US ~Russia'n relations 111 recent



Confidential

years.

The. ee?eeted evidence ?can be brought before the Subcemmittee on Qversight and
Investigatiens of the Committee of the House of Reptesentatives and other concerned US
government agencies to in? estigate the causes and the reliability of information that prompted the
adaption of the Magnitsky- Act.

Changing attitudes to the Magnitsky stery in the Congress obtaining reliable knowledge
abOut real events and persOnal motives of those behind the lobbying of this destructive. Act taking
into account the preselectien nolitical situation may change the cement climate 1n the interstate
relatiens Such a situation could have a very favorable response from the Russian side on many
key controversial issues and disagreements with the Unite-ti States, including matters concerning
the adoption procedure