http://assembly.coe.int

Doc. 13356
18 November 2013

Refusing impunity for the killers of Sergei Magnitsky
Report1
Committee on Legal Affairs and Human Rights
Rapporteur: Mr Andreas GROSS, Switzerland, Socialist Group

Summary
The Committee on Legal Affairs and Human Rights is appalled by the death in 2009 in pretrial detention of the
Russian tax and accountancy expert, Sergei Magnitsky, who had carried out investigations into a massive
fraud against the Russian fiscal authorities, and that none of the people responsible for his death have yet
been punished. Mr Magnitsky, who was detained for alleged tax evasion after his complaints were sent for
investigation by the very officials whom he had accused of complicity in the fraud he had denounced, faced
increasingly harsh conditions despite declining health, and died after being beaten with rubber batons.
Based on a detailed analysis of these events, the committee urges the competent Russian authorities to fully
investigate the circumstances and background of Mr Magnitsky’s death, and the possible criminal
responsibility of all officials involved, including contradictory testimony by prison officials and other witnesses,
the existence of two different versions of the “death report”, and the origin of the extreme wealth displayed by
certain retired Interior Ministry and tax officials. Targeted sanctions against the individuals involved – such as
visa bans and asset freezes – should be considered as a means of last resort, the committee proposes.

1.

Reference to committee: Doc. 12909, Reference 3907 of 5 October 2012.

F - 67075 Strasbourg Cedex

 

assembly@coe.int

 

Tel: +33 3 88 41 2000

 

Fax: +33 3 88 41 2733

 Doc. 13356 Report

Contents
Page
A. Draft resolution......................................................................................................................................... 3
B. Explanatory memorandum by Mr Gross, rapporteur ................................................................................ 6
1. Introduction.......................................................................................................................................... 6
1.1. Procedure to date ....................................................................................................................... 6
1.2. Earlier work by the Assembly on the case of Sergei Magnitsky................................................... 6
1.3. Working method and objective.....................................................................................................7
2. Sergei Magnitsky – what happened to him, and why?......................................................................... 8
2.1. The viewpoint of Sergei Magnitsky’s relatives..............................................................................8
2.2. The road to Sergei Magnitsky’s arrest........................................................................................10
2.3. Sergei Magnitsky’s ordeal in pretrial detention – pressure until death........................................32
3. Conclusions....................................................................................................................................... 43
Appendix 1 – Update in light of new information received...........................................................................45
Appendix 2 – Timeline.................................................................................................................................51

2

 Doc. 13356 Report

A. Draft resolution2
1.
The Parliamentary Assembly reiterates its strong support for the fight against impunity and against
corruption as a threat to the rule of law, in line with its Resolution 1675 (2009) and Recommendation 1876
(2009), and Resolution 1943 (2013) and Recommendation 2019 (2013), and for the protection of whistleblowers expressed in Resolution 1729 (2009) and Recommendation 1916 (2009).
2.
It is appalled by the fact that Sergei Magnitsky, a tax and accountancy expert with a Moscow-based law
firm, died in pretrial detention in Moscow on 16 November 2009 and that none of the people responsible for
his death have yet been punished.
3.
Mr Magnitsky had carried out investigations on behalf of a client on a massive fraud against the
Russian fiscal authorities. The suspects he had designated had effectively obtained the reimbursement of
taxes paid by his client’s companies, which had been fraudulently re-registered in the names of known
criminals.
4.
The complaints were addressed to senior representatives of Russian law enforcement bodies, but they
were sent for investigation to the same Interior Ministry officials who had been accused of complicity. They
placed Mr Magnitsky in pretrial detention, in increasingly harsh conditions, for alleged tax evasion committed
in 2001 together with his then client William Browder. After six months in detention, Mr Magnitsky was
diagnosed with pancreatitis. Shortly before his scheduled treatment, he was transferred to another prison
without adequate medical facilities.
5.
After almost a year in detention, on 16 November 2009, Mr Magnitsky, whose state of health had
further deteriorated, was transferred back to a detention centre equipped with relevant medical facilities.
Following his arrival, he was beaten with rubber batons and died the same evening. Civilian emergency
doctors called in by prison officials were kept waiting for more than an hour, after which they found Mr
Magnitsky’s lifeless body on the floor of a holding cell.
6.
The precise time and causes of Mr Magnitsky’s death are still unclear. Contradictory testimony and
official records have not yet been fully investigated.
7.
Two prison officials were indicted for negligence. The proceedings against one of them were terminated
on 2 April 2012 due to prescription, the other was acquitted in line with the prosecutor’s request on
28 December 2012. None of the people present at the time of Mr Magnitsky’s death, or accused by his family
of having orchestrated the pressures he had complained about, was ever indicted.
8.
The trial of Mr Magnitsky, who is now accused of having participated himself in the fraud he had
denounced and in alleged tax evasion by his client, is being pursued posthumously, despite numerous
protests of his widow and his mother. Russian law allows posthumous trials only exceptionally, at the request
of the family, for rehabilitation purposes.
9.
The lawyers who acted on behalf of the true owners of the fraudulently re-registered companies, in
order to help them regain control, are now being prosecuted for acting on false power of attorney, as they had
not obtained their powers from the false owners of the companies.
10. The Russian Public Oversight Committee, mandated by the State to inspect all places of detention in
the Russian Federation, carried out an investigation into the circumstances of Mr Magnitsky’s ill-treatment and
death in detention. It pointed out numerous inconsistencies, omissions and contradictions in the official
records concerning the case.
11. The Presidential Council on Human Rights, on the basis of the Public Oversight Committee’s findings,
thoroughly evaluated the case of Mr Magnitsky and urged the competent Russian authorities to hold to
account those responsible for his death.
12. Mr Magnitsky’s former client, William Browder, who is now wanted by the Russian authorities for tax
fraud, is leading a worldwide campaign in favour of visa bans and account freezes against people allegedly
sharing in the responsibility of Mr Magnitsky’s death and the ensuing cover-up. Following the adoption of the
“Magnitsky Act” in the United States of America, he is campaigning for similar sanctions in Europe.

2.

Draft resolution adopted by the committee on 4 September 2013.
3

 Doc. 13356 Report

13. As a reaction to the Magnitsky Act, the Russian State Duma adopted a law envisaging similar
measures against United States officials involved in human rights violations. The law also prohibits the
adoption of Russian orphans by American families, and senior government representatives have publicly
commended the officials covered by sanctions under the Magnitsky Act for their actions.
14.

In view of the above, the Assembly urges the competent Russian authorities:
14.1. to fully investigate the circumstances and background of Mr Magnitsky’s death and the possible
criminal responsibility of all officials involved, in particular:
14.1.1. the contradictory testimony by prison officials and other witnesses concerning the
events following Mr Magnitsky’s arrival at the Matrosskaya Tishina pretrial detention centre on
16 November 2009;
14.1.2. the existence of two different versions of the “death report” of 16 November 2009
signed by Dr Gaus and others;
14.1.3. the reasons why Mr Magnitsky was moved to Butyrka prison one week before the
second ultrasound and surgery scheduled at Matrosskaya Tishina prison;
14.1.4. the assignation of a mere hygiene specialist to provide medical care for Mr Magnitsky,
who had previously been diagnosed with serious diseases such as pancreatitis;
14.1.5. the prescription and administration, to Mr Magnitsky, of the drug Dyclofenac, which is
suspected of, inter alia, aggravating pancreatitis in certain circumstances;
14.1.6. the unavailability of CCTV footage of the arrival of Mr Magnitsky at Matrosskaya
Tishina prison on the day of his death, in view of testimony according to which investigators had
taken away the recordings;
14.1.7. the incompleteness of the legally required ledger of complaints made during a critical
period at Butyrka prison, in view of testimony that the extracts of the ledger presented during the
proceedings appeared to have been rewritten on a single occasion;
14.1.8. the personal relations existing between persons suspected of participating in the
criminal conspiracy denounced by Mr Magnitsky, including certain officials and former officials of
the Ministry of the Interior, of the tax offices involved in the fraudulent tax reimbursement, the
owner of the bank used in the laundering of the proceeds, and lawyers involved in the fictitious
law suits, including instances of joint travel to Dubai, Cyprus and London;
14.1.9. the origin of the extreme wealth displayed by certain retired Interior Ministry and tax
officials;
14.1.10. the fraudulent law suits before the arbitration courts in St Petersburg, Moscow and
Kazan recognising the fictitious debts that purportedly annulled the profits of the fraudulently reregistered companies in preparation of the tax reimbursement fraud denounced by
Mr Magnitsky;
14.1.11. the procedure followed by the two tax offices involved in the fraud denounced by
Mr Magnitsky in approving reimbursements amounting to the equivalent of US$230 million,
within 24 hours of the application, in particular whether the required background checks with the
Interior Ministry had taken place, given that the Interior Ministry had previously received detailed
information prepared by Mr Magnitsky on the fraudulent re-registration of the companies asking
for the reimbursement;
14.2. to fully co-operate with the competent authorities of all countries, including Cyprus, Estonia,
Finland, Latvia, Lithuania, the Republic of Moldova and Switzerland, which have opened criminal
investigations for money laundering in light of information received on suspect transfers of funds that
can be traced back to the fraud denounced by Mr Magnitsky, or to similar crimes committed beforehand
or afterwards;
14.3. to hold to account for their acts and omissions all those who share in the responsibility for
Mr Magnitsky’s death, in particular those who ordered his frequent moves between prisons and cells,
with ever deteriorating conditions of detention, failure to provide necessary medical treatment, and, just
before his death at Matrosskaya Tishina prison, the beatings and the manner in which Mr Magnitsky
was left alone in a cell in an apparently critical condition;
14.4. to close the posthumous trial against Mr Magnitsky and cease putting pressure on his mother
and his widow to participate in these proceedings;
4

 Doc. 13356 Report

14.5. to cease the persecution of other lawyers acting for the true owners of the fraudulently reregistered companies.
15. The Assembly commends the Russian Federation for having set up the robustly mandated and
independent Public Oversight Committee, which can serve as a model for many other member States of the
Council of Europe. In order to further strengthen this valuable prison oversight instrument, the resources at its
disposal should be increased and access by detainees facilitated for preventive purposes.
16.

It encourages the competent Russian authorities to persist in fighting corruption at all levels by:
16.1. improving co-ordination between bodies possessing relevant information, such as the Central
Bank, and others who are empowered to carry out criminal investigations and to prosecute
perpetrators;
16.2. further promoting transparency in business relations, especially by improving public access to
corporate information (beneficiary ownership, directors, balance sheets and court and tax records) and
by obliging all banks to inform the Central Bank of all transfers of funds over and above a certain
threshold;
16.3. promoting modern public service ethics based on transparency (including recruitments and
promotions), fair pay and zero tolerance for extortion, bribe-taking and influence-peddling.

17. The Assembly invites all other member States of the Council of Europe to consider ways and means of
encouraging the Russian authorities to hold to account those responsible for the death of Mr Magnitsky and to
fully investigate the crime he had denounced, in the interest of the Russian Federation and of all her hardworking and tax-paying citizens.
18. Regarding the imposition by the United States of targeted sanctions against individuals (visa bans and
account freezes), as well as corresponding European Parliament resolutions and the above-mentioned law
adopted by the Russian State Duma, the Assembly considers these as a means of last resort. Recalling its
Resolution 1597 (2007) and Recommendation 1824 (2007) on United Nations Security Council and European
Union blacklists, it stresses that any such measures should be subject to a fair and transparent procedure.
The Assembly resolves to follow closely how the recommendations in this resolution are implemented.

5

 Doc. 13356 Report

B. Explanatory memorandum by Mr Gross, rapporteur
1. Introduction
1.1. Procedure to date
1.
The motion for a resolution on “Refusing impunity for the killers of Sergei Magnitsky”3 was transmitted
to the Committee on Legal Affairs and Human Rights for report on 5 October 2012. At its meeting on
12 November 2012, the committee appointed me rapporteur.
2.
On 21 January 2013, the committee discussed an introductory memorandum4 and authorised me to
carry out fact-finding visits to Moscow, London, Nicosia and Bern.
3.
In order to allow the Russian authorities to give me their official views on the different aspects of the
case, I went to Moscow first, between 13 and 16 February 2013. Next, from 25 to 27 April, I travelled to
London in order to meet both the competent British authorities and Sergei Magnitsky’s former client, Bill
Browder. Already on 7 January, I met with the Swiss Prosecutor General and his Deputy and, on 29 and 30
April, with the competent Cypriot authorities. Finally, on 20 and 21 May 2013, I returned to Moscow in order to
hear the Russian authorities’ response to the issues raised by all the other interlocutors since my first visit.
4.
I should like to use this opportunity to thank the Russian, United Kingdom, Cypriot and Swiss authorities
for their co-operation. I regret nevertheless that it was not possible, in Moscow, to speak directly with the
persons most immediately concerned by the allegations of criminal conspiracy, despite the fact that I had sent
a list with the names of these persons in advance of the two information visits.
1.2. Earlier work by the Assembly on the case of Sergei Magnitsky
5.
In reverse chronological order, the activities of the Assembly concerning the case of Sergei Magnitsky
to date are the following:
1.2.1. Monitoring Committee
6.
In view of the serious allegations made in connection with the case of Sergei Magnitsky, together with
György Frunda, we put a number of questions to the Russian authorities in our capacity as co-rapporteurs on
the honouring of obligations and commitments by the Russian Federation. In May 2012, we submitted a
number of questions to the Russian parliamentary delegation. As we explained in our report adopted during
the October 2012 part-session,5 the replies did not go beyond referring to the usual official position of the
Russian authorities, such as those set out in the results of official investigations and court decisions. I did not
and do not consider them to be satisfactory.
7.
Given the unavoidably limited possibilities to enter into detail in the framework of monitoring reports,
which must cover a wide panoply of democracy, rule of law and human rights issues in this immense country,
it is precisely the purpose of this present, separate report to provide the opportunity for all sides involved to
present and explain their positions in such a way that the Assembly can reach a factually and legally wellfounded and balanced assessment of this problem, in the light of the Council of Europe’s standards on the
fight against impunity.
1.2.2. Written declaration
8.
On 9 February 2012, 58 members of the Parliamentary Assembly signed a written declaration6 referring
to the findings of the Presidential Human Right Council, calling on Russia to “immediately prosecute the
people named in the Human Rights Council's report, cease the intimidation of Magnitsky's family and allow an
independent evaluation in his case”. The declaration, initiated by Pieter Omtzigt, was accompanied by two
written questions he addressed to the Committee of Ministers.7

3. Doc. 12909.
4. Document AS/Jur (2013) 01 of 18 January 2013.
5. Doc. 13018 on the honouring of obligations and commitments by the Russian Federation.
6. Written declaration No. 490 of 9 February 2012, Doc. 12744 (2nd edition), “The Sergei Magnitsky case”.
7. Doc. 12809 of 13 December 2011, “Mr Magnitsky’s case investigation”, and Doc. 12688 of 11 July 2011, “Death of
Sergey Magnitsky”.
6

 Doc. 13356 Report

1.2.3. Round table on 7 September 2011
9.
On the margin of the meeting of the Committee on Legal Affairs and Human Rights in Oslo, in June
2011, Mr Browder, a client of the late Sergei Magnitsky engaged in worldwide lobbying efforts aimed at
holding to account Mr Magnitsky’s killers, made an intervention at a parliamentary seminar co-hosted by the
Norwegian delegation to the Assembly and the Norwegian Helsinki Committee.
10. The Russian delegation expressed, at the Oslo meeting, its preference for a “round table” format, in the
presence of representatives of all sides. Ms Marieluise Beck (Germany, ALDE), rapporteur on “Threats to the
Rule of Law in Council of Europe member States – asserting the Parliamentary Assembly’s authority”
responded by organising a round table on the Magnitsky case at the committee meeting on 7 September 2011
in Paris with two persons who had carried out extensive research on the Magnitsky case: Ms Evgenia Albaz,
journalist at the Moscow-based Novoje Vremja (New Times), and Ms Elena Panfilova, Director of
Transparency International, Russia. The Russian delegation, though invited to do so by the rapporteur,
declined to nominate two experts to present the authorities’ views.
1.2.4. Report on “Politically motivated abuses of the Criminal Justice System in Council of Europe
member States”
11. In her last report for the Assembly, adopted in October 2009,8 Ms Sabine LeutheusserSchnarrenberger (Germany, ALDE), now Federal Minister of Justice of Germany, summed up the modus
operandi of the alleged massive tax reimbursement fraud denounced by Sergei Magnitsky and, most
importantly, demanded his release from pretrial detention at a time when he was still alive, but already
suffering from serious health problems
1.3. Working method and objective
12. My working method has consisted in speaking openly with and carefully listening to all sides in order to
obtain information from a variety of points of view. I have obtained much detailed information from the Russian
Public Oversight Committee lead by Mr Valery Borshev, whose team carried out an officially mandated, indepth investigation immediately after the death of Sergei Magnitsky, and from different investigative reporters,
who succeeded in bringing to light the “money trail” for a sizeable part of the funds stolen from the Russian
budget in co-operation with colleagues from several other countries. I have also received interesting materials
and explanations from Mr Browder and his collaborators in London, as well as from the lawyers of Sergei
Magnitsky’s mother working on the application she has made to the European Court of Human Rights and
who are not connected with or funded by Mr Browder.9 I am grateful for the information received from all sides
and I have done my best to cross-check and verify it before assessing it and reaching the conclusions that are
summed up in this report.
13. I should like to stress that I do not consider it as my task to reach a (quasi-judicial) “judgment” on the
“case” of Sergei Magnitsky. Instead, along the lines of the work of former Assembly colleagues such as my
compatriot Mr Dick Marty or Mr Christos Pourgourides, or Ms Leutheusser-Schnarrenberger, who submitted
strong “investigative-style” reports to the Assembly,10 I am merely trying my best, with the help of the
secretariat, to explore and expose the truth by assessing in an impartial and neutral manner the plausibility
and credibility of all information received.
14. As is indicated in the title of the motion, the core issues for this report are the precise circumstances of
and accountability for the death of Sergei Magnitsky in pretrial detention. But in order to truly understand what
happened to Mr Magnitsky, we must also look closely into the accusations that he had made before he was
arrested and for which he was later blamed himself, together with his client, Mr Browder. It is necessary to
follow the “money trail” in order to evaluate the credibility and plausibility of allegations and counter-allegations
with respect to key players, including those accused of having ordered the maltreatment and possibly the
8. Doc. 11993, in particular paragraphs 87-90 and 108-112.
9. Their work is funded by the Open Society Justice Initiative.
10. See, for example, Mr Marty’s reports on renditions and secret detentions (“CIA reports”) (Doc. 10957 and
Doc. 11302) and on inhuman treatment of people and illicit trafficking in human organs in Kosovo (Doc. 12462),
Mr Pourgourides’ reports on disappeared persons in Belarus (Doc. 9783), and fair trial issues in criminal cases concerning
espionage or divulging state secret (Doc. 11031), and Ms Leutheusser-Schnarrenberger’s reports on “Investigation of
crimes allegedly committed by high officials during the Kuchma rule in Ukraine – the Gongadze case as an emblematic
example” (Doc. 11686), and on “The circumstances surrounding the arrest and prosecution of leading Yukos executives
(Doc. 10368) and my own information note for the Assembly’s Bureau on the suspicious circumstances of the death of
former Macedonian President Boris Trajkovski (AS/Jur (2007) 48 rev).
7

 Doc. 13356 Report

killing of Mr Magnitsky in detention: money – we are talking about the equivalent of US$230 million, which
may only be the tip of the iceberg – and the desire to cover up an earlier crime are among the most prevalent
motives for killings.
15. I will thus present my findings in the following way: describing what happened to Sergei Magnitsky from
the time he was involved in this affair, I will deal with the controversial issues as they arise, presenting each
time first the “official version” upheld by the Russian authorities, then the version defended by Mr Magnitsky’s
family and his former client, and then my own conclusions reached on the basis of the working method
indicated above.
2. Sergei Magnitsky – what happened to him, and why?
2.1. The viewpoint of Sergei Magnitsky’s relatives
2.1.1. Sergei Magnitsky’s widow – Natalya Zharikova
16. I should like to begin by presenting the individual concerned, Sergei Magnitsky, and, with a glimpse of
the ordeal he went through, a few observations about him, seen through the eyes of his widow, Natalya
Zharikova. She is admittedly not an “objective” source, but she greatly impressed me during our meeting in
London as a decent, modest, almost shy woman who clearly felt deeply for her deceased husband, with
whom she had been in love since their common childhood in Nalchik, a provincial town in southern Russia not
far from the troubled North Caucasus region of the Russian Federation.
17. Natalya described her husband as a smart, modest and idealistic person. They grew up together in
Nalchik. Sergei had always been honest – according to Natalya, maybe a little too honest for his own good, at
times – and often argued with teachers. He was a talented student and very interested in history. Sergei
owned a full collection of Lenin’s works and had joined the Komsomol movement as a matter of principle. He
graduated from school in Nalchik in 1989 and went on to study at Moscow University, while Natalya stayed in
Nalchik, attending the local university. In Moscow, as a student, Sergei lived very poorly, in a small room in a
communal flat. After graduation, he began to work as an accountant, and in 1996, when they could finally
afford it, Natalya moved in with him. Sergei had never been overly ambitious, he just wanted to do a good job.
18. Firestone Duncan, his employer, was a small company, but Sergei had no ambitions to move to a
bigger one. He was not keen on getting involved in politics, and “he never took a client trying to bypass the
law”. Sergei always worked very long hours, but he was healthy, except for the occasional flu, he didn’t drink
alcohol, only a little on social occasions. The diagnoses of hepatitis and diabetes made in prison were new to
her. He never told Natalya about what was going on in the office. She was therefore totally surprised and
shocked when the police came, at the end of November 2008, to search their flat for 12 hours and arrested
Sergei at the end of the search. Sergei told her not to worry, he would be back the following day. But he never
returned, and she was only able to see him during a court hearing relating to the extension of his detention, in
a cage, without being able to speak with him. She had approached the investigators, but they refused to allow
her to meet Sergei in prison, except once, after almost a year in pretrial detention.
19. Sergei’s mother moved from Nalchik to Moscow. The two women often bought food to bring to the
prison. The distance from their flat, the fact that they did not own a car, and especially the burdensome
procedures involving many hours of waiting each time meant that it took them a whole day each time – “only
Matrosskaya Tishina prison was a little better organised”. Sergei shared with his fellow inmates whatever food
he received. After Sergei’s death, on 16 November 2009, Natalya was not allowed to see her husband’s body
in the morgue of the pretrial detention centre. “They gave us the body only for the funeral, already prepared,
dressed in clothes they had asked for in advance, and made-up.” But his mother opened the blanket and still
saw bruises on his knuckles, despite the passage of time and the make-up. When the case against Sergei
was reopened posthumously, and she was summoned to appear before the authorities, Natalya and Sergei’s
mother were “shocked, scared and stressed”, especially when they found out that the same investigators were
again in charge. Natalya wrote to the investigators that she was “strictly against” reopening the case, she also
told a (female) investigator that she could not understand how they could prosecute a dead man. Natalya
agreed with Sergei’s mother that these people could never be trusted to rehabilitate Sergei. At the beginning
of the ordeal, Natalya was “scared and kept her head low”, whereas Sergei’s mother had been more active.
Now Natalya had decided to be more outspoken, too. She was proud that all Sergei’s former friends and
colleagues spoke so very highly of him.

8

 Doc. 13356 Report

2.1.2. Sergei Magnitsky’s mother – Natalia Magnitskaya
20. I met Natalia Magnitskaya in Moscow in May 2013. We spoke for more than three hours. For the sake
of helping to make the truth about her son better known, she went through the ordeal of reliving the nightmare
of her son’s death in detention, and his posthumous prosecution. Ms Magnitskaya is a soft-spoken woman,
deeply affected by the loss of her son, but not tearful, determined to see those responsible for Sergei’s death
held to account, but not vengeful or aggressive.
21. After her son was arrested, she left her home in Nalchik and moved in with her daughter-in-law in
Moscow. She needed help with the children, especially the youngest boy, who had just started grade 2. She
also wanted to visit her son in prison and bring him food, but she suffered from the same obstacles already
described by her daughter-in-law. In his first place of detention (pretrial detention centre No. 5), Sergei did not
have any health difficulties, just a bout of flu, for which he was treated. He was not allowed to have visitors,
but he wrote a lot of letters, asking about his wife and children, and other family members, and discussing
books he read there. From the pretrial detention centre No. 5, he was moved to a temporary detention centre
and later, in April 2009, to Matrosskaya Tishina.
22. Until April 2009, Sergei Magnitsky wrote that he had to be released because he was innocent, not
because of his state of health. Her son had always been healthy, a little overweight, but never seriously ill,
with the exception of one stay in hospital for appendicitis. As of April 2009, he began to complain about
stomach problems. At the request of a relative, who is a doctor, he described the symptoms in detail; they
corresponded to the diagnosis made by the prison doctors in Matrosskaya Tishina, namely that he suffered
from pancreatitis.
23. Soon after the diagnosis was made and despite the prescribed additional ultrasound examination and
surgery Sergei Magnitsky was moved to the harsh Butyrka prison. After he was moved there, he suffered a lot
from not being allowed any reading materials. While he was in Butyrka, their contacts with Sergei were very
limited, letters needed about two months each way, in four months, they received only two letters. When they
asked the judge for permission to visit Sergei, the reply was that this would “not serve the purpose” – as in
Alexander Solzhenitsyn’s “Gulag Archipelago”.
24. Ms Magnitskaya also said that she was never informed about her son’s transfers to different prisons or
cells and found out each time only when she came to the prison with food parcels.
25. Ms Magnitskaya indicated that the drug her son was given at Butyrka prison after he suffered more and
more acute stomach pains – Diclofenac – should be taken with milk or kefir in order to prevent more damage
to the digestive system. But her son was never given any, and she was not allowed to provide it for him.
Dr Litvinova, his doctor at Butyrka prison, had first testified that Sergei had given her a paper from Moscow
hospital No. 36 showing that he had been diagnosed with pancreatitis in March 2008, namely before his
arrest. Dr Litvinova changed her story after the hospital had confirmed that Sergei had never been there.
26. Ms Magnitskaya saw her son for the last time alive at the court hearing about the prolongation of his
detention four days before his death, in November 2009. Sergei looked white and tired, and had lost a lot of
weight, but he did not look like he was terminally ill. When she next saw him at the funeral, she pulled back
the blanket covering his upper body, and she saw marks on his fingers and knuckles, both scratches and
haematoma, and his hands were balled into fists, not folded as is customary. The family had to say farewell to
Sergei in a dark prison morgue and was not allowed the use of a proper funeral home. She had also been
twice refused permission to have independent experts perform an autopsy, despite all the contradictions
resulting even from the official records of what had happened to her son. Ms Magnitskaya is convinced that
her son was killed intentionally, at Matrosskaya Tishina, brutally beaten while he was in a fragile state of
health, then left to die miserably alone in his cell, or even killed directly by one of several known methods of
inducing heart failure.
27. The mother’s nightmare still continued through the posthumous prosecution of her son and the public
propaganda campaign against him and his former client, Mr Browder. She was grateful to Bill Browder, who
had said to her that he felt personally guilty for what happened to her son. He was now part of the inner circle
of the family. He had done everything he could to help her and her family obtain justice. Not many would have
taken responsibility in such a way.

9

 Doc. 13356 Report

2.2. The road to Sergei Magnitsky’s arrest
2.2.1. Search and seizure raids at the Moscow offices of Hermitage Capital and Firestone Duncan: the
“Kameya case”
28. On 4 June 2007, 25 officers of the Moscow Branch of the Interior Ministry, led by Lt. Col. Artem
Kuznetsov, searched the offices of the investment company Hermitage Capital in Moscow, purportedly to
obtain information concerning the tax situation of a Russian company called “Kameya”, on the basis of a
criminal case opened on 28 May 200711 against the Director of Kameya and Chief Operating Officer of
Hermitage, Mr Ivan Cherkasov.
29. At the same time, representatives of the Moscow Branch of the Interior Ministry also raided the offices
of Firestone Duncan, Sergei Magnitsky’s employers. Hermitage had been a client of Firestone Duncan for
legal and accounting services for many years. I was told that one of the lawyers working with Firestone
Duncan, who tried to stop the investigators from seizing documents belonging to other clients unrelated to
Kameya was severely beaten and had to spend two weeks in hospital. All of Firestone Duncan’s computers
were taken during the raid and two van-loads of client documents taken from the offices. A detail the
importance of which will become apparent later is that many original corporate documents (seals, original
corporate certificates and charters) for companies registered by this firm were removed.12
30. The background of the “Kameya case”, serving as justification for the two above-mentioned “raids”, was
the following:13 Kameya was accused of having underpaid dividend withholding tax amounting to 1.15 billion
roubles (about US$44 million), by unlawfully applying the double taxation agreement between Cyprus and
Russia. The agreement foresees a withholding tax rate of 5%, whilst without the benefit of the agreement, the
tax rate would have been 15%. Kameya was an investment company owned by a Hermitage client investing
in stocks of Russian companies, over a period of seven years, during which the prices of the stocks detained
rose, generating a profit for Kameya of about 12.3 billion roubles (US$472.2 million). In February 2006,
Kameya paid the equivalent of US$113.3 million in profit tax to the Federal Tax Service, at the 24% rate
foreseen by law. After the tax payment, Kameya’s sole shareholder (a Cyprus-based holding company)
decided to distribute the remaining profit to itself. According to the double taxation agreement, a 5%
withholding tax applied and was paid over to the Federal Tax Service on 24 April 2006, the remainder
distributed to the Cyprus company. So far, this is undisputed.
31. The Interior Ministry’s investigators then claimed that the double taxation agreement was applied
incorrectly because Kameya’s Cyprus-based holding company did not have the required certificate of Cyprus
tax residency. But notarised copies of this certificate had indeed been submitted to the tax authorities, as
confirmed by letters from the Russian Ministry of Finance dated 26 July 2007 and by the Federal Tax Service
dated 15 October 2007, which both state that the 5% withholding tax rate was correct. In fact, on 13
September 2007, Kameya was informed by the Federal Tax Service that it had actually overpaid taxes by
some 3.96 million roubles (or about US$140 000). This was confirmed by a subsequent audit by Moscow Tax
Authority No. 7.14
32. Another suspicious circumstance in relation to the Kameya case is a telephone conversation on
17 February 2007, namely three months before the opening of the criminal case, between Lt. Col. Kuznetsov
and a partner of Hermitage capital. The Hermitage partner whom I met in London testified that Mr Kuznetsov
referred to the visa request by Hermitage founder and CEO Bill Browder (who had been refused entry into
Russia in November 2005 “in the interests of ensuring the security of the state, public order or public health”15
after having travelled between the United Kingdom and Russia for many years as a successful investment
fund manager specialising in investments in Russian companies). Mr Kuznetsov indicated that before any
response could be given to Mr Browder’s visa request, he needed to come to Hermitage’s offices in order to
obtain answers to a number of questions. Any decision concerning the visa “will depend upon how you
behave … and that … the sooner we meet and you provide us what is necessary, the sooner your problems

11. Case No. 151231.
12. I was shown relevant written testimony of a lawyer with Firestone Duncan, Ms Lilya Guzheva.
13. Details and exhibits corroborating the information presented in the formal criminal complaint on behalf of Glendora
Holdings Limited and Kone Holdings Limited and the other entities listed dated 5 June 2008 addressed to the Cyprus
Police Department by Paul Wrench on behalf of the boards of directors of Glendora Holdings and Kone Holdings, pp. 6-9
(available from the secretariat).
14. Letter attached to the formal complaint, ibid., pp. 137-138.
15. Article 27, paragraph 1 of Federal Law No. 114FZ; the text in inverted commas is a translation of this provision.
10

 Doc. 13356 Report

will disappear”.16 Hermitage interpreted this as an extortion attempt and asked Mr Kuznetsov to provide all
questions in writing, stating that Hermitage would be happy to answer any questions in the same way. Mr
Kuznetsov declined.
33. The Russian authorities did not deny any of the information on the Kameya case, they merely stated,
without substantiating, that the search and seizure actions on 4 June 2007 were motivated by a bona fide
criminal case concerning underpayment of taxes by Kameya.
34. In view of the precise, substantiated and well-documented presentation of the facts on the Kameya
case by the representatives of Hermitage, I conclude that the criminal case must have been opened for other
reasons than the bona fide pursuit of criminal justice. One of the real reasons might well have been to justify
the two “raids” on the offices of Firestone Duncan and Hermitage, during which items were taken by the
investigators, which, as it is alleged, were later used in the commission of the tax reimbursement fraud
denounced by Sergei Magnitsky. The idea for this crime may well have been developed after the perceived
failed extortion attempt on 17 February 2007.
2.2.2. A word on the allegations against Hermitage Capital
35. In order to understand the background of the case and to assess the credibility of the two opposing
“versions” – whether Sergei Magnitsky had blown the whistle on a criminal scheme by corrupt officials and
was placed in detention in order to put him under pressure to change his testimony or whether Mr Magnitsky
and his employer Firestone Duncan aided and abetted Hermitage Capital and Bill Browder to commit tax
evasion and precisely the tax reimbursement fraud that he had denounced on behalf of Hermitage – we need
to look at the background of the business activities in which Sergei Magnitsky became involved before he was
arrested. If these business activities were indeed unlawful, as my official Russian interlocutors have alleged,
the credibility of the “Sergei the wronged whistle-blower” version would be seriously undermined. The
opposite would be true if these business activities were not unlawful, but had the potential of seriously
annoying powerful interest groups in Russia. I can therefore not avoid discussing the allegations raised
against Sergei Magnitsky’s client, Bill Browder, founder and CEO of Hermitage Capital, by the Russian
authorities.
2.2.2.1. A capitalist’s emotions
36. When I went to London to meet with Mr Browder and his collaborators, I was in for a surprise. Bracing
myself for meeting a hedge-fund manager, a hard-core capitalist out to defend his own business interests, I
was impressed by Mr Browder’s deeply emotional reaction to the death of Sergei Magnitsky. Mr Browder’s
family history may provide some explanation. He grew up in an unusual (in the United States) left-wing family
as the grandson of the 1930s and early 1940s General Secretary of the United States Communist Party and
decided to “become a capitalist” as his version of a young man’s rebellion against his family, which had
nevertheless left a lasting imprint on his personal values. He graduated from Stanford Business School and
moved to London, to work for a large consulting firm, shortly after the fall of communism. When he discovered
that Polish companies were selling at this time for barely more than their annual profits, compared to 10 or 20
times in more settled markets, he set up an investment company of his own, attracting funds first from friends
and colleagues and soon snowballing into one of the largest investment funds in the region, in particular after
moving into the Russian market.
37. But Sergei Magnitsky was after all “only” an employee of a law firm – Firestone Duncan – that had
provided Mr Browder’s investment company with legal and accounting services. Why did his death so affect
his client, Mr Browder? He explained to me that he had come to the conclusion that he was himself the
intended victim of the conspiracy, which ultimately caused the death of Sergei Magnitsky. In other words, for
Mr Browder, Sergei Magnitsky had died in his stead. For me, this goes a long way towards explaining the
dogged, sometimes slightly overdone, worldwide lobbying campaign to obtain “justice for Sergei”. His
characteristic radical, single-minded focus, if not obsession, with Sergei Magnitsky has led Mr Browder to
remain focused on Russia even though his investment fund business orientated towards Russia was
undermined to the point that – during my stay in London – the Hermitage Fund, which had already shrunk
considerably since the raid on Hermitage’s offices in June 2007 and the fraud against his companies, was
finally liquidated by HSBC, the manager of the Hermitage Fund. Hermitage Capital is now focused on
investments in other international markets. This said, Hermitage’s investors were lucky in that Mr Browder,
who saw trouble for his business in Russia coming after the cancellation of his visa, had liquidated and

16. The partner’s account of this conversation is laid down in the formal criminal complaint, op. cit.; he provided more
detail and background during our conversation in London.
11

 Doc. 13356 Report

repatriated the Fund’s assets in good time for the investors to “miss” the general market downturn during the
2008/2009 financial crisis triggered by the Lehman Brothers bankruptcy, a worldwide market downturn that hit
Russia disproportionately hard.
2.2.2.2. Mr Browder attempting to recuperate losses incurred in Russia?
38. It is often said that Mr Browder “lost a lot of money” in Russia, and is using his campaign to try and
recuperate it. In fact, Mr Browder’s business consisted in managing other people’s money, with varying
success. During the very profitable period following the privatisation campaign in the mid-nineties he achieved
a kind of cult status among investors. But Hermitage’s investors, like all other Russian stockholders, suffered
losses of 90% during the Russian financial crisis of 1998. Mr Browder still feels “stung” by the losses he could
not prevent, which were, in his view, partly caused by the general debt crisis of the Russian Federation, and in
part by what he called an “orgy of theft” by oligarchs (“persons appointed to be billionaires”) who had given up
trying to “behave themselves” for the sake of attracting investments from abroad when they realised that the
state’s financial crisis blocked access to foreign capital anyway. Nevertheless, the Hermitage Fund’s figures
show that those of their investors who held on and did not sell after the crash in 1999 recuperated their losses
and even made some gains until the new troubles started in 2007. Over the long term, Hermitage beat the
Russian stock market by a considerable margin. In view of the nature of Mr Browder’s past business activities
in Russia, I fail to understand in what way a campaign pushing for the prosecution of those responsible for
Sergei Magnitsky’s death can help him “recuperate” money he (or more precisely, the investors whose money
he managed) may have lost in Russia.
2.2.2.3. Hermitage minority shareholder activism: unlawful influence or even “greenmail”?
39. The methods Mr Browder and his team used in order to increase “shareholder value” by investigating
and publicising fraud and theft by the companies’ own management and thereby increasing declared profits
and consequently share prices, were much applauded in western academic and business circles.17
Mr Browder’s team explained and documented several examples for me in some detail: how they exposed
the fact that from one year to the next, Gazprom’s electricity bill more than doubled – because a newly
created “middleman” company siphoned off huge commissions; and how in the construction of the “South
Stream” gas pipeline, the construction cost per meter of pipeline in Russia was double that in Turkey – whilst
the Turkish contractors had been criminally convicted in their own country for overcharging. There are many
more similar examples, which Mr Browder publicised aggressively at the time, even using them for “corporate
electioneering” purposes, when a Hermitage representative ran for a seat on the Gazprom board as a
representative of minority shareholders.
40. I heard from several Russian interlocutors that Mr Browder had tried to exercise “undue influence” on
Gazprom and other Russian companies – I wonder if they meant these “naming and shaming” tactics. If that is
so, I fail to see the problem: fighting corruption, waste and theft in companies, even “strategic” ones, is in the
interest of all shareholders, including the Russian people, who through their State and as individual
shareholders hold a majority of Gazprom shares.
41. I also heard from Russian interlocutors that Mr Browder’s tactics constituted (unlawful) “greenmail”. I
learnt that the term “greenmail” generally refers to non-transparent business practices such as a minority
shareholder trying to oblige the majority, respectively the company’s management, to buy him or her out at
above-market prices – in exchange for the said minority shareholder keeping silent about the “dirt” he or she
dug up about management corruption or other corporate misbehaviour. In my view, such business practices
constitute – unlawful – blackmail, as they involve making a threat aimed at obtaining something (i.e. the
buyout at a premium) that the author of the threat was not legally entitled to, at the expense of others (i.e. of
all other shareholders). Such an activity legally amounts to (unlawful) blackmail, even though the threatened
action (publicising truthful information about corporate misbehaviour) is not unlawful as such. But in
accordance with information at my disposal, this is not what Hermitage did: they did not threaten to make
information on business malpractice public in order to be bought out at above-market stock prices – they
published their findings as a matter of course, expecting to benefit (like all other shareholders) from an
increase in the share price resulting from the corporate clean-up that could be expected to follow the exposure
of the corrupt practices. Again, I fail to see why this is a problem, let alone a criminal matter.

17. See on the “Hermitage effect”, the Harvard case studies: “Gazprom and Hermitage Capital: Shareholder Activism in
Russia” and “Hermitage Fund: Media and Corporate Governance in Russia”.
12

 Doc. 13356 Report

42. But obviously, such business tactics earned Mr Browder the enmity of those who profited from the lack
of transparency – in particular the “oligarchs”. Interestingly, it was rumoured in the markets for some time that
Mr Browder was secretly in league with President Putin. Indeed, shortly after Mr Putin’s accession to the
Presidency in the spring of 2000, he had given effect to some of Mr Browder’s research into theft and graft in
the Russian economy, and used the opportunity of the scandals triggered by Mr Browder’s revelations to
replace key players in the economy – presumably by persons President Putin found more reliable.
Mr Browder told me that he never actually met President Putin in person. But he thought that there may have
indeed been an objective “coincidence of interests” between them for some time. Clearly, at some point –
according to Mr Browder, as soon as President Putin had safely established his position of dominance and Mr
Browder’s business tactics started to annoy the new team in power itself – Mr Browder fell from grace, as
evidenced by the withdrawal of his visa in November 2005, on “national security” grounds. But the visa
withdrawal gave rise to an international lobbying campaign by Mr Browder in favour of his visa being reestablished. It became clear to the authorities that the annoyance was not going to go away easily. This
seems to have further hardened the authorities’ attitude towards Hermitage and all those working on its
behalf, including Sergei Magnitsky.
2.2.2.4. Alleged illegal acquisition of Gazprom shares
43. On 5 March 2013, the Russian authorities opened a new criminal case against Bill Browder concerning
illegal acquisition of Gazprom shares. In fact, under a Presidential decree of 5 November 1992, direct foreign
ownership of Gazprom shares was limited to 9% of all shares. Due to strong demand from foreign investors,
the “foreign” shares soon traded at a considerable premium over the price of the “local” shares, creating an
incentive for would-be foreign investors to devise ways and means to acquire “local” shares at “local” prices,
using loopholes in the legislation, in particular by holding Gazprom shares through holding companies
incorporated in Russia.
44. Another Presidential decree in 199718 on Gazprom share ownership required that Russian companies
holding Gazprom shares could only be less than 50% foreign-owned. In reaction to this, the holding structures
for so-called “grey market” Gazprom shares held for the benefit of foreign investors were further refined, with
the depositary accounts assistance provided by Gazprom Bank, the officially designated “registrar” of
Gazprom shares. According to Mr Browder, all market intermediaries developed structures for foreign
investors to hold “local” Gazprom shares, including for example Gazprom Bank itself, United Financial Group/
Deutsche Bank and Ruhrgas. The holding structure set up by Hermitage Capital in 1999 for a large American
client included a Cypriot (i.e. “foreign”) holding company (Zhoda Ltd. And its predecessor Peninsular Heights
Ltd.) owning 49% of the capital of each of two Russian companies (Kameya LLC and Baikal-M LLC), which in
turn owned 51% of each other's capital, with Kameya holding the coveted “local” Gazprom shares. According
to Mr Browder, who showed me copies of the relevant documents, Hermitage Capital fully disclosed this
structure, including the foreign ownership element, to Gazprombank (Gazprom's shares registrar), to the
Russian Federal Tax Service and to the Russian “Unified Registry for Legal Entities” (i.e. the central
companies registry). The Federal Tax Service, in a tax audit of Kameya LLC dated 2 November 2005,
acknowledged Kameya's (partial) foreign ownership and confirmed that the structure complied with the 1997
decree. Gazprom Bank and the Unified Registrar for Legal Entities also acknowledged Kameya's ownership
structure and did not raise any objections.
45. In August 2004, a member of the Russian State Duma, Mr Yuri Saveliev, requested the law
enforcement authorities to investigate the illegal acquisition of Gazprom shares by non-residents through the
“grey market” structures set up by UFG/Deutsche Bank. But on 18 October 2004, the General Prosecutor's
Office publicly confirmed the legality of UFG's Gazprom structures. Finally, by Presidential decree No. 1519 of
23 December 2005, all restrictions on foreign ownership of Gazprom shares were abolished. It should be
noted that the only sanction foreseen in the 1997 decree for a breach of the prohibition on foreign ownership
of Gazprom shares was the obligation to sell such shares within three months (when the Russian ownership
of the company holding the shares fell below 50%, for example due to restructuring) or that the acquisition of
shares was “null and void in the territory of the Russian Federation” (for example, when the company
acquiring the shares did not meet the Russian ownership requirement in the first place). The decree foresees
no other sanctions, let alone penal ones.
46. Consequently, the retrospective prosecution of the Hermitage executives for any violation of this decree
would appear to violate the principle of “nullum crimen, nulla poena sine legem” enshrined in Article 7 of the
European Convention on Human Rights (ETS No. 5), even if the holding structure used by Hermitage (and
many other market intermediaries) violated the decree. Whilst these “grey market” structures were clearly
18. Presidential Decree No. 529 dated 28 May 1997.
13

 Doc. 13356 Report

designed to help foreign investors circumvent the temporary “ring-fence” built around Gazprom by the 1993
and 1997 decrees (and abolished by the 2005 decree), they were obviously tolerated by the authorities,
whatever their reasons might have been. In my view, the authorities cannot now change their minds
retroactively, in addition solely to the detriment of one of the “grey market” participants and not the others: this
would be a case of selective justice, which in the practice of the Assembly is often seen as an indication for
the “political” motivation of criminal prosecutions.19
2.2.2.5. Hermitage “seed money” allegedly stolen by Mr Browder from an International Monetary
Fund disbursement to Russia in 1998?
47. Another allegation made against Hermitage Capital more recently is that much of the “seed money”
used to jump-start their business in Russia was derived from an alleged large-scale theft of International
Monetary Fund (IMF) funds disbursed to Russia under the SDR 3.6 billion (equivalent to US$4.8 billion) loan
disbursed in 1998. According to the recent Russian allegations,20 the equivalent of US$3.6 billion
“disappeared” in a scheme in which a mysterious billionaire banker, Edmond Safra, and his “Republic National
Bank of New York”, was allegedly involved alongside Bill Browder. My interlocutors even drew a link between
Mr Browder and Mr Safra’s death in a fire of his penthouse apartment in Monaco. Mr Safra died shortly after
the sale of his bank to HSBC, which had reportedly been prompted by losses the “Republic National Bank”
suffered in Russia.
48. After I was confronted with these allegations, I promptly contacted the IMF in order to obtain up-to-date
information. The answer I received in early June 2013 was that the IMF’s legal services found no indication
that Russian authorities have contacted the IMF in regard to the matter and no indication that the IMF has any
information about the recent allegations against Browder and Hermitage. An IMF publication dated
13 September 1999 under the title of “Facts about IMF Lending to Russia”21 commented on allegations in the
press that IMF funds advanced to Russia “may have been diverted from their intended purpose and included
in the flows of capital that left the country illegally”. The then Managing Director of the IMF, Michel
Camdessus, was cited as follows: “That there has been capital flight on this scale (from Russia) does not
surprise us, but there is no proven link between this money and the loans released by the IMF”. The
statement stressed that neither the IMF nor the US authorities had any evidence that IMF funds were
misappropriated, and pointed out that under the $4.5 billion programme approved in July 1999, all IMF money
disbursed to Russia would be held in an account at the IMF and would be used only for Russia’s debt service
to the Fund. Regarding allegations of mishandling of the July 1998 disbursement, the IMF had insisted on the
preparation and publication of investigations by the accounting firm PricewaterhouseCoopers (PwC), which
also covered relations between the Central Bank of Russia (CBR) and one of its offshore subsidiaries
(FIMACO), and the statistical reporting to the IMF by the CBR. According to the statement, “[t]he
investigations found no evidence to support the allegations concerning misappropriation of funds”.
49. There were indeed serious allegations raised at the time in the United States22 and also in Russia23
that IMF funds may have been misappropriated for the benefit of President Yeltsin’s family and its trustees,
powerful Russian oligarchs, including Roman Abramovich and Boris Berezovsky, and others in positions of
influence in Russia. There were also allegations of the widespread use of, by the Russian Central Bank of
FIMACO, a secret Jersey offshore company with a US$1 000 charter capital, to conceal Russian Government
assets and debts from the IMF and other foreign creditors.24 After a period of investigating these allegations
more or less robustly during 1999-2002, the Russian Prosecutor General’s Office and the Russian Audit
Chamber strongly denied, in 2004, that any misappropriation of IMF funds had occurred.

19. See the statement of then Chairman of Gazprom and First Deputy Prime Minister Dmitry Medvedev: “The
government would not be punishing such schemes, as they became possible due to the loopholes in the Russian
legislation, and it was the government's direct fault.” (New York Times, 2002) See also the quote of a source in the law
enforcement bodies cited by Vedomosti in March 2013: “There are no other criminal cases concerning trading Gazprom
shares using grey schemes.”
20. See, for example, Russian state news agency Itar-Tass on 7 March 2013; also referred to in the NTV program
“Browder List” aired on 6 March 2013, generally presenting Mr Browder in a very unfavourable light.
21. www.imf.org/external/np/vc/1999/091399.HTM.
22. See http://commdocs.house.gov/committees/bank/hba51201.000/hba51201_0f.htm;
http://commdocs.house.gov/committees/bank/hba59889.000/hba59889_0.HTM.
23. See www.fas.org/news/russia/2000/russia/part08.htm.
24. See http://online.wsj.com/article/SB935362161238969094.html;
www.nytimes.com/1999/09/02/world/us-seeks-details-on-russia-s-use-of-aid.html;
www.heritage.org/research/reports/1998/10/russias-meltdownnbsp-anatomy;
www.law.harvard.edu/programs/about/pifs/llm/sp26.pdf;
www.accessnorthga.com/detail.php?n=195710.
14

 Doc. 13356 Report

50. The fact remains that the loan was transferred from the IMF directly to the Russian Central Bank’s
foreign account, not to private parties, and could not have been taken out of the Russian Central Bank’s
account without its instruction. Further, throughout the entire time, the Russian Central Bank had acted as the
holder of the IMF funds. During 1999-2002, the Russian Central Bank had fully covered all its obligations to
the IMF regarding the loan repayment.
51. In addition, I should like to point out that Mr Browder’s business activities did not actually start at the
time of the alleged theft of “seed money” in 1998, but much earlier, in 1996, and that according to Hermitage
there were no new inflows in the two years following the July 1998 IMF loan and the August 1998 default.
Given also that these allegations are made only now, 15 years after the alleged facts, I do not find them
convincing.
2.2.2.6. A word on the use of “off-shore” holding companies
52. Having examined the materials provided by Hermitage, which include tables and drawings of holding
structures and ownership schemes such as the one discussed above for the adaptation to the temporary
“ring-fence” around Gazprom (point 2.2.2.4), I could not help noting with some discomfort that off-shore tax
havens/countries with tax incentives such as Cyprus, the British Virgin Islands and Channel Islands, and the
US State of Delaware were also used extensively by Hermitage. As a good Social Democrat, I asked the
Hermitage people some hard questions about this practice. Is this not just a way of “cheating” high-tax
countries out of their much-needed revenue? The answers received made me reconsider: Hermitage, whose
business it was to invest other people’s money, has indeed used off-shore tax havens (this is an “industry
standard”, a practice followed by most if not all investment companies). The reason is the need to minimise
administrative red-tape, by letting the profits accrue in companies registered in countries with very low or even
zero tax rates. These (untaxed or little taxed) profits are then paid out to investors in the form of redemption
proceeds, which they have a legal duty to declare as income in their own countries. The alternative – the
investment company itself paying high taxes and then helping investors obtain the refund or deduction of the
taxes paid by the investment company from the person income tax they owe in their own country – would be
much more complicated and not lead to a substantially different result, from the point of view of the investors’
(high-tax) countries of residence.
53. Hermitage had over 6 000 investors from more than 30 countries. Most of these have double taxation
agreements among themselves and with Russia or the United Kingdom, but there are big substantive and
procedural differences between them. Administering the correct application of these rules to each investor for
the purpose of paying out redemption proceeds and avoiding double-taxation would be prohibitively
burdensome.
54. In my view, the real problem with the use of off-shore tax havens by international investment companies
lies in the fact that some of them tend to “aid and abet” tax evasion committed by dishonest investors by
failing to fulfil their legal duty to declare income received from such holding companies in tax havens in their
own countries. By refusing to co-operate with foreign tax authorities and communicating the income collected
by the investors, hiding behind strict “banking secrecy” rules, they effectively make it quite easy for dishonest
investors to evade taxation. Hermitage, competing with other investment companies, was in no position to
deviate from the generally accepted “industry standard” to the detriment of its investors. It is up to us
politicians in the “high-tax” countries to put enough pressure on all off-shore tax havens to co-operate with our
fiscal authorities.
2.2.3. The two criminal cases against Sergei Magnitsky: the grounds for his arrest and detention
2.2.3.1. Aiding and abetting tax fraud by Hermitage (the “Kalmyk case”)
55. On 28 November 2012, Sergei Magnitsky (posthumously) and Bill Browder (in absentia) were indicted
for two separate counts of tax evasion concerning alleged underpayment of taxes due for 2001 by two
investment companies belonging to the Hermitage Fund and registered in the Kalmyk Republic of the Russian
Federation – Saturn Investments and Dalnaya Step. A criminal case against Mr Browder in this respect had
first been opened in October 2004 and closed for “lack of any crime” on 5 May 2005. It was reopened against
Mr Browder on 27 February 2008 and Mr Magnitsky was added as a co-defendant on 25 November 2008.
The total alleged underpayments amount to the equivalent of about US$17 million, of which US$14 million
concerned wrongful exemptions from Kalmyk local and regional taxes and US$3 million fraudulently obtained
tax benefits for the employment of disabled persons.

15

 Doc. 13356 Report

i) Unlawfully obtained Kalmyk local and regional tax exemptions?
56. The disputed Kalmyk local and regional tax exemptions were based on Federal Law No. 2118-1 on the
“Basis of the Tax System of Russia”, which allowed Russian regions to set their own tax rates in order to
attract companies for registration, for the purpose of promoting regional economic development, and on two
Kalmyk tax laws of 1995 and 1999.25 In essence, the total tax burden of 35% was effectively reduced to 11%
(the Federal tax) plus a negotiated “fee” or “contribution”, which replaced the usual Municipal and Regional
taxes set at 5% and 19% respectively. In response to these incentives, many important Russian companies
registered their business in Kalmykia or other low-tax regions.26
57. The conditions set by law to qualify for the regional tax reduction are fourfold: 1) to obtain a “Tax benefit
certificate” by the competent Kalmyk authorities; 2) to enter into a contract with the Government of Kalmykia
on a contribution to an investment project listed in a “public offer” issued by the Ministry of Investment Policy;
3) registering with the Ministry of Investment Policy; and 4) making the agreed payments to keep the tax
benefit current.
58. I have seen the documents establishing that in the case of Saturn Investments and Dalnaya Step, all
four conditions were fulfilled. This does not appear to be disputed by the Russian authorities, which now claim
instead that the Hermitage subsidiaries did not qualify for the Kalmyk regional tax advantages because they
did not sign “additional investment agreements” in 2001. But the Kalmyk law requiring an additional
agreement27 came into force only in July 2002 and did not apply to the year 2001, during which the
underpayment in question is alleged to have occurred. It would therefore appear that the accusation in
question is legally unfounded.
ii) Unlawfully obtained Federal tax reduction for employment of handicapped persons?
59. The second tax fraud accusation concerns an alleged underpayment by Hermitage's two Kalmyk
subsidiaries of the equivalent of US$3 million corresponding to a reduction of the 11% Federal tax rate to
5.5% foreseen by law as an incentive for the employment of handicapped persons. The Russian authorities
maintain that the employment of handicapped people was fictitious, that is to say that they were not actually
employed by the Hermitage subsidiaries. Video footage of testimony of several apparently mentally
handicapped people was shown on Russian television in March 2013, which as I was told in Moscow would
also be used as evidence in the posthumous/in absentia trial against Sergei Magnitsky and Bill Browder.
These persons state that they were never actually paid by Hermitage. The commentary called on viewers to
judge for themselves whether these people could possibly have worked as “financial analysts” – the job title
conferred upon them by Hermitage.
60. The representatives of Hermitage whom I met in London explained to me that their adviser Firestone
Duncan co-operated with the Kalmyk Government's Foundation for Support of Small Businesses and the local
Afghan War Veterans Association to identify suitable handicapped people28 for employment in Hermitage's
Kalmyk subsidiaries and managing their employment. As their subsidiaries were investment companies with a
very small staff it was not difficult to reach the 50% threshold of handicapped employees required to qualify for
the tax break. The five persons were given a job title in line with the activities of the companies in question.
One of the handicapped persons they hired on the advice of the War Veterans Association even had a
relevant qualification, as a bookkeeper. All five were assigned fairly simple tasks, commensurate with their
severe handicaps, which included following the regional print media and reporting on relevant developments
to Hermitage in Moscow. Mr Browder stressed that the law did not specify any job specifications to be fulfilled
by the handicapped employees. His subsidiaries could also have recruited them as doormen, cleaners or any
other job. Mr Browder had also viewed the video footage referred to above and was outraged by the public

25. Republic of Kalmykia Law No. 7-1-3 on “Tax benefits to a certain category of taxpayers” of 28 January 1995 and Law
No. 12-II-3 on “Tax benefits to enterprises investing in the economy of the Kalmyk Republic” of 12 March 1999.
26. Hermitage provided me with a list of such companies, including Sibneft and TNK (oil) with registered companies in
Kalmykia and Chukotka, Alfa Bank (finance) in Altai/Buryatiya, and Rusal (metal) in Kalmykia. According to Mr Browder,
no other business executive has to date been criminally prosecuted for using the regional tax reduction scheme – with one
notable exception, namely that of Yukos oil, whose founder and CEO Mikhail Khodorkovsky had also fallen out of favour.
27. Republic of Kalmykia Law No. 197-11-3 of 10 June 2002 on “Tax benefits for the companies investing in the Republic
of Kalmykia”.
28. For example people having a “type three invalidity “, which is “granted to people who are unable to carry out jobrelated duties due to medical conditions and need to be transferred to a job with a lower qualification. Among the
recognised defects might be anatomical defects like stump limbs, significant limitation of joint movement, and paralysis of
extremities, including those received during military service” (cited from a translation of the “Instruction on Specifying
Invalidity Groups” dated 1 August 1956 made available to me by Hermitage).
16

 Doc. 13356 Report

humiliation inflicted on these people. He pointed out that they had obviously been pressured to testify that
their salary had not been paid and showed me records that they were questioned at the regional headquarters
of the FSB. The salaries of the five handicapped employees – set at five times the legal minimum wage – had
been paid out in full, and these employees were kept on the payroll well beyond the abolition of the tax break
in question. I was shown the wire transfers documenting the payments.
61. The accusation against Sergei Magnitsky and Bill Browder of having fraudulently obtained this tax
reduction “at the expense of handicapped persons” is a very serious one and could undermine the general
credibility and moral standing of both accused persons. I therefore asked Mr Browder many tough questions.
The detailed and well-documented replies received have gone a long way to convincing me that Hermitage
did not violate the law. This was also confirmed by an audit carried out by the competent tax authorities in
2003 and by the closure in 2005 of an earlier criminal case opened in 2004 by the Kalmykian authorities for
“lack of any crime”.29
62. During my second visit to Moscow in May 2013, the representatives of the Prosecutor General’s Office
handed me a large volume of documents purportedly showing that in another tax audit performed in 2004 the
authorities had come to the conclusion that Hermitage’s Kalmykian subsidiaries had after all underpaid their
taxes and that in subsequent court cases, in which Sergei Magnitsky had appeared on behalf of Hermitage’s
subsidiaries, their appeals against the result of the new tax audit were rejected by the Kalmykian arbitrage
courts. But these documents do not change my legal assessment of this case. The “repeat audit” of
31 December 2004 was taken into account and referred to in the 2005 decision to close the criminal case for
“lack of any crime”. Furthermore, according to the representatives of Hermitage Capital, with whom I
discussed these documents upon my return from Moscow, Hermitage had not been informed of the purported
new “repeat” tax audit at the time, whilst the law requires that the directors of the audited firms must be
informed of the audit conclusions. Subsequently, the Russian Constitutional Court ruled that such “repeat
audits” are unconstitutional as they were repeatedly used to harass and “destabilise” taxpayers.30 According
to Hermitage, the “repeat audit” (contrary to the full tax audit of Dalnaya Step concluded nine months earlier,
in March 2004) even lists the wrong persons as directors. This raises their suspicion that these documents
were not produced at the time indicated in their dates.31
63. The assessment of the use of this legal tax incentive from an ethical or moral standpoint depends to a
large extent on the weight one is prepared to attach to the economic context and the social and political
choices made at the time by the Russian Government. The 1991 Law on “Corporate Tax of Enterprises”,32
which foresaw a reduction of the tax rate from 11% to 5.5% on condition that at least 50% of the company's
employees were disabled, was passed in traumatic circumstances. The State was practically bankrupt and
was unable for some time to pay the salaries of teachers and policemen, let alone pensions and social welfare
payments for handicapped people, even war veterans. The legislator, instead of funding such vital expenses
by general tax revenue, whose collection became increasingly difficult because of the general economic and
financial crisis in Russia at this time,33 apparently tried to “privatise” assistance to handicapped people by
promising tax advantages to companies paying them living wages. I do not think that this was a very good
idea, in terms of costs and benefits: in the case of Hermitage’s Kalmyk subsidiaries, for example, it cost the
State US$3 million in tax reductions to obtain the payment of wages to five handicapped persons and one
non-handicapped “manager” for one year. Not surprisingly, therefore, the law was subsequently changed (as
of 1 January 2002) once the State was again able to pay out salaries, pensions and welfare entitlements. But
the tax incentive in question was still in legal force in 2001, and the management and advisers of Hermitage
Capital34 saw no reason to deprive their shareholders and investors of its benefit. With the benefit of
hindsight, this does not look very elegant, but to the credit of Hermitage it should be stressed that they kept
the handicapped people on the payroll for a considerable time even after the tax break was abolished.35
29. I have received copies and translations of the relevant official documents and correspondence from Hermitage.
30. See judgment of 17 March 2009 (in Russian).
31. During my second visit to Moscow, I also received documents from the Prosecutor’s Office concerning bankruptcy
proceedings in Kalmykia against Dalnaya Step, one of Hermitage’s Kalmykian subsidiaries. These documents also appear
to be irrelevant for the criminal case against Mr Magnitsky. In short, Hermitage had decided to move their Kalmykian
subsidiaries back to Moscow after the abolition of the favourable regional tax regime. The Kalmykian authorities
administratively resisted the change of registration, and a closure would have been even more cumbersome. Hermitage
therefore sold the company’s assets and transferred the empty shell to a local service provider for liquidation in due
course. The service provider may well have abused the company for fraudulent activities, of which Hermitage had only
been informed years later, precisely at the time when they started being “framed” by the authorities, as they see it.
32. Federal Law No. 2116-I of 27 December 1991.
33. The price of oil, an important source of revenue for Russia at all times, was at a record low, at less than a tenth of
recent levels.
34. Including Arthur Anderson and Firestone Duncan.
17

 Doc. 13356 Report

iii) Unusual circumstances of the (re-)opening of this criminal case
64. The tax evasion accusations are suspect also in light of the peculiar circumstances of the (re-)opening
of the criminal case, which had been opened in 2004 on the basis of an FSB report and closed for “lack of any
crime” on 5 May 2005.36 Mr Browder showed me copies of internal flight records which establish that, on
26 February 2008, Ministry of Interior investigator Karpov and two subordinates of Lt. Col. Kuznetsov, as well
as an FSB official, travelled to Kalmykia, just three weeks after one of the complaints made by Hermitage
about the theft of their Russian investment companies, naming Mr Karpov and Mr Kuznetsov as suspects, led
to the opening of a criminal case on 5 February 2008. One of the Russian lawyers working for Hermitage
subsequently obtained confirmation from the Kalmyk official who had been in charge of the 2004/2005
criminal case that the officials who had flown in from Moscow had instructed him to re-open the case despite
there not being any new evidence, on account of the “deterioration of relations between the Russian
Federation and the United Kingdom”. The flight records show that Mr Karpov and his colleagues returned to
Moscow as soon as the case was re-opened.
iv) Statute of limitations
65. Legal pursuits for any tax underpayments concerning 2001 would also appear to be time-barred: the
limitation period of three years for purposes of correcting the amount of taxes due ended at the end of 2004,
and the 10-year statute of limitation for criminal prosecutions at the end of 2011. Consequently, the formal
indictments dated 22 March 2013 and the posthumous trial against Sergei Magnitsky and the trial in absentia
against Bill Browder appear to violate Russian law.
v) Continuation of the prosecution of Sergei Magnitsky post mortem
66. The case against Sergei Magnitsky is being pursued after his death, even at the trial stage. According
to Russian law, which was explained to me in some detail in Moscow by the former Vice-President of the
Constitutional Court of the Russian Federation, Ms Tamara Morshchakova, posthumous trials are only
allowed at the request of the suspect’s family, for purposes of rehabilitation. As Ms Morshchakova said, “if
posthumous prosecutions were allowed, responsibility for a lot of crimes would just be assigned to dead
people”. Both Sergei Magnitsky’s widow and his mother have vigorously protested against the posthumous
prosecution and trial, publicly37 and in their meetings with me, because they do not believe that there is any
chance of justice being done – especially as long as the same investigators, who had Sergei Magnitsky
arrested and are in their view responsible for his death in detention, remain in charge: “they have a vested
interest that Sergei is found guilty in order to escape responsibility for their own crimes”, said his widow.
67. During my second visit to Moscow, I received copies of the court decisions refusing Ms Magnitskaya’s
appeal against the decision of the Prosecutor General’s Office to reopen the case against Mr Magnitsky.
These decisions by the Ostankinsky District Court in Moscow and the Moscow City Court seem to violate
Russian law as explained by the former Vice-President of the Russian Federal Constitutional Court.
vi) Conflict of interest issues
68. Regarding the conflict of interest issue alluded to by Sergei Magnitsky’s widow with respect to the
persons put in charge of the pursuit of the trial post mortem, I was told by the representatives of the Interior
Ministry and of the Investigative Committee during my first visit in Moscow in February 2013 that
Mr Kuznetsov and Mr Karpov did not have a conflict of interest because they had been involved in the original
investigation concerning Mr Magnitsky only at the early stages of the procedure and because the accusations
Mr Magnitsky made against them were “not serious”. On the occasion of the same visit to Moscow, I asked
Ms Morshchakova and Ms Mara Polyakova, the Chair of the Russian Presidential Human Rights Council’s
Committee of Independent Experts, which had provided an expert analysis of the case of Sergei Magnitsky for
the Human Rights Council, for their opinion. Both stressed that Russian law, in line with the standards of the
European Convention on Human Rights, requires that criminal investigators must be taken off a case when

35. I was given a list of the names of the five handicapped persons and the non-handicapped manager from the
Afghanistan War Veterans Association hired to co-ordinate their work, including the start and end dates of their
employment showing that they were on the payroll for 2-4.5 years, well beyond the time during which the tax break was
claimed, that is to say only for the year 2001.
36. I was given copies of the order dated 4 October 2004 by Lt. Col. D.D. Nuskhinov to open criminal case No. 401052,
which refers to a report from a “senior operative” of the FSB and of the order by the same senior investigator of 5 May
2005 to close the case “for lack of a crime”.
37. See paragraphs 154-156 below.
18

 Doc. 13356 Report

they find themselves in a conflict of interest situation. The contrary position taken by the authorities was
clearly against the law. Investigators Kuznetsov and Karpov had previously been denounced by Sergei
Magnitsky in the criminal complaints by Hermitage, which he had prepared, of being personally involved in the
very crime they were put in charge of investigating and which they now try to blame on Mr Magnitsky and his
clients. They were presently accused of being responsible for the death of Mr Magnitsky in pretrial detention
and could not possibly be seen to be unbiased and neutral investigators in the same case.
69. I agree with Ms Morshchakova and Ms Polyakova. In particular, it cannot be said in earnest that the
accusations against the investigators in the complaint were “not serious” – the 245-page complaint addressed
simultaneously to the Russian Prosecutor General, the Head of the Investigative Committee and the Head of
the Interior Ministry’s Internal Security Department on 3 December 2007 presented ample details and
supporting documentation, which should have at least sounded the alarm bells. A criminal case was indeed
opened in response to these complaints, on 5 February 2008. This is precisely where the conflict of interest
began: the investigators accused of complicity in the complaint were put in charge of the investigation, and
placed their accuser, Sergei Magnitsky, in pretrial detention.
70. Mr Magnitsky’s own statements in the months and weeks preceding his death in detention on
19 November 2009 complete the picture: on 11 September 2009, he accused the investigators of “organised
physical and psychological pressure”;38 on 14 October 2009, he pointed out their “vested interest in stopping
my activity related to assistance to my client in the investigation of these crimes … which became the reason
for my persecution”;39 on 11 November, he wrote: “I intend to bring to justice those who are responsible for it
[the falsification of case materials]”;40 and finally on 12 November, he wrote “Investigator Silchenko does not
want to investigate those behind the [US$230 million] theft, but wishes for me to stay behind bars and other
lawyers outside the country”.41 One week later, Sergei Magnitsky died behind bars.
71. Were these not “serious” accusations, which put into doubt the objectivity of the investigators in
question? The competent Russian authorities do not seem to think so.
72. In November 2012, the lawyer for Natalia Magnitskaya filed another conflict of interest complaint with
the Russian Prosecutor General and the Russian State Investigative Committee pointing out the threat to
victims and witnesses arising from the decision of the Investigative Committee to grant unlimited access to
files of the ongoing investigation into Mr Magnitsky’s death to the same Interior Ministry officials who stand
accused of having been involved themselves in the crimes investigated by the Investigative Committee.
2.2.3.2. Did Sergei Magnitsky aid and abet the fraudulent reimbursement of US$230 million in
taxes paid by Hermitage?
73. The second main accusation against Sergei Magnitsky, as well as Bill Browder, is that they were
themselves the “criminal masterminds” behind the US$230 million tax reimbursement fraud, which they had
denounced in detailed complaints addressed to the highest Russian law enforcement authorities.
74. When I met with the representatives of the authorities in Moscow in February 2013, I was informed that
there were two main elements of proof against Mr Magnitsky and Mr Browder: 1) a handwritten “scheme”
drawn up by Mr Magnitsky showing the complex “structure” of the criminal conspiracy and designating himself
as its organiser, which was seized during a search of Mr Magnitsky’s private apartment; and 2) the testimony
of Mr Victor Markelov, who had been convicted on 28 April 2009 for having carried out the US$230 million tax
reimbursement fraud and sentenced to five years’ imprisonment, and who had accused Mr Magnitsky of
having organised this crime. They dismissed the allegation that the persons accused by Hermitage of having
fraudulently re-registered the three “stolen” Hermitage investment companies (Rilend, Parfenion and
Makhaon) must have had the original company seals in their possession (which had indeed been seized by
the accused Interior Ministry investigators during their search of the offices of Hermitage Capital and their
lawyers, Firestone Duncan42): duplicates of the seals could have easily been reproduced, and would not have
been distinguishable from the ones used in the re-registration of the companies.

38. Translation of a complaint by Mr Magnitsky addressed to Prosecutor General Chaika, filed by his lawyers.
39. Translation of a handwritten complaint by Sergei Magnitsky dated 14 October 2009.
40. Translation of a handwritten complaint by Sergei Magnitsky dated 11 November 2009, copy filed with the court by
Mr Magnitsky’s lawyers on 13 November 2009.
41. Translation of a handwritten complaint by Sergei Magnitsky dated 12 November 2009.
42. See paragraph 28 above.
19

 Doc. 13356 Report

75. During my second visit to Moscow, I was also given copies of judgments allegedly showing that the
arbitrage courts had recognised that Hermitage’s companies had in fact not been not “stolen” from them, but
sold by Hermitage themselves to the company (“Pluton”) owned by Mr Markelov, who was already convicted
for involvement in the US$230 million tax reimbursement fraud.
76. The representatives of Hermitage in London provided me with information, supported by documents, for
the purpose of establishing that the true criminals were the “Klyuev group”, which included the Ministry of
Interior Investigators Lt. Col. Artem Kuznetsov and Major Pavel Karpov.
77. The representatives freely admitted that Hermitage had reserve copies of the company seals seized
during the raid in June 2007 – otherwise they could not have continued their compulsory tax and other
statutory filings with the authorities. They insisted that this was standard practice.43 But they stressed that in
order to effect any change in the ownership of a company, and even a change of address, not only the
company seals were needed, but also the originals (not: photocopies, even certified ones) of the founding
documents of the company (the company charter, the certificate of registration with the state company registry
and the certificate of registration with the tax authorities). These originals, concerning Hermitage’s Russian
investment companies Rilend, Parfenion and Makhaon, had been seized by the Interior Ministry investigators
named in Hermitages’ criminal complaints and were in their custody at the time when they must have been
used for the fraudulent re-registration of the companies in the name of their new “owner” and new “directors”
(all with previous criminal records) to new tax offices (which would then approve requests for tax refunds
totalling US$230 million submitted by the new “directors” in one day).
78. Regarding the handwritten “schemes”, there could be no doubt that Mr Magnitsky drew up some
graphical visualisation of the fraudulent scheme that they had asked him to investigate. Whilst the
representatives of Hermitage had never seen a copy of this document, it did not appear plausible that
Mr Magnitsky would denounce a scheme in which he himself was a participant.44
79. Regarding the arbitrage judgments in question, they showed to the contrary that the theft had been
recognised as such by the only Russian court which had dealt with the substance of the issue, namely the first
instance arbitrage court. The second and third instance failed to address the substantive issue because of a
procedural trick used by the “company thieves”.45
80. The testimony I heard in London of two Russian lawyers, Edward Khareitdinov and Vladimir Pastukhov,
who had worked on this file, together with some additional factual elements concerning the actors of the tax
reimbursement fraud and their “modus operandi” pointed out by the representatives of Hermitage, tend to
underpin this version of the facts.
i) The story of Edward Khareitdinov
81. Edward Khareitdinov46 was hired as an independent lawyer by Hermitage after the search-and-seizure
at their offices in June 2007 in order to defend Mr Cherkasov against the accusations linked to the “Kameya”
case (see point 2.2.1 above – this case had provided the justification for the above-mentioned search-andseizure raids). I had separate, lengthy meetings with him in London in February 2013. Here is his account of
the events that ended up disrupting the comfortable life of a “society lawyer” he had enjoyed before:47
“I soon realised that the “Kameya” allegations were groundless. Repeated requests for clarification I
had made with investigator Karpov and his colleagues had remained unanswered, properly, for about
six months. I had become the main “channel of communication” between Hermitage and the authorities,
and worked in close co-operation with Sergei Magnitsky, of Firestone Duncan, whose professionalism I
held in great esteem. In October 2007, Hermitage received a “mysterious” telephone call from a bailiff in
43. This was confirmed by a senior executive of the Novaya Gazeta newspaper in Moscow.
44. I asked the Russian authorities for a copy of this document, and for any evidence they may have that the scheme
was actually drawn up before the crime was committed. I have not received such documents.
45. In brief, “Pluton” had re-sold the three Hermitage companies to another company, “Boily Systems”, registered in the
British Virgin Islands. After Hermitage obtained an injunction against “Boily” in the BVI courts, the proceedings before the
Moscow arbitrage court were successful until “Pluton” (which should normally not have been recognised as having legal
standing to do so after selling the companies to “Boily”) appealed the arbitrage court judgment. The appeal was successful
on the basis of the argument that since the (suspicious) liquidation of “Pluton” and subsequently, of the three Hermitage
companies, the lawsuit had become “without object” – ignoring the fact that “Boily”, the defendant in the original case, still
existed.
46. A former criminal investigator (from 1984 to 1987) and Moscow judge (from 1987 to 1992), member of the Moscow
Bar since 1993.
47. Based on my summary of the meeting, approved by Mr Khareitdinov.
20

 Doc. 13356 Report

St Petersburg, who asked about one of Hermitage’s companies. The company had never been to court
in St Petersburg before. This call had prompted Sergei to immediately check Firestone Duncan’s
mailboxes, where he found correspondence addressed to the Hermitage companies, including claims
for damages against them.
I received power of attorney from the true (HSBC) directors of Hermitage’s three Russian companies48
and took the overnight train to St Petersburg on 18 October 2007. When I came to the Arbitrage Court
and inspected the relevant files, I was shocked to learn that the court had decided everything on the
basis of simple photocopies. The claims had been filed by a Mr Strazhev, whose passport details
(presented to the St Petersburg court) were invalid, as I was able to confirm immediately with the
immigration service. I also saw in court records powers of attorney issued by unknown persons
authorising unknown lawyers to defend Hermitage companies in court against multi-million dollar claims
However, instead of defending the companies, the lawyers had accepted all claims against the
companies they purported to defend, without any objection. Given the large amounts of the claims and
the fictitious and/or unknown identities of the persons involved, it all indicated a large-scale fraud.
Sergei made a request to the Russian Companies House (companies registry) and discovered that
changes had recently been made in the Registry, and new individuals were entered as the companies’
owners and directors. Sergei explained to me that such substantial changes to the Registry could not
have been effected without the original certificates that had been seized by the Interior Ministry in the 4
June 2007 raids. We also noted that while changes naming new directors were made in the Registry in
September 2007, these “new directors” issued powers of attorney authorising lawyers to appear in the
St Petersburg court even before that, already in August 2007. At this point I understood that the judges,
the advocates appearing for both sides in this lawsuit, and investigators Karpov and Kuznetsov were
involved in a crime against my client.
At a meeting with investigator Karpov on 29 November 2007, concerning the “Kameya” case, I asked
Mr Karpov whether he knew that in the St Petersburg arbitration court, copies of documents were used
that he had had in his custody since the “Kameya” search and seizure raids at the Firestone Duncan
and Hermitage offices. Mr Karpov immediately became white and told me it was Kuznetsov’s initiative.
He didn’t say so verbally, but opened his laptop and typed several sentences to the following effect: “it
is not my case, Kuznetsov is demanding that a number of other people are added from Firestone
Duncan and Hermitage”.
A few days after this conversation, we had prepared a criminal complaint of some 250 pages including
appendices, one copy dated 3 December 2007 was sent to the Prosecutor General, Mr Chaika, and the
Head of the Investigative Committee, Mr Bastrykin, and one dated 6 December 2007 to the Head of the
Department of Investigation of the Ministry of the Interior, Mr Draguntsov.49 The reply from
Mr Draguntsov’s office, of two short paragraphs, was that the investigation of the alleged impropriety of
Interior Ministry officers was not their remit. The Prosecutor General’s Office merely forwarded the
complaint to the Moscow branch, which in turn forwarded it to the Interior Ministry. Mr Bastrykin’s office,
where I had also filed a complaint against the St Petersburg judges involved in the fraudulent case,
forwarded this complaint to its St Petersburg branch, which refused to open a case, but kindly informed
me that they had also refused to open a case for libel against me.50 Two of the six complaints were
sent for investigation to Mr Karpov, who had been named as a suspect. Mr Karpov then summoned me,
an attorney who had filed on behalf of his client an application seeking to investigate Mr Karpov, for
questioning as a witness – a gross violation of Russian law, but my complaint in relation thereto was
rejected. A case on the theft of the companies was only opened on 5 February 2008, 60 days after the
complaint, instead of the standard three to maximum ten days required by law. Complaints on behalf of
Hermitage were filed three weeks before the US$230 million budget theft occurred, on 26 December
2007. The delay gave the criminals ample time to launder the money – as we now know, the last
transfer out from Mr Klyuev’s Universal Savings Bank, which had received the fraudulent tax
reimbursements, was made on 4 February 2008, a day before a case in response to Hermitage’s
complaint was finally opened.
This was followed by an elaborate plot to undermine Hermitage and the lawyers working for them. On
27 February 2008, the ‘Kalmykia case’ [see point 2.2.3.1 above] was opened, and on 4 May 2008, the
Interior Ministry sought to initiate a case against me and fellow lawyer Vladimir Pastukhov for allegedly
48. He showed me the bilingual (Russian/English) affidavits signed by Paul Wrench and his colleagues affirming that they
were the directors of the companies concerned (Rilend, Parfenion and Makhaon) and gave power of attorney to
Mr Khareitdinov.
49. He showed me various receipts establishing that these complaints were deposited by him personally.
50. Mr Khareitdinov showed me the letters mentioned and their translations into English.
21

 Doc. 13356 Report

acting with a false power of attorney – on the initiative of Mr Droganov, a subordinate of Mr Kuznetsov.
Mr Kuznetsov approved this ‘crime report’ suggesting that we did not have genuine powers of attorney
when making filings with courts and government bodies seeking to defend our client against the fraud in
complaints naming Mr Kuznetsov and Mr Karpov for abetting the fraud against our client. This was five
months after I had filed the first complaints on behalf of Hermitage naming Mr Kuznetsov as a suspect
in the fraudulent activity and seeking his investigation. I am now wanted for having acted on behalf of
the companies’ true owners and fighting against false liabilities used in a fraud against the State
budget! Under this proceeding, Kuznetsov and other officers who persecuted me for my professional
activity and my association with the ‘wrong’ client, claimed that only the fraudulent directors – Mr
Markelov, Mr Kurochkin and Mr Khlebnikov – had the right to issue me with ‘lawful’ powers of attorney
to fight the fraud against themselves. Despite the absurdity of this proposition, the criminal case against
me remains open.
By mid-summer 2008, we had understood that the scheme was all about stealing the taxes Hermitage
had paid the previous year. It was actually Sergei Magnitsky who first figured out that the sum of the
damages judgments against the three Hermitage companies in the different courts (the equivalent of
about US$1 billion) roughly added up to the total of the companies’ 2006 profits, and we therefore came
to realise that the ‘empty’ companies stolen from Hermitage had been used to steal the taxes paid by
them previously.
This was explained in much detail in a new set of criminal complaints dated 23 July 2008 filed on 25
July 2008 with the heads of all relevant law enforcement bodies as well as the Audit Chamber, the Tax
Ministry and the Central Bank. We received no reply for six weeks, except from the Audit Chamber,
which informed us that they were not competent for dealing with the complaint about the US$230
million theft from the Russian budget.
Strangely, on 20 August 2008, in my absence and in breach of the legal rules protecting lawyers and
granting them special status, Ministry of Interior officials searched my office and immediately seized a
DHL package, which had just been delivered, the purported sender being the London office of
Hermitage. My secretary said that she had put the package on my desk unopened. Mr Cherkasov (a
Hermitage executive) told me that it was most unusual that such a package be sent to me, as
Hermitage’s London office would have sent any documents concerning their Russian companies to
Mr Magnitsky at Firestone Duncan. The two men who sent the package were captured by CCTV at the
DHL depot in London, carrying Russian-print plastic bags. The London police, at Hermitage’s request,
had established that they were not employees of Hermitage.51 I was not informed of the content of the
package. But soon thereafter, I read in the newspaper that in a police search of Edward Khareitdinov’s
law office, compromising materials concerning the fraudulent re-registration had been seized. Later,
from the list of items composed by the Interior Ministry, I found out the contents of the package, which
allegedly included some original documentation of the companies that we had asked for in the process
of chasing after the stolen companies, which had been moved first from Moscow to Novocherkassk (in
southern Russia) and then on to Khimki (in the Moscow region). The Khimki tax office had informed us
that they had never received all the documents, whereas the Novocherkassk tax office informed us that
their Moscow colleagues had sent some documents to them, but that these were only blank sheets of
paper. Some of these ‘lost’ original company documents apparently ‘turned up’ in the DHL package
from London. To me, the whole DHL package episode was a clumsy attempt to ‘frame’ me and my
clients. According to my secretary, the officials who came to search my office knew exactly what they
were looking for. They had obviously tracked on DHL’s website the progress of the package their
accomplices had sent from London.
Following my complaint, the Moscow and International Bar Associations protested against the search of
my law office, whereas Mr Gordievsky of the Investigative Committee opened the above-mentioned
criminal case against me on the basis of Mr Kuznetsov’s report alleging that I acted on a ‘false’ power
of attorney, despite evidence to the contrary, including examinations confirming that the signatures and
stamps on the powers of attorney issued to me were genuine and in spite of the affidavits from my
clients who issued me the powers of attorney confirming they had indeed had done so in good faith. My
application to the European Court of Human Rights against the unlawful decisions taken in this respect
by the Russian courts, up to the Russian Supreme Court, is still pending.
At the end of August 2008, just a month after the complaints seeking to investigate the US$230 million
theft had been filed, all lawyers working for Hermitage were practically under siege. In addition to the
search of my law office and police summonses, I noticed surveillance. My wife received threatening

51. I was given copies of the footage and the statement by the London police.
22

 Doc. 13356 Report

phone calls. In October 2008, I travelled to London and discussed the situation, including the ongoing
fraud and attempts to frame me, with Mr Browder and other members of the Hermitage team. Taking
into account all information and events that had occurred it was clear that it would be dangerous for me
to return to Russia to continue to fulfil my professional duties.
On 27 October 2008, the HSBC-appointed Hermitage director wrote another complaint to Russian
General Prosecutor Chaika, reiterating the facts about the criminal conspiracy – the frauds against
Hermitage and the Russian treasury and the ongoing attempts to liquidate the stolen Hermitage
companies and conceal the fraud. The complaint also raised specific complaints about the harassment
of all lawyers who acted for Hermitage in Russia defending it against the fraud, including illegal
searches of the lawyers’ offices, summonses for questioning and baseless criminal proceedings. The
complaint explained why the evidence provided by Mr Markelov, previously convicted for manslaughter
and arrested for unlawful activity, on which the Russian authorities based their allegation in targeting
Hermitage lawyers, was wholly unreliable. Finally, it posed a series of questions to assist with the
investigation of the criminal conspiracy and seizing and preserving evidence. The complaint was never
properly responded to.”52
ii) The story of Vladimir Pastukhov
82. Vladimir Pastukhov, a Ukrainian-born, soft-spoken intellectual with severely impaired eyesight, was a
lawyer and professor of political science in different institutes of the Russian Academy of Science (Institute of
Comparative Political Studies, Institute of Latin America, Moscow State University High School of Economics
and others) and recently became a Fellow of St Anthony’s College at the University of Oxford. As a “starving
scholar” in the mid-nineties, he joined the Moscow Bar and took on some legal work, including public-interest
litigation sponsored by the European Union’s TACIS programme in the Centre of Constitutional Legal
Defense. In that context, he came across Hermitage, one of Russia’s “most active shareholders”. Around
2003, he successfully defended Hermitage’s Vadim Kleiner against a lawsuit by Sberbank. He represented
minority shareholders’ interests (including Hermitage) in a lawsuit about the treasury shares of
Surgutneftegaz. Mr Pastukhov also acted as a legal and strategic adviser for numerous high-level political and
business institutions and public figures, including the Chairperson of the Constitutional Court and was a
consultant at the State Duma. I spoke with him at length in London, in February 2013. Here is his account of
events:53
“At the end of 2005, Hermitage Capital asked me for help concerning the cancellation of Bill Browder’s
visa. I noted that this matter should be resolved at the highest political level and no progress could be
achieved at that time. In June 2007, Hermitage contacted me again, asking for advice following the
search-and-seizure raids that had just taken place. I was to be the ‘strategic thinker’ to analyse and coordinate the output of the lawyers dealing more directly with the cases. I soon found that there was a
huge gap between the accusations of tax evasion and the Russian tax authorities’ own position that
there was in fact no problem with the tax payments. I explained to the representatives of Hermitage that
under Russian law, it is only for the tax authorities to evaluate tax issues. The first time I heard about
the theft of the Hermitage companies was sometime in mid-October 2007, in a telephone call when I
was in Helsinki at a conference with constitutional lawyers. The further fateful engagement in this case
partly destroyed and partly rebuilt my life.
Hermitage told me about the fraudulent re-registration of Hermitage’s Russian companies, and the
strange lawsuits against them. My advice was: 1) file a criminal complaint; 2) start civil litigation to
reverse the fraudulent re-registration and the fake judgments; 3) immediately send a lawyer to
St Petersburg to investigate what happened; and 4) hold a press conference. Unfortunately, only the
first three pieces of advice were followed – the western lawyers involved advised against going public at
this stage. When my colleague Edward Khareitdinov returned from St Petersburg, reporting that the
claims for damages had obviously been fraudulent, we were shocked, but we did not feel threatened.
We did not feel threatened because we didn’t understand what was happening. Nobody could have
imagined at that time what was the real purpose behind the theft of the companies and the fraud
against them – we just thought that someone had bribed the court in order to plunder the stolen
companies’ assets. No one doubts that In Russia, hundreds of thousands of cases are decided each
year by the courts without any bribes. At the same time, there is a system of ‘parallel justice’, which is
partially controlled by the government and provides judgments ‘on demand’. But some things in this

52. Mr Khareitdinov showed me a number of documents corroborating his “story” and a copy of the 27 October 2008
complaint to Mr Chaika.
53. Based on my summary of the meeting, approved by Mr Pastukhov.
23

 Doc. 13356 Report

case looked very strange. By that time, the Hermitage companies had sold practically all their assets. At
that time, the estimated rate for a bribe needed to obtain such an extraordinary fake court judgment
could be the equivalent of about US$1 million.54 Why would someone ‘invest’ so much money in this
affair? Only later did we understood the real purpose pursued by the companies’ thieves and see that
the strange judgments, which were still under appeal, had been accepted by the tax office as a basis for
the reimbursement of the taxes Hermitage had paid on the profits purportedly annulled by the damages
claims. Even then we were still under the naïve impression that this was just a ‘local, limited criminal
conspiracy’ which could not go to the top. It was our biggest mistake at that time. We underestimated
the threat to ourselves and relied too much on the anticipated positive reaction from the high authorities
to which we had made our extraordinary disclosure.
We had to act fast: around the new year 2007/2008, the cover-up had started; the stolen companies
were moved away from Moscow, we needed to regain control and understand what had happened with
them. On 29 January 2008, we launched a court case to return the companies to Hermitage, having
received power of attorney from their real directors, at HSBC. As part of the claim, we requested the
court to disclose files of the stolen companies from the tax offices (it would have shed some light on the
story of their fraudulent re-registration). But a few days later we were informed that on 30 January 2008
– the day after our court application was filed! – all requested files of the stolen companies had been
‘lost’ by the tax office. On 5 February 2008, a criminal case was finally opened, following our complaint
filed in December 2007. We were quite naïve, considering this as a partial victory. But later it turned out
that the case was actually targeting us. At the end of the same month, after an old criminal case against
Mr Browder concerning purported tax evasion in Kalmykia was reopened on 27 February 2008, I
started to understand that we had encountered a much more serious problem than we had first
suspected. The resources used against Hermitage were disproportional and exceeded everything I had
come across before in my professional life.
Between December 2007 and March 2008, the fabricated judgments in St Petersburg against the
stolen companies were annulled upon our appeals. The appeals court judges, made aware of our story,
were wide-eyed and shocked by the decisions made by their colleagues from the first instance courts.
To our surprise, at this stage, there was no resistance to our work in the court from the criminals.
Nobody from their side appeared in court and we easily obtained judgments reversing the fraudulent
multi-million dollar awards. This only strengthened our illusions about the localised nature of the fraud.
But on 24 March 2008, we met in the St Petersburg court a young lady who claimed before the court
that she alone was mandated to act on behalf of the Hermitage companies, whereas Mr Khareitdinov’s
and my own powers of attorney were ‘fake’. But the court did not support her assertion and issued a
decision in our favour. Around the same time, more identical fraudulent decisions in other regional
arbitrage courts against Hermitage companies were uncovered. It became clear that Hermitage needed
a bigger team of lawyers who could handle all this litigation. That was why new lawyers stepped into the
case, and I reverted to my previous role as a “strategy advisor”. In July 2008, when I was on another
trip to St Petersburg, I received a call from Hermitage asking me to come to London, as they had found
through the analysis done by Sergei Magnitsky of the documents obtained by the lawyers, that the
company thieves had stolen the taxes paid by Hermitage. After another examination of the evidence,
Hermitage finally went public.
In mid-August 2008, just a few days after my return from medical treatment in Munich, I received phone
calls from a number of lawyers, including Mr Khareitdinov, who said that their offices had been “visited”.
I was still not too worried. But then I was summoned for interrogation at the police station in Kazan
(Tatarstan), on a Saturday evening. The Kazan police station is notorious for rapes and beatings. As I
was not a specialist in criminal law, I decided to discuss this with Edward Khareitdinov. I accepted his
advice, warning me that I would probably end up spending the weekend there in custody (because I
wouldn’t be able to call for assistance before Monday). I also knew that police interference with the
duties of an attorney and the attempt to question an attorney about their professional advice and the
circumstances of the case were illegitimate, and my rights were protected by the Law on attorneys and
their activities. So I didn’t go to Kazan, and instead called the investigator in Kazan, explaining that
Russian law prohibits the questioning of a lawyer concerning his client’s case. I have a transcript of this
conversation, in which the investigator said that he “did not care about this law”. He also refused to
meet me in Moscow, where I was based. The stress during this period provoked the detachment of my
retina. I underwent medical treatment abroad and after that I went for a further consultation to London,
where I also discussed with Hermitage the next steps to be taken in defence against the fraud Bill

54. Mr Pastukhov handed me the printout of a “price list” for bribes required for different types of official acts published on
the Russian Internet and a report by the Center for Studies of Regional Problems.
24

 Doc. 13356 Report

Browder had kept calling me about, urging me to leave Russia. But that was not so easy for a man in
my position. Mr Browder failed to persuade me. But he found in London one of my old Russian friends
whose opinion was very important for me and briefed him about the situation. That worked. In London I
found out that a criminal case had been opened against me for “use of a false power of attorney”. I
succeeded in having this case closed again,55 contrary to Mr Khareitdinov, who had done exactly the
same as I – acting for the true owners against the company thieves. But I still prefer to stay in London
for the time being.”
iii) Other factual elements concerning the actors and the modus operandi of the US$230 million tax
reimbursement fraud
– The suspiciously fast approval and disbursement of the tax refund
83. On 21 and 24 December 2007, the newly registered directors of the stolen Hermitage companies
Rilend (Mr Kurochkin), Parfenion (Mr Markelov), and Makhaon (Mr Khlebnikov) filed requests for refunds of
the equivalent of US$230 million of taxes previously paid by Hermitage with the Moscow tax offices Nos. 25
and 28, where these companies had been re-registered earlier by Messrs. Markelov, Kurochkin and
Khlebnikov. These “directors” requested from the tax authorities the refund of the equivalent of US$230 million
to accounts opened by Messrs Markelov, Kurochkin and Khlebnikov less than two weeks before the
application, in two small Moscow banks: Intercommerz and Universal Savings Bank. The tax refund
applications claimed that losses equivalent to US$973 million cancelled out the previous year’s profits of the
same amount.56 Despite the fact that some of the judgments granting these damages had not yet come into
legal force and some were already under (ultimately successful) appeal, the refunds, amounting to the largest
tax refund in Russian history, were approved within one day of the application, and paid out only two days
later.57 Before making the refund, the tax authorities had inquired with the Moscow Branch of the Interior
Ministry about the applicants and received confirmation of the existence of the legal entities and their
relationships.58 Just three weeks earlier, the Interior Ministry had received the first detailed criminal complaint
by Hermitage about the fraudulent re-registration of their companies, which could only have been achieved
using original corporate documents that were in the custody of the previously named Interior Ministry
investigators at the relevant time. The complaints named Mr Markelov as the new, unlawful owner, through a
holding company (“Pluton”) registered in Kazan (Tatarstan), which was fraudulently registered as the 100%
owner of all three Russian Hermitage companies (Rilend, Parfenion and Makhaon). They also pointed out that
the three new “directors” (MM. Kurochkin, Mr Markelov and Mr Khlebnikov) all had serious criminal records,
including manslaughter, burglary and theft. The Interior Ministry nevertheless gave the confirmation requested
by the tax office.59

55. Mr Pastukhov explained to me off the record how he achieved this.
56. Rilend’s 2006 profits stood at the equivalent of US$321 million (taxes paid: US$75 million), Parfenion’s at US$581
million (taxes: US$139 million) and Makhaon’s at US$71 million (taxes: US$16 million). The collusive lawsuits referred to
by Mr Khareitdinov and Mr Pastukhov (see paragraphs 81 and 82 above) before the arbitration courts in St Petersburg
(against Makhaon, by “Logos Plus”), Moscow (against Rilend, by “Instar”) and Kazan (against Parfenion, by “Grand
Active”), added up exactly to each defendant’ profits of the previous year, plus an identical lawsuit against Rilend by Logos
Plus in St Petersburg and several other, smaller lawsuits. I was shown translations of extracts from the courts’ records
including the judgments and statements from Mr Andrei Pavlov, purporting to act for Rilend, confirming that the defendant
understands the charges, does not have any objections and fully accepts the claims Judge Orlova, of the St Petersburg
arbitration court, in the Logos Plus claim against Parfenion, is on record as having stated that the acceptance of the claim
by the defendant releases the plaintiff from the requirement to prove the case. Extensive details of these court cases and
the circumstances of the alleged “company theft” is provided in the “Formal criminal complaint” of 5 June 2008 addressed
to the Cypriot law enforcement authorities (available from the secretariat), pp. 9-28.
57. Source: bank records obtained by Hermitage, Russian Central Bank Data Base.
58. According to a statement made on 29 July 2008 by Olga Viktorovna Tsymai, Head of Audits Division No. 1 of
Moscow Tax Inspection No. 28 (source: materials from case No. 3/3-560/2008 at the Vakhitov Court in Kazan, obtained
and translated into English by Hermitage).
59. Ibid.
25

 Doc. 13356 Report

– The mild sentence imposed on Mr Markelov
84. On 24 January 2009, Mr Markelov came to
up for the theft of $230 million from the budget
Mr Markelov gave evidence to the Interior Ministry
from a Mr Gasanov. In particular, in his testimony
said:

the Russian Interior Ministry in Moscow and gave himself
that occurred a year before. In January-February 2009,
“admitting his guilt”, stating that he acted under instruction
to the Interior Ministry on 25 February 2009, Mr Markelov

“I opened a bank account in Russian rubles for OOO Parfenion in CB “Intercommerz” ... The account I
opened under instruction of O.G. Gasanov. The documents necessary to open an account for OOO
Parfenion in CB “Intercommerz” I received from Gasanov. He also told me what to do and where to go
to.”
In another testimony to the Interior Ministry on 20 March 2009, Mr Markelov said: “I confirm the
previously given testimony during the course of the preliminary investigation. On the request from my
acquaintance Gasanov Oktai Gasanovich in 2007 I bought in my name OOO “Pluton”, which later on
became a shareholder in OOO Makhaon, OOO Parfenion and OOO Rilend. I became the general
director of OOO Parfenion; my acquaintance Kurochkin Valery Nikolaevich became the general director
of OOO Rilend; my acquaintance Khlebnikov Vyacheslav Georgievich became general director of OOO
Makhaon. Gasanov and persons unknown to me produced a package of documents on behalf of OOO
Parfenion, OOO Makhaon and OOO Rilend, which Khlebnikov, Kurochkin and I submitted to tax
inspections Nos. 25 and 28 in Moscow ... As far as I understood, on the basis of these documents
money from the budget were wired to OOO Parfenion, OOO Makhaon and OOO Rilend. How this
money was taken from the accounts of OOO Makhaon and OOO Rilend, I don't know; for OOO
Parfenion I signed the wire transfers to make payments from the account. I don't know to what accounts
the money was transferred later on. As a result of my participation this money was stolen from the
budget, however, I myself did not receive any of that money.”60
85. On 10 April 2009, Russian Deputy Prosecutor General Grin signed an indictment of Mr Markelov for the
US$230 million theft (Article 159 of the Russian Criminal Code). On 28 April 2009, he was convicted by the
Tverskoi Court in Moscow and sentenced to a prison term of five years. The judgment imposed neither a fine
nor a duty to reimburse the State. The judgment merely mentioned that he had worked together with
“unknown co-conspirators”, without referring to the evidence adduced by Hermitage in their criminal
complaints lodged in December 2007 and July 2008 against numerous other suspects. Instead, the
conclusions of the accusation61 appear to believe Mr Markelov’s testimony that he opened a new bank
account for Parfenion with Intercommerz Bank in mid-December on an instruction from a Mr Gasanov, who
had been dead since 1 October 2007.62 Such inconsistencies tend to undermine the credibility of
Mr Markelov’s new testimony that Sergei Magnitsky was the one who gave him his instructions.
86. Apparently, he knew in advance about the mild sentence he could expect. I learnt during my first visit to
Moscow in February 2013, from one of the lawyers, that Mr Markelov had bragged about being about to
receive a sentence of “five years, at a million dollars a year” to fellow inmates before the sentence was
actually pronounced. He was apparently released early, for good behaviour, on 4 March 2012. In a country
known for very tough sentences even for fairly minor offenses, his treatment by the law enforcement bodies is
remarkably favourable.63
– Alleged earlier connections between Mr Markelov and Interior Ministry investigators Karpov and Kuznetsov
87. The favourable treatment of Mr Markelov in this case may be linked to a prior relationship with the
Interior Ministry investigators Messrs Karpov and Kuznetsov. Fyodor Mikheev, a Russian industrialist
kidnapped for purposes of an extortion of the equivalent of US$20 million, and his wife allege publicly that Mr
Markelov held Mr Mikheev hostage in a house outside of Moscow on instructions from Lt. Col. Kuznetsov. In
the materials of the kidnapping case,64 Major Karpov is also mentioned as a suspected participant in the
kidnapping operation. Mr Mikheev and his wife have publicly65 alleged that after Mr Mikheev was released

60.
61.
62.
63.
64.
65.

Transcript and translation made available by Mr Magnitsky’ family’s lawyers.
Signed by Deputy General Prosecutor Grin.
Death certificate issued on 2 October 2007 (death in Moscow, from cardiosclerosis on 1 October 2007).
I had asked for a meeting with Mr Markelov, but this proved to be impossible.
Case No. 352470 opened on 28 August 2006.
In an interview for a documentary of the BBC aired on 15 November 2010.
26

 Doc. 13356 Report

from his captors, he was soon re-arrested, and Mr Kuznetsov visited him in custody and pressured him to give
false testimony that the kidnapping had never happened, exonerating him and Mr Markelov, which
Mr Mikheev refused to do.
88. Without speaking with Mr and Mrs Mikheev and analysing the case file myself, I dare not take position
on the credibility of these allegations, even though the BBC found them serious enough to include them in
their documentary on police corruption in Russia.
– Earlier connections between some of the principal suspects: Cyprus, Dubai, Switzerland, the United
Kingdom, Turkey and Spain as common travel destinations
89. Dmitry Klyuev was, at the time of the transfers in question, the beneficial owner of the Universal
Savings Bank,66 which is strongly suspected of having laundered the proceeds of the US$230 million tax
reimbursement fraud (and others). On 28 April 2007, five weeks before the search and seizure raid on
Firestone Duncan and Hermitage, Mr Klyuev flew to Larnaca (Cyprus) in his private jet, with Lt. Col.
Kuznetsov on board, who is strongly suspected of being behind the seizure of the Hermitage corporate
documents used in the fraud. On 5 April 2006, Mr Klyuev had also travelled to Cyprus with Mr Kuznetsov’s
collaborator, investigator Pavel Karpov, and a colleague, investigator Anton Golyshev.67
90. According to Russian Border Control Service records, Ms Olga Stepanova, the Head of Moscow tax
office No. 28, which had just approved the fraudulent tax refund, travelled together with Mr Klyuev to Dubai
(departure on 1 January 2008, return on 3 January 2008) and Geneva (departure on 16 January 2007, no
return date available). These trips took place precisely at the time when the fraudulent reimbursements
received from the tax authorities by Mr Klyuev’s bank were being laundered by numerous outbound transfers
(see “money trail” below).
91. The lawyers, who had purported to act on behalf of the fraudulently re-registered companies and readily
accepted the damages claims wiping out the Hermitage companies 2006 profits, in preparation for the tax
reimbursement fraud, Mr Andrei Pavlov (lawyer for Rilend) and Ms Mayorova (lawyer for Makhaon), also
travelled extensively with Mr Pavel Karpov, one of the police officers suspected of involvement in the
conspiracy. Russian border control records establish joint trips to London (1-5 January 2007), Larnaca (30
April – 5 May 2007), Istanbul (1-4 January 2008), Madrid and Barcelona (1-7 January 2009) and again
London (outbound 1 January 2010, return flights unavailable). Ms Mayorova’s United Kingdom visa
application even stated expressly that she was travelling with MM. Pavlov and Karpov.68
92. These prior connections between some of the key suspects in the conspiracy may, of course, be just a
coincidence. But Russia is a big country.
– The “money trail” and the sudden riches of the officials suspected of complicity
• Investigations by Novaya Gazeta and Hermitage
93. Investigative journalists of the Novaya Gazeta, working together with colleagues of the Organised
Crime and Corruption Reporting Network (OCCRP), have followed the “money trail” beginning with the
suspect tax reimbursements and leading to any number of exotic destinations. I had the privilege of meeting
two of these reporters during my first visit to Moscow, in February 2013. They explained their working
methods to me – following the trail of a long list of tax reimbursements made by certain tax offices during a
certain period of time, checking out the owners, directors and activities of the recipient companies. In a large
number of cases adding up to the equivalent of US$1 billion (including part of the tax reimbursements made in
the Magnitsky case), they found out – using publicly available databases – that the recipient companies had
no business activity other than the receipt and onward transfer of the tax reimbursements; their “directors”,
sought out by the reporters, were in many cases poor people whose identity papers had been used without
their knowledge, and the money was transferred on to foreign destinations, in smaller batches aimed at
confusing the trail. The journalists followed the transfers meticulously, with the help of foreign colleagues,

66. I received a copy and an English translation of an extract from the testimony of Mr Klyuev made on 4 August 2005 in
the “Mikhailovsky GOK” case confirming his ownership of the Universal Savings Bank.
67. These trips are established by Russian “flight manifests” and border control records obtained by Hermitage. During
my fact-finding visit to Cyprus, at the end of April 2013, I asked the competent authorities for confirmation of these data
from the Cypriot side, and possible additional information on their stays in Cyprus. I received the requested confirmation in
June 2013.
68. Copy of the visa application made available to me by Hermitage.
27

 Doc. 13356 Report

again accessing publicly available databases and registries, over many stages, and established the final
destinations for considerable amounts of money, which had originally been stolen from the Russian people.
Novaya Gazeta published a summary of their findings in 201269 and made their findings available to the
competent authorities.
94. In parallel, Hermitage has done research of its own, making use of information provided to it by inside
“whistle-blowers”.
95. I have learnt a lot thanks to the detailed explanations received from the Russian journalists and
Hermitage, trying to understand the painstaking and meticulous work needed in order to follow the “money
trail”. One important lesson is that (serious) money cannot disappear, it always leaves an indelible digital “trail”
– the exception being cash, but the amounts that can be physically transported and hoarded in this form are
insignificant in relation to the amounts in question in this case, or in any other large-scale organised criminal
activity.70 The details of all bank transfers (sender, recipient, amount.) are kept for many years in electronic
form, and the Central Banks keep copies. The deletion of information on individual transfers is impossible –
the global financial system functions like a gigantic digital balance sheet; if individual entries were deleted on
one end, the whole “cascade” would collapse. The money trail is out there, it just needs to be followed. In the
Magnitsky case, this work is ongoing, and some astonishing results have already been obtained. But they
were obtained mostly through the work of investigative journalists and private investigators, with the help of
whistle-blowers and not – so it would appear – by the authorities whose job it is to investigate crimes and go
after the perpetrators and their loot.
96. I have received complete documentation concerning a “money trail” leading from the Russian treasury
via the “stolen” Hermitage companies, via a total of five Russian companies and banks, two Moldovan
companies and banks and one Latvian company to two British Virgin Island companies’ accounts at Credit
Suisse in Zurich and then on to the Credit Suisse account of another company owned by Mr Vladlen
Stepanov, the (ex-)husband of Ms Olga Stepanova, head of Moscow tax office No. 28 (which had authorised
the transfers from the treasury in question).
97. Another “money trail” has been reconstituted leading from the reimbursement of the taxes paid by
Hermitage by the Russian treasury via the “hijacked” Hermitage companies (Parfenion, Rilend and Makhaon)
and many other way-stations, including in the Republic of Moldova, to a UBS account in Zurich of a Cypriot
company owned by Mr Denis Katsyv, the son of the former Minister of Transport and Vice-Governor of the
Moscow Region, Mr Piotr Katsyv, and by Mr Litvak.
98. Additional convoluted “money trails” coming from the Russian treasury ultimately lead to corporate
accounts with the FBME Bank in Cyprus beneficially owned by Mr Klyuev and other accounts connected to
him and Mr Pavlov with other Cypriot banks.
• Reactions of the Russian authorities
99. In light of this information, the attitude shown by the Russian authorities so far is not really convincing.
Shortly after the tax theft allegations in the Magnitsky case became known, the spokesperson of the Ministry
of the Interior, Ms Dudukina, publicly stated that the whereabouts of the tax money fraudulently paid into the
Universal Savings Bank could no longer be established because a truck transporting the bank’s
documentation had accidentally burnt.71 My interlocutors at the Ministry of the Interior and at the Investigative
Committee evaded my question when I enquired about the credibility of this statement.72 Regarding the
treasury funds ending up in Mr Stepanov’s account, I was told that this had been verified and that the funds in
Mr Stepanov’s account could be explained by his successful business activities, including building tunnels in
Russia. Also, the couple had been divorced many years ago. But in my view, this does not explain how the
same treasury funds, whose disbursement had been authorised by Ms Stepanova, ended up in her husband’s

69. “Following the Magnitsky Money”, www.novayagazeta.ru/inquests/53950.
70. I have a lot of sympathy for the proposal to abolish the €500 note, which would further reduce the possibility of
transporting and hoarding black money in cash.
71. Available at:
http://online.barrons.com/article/SB50001424052970204569604576259313266852054.html#articleTabs_article
%3D1.
72. The Chairperson of the Russian Central Bank, Mr Ignatiyev, whom I met on 21 May 2013, explained to me in detail
how the Central Bank is regularly informed, in electronic form, of interbank transfers and in particular of transfers to foreign
banks. But his answer to my specific question regarding the credibility of Ms Dudukina’s statement was also not quite clear
to me. He did not exclude that in some cases of trickery by very small banks information on transactions can get lost for
good. This was the reason for a recent law designed to improve information security in such cases.
28

 Doc. 13356 Report

or ex-husband’s73 account, via the complicated path described above. If the treasury funds in question were
really disbursed for the payment of tunnels built by Mr Stepanov in Russia, why were they not transferred to
him directly, without the elaborate detours that raise suspicions of money-laundering?
• Sudden riches of suspect officials
100. In addition, shortly after the fraudulent disbursements, Ms Anisimova and Ms Tsareva, working at
Moscow tax office No. 28, received US$569 000 and US$591 000 respectively.74 On a website dedicated to
the Magnitsky case,75 details of the riches amassed by different players in the alleged conspiracy, including
Ms Stepanova,76 Lt. Col. Kuznetsov77 and Major Karpov, are published, including villas in Dubai, luxury
apartments in Moscow, Cyprus and elsewhere, and fat bank accounts in well-known off-shore havens. The
allegations appear to be well-documented by extracts from land registries, bank statements, wire transfers,
photographs, etc. The entry documenting the lifestyle of Mr Karpov,78 whose salary as a modest Interior
Ministry official was the equivalent of about US$6000 – annually! – is quite impressive, including the
acquisition of real estate and luxury cars totalling US$1.3 million (even if the Porsche is registered in the name
of his elderly mother), worldwide travel, and more. It would appear that much of the information is actually
gleaned from Mr Karpov’s own “Facebook”-like Russian web-page. When I was told by the representatives of
the Ministry of Interior that Mr Karpov (and his former colleague, Mr Kuznetsov) had retired from active service
(at the age of 36 and 38), I asked whether Russian pensions allow such young retirees to live in such luxury.
The answers received – that police pensions are indeed quite generous, that service done in Chechnya
counts double for pension purposes and that Mr Karpov might have additional sources of income from
business activities – have not convinced me. Neither has the additional information received in May 2013 that
Mr Karpov’s mother had made a large profit re-selling an apartment originally bought for the equivalent of US
$20 000 and later resold at US$100 000, which she had then invested in the Moscow penthouse referred to in
the Internet publications. This does not explain more than a small fraction of Mr Karpov’s and his immediate
family’s recent wealth.
101. During 2011 and 2012, Sergei Magnitsky’s former employer, Jamison Firestone, filed a number of
lawsuits with the Moscow courts79 seeking to compel a criminal investigation into suspicious wealth
accumulated by Russian tax officials allegedly involved in the fraudulent tax refunds. Reportedly, Olga
Tsareva and Elena Anisimova, of Moscow Tax Office No. 28, were named in Firestone’s complaint for having
bought foreign properties worth about US$2 million each, paid for with funds from Swiss bank accounts. In
January 2012, Firestone also filed a complaint against high-ranking officials of the General Prosecutor’ Office
and the Ministry of the Interior for covering up crimes allegedly committed by officials associated with Dmitry
Klyuev. In November 2012, the Interior Ministry responded by saying that they found no evidence of complicity
of law enforcement or tax officials in the US$230 million tax reimbursement fraud against the Treasury80 and
that there was also no data indicating the involvement of officials in laundering the US$230 million.81
102. In August 2012, Jamison Firestone filed further complaints with the Russian Investigative Committee
seeking investigation of the suspicious enrichment of Interior Ministry investigators Kuznetsov and Karpov (as
earlier complaints made since the summer of 2010 had remained unanswered).
103. The Russian Deputy Minister of the Interior pointed out to me that Mr Karpov is now suing Mr Browder
for libel in a London court. Mr Karpov did indeed appear on Russian TV, complaining that Mr Browder had not
turned up to defend himself. Mr Browder confirmed that Mr Karpov had indeed launched a lawsuit, and had
hired hugely expensive London lawyers for this purpose. Mr Browder’s lawyers advised seeking to strike out
Mr Karpov’s application on the ground of it being an abuse of the court process by a nominal claimant (i.e.
effectively by a front man on behalf of other interests).

73. I was told that Mr Stepanov and his wife were divorced by court order in 1992. But the Stepanovs gave effect to the
court order only in November 2010, by registering the court order with the state matrimonial registrar. Since the purported
1992 divorce, they have extensively travelled abroad together, including on many occasions during between 2006 and
2010. In addition, they have a joint Swiss bank account which was opened in 1999, and continued to jointly manage it
beyond 2004. The account documents refer to their joint place of residence in Moscow.
74. I have received copies of wire transfers dated 17 and 18 January 2008.
75. www.russian-untouchables.com.
76. http://russian-untouchables.com/eng/olga-stepanova/.
77. http://russian-untouchables.com/eng/artem-kuznetsov/.
78. http://russian-untouchables.com/eng/pavel-karpov/.
79. Investigative Committee case No. 344212.
80. Interior Ministry case No. 152979.
81. Interior Ministry case No. 678540.
29

 Doc. 13356 Report

104. I was told by the Russian authorities, in Moscow, that investigations were still ongoing in order to
identify the recipients of the stolen funds and prosecute them, and that a case had been opened against Ms
Stepanova. But this needed still more time, and the co-operation of the authorities of the countries to which
the funds had been transferred. There are quite a few such countries – Hermitage has to date filed complaints
with the law enforcement authorities of Austria, Cyprus, Estonia, Finland, Hong Kong, Latvia, Lithuania and
Switzerland, and many of them have already opened formal criminal investigations.
• The mysterious death of an informer
105. Some of the information facilitating the investigation of the “money trail” was provided to Hermitage by a
Russian whistle-blower, Mr Perepilichny, who had fled to the United Kingdom, where he died mysteriously in
November 2012 in front of the door of his house in Surrey – an apparently healthy man in his forties.
106. He had also been questioned by and provided information to the Swiss law enforcement authorities.
This was publicly confirmed by the Swiss Federal Prosecutor’s Office,82 which also pointed out, with respect
to the consequences of Mr Perepilichny’s death on the ongoing criminal proceedings, “that our strength
resides in our ability to minimise the influence of such a regretful event on our investigation”.83
107. The investigations into the cause of Mr Perepilichny’s death are still ongoing, and I was unable to obtain
any information from the competent United Kingdom authorities. The representatives of Hermitage are
convinced that the authorities, intentionally or not, have done an imperfect job so far. In their view, the local
police failed to understand the role that Mr Perepilichny had played in providing information on some
“dangerous people”, including some of the suspects in the “Magnitsky case”. He had been involved with
managing funds and transactions that are subject of the ongoing Swiss investigation. When he lost a big
amount of his “customers’” money during the financial crisis in 2008/2009, he felt threatened and fled to
England, taking with him documentation on financial transactions on behalf of his “customers”. Responding to
an appeal by Hermitage to potential whistle-blowers, he decided to share this information with Hermitage,
which in turn transmitted it to the competent authorities in the countries concerned. As soon as Hermitage
found out about Mr Perepilichny’s death, their lawyers immediately contacted the police to urge them to be
particularly diligent in establishing the cause of death. Unfortunately, according to Mr Browder, it took the
police several days to react to these exhortations and request toxicology tests and it may well be that too
much time had passed in order to establish or exclude “foul play” with certainty.
108. During my meetings with the Russian authorities in Moscow, insinuations were made on several
occasions that the suspicious death of Mr Perepilichny (as well as that of Mr Magnitsky himself, and of other
possible accomplices) may well serve Mr Browder’s interests. I do not find these insinuations convincing at all,
given that Mr Browder had strongly pushed the British police, through the media and political channels, to
commence robust and timely investigations into possible “foul play” in a death that was first found to be
caused by a heart attack by local police officers. Similarly, his powerful public campaign against “impunity for
the killers of Sergei Magnitsky”, at a time when the authorities were trying to minimise this death as an
unfortunate coincidence, caused at most by the negligence of some lowly prison officials, would not make any
sense if he had somehow been involved in Sergei Magnitsky’s death.
• Meetings with the Swiss, Cypriot and United Kingdom authorities
109. As authorised by the committee, I have spoken with the Swiss Federal Prosecutor and his Deputy84 in
Bern, and with the Cypriot Attorney General and the head of the Cypriot anti-money laundering unit
(MOKAS)85 in Nicosia. They have indeed received extensive documentation, from Hermitage, establishing
“money trails” starting with the fraudulent tax reimbursements by the Russian treasury and leading to banks in
their countries.

82. See for example the reports of 28 November 2012 in The Independent: Alexander Perepilichnyy: Supergrass who
held key to huge Russian fraud is found dead in Surrey; Swiss Prosecutors say death of Russian whistle blower will not
derail huge fraud investigation; and on 27 November 2012: A $230 million fraud – and a trail of death that just keeps
growing; Timeline of the Magnitsky scandal: the fraud that cost two lives; Tagesanzeiger of 3 January 2013 (cover page):
Verdacht auf Geldwäscherei: Bund blockiert Millionen; im Fall Magnitski lassen die Ermittler Konten bei der CS und
anderen Banken einfrieren.
83. Cited from a copy of a public statement made by the Swiss Federal Prosecutor’s office immediately after the death of
Mr Perepilichny.
84. Mr Lauber and Ms Bino.
85. Mr Clerides and Ms Papakyriacou.
30

 Doc. 13356 Report

110. My impression was that the Swiss authorities, which have already opened a criminal case, heard a key
informer (Mr Perepilichny, see above paragraphs 105-108), ordered the freeze of suspect funds and
addressed a request for mutual assistance to Russia (which had recently also addressed a similar request to
them) have acted with due diligence. The same would appear to apply, in principle, to the Cypriot authorities.
An apparent administrative mishap or breakdown of communication following the transmission of an initial
complaint in 2008 on behalf of Hermitage concerning the “company thefts” (with Cypriot links) unfortunately
delayed the start of the investigation considerably. But my impression is that – contrary to what Hermitage
seems to believe86 – the Cypriot authorities did not wait for any “green light” from Moscow in order to begin
their investigation. At the same time, it seems to me that small countries with a limited investigative capacity,
experience difficulties in carrying out the numerous, complex investigations of suspected instances of money
laundering that come with these countries’ role as a popular location for so-called “letterbox companies”
holding assets controlled by foreign businesses and wealthy individuals. It may well be that small countries in
a similar position need to further increase their investigative resources in order to maintain or strengthen their
credibility as financial centres subjected to the rule of law.87
111. On 25 April 2013, a meeting took place at Europol in The Hague to exchange information and coordinate the investigations by anti-money laundering experts of a number of countries concerned by transfers
of funds originating in the tax reimbursement fraud denounced by Sergei Magnitsky.88 I can only applaud
Europol for organising such a meeting, which should in my view mark the beginning of co-ordinated action by
the competent authorities to follow the “money trail” wherever it leads. The competent Russian authorities
should be at the forefront of such an action, as it is the money of the Russian people that was stolen. But
international co-operation requires a minimum of mutual trust, which is likely to suffer when serious allegations
of corruption against law enforcement officials are not investigated robustly and without undue delay. I
received confirmation of such distrust in London. The Head of the Central Authority in the United Kingdom89
told me at our meeting in February 2013 that a request for legal co-operation received from Moscow in March
2012 was so “blatantly politically motivated” that the British authorities could not possibly accede to it.
• The similarity of the modus operandi used in the Magnitsky case and in the Rengaz and other frauds
112. A very strong argument against blaming the US$230 million tax reimbursement fraud on Sergei
Magnitsky himself is the fact that similar tax reimbursement frauds were committed before and after
Mr Magnitsky was taken into custody, and even after his death.90 Thanks to the above-mentioned
investigations on the “money trail”, it has been shown that the same suspects (the so-called “Klyuev group”),
using the same modus operandi (annulling a fraudulently re-registered company’s profits of the previous year
through sham damages claims and then obtaining the reimbursement of the taxes which had been paid by the
company’s real owners), using the same Moscow tax offices Nos. 25 and 28 and the same money-laundering
paths, beginning with newly opened accounts in Mr Klyuev’s Universal Savings Bank and a new bank which
replaced it at a later stage. In the Rengaz fraud, which took place in 2006, a year before the US$230 million
fraud, the perpetrators even used the same arbitrage courts in Moscow and Kazan in order to obtain the
damages judgments annulling Rengaz’s profits. The lawsuits in Kazan in the Rengaz case were brought by
the same lawyer as in the case denounced by Mr Magnitsky (namely Mr Pavlov), on behalf of the same
plaintiff (Mr Sheshenia); similarly, the lawsuits in Moscow were brought by a Mr Plaksin as plaintiff, and again
Mr Pavlov as his lawyer. The perpetrators of the Rengaz fraud even used the same “templates” for their sham
damages claims as in the fraud denounced by Mr Magnitsky, consisting of a “Framework Agreement”, a

86. My Cypriot interlocutors found that the public pressure exercised by Hermitage was both unnecessary and
unwarranted.
87. This impression seems to square with the findings of the report published in May 2013 of the parallel evaluation by
the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of
Terrorism (MONEYVAL) and Deloitte, which reportedly found that Cyprus was “surprisingly vulnerable” to money
laundering (see for example EU Observer, 20 May 2013, “Leaked report damns Cyprus on money laundering”; Spiegel
online, 17 May 2013, “Insufficient efforts: report faults Cyprus on money laundering”; see also the press release of the
Central Bank of Cyprus, and that of MONEYVAL.
88. I undertook not to reveal the participating countries and any other detail pertaining to this meeting.
89. Ms Price.
90. See “Tax Scam Points to Complicity of Top Russian Officials,” Financial Times, 12 April 2012;
“VAT. We’ve Solved the Magnitsky Case. How Billions Left Russia. Schemes, Names, Banks”, 1 April 2012;
Complaint from Hermitage to Russian Investigative Committee seeking to investigate $230 million in suspicious
refunds via tax offices No 25 and No 28 to Universal Savings Bank during 2006-2008, 13 October 2009. After Universal
Savings Bank’s voluntary closure in 2008, VAT rebates continued to Benefit bank – see “Magnitsky Files”, at 16:30 sec.
31

 Doc. 13356 Report

“Sale-Purchase-Agreement” and a “Cancellation Agreement.”91 In both cases, the defendant companies
immediately accepted the claims in full, and the judges released the plaintiffs from the requirement to prove
the case. In my view, all these similarities cannot be mere coincidences.
iv) Assessment of the accusations against Sergei Magnitsky concerning the US$230 million tax
reimbursement fraud
113. In view of the factual elements presented above, in particular:
–

the powerful testimony of the lawyers who had worked on the case, MM. Khareitdinov and Pastukhov;

–

the fact that Mr Magnitsky had played a key role in preparing the criminal complaints by Hermitage
denouncing the conspiracy before the fraud was actually completed;

–

the suspiciously fast approval of the tax refunds, which Mr Magnitsky and Hermitage could not have
controlled;

–

the mild sentence imposed on Mr Markelov, suspected as the “straw man” or “fall guy” of the criminal
conspirators;

–

the previous connections between Mr Markelov and other key suspects, including the Interior Ministry
Investigators Lt. Col. Kuznetsov and Major Karpov, whom Mr Magnitsky had accused of being coconspirators, and who were effectively put in charge of the investigation against themselves, and
between the police officers and the lawyers involved in the sham lawsuits and the owner of one of the
banks involved in the fraud, Mr Klyuev;

–

the unbroken “money trail” leading directly to key suspects accused by Mr Magnitsky and Hermitage
and members of their family, including Ms Stepanova, the head of one of the tax offices involved in the
fraud, two of her collaborators, and Mr Klyuev;

–

the well-documented wealth of key suspects, living far beyond the means afforded by their official
salaries or pensions, and the lukewarm reaction of the authorities thereto;

–

the similarity between the case now blamed on Sergei Magnitsky and other tax reimbursement frauds
carried out before and after his arrest and even after his death.

114. I am personally convinced that this crime was not committed or in any way aided or abetted by
Mr Magnitsky, but by a group of criminals, including the people he had accused before these same people
took him into custody, where he died in the circumstances that we are now going to look at in some more
detail.
2.3. Sergei Magnitsky’s ordeal in pretrial detention – pressure until death
2.3.1. The undisputed facts
115. On 7 October 2008, Sergei Magnitsky testified before the Russian State Investigative Committee about
the suspected involvement of Interior Ministry officials Lt. Col. Kuznetsov and Major Karpov and others in the
fraudulent re-registration of Hermitage companies and the US$230 million tax reimbursement fraud. On
6 November 2008, General Logunov, Deputy Head of the Interior Ministry’s Investigative Department,
assigned the case to Lt. Col. Kuznetsov and three of his subordinates, to investigate the crime denounced by
Mr Magnitsky. On 12 November 2008, General Logunov of the Interior Ministry assigned the same officers to
the case against Hermitage/Magnitsky.92 Both investigative groups (consisting of the same people) were
headed by Interior Ministry Investigator Major Oleg Silchenko.
116. Less than two weeks later, on 24 November 2008, Sergei Magnitsky was arrested at his home,
following a search, by two subordinates of Lt. Col. Kuznetsov following an order by investigator Oleg
Silchenko. He was first held at “IVS-1”, a Temporary Detention Centre in Moscow assigned to the Moscow
Branch of the Interior Ministry, then transferred to Moscow Detention Centre No. 5, then back to IVS-1, back
to Detention Centre No. 5 and after that to Matrosskaya Tishina (henceforth MT) pretrial detention centre,
where he fell ill by June 2009, losing 40 pounds and suffering from severe abdominal pains. According to
medical records of the MT detention centre dated 13 July 2009, he was diagnosed with pancreatitis,
cholecystitis and gallstones, based on an ultrasound examination on 1 July 2009.93 He was prescribed

91. I have received copies of the “contracts” in question and translations of key passages from Hermitage.
92. Copies of the Interior Ministry decisions of 6 and 12 November 2008 were obtained from Hermitage.
32

 Doc. 13356 Report

surgery within one month, after another ultrasound examination. This was confirmed in a letter addressed to
Mr Magnitsky’s lawyers by D. Vasiliev, acting Head of MT, in the following terms: “hereby to confirm that
Sergei Magnitsky was examined on 1 July 2009 and diagnosed with calculous cholecystitis, prescribed with
an ultrasound examination within a month and a scheduled surgery.”
117. On 25 July 2009, a week before his scheduled examination and surgery, Mr Magnitsky was suddenly
transferred to Butyrka prison, a maximum security detention centre, which had no facilities to perform an
ultrasound examination or surgery. The transfer was co-ordinated with Interior Ministry investigator Oleg
Silchenko and approved by the Deputy Head of the Federal Penitentiary Service, General Petrukhin.94 At
Butyrka, Mr Magnitsky’s state of health continued to deteriorate.
118. On 16 November 2009, Dmitry Komnov, Head of Butyrka, ordered his subordinates to transfer
Mr Magnitsky back to MT, due to the “need for urgent admission to a hospital with a diagnosis of acute
pancreatitis and cholecystitis”. The transfer was approved by General Davydov, the Head of the Moscow
Penitentiary Service. Upon arrival at MT, Mr Magnitsky was placed in an isolation cell and handcuffed to a
bed.95 A civilian emergency medical team was called to MT prison by duty officers. It arrived at 8 p.m. but was
not allowed into Mr Magnitsky’s cell for one hour and 18 minutes. Sergei Magnitsky died the same evening at
the MT detention centre.
2.3.2. The disputed facts
2.3.2.1. Did Sergei Magnitsky complain about his detention conditions and lack of medical care?
119. Officials in Moscow (representatives of the Interior Ministry and of the Prosecutor General’s Office) told
me that Sergei Magnitsky had complained neither about his detention conditions, nor about lack of health care
provided to him in detention.
120. Mr Magnitsky’s mother and Hermitage provided me with a long list of the complaints made by
Mr Magnitsky and his lawyers on his behalf, as well as copies of the complaints and translations into English,
complete with the replies given by the authorities to these complaints:
–

on 9 and 11 August 2009 to D. Komnov, Head of Butyrka Prison: “I hereby urgently request to be seen
as the nature of my rights violations endangers my health”;

–

on 19 August 2009 to O. Silchenko, Interior Ministry investigator: “Please allow to carry out the medical
examination of Sergei Magnitsky, who had been diagnosed with pancreatitis and cholecytitis”;

–

on 31 August 2009 to V. Davydov, Head of the Moscow Penitentiary Service: “For a week I was
deprived of any access to clean and hot water, which I require given my abdominal illnesses”;

–

on 11 September 2009 to Y. Chaika, General Prosecutor: “Medical care has been denied, no medical
examination and no operation have been performed. Please intervene”;

–

on 14 September 2009 to Judge A. Krivoruchko, at the Tverskoi District Court: “I request to review my
complaints about the unbearable conditions of my detention and the denial of all medical care”;

–

On 12 November 2009 to Judge E. Stashina, at the Tverskoi District Court: “I request to review my
medical records, ultrasound examination results, requests for medical care, complaints about my
conditions in detention, described in the complaint filed with the European Court of Human Rights”.

121. The replies speak for themselves:
–

on 2 September 2009 from investigator O. Silchenko: “I deny in full the request for a medical
examination of Magnitsky”;

93. A worrisome detail regarding the diagnosis of pancreatitis is the statement by Dr Guseinov included in the First
Medical Commission Report of 12 May 2010 (exhibit E 23 of the application to the European Court of Human Rights by
Natalia Magnitskaya). Dr Guseinov had expressed concern that Mr Magnitsky had been prescribed the drug Diclofenac,
which “would have an adverse effect and may cause acute pancreatitis”. According to Ms Magnitskaya’s lawyers before
the Strasbourg Court (paragraph 476), the authorities failed to investigate this further to establish whether the drugs
prescribed by the prison authorities might have in fact caused Mr Magnitsky’s illness.
94. According to letters addressed by Mr Oleg Silchenko to Mr Prokopenko, Head of MT, on 2 July 2009, and by General
Petrukhin to Mr Vasiliev, Acting Head of MT, on 22 July 2009.
95. According to a report signed by O.G. Kuznetsov (Deputy aid on duty to the Head of MT) and F. Tagiev (Head of the
MT Detention Centre).
33

 Doc. 13356 Report

–

on 14 September 2009, from Judge A. Krivoruchko: “Request to review complaints about withholding of
medical care and cruel treatment is denied”;

–

on 7 October 2009 from V. Davydov, Head of the Moscow Penitentiary Service: “Magnitsky received his
boiler. The hot water supply is centralised”;

–

on 7 October 2009 from D. Komnov, Head of Butyrka prison: “Based on his medical records, Magnitsky
can be detained”;

–

on 9 October 2009 from A. Pechegin, of the Prosecutor General’s Office: “No pressure was exerted.
There is no reason for the prosecutor to intervene”;

–

on 12 November 2009 from Judge E. Stashina: “Deny request to review the medical records and
conditions of detention as irrelevant”.

122. The investigators of the Public Oversight Committee (POC), mandated by the President of Russia to
inspect any places of detention at any time and speak freely with prison employees and inmates, carried out
visits to the Butyrka and Matrosskaya Tishina detention centres beginning on the day after Mr Magnitsky’s
death. At my meeting in Moscow with the POC team led by Mr Valery Borshov, I was told that they were
shown the official log (ledger) of complaints at Butyrka prison, which did not include any complaints from
Mr Magnitsky. But the log had looked manipulated in that the entries for the relevant time were all made in the
same handwriting and using the same pen, apparently in one trait, instead of the separate entries after each
complaint prescribed by law. Officials later told Mr Borshov that the log had never been properly kept.
Mr Borshov told me in Moscow that he too was told, by Mr Komnov (the Head of Butyrka prison), and in the
presence of a person who had actually responded to such a complaint, namely General Davydov, that
Mr Magnitsky had never complained.
123. Here are some examples of Mr Magnitsky’s complaints about his detention conditions, quoted from a
handwritten statement addressed to the court on 19 January 2009:
–

“Cells are overcrowded. Fourteen people can be kept in a cell with eight beds. We have to take turns to
sleep.”

–

“At the same time, a freezing wind comes from the permanently opened window.”

–

“I have to eat in the same space as the toilet. There is constant smoke in the overcrowded cell.”

–

“Hot food is provided essentially only once a day, at lunch time, at breakfast we get porridge with insect
larvae, and at dinner – rotten boiled herring, just the smell of which causes nausea. Sometimes there is
no food at all.”

–

“I am kept in a cell with defendants and those already convicted for violent crimes like burglary, murder
and battery.”

124. He had also complained about being kept for several days in a cell in which the toilet, situated inside
the cell, overflowed so that the floor was covered with excrement.96
125. Sergei Magnitsky cried for help in a dramatic letter to his lawyer, Mr Kharitonov, of 25 August 2009,
which formed the basis for his lawyers to form numerous formal complaints, including on 11 September 2009
to Prosecutor General Yuri Chaika and to the head of the Interior Ministry’s Investigative Committee, General
Anichin:
“On 23 August 2009 at 4.30 p.m. I felt excruciating pain at the solar plexus … I laid down and struggled
with it … a bit later the pain started to increase again even harder than earlier … to stand against it
could only be possible by sitting in a crouched position, the pain was so hard I could not even breathe
… On 24 August around 4 p.m. a pain attack started again. I could not lay down this time, as it was
hard to sustain it and again I was crouching … My cell mate … started pounding on the door crying for
help, but no one came …”
126. The complaint was assigned for review to Major Silchenko, who recommended it to be “archived” as
this complaint was “not within [their] competence”. Mr Silchenko’s recommendation was approved by his
superior, Colonel Karlov.97

96. See Mr Magnitsky’s letter (in Russian).
97. Major Silchenko’s recommendation (in Russian).
34

 Doc. 13356 Report

127. On 12 November 2009, at his last court appearance, his detention was prolonged again. According to
Butyrka prison doctor Ms Litvinova, Mr Magnitsky was upset about the prolongation of his detention. In a
handwritten complaint dated 13 November 2009, Mr Magnitsky explained that he was suffering from acute
pain and requested urgent medical assistance, recalling once again that he had been scheduled for an
ultrasound in July at Matrosskaya Tishina but was transferred to Butyrka just before the scheduled
examination. Having again and again complained about his ill health, he had been told that he could get
treatment when he got out.
128. The investigators of the Public Oversight Committee (POC) confirmed that in Russia, in their
experience, substandard detention conditions are commonly applied during pretrial detention on the
instruction of the investigators in charge of the case in order to “break” inmates and oblige them to confess or
otherwise co-operate with the investigators. The “standard bag of tricks” commonly used in Butyrka included
overflowing toilets, broken windows in winter, and aggressively violent new cell mates. Mr Borshov also
pointed out that the fact that Mr Magnitsky was moved five times between prisons, and more than 20 times
between different cells (including eight times in the final three months) was another typical indication of
pressure being exerted on him.98
129. Mr Borshov also pointed out that the initiative for moving Mr Magnitsky from Matrosskaya Tishina to
Butyrka (a prison without the required medical facilities) in July 2009, a week before the scheduled treatment,
had come from investigator Silchenko.99 The Governors of Matrosskaya Tishina and Butyrka prisons would
have been duty-bound to refuse the transfer if they could not provide the required treatment. The planned
renovation of Mr Magnitsky’s cell at Matrosskaya Tishina, which was officially given as the reason for the
transfer, had still not begun when Mr Borshov carried out his inspection visit after Mr Magnitsky’s death in
November. It was well known that withholding necessary medical treatment was a frequently used method of
putting pressure on pretrial detainees.
130. In light of the well-documented, specific complaints reproduced above, I find it downright cynical that
the authorities now say that Sergei Magnitsky never actually complained about his treatment in detention and
the lack of medical treatment, and that the conditions of detention for criminals held in Russian prisons had
improved a lot; while they were still not pleasant, especially for persons used to a more comfortable life, this
was inevitable (“dura lex sed lex”). In my view, this is unacceptable: Sergei Magnitsky was a healthy young
man when he was taken into custody, presumed innocent by law. He was not allowed to talk to his wife and
children even once, for almost a year. Being kept deliberately in miserable, unhealthy conditions, he
developed serious diseases, for which he was not given adequate treatment. Less than a year after his arrest,
he died in still unclear circumstances. This is not “dura lex sed lex”, this is a violation of Russian law and of the
European Convention on Human Rights.
131. During my second visit to Moscow, the representatives of the Investigative Committee put into doubt
the family’s assertion that Mr Magnitsky was in good health when he was arrested.100 When I mentioned this
to Ms Magnitskaya and Mr Borshov, whom I met the following day, they informed me that Ms Litvinova (the
prison doctor, really trained as a “hygiene specialist”, who treated Mr Magnitsky at Butyrka prison) had first
testified that Mr Magnitsky had given her a paper from Moscow hospital No. 36 saying that he had been
diagnosed with pancreatitis or some other stomach problem, in March 2008 (that is to say well before his
arrest). But a reply from hospital No. 36 was received and added to the file of the case on Mr Magnitsky’s
death according to which Mr Magnitsky had never been diagnosed or treated at this hospital.

98. The United Nations Special Rapporteur on Torture had previously pointed out that these were commonly used
pressure tactics in Russia (see United Nations Commission on Human Rights, Follow-up to the recommendations made
by the Special Rapporteur, 21 March 2006, UN document E/CN.4/2006/ADD.2, paragraphs 251 and 264).
See also the judgment of the European Court of Human Rights in a case concerning a detainee of Butyrka prison, in
which the Court found a violation of the right to an effective and accessible remedy in view of the complaint by the
detainee that “the administration would start transferring him to a new cell every second day, as had happened to other
detainees. In that way, he would have been completely deprived of sleep because he would have lost his place in the
‘sleeping queue’” (Sudarkov v. Russia, judgment of 10 July 2008, paragraph 18).
99. He handed me copy of a letter from Mr Silchenko to MT to this effect (the move would “serve the purpose” of the
detention).
100. They promised to send me documents establishing that Mr Magnitsky had been diagnosed with pancreatitis before
his arrest.
35

 Doc. 13356 Report

2.3.2.2. Was Sergei Magnitsky beaten upon his arrival at Matrosskaya Tishina prison on
16 November 2009 prior to his death, and why?
132. I was told by several representatives of the authorities that Mr Magnitsky was not beaten upon his
arrival at MT prison.
133. But the use of “special measures” including handcuffs and rubber batons against Mr Magnitsky
because of a “nervous breakdown” was expressly mentioned in a report signed by a “D.F. Markin”101 and two
“witnesses”, inspectors Larin and Borovkov, and sanctioned by the Head of MT prison, Mr F. Tagiev.102 I am
not convinced by the explanations given to me during my second visit in Moscow that this document is “out of
context” and that the mentioning of rubber batons as part of the special measures used against Mr Magnitsky
was purely “automatic”.
134. According to Mr Borshov, Chair of the Public Oversight Committee, Russian law does not allow the use
of batons in the case of a nervous breakdown. Also, according to a psychiatric expertise ordered by
investigator Lomonossova for the judicial proceedings brought against certain prison officials, Mr Magnitsky
was not in an unusual mental state. According to testimony of the prison guards referred to by Mr Borshov,
Mr Magnitsky had fully co-operated with the prison staff putting on the handcuffs and followed them to the
holding cell voluntarily.
135. In addition, the autopsy, the testimony of Mr Magnitsky’s mother103 and photographs taken by family
members when they were first permitted to see the body confirm that Mr Magnitsky had visible injuries on his
body that had never been explained, including bruising on the knuckles of both hands and deep marks on
both wrists that could not be explained by the normal use of handcuffs. The explanation given by
Dr Alexandra Gaus, namely that the bruises were caused by throwing around the cot (bed) to which he was
handcuffed, was dismissed by Mr Borshov, who pointed out that the cots in the cells are bolted to the floor.
The Second Medical Commission report No. 555/10 also notes that the formation of the injuries found on the
body of Mr Magnitsky “does not exclude the possibility that part of the injuries formed based on the traumatic
impact of a rubber truncheon”.104
136. It is therefore clear to me that Sergei was indeed beaten shortly after his arrival at MT prison, whereas
the reason mentioned in the official report about the use of batons – a nervous breakdown – is doubtful both
for legal and factual reasons.
2.3.2.3. Where, when and how exactly did Sergei Magnitsky die?
137. Dr Alexandra Gaus, the MT prison doctor had seen Mr Magnitsky upon his arrival at MT and filled in his
arrival papers. She diagnosed Mr Magnitsky with a “mental breakdown”; he had shouted “someone is trying to
kill me” and “someone is going through my personal belongings”.
138. The POC report gives the following account of the testimony given to them by Dr Gaus:
“During the survey, his abdomen was tense, he felt pain in both the left and right parts of the area,
which is an obvious symptom of pancreatitis. In the medical records, she read about the prescription to
undergo a repeat ultrasound examination. During the survey, Magnitsky had twice a desire to vomit
(with no actual vomiting), and she gave him a hygienic [plastic] bag. Initially, he was calm, agreed to a
hospitalisation and signed on the medical record. … He then sat down and covered himself with the
plastic bag and said that they want to kill him. It continued for a short period of time and he twice hit the
floor with the cot, then put it back and got scared and started to hide again behind the plastic bag which
she had given him. In her opinion, it looked like acute psychosis and delirium of persecution. They
called for the psychiatric emergency services.”105
139. Mr Borshov pointed out that 250 pages from Mr Magnitsky’s diary had indeed gone missing. Regarding
the plastic bag, Mr Borshov suspects that it was another measure of restraint and pressure that is habitually
used against detainees. Another indication for “foul play” at this stage was that the video recordings of the
arrival, mandated by law, had been “unavailable” to the POC inspectors, but also to Ms Lomonossova, the
first investigator in charge of the investigation of Mr Magnitsky’s death. On the video recording made at

101. Which would appear to be an erroneously spelt signature of D.F. Markov, the Aid on duty to the Head of MT.
102. A copy of this report was made public by the Public Oversight Committee.
103. Who told me that she pulled back the blanket covering the upper body, but did not “rip open” her son’s shirt, as a
representative of the Investigative Committee had said during our meeting in May.
104. Copy made available by Mr Magnitsky’s mother’s lawyers.
105. http://russian-untouchables.com/docs/Public-Oversight-Commission-Report.pdf, p. 17.
36

 Doc. 13356 Report

Butyrka prison on his departure, which Mr Borshov was shown, Mr Magnitsky appeared calm and sufficiently
well to walk by himself, carrying two bags with his belongings. Earlier the same day (16 November 2007), his
acute pancreatitis had apparently required emergency treatment. An emergency call was placed at 2.29 p.m.
and an ambulance arrived at Butyrka prison at 2.57 p.m. But the ambulance team were then kept waiting for 2
hours and 35 minutes, with no explanation given for this delay. Regarding the recordings of Mr Magnitsky’s
arrival at Matrosskaya Tishina prison, Mr Borshov had been told by the Head of MT, Mr Taghiev, at a meeting
three days after Mr Magnitsky’s death, that the recordings had been taken away by investigators. Later, Mr
Taghiev fell in line with the official version according to which there were no recordings. Mr Magnitsky’s
family’s lawyers had asked for Mr Taghiev to be summoned as a witness in court, but this request was denied.
140. Because of Mr Magnitsky’s “mental breakdown”, Dr Gaus called in the civilian “psychiatric emergency”
doctors as well as a group of eight prison security staff headed by Mr Markov, who used “special means”
against Mr Magnitsky (see paragraphs 132-136 above). The security officers took Mr Magnitsky into another
cell (No. 4), where he was left without medical assistance or any medical observation. Fifteen minutes later, at
8 p.m., the civilian emergency doctors, led by Dr Kornilov, arrived at the prison gate, but they were kept
waiting for over an hour, according to Dr Kornilov’s testimony. When they were allowed to enter cell No. 4, at
about 9.15 p.m., they found Mr Magnitsky’s lifeless body on the floor. According to Dr Kornilov, who had
carefully examined the body, Mr Magnitsky had already been dead for more than fifteen minutes. Dr Kornilov
called in the time of death to the headquarters of the Medical Emergency Service, where it is officially
documented.106 The lawyers for Mr Magnitsky’s mother pointed out that Dr Kornilov’s testimony is consistent
with that of Captain Pluzhnikov of the MT prison, who stated that he had received two calls at about 9 p.m. to
prepare for receiving a detainee “who was in a grave condition”, and another call from Major D.F. Markov
shortly thereafter asking him to “write a report on the detainee’s death”.107 Again with respect to the time of
death, Major Markov stated that between 8.15 and 8.20 p.m., he received a message from the duty officer’s
room that Mr Magnitsky was “bad” and went to the cell where he found him unconscious on a stretcher. At
8.50 p.m., Dr Gaus had called him to tell him that Mr Magnitsky was dead.108 But Dr Gaus testified that she
received a call at about 9.20 p.m. that Mr Magnitsky “felt bad” and went to cell No. 4. By contrast, Dr Kornilov
said that while he and his emergency team were waiting to see the patient, the medical officer came back “to
say that the patient was dead”. By contrast, Dr Gaus stated that when she entered the cell at 9.20 p.m., she
found nurse Semenov attempting resuscitation, that “Dr Nafikov ran in to perform resuscitation procedures”
and that on examining the patient herself she found a pulse “only on the carotid artery”. Mr Borshov told me
that nurse Alexander Semenov looked scared when he and his colleagues had tried to interview him about the
circumstances of Mr Magnitsky’s death.
141. The official prison medical record states that Mr Magnitsky was still alive at 9.15 when Dr Kornilov and
his assistant Mr Morozov arrived at cell No. 4. The records describe Mr Magnitsky as “sitting on the cot”,
“sweating and experiencing difficulty breathing” and note that “during the examination performed by the
psychiatrist”, Mr Magnitsky’s condition “suddenly and sharply worsened, and the patient lost consciousness”.
By contrast, Dr Kornilov himself testified that when he came to the cell just before, at 9.15 p.m., there was “no
pulse, no heart beating, no breath, and no arterial tension”. Whilst Dr Kornilov stated that he had reported the
fact that the patient had died before the arrival of the first-aid team to the two medical officers of the detention
centre who were present, this was not mentioned by Drs Gaus and Nafikov. These astonishing contradictions
between the witness testimonies and official records about the time of death have still not been investigated,
let alone resolved.
142. What about the cause of death? Natalia Magnitskaya is convinced that the prison staff deliberately
killed her son. She bases herself on the evidence of the use of rubber batons against her son (see paragraph
133 above), who had clearly been in a critical medical condition even before, and the fact that he was left
without medical attention for the last hours before his death, whilst the civilian emergency team was kept
waiting outside. On the morning of 17 November 2009, Mr Magnitsky’s lawyers were informed by MT staff that
their client had died from pancreonecrosis, rupture of the abdominal membrane and toxic shock. On the same
day at noon, the spokesperson of the Interior Ministry, Ms Irina Dudukina, stated that the cause of death was
heart failure and that there were no signs of violent death.109

106. According to Mr Borshov, who also told me about his initial difficulties in being put in contact with Dr Kornilov, for
whom he expressed high esteem.
107. Quotations from the First Medical Commission Report (No. 40-10) of 12 May 2010, made available by Natalia
Magnitskaya’s lawyers.
108. D.F. Markov, Record of Interrogation, 19 January 2010 (made available by Natalia Magnitskaya’s lawyers).
109. See http://ria.ru/incidents/20091117/194205926.html#ixzz2TTDwjzZv;
http://new-region-2.livejournal.com/48309756.html.
37

 Doc. 13356 Report

143. The official death certificate (“act of death”) of 16 November 2009 prepared on the day of
Mr Magnitsky’s death, signed by Dr Gaus, Major Markov and Captain Pluzhnikov and bearing an official
stamp includes as one of the (possible) causes of death, in addition to “heart failure”, a “closed craniocerebral
injury”. A copy of this document in its original form was obtained by the Public Oversight Committee, Mr
Borshov. But it was later amended, for unexplained and uninvestigated reasons, as shown by documents
made available by Ms Magnitskaya’s lawyers. Whilst the date, the layout and the signatures remained
unchanged, the (abridged) reference to the “closed craniocerebral injury” (which had appeared at the end of a
paragraph) disappeared.110
144. When I raised this apparent manipulation with the representatives of the Investigative Committee,
during my second visit to Moscow, I was told that the document had been referred to out of context and was
legally irrelevant, because Dr Gaus was not qualified to make an assessment of the causes of death. The
causes of death could only be determined by a proper autopsy, which had been done by highly qualified
experts subsequently. When I asked why the document, if it was legally irrelevant, was nevertheless altered in
such an unusual way, I was not given any meaningful reply. Mr Borshov commented that the possibility of a
head injury indicated in the original version of the “act of death” should at the very least have been
investigated and commented on during the official autopsy.
2.3.3. Reactions and judicial proceedings following Mr Magnitsky’s death
145. At the end of November 2009, the then Russian President, Dmitry Medvedev, ordered prosecutors and
the Ministry of Justice to investigate the death of Sergei Magnitsky.
146. However, the initial reaction of the Russian authorities was to downplay wrongdoings. The Head of the
Investigative Committee of the Ministry of the Interior, Aleksey Anichin, at a press conference on
23 December 2009, even described Mr Magnitsky as “guilty” of committing the crimes he was taken to prison
for. The Minister of Justice, Alexander Konovalov, whilst admitting serious problems in pretrial detention
facilities, said that more evidence was needed to show that Mr Magnitsky had not received adequate medical
care. In the opinion of the Head of the Moscow Investigative Committee, Anatoly Bagmet, there was no
justification for starting a criminal case against officials.111 By contrast, the Chairperson of the Moscow
Helsinki Group, Ms Lyudmila Alekseyeva,112 and Human Rights activists from several countries appealed to
President Medvedev to push for criminal proceedings against the suspects, following an independent
investigation carried out by the Moscow Public Oversight Commission chaired by Mr Valery Borshev.113
147. Bill Browder’s campaign also established a list (“Magnitsky list”) of persons suspected of wrongdoings
in this context and is lobbying for these persons to be subjected to “targeted sanctions” (visa bans, asset
freezes).114 The Russian Foreign Ministry considers such measures as an attempt to pressure investigators
and interfere in the internal affairs of another State and that such sanctions would violate the presumption of
innocence. President Putin, shortly after his re-election, has even included fighting off such sanctions (“to work
actively on preventing unilateral extraterritorial sanctions by the United States against Russian legal entities
and individuals”115) in the list of priority foreign policy objectives for the Russian Federation.
148. In January 2011 the United Nations Special Rapporteur on Torture, Juan E. Mendez, opened an
investigation into Mr Magnitsky’s treatment and death. However, the Russian Foreign Ministry turned down
the request to provide information about the investigation into Mr Magnitsky’s death to the United Nations
Human Rights Council.

110. I obtained copies of both versions (in Russian and with a translation into English).
111. See BBC news, 23 November 2009.
112. English translation of Ms Alekseyeva’s letter to Mr Bastrykin, Chairperson of the Investigative Committee in the
Russian Prosecutor General’s Office dated 26 March 2010.
113. See Aldrick, Philip (28 December 2009), “Sergei Magnitsky: independent investigation into death of lawyer slams
Russia”, The Telegraph (London); and the English translation of the report.
114. The European Parliament, in a resolution adopted on 16 December 2010, calls for 60 officials believed to be
connected to Magnitsky’s death to be banned from entering the European Union; the Canadian Parliament's
subcommittee on international human rights adopted a resolution on 30 November 2010 calling for a visa ban and asset
freeze. In the United States, Senator Benjamin Cardin introduced the “Justice for Sergei Magnitsky Act” in the US Senate
with a similar objective; on 4 July 2011, the Dutch Parliament condemned the treatment of Magnitsky and opened the door
to sanctions on named individuals involved in his persecution.
115. See the President’s “Executive Order on measures to implement foreign policy” of 7 May 2012.
38

 Doc. 13356 Report

149. On 6 July 2011, the Presidential Human Rights Council presented a report to President Medvedev
finding that Sergei Magnitsky had been mistreated and denied adequate medical care in prison, particularly in
the last days and hours of his life. “There is also reason to suppose that his death was provoked by beating”,
the report added. The Council singled out a number of officials as being at fault for neglect over his death. The
President reportedly commented that “[p]eople should not die in prison. If they are ill, they should get out for
treatment”.116 The report asserts that “this conflict of interest testifies either to negligence or to a particular
interest on the part of those leading the investigation”.117 Another report published in July 2011 by the
National Anti-Corruption Committee, chaired by Mr Kyrill Kabanov, reportedly found that there was no way Mr
Magnitsky himself could have organised the theft of US$230 million.118
150. The Presidential Human Rights Council noted that “the officials accused by Sergei Magnitsky of
implication in illegal tax refund and involved in the investigation on his case, were not brought to criminal
responsibility but promoted afterwards”.119 Following the release of the Human Rights Council’s findings,
President Medvedev reportedly acknowledged that a crime had been committed in this case. But despite the
fact that the Council named specific officials as being responsible for Mr Magnitsky’s illegal arrest and torture
in detention, no criminal investigation has been opened against the said officials and none of them have been
charged. On the contrary, the Russian Interior Ministry formally rejected as inadmissible the Presidential
Council’s findings.
151. On 13 July 2011, “Physicians for Human Rights”, a non-governmental organisation (NGO) supporting
torture victims, published an independent evaluation of Magnitsky’s medical records, calling his ill-treatment in
custody “deliberate, calculated and inhumane”.120
152. On 18 July 2011, the Russian Investigative Committee indicted a prison doctor at Butyrka, Ms Litvinova,
and the former deputy head of the prison, Mr Kratov, of negligence leading to the death of Mr Magnitsky.121
153. On 30 July 2011, Deputy Prosecutor General Victor Grin ordered the opening of a posthumous criminal
case against Sergei Magnitsky.122 It was assigned to Interior Ministry investigators O. Silchenko and
M. Sapunova, who were members of the investigative team on the case against Mr Magnitsky prior to his
death.
154. In August and September 2011, Magnitsky’s mother and widow were summoned for questioning as
witnesses under the posthumous case opened against the deceased. They objected to the reopening of the
case and to the psychological pressures exerted upon them by the same officials they believe had tortured
Sergei Magnitsky in custody.
155. In September and October 2011, the Interior Ministry refused petitions from relatives to stop
Mr Magnitsky’s posthumous prosecution and to remove the investigators from the case who were suspected
of being involved in Mr Magnitsky’s ill-treatment and death – refusals that were confirmed by the Prosecutor
General’s Office in November 2011. In January 2012, the Interior Ministry insisted that the family should either
participate in the posthumous prosecution or wave their right to Mr Magnitsky’s rehabilitation. In February
2012, Mr Magnitsky’s mother filed new complaints with respect to pressure placed on the family, by the
Russian Interior Ministry, in connection with the posthumous prosecution of her son. On 2 March 2012, she
also complained to the Presidential Human Rights Council about the intensive pressure and intimidation the
family were subjected to. In April and May 2012, more appeals by the mother against the posthumous
prosecution of Sergei Magnitsky were rejected by Russian courts. On 4 April 2012, Amnesty International
supported the mother’s appeals.123

116. See BBC News Europe on 5 July 2011, “Medvedev: Criminal Acts killed Russian Lawyer Magnitsky”.
117. Preliminary Conclusion of the working group on the study of circumstances of Sergey Magnitsky’s death, the working
group on civic engagement in judicial reform, the working group on citizen participation in prevention of corruption and
public safety of the Presidential Human Rights Council, p. 1, paragraph 3.
118. See V. Ruvinsky, “Inside Russia, new light shines on Magnitsky case”, Russia beyond the Headlines, 11 July 2011.
119. See Preliminary Conclusions, op. cit., p. 1, paragraph 2.
120. Available at: https://s3.amazonaws.com/PHR_Reports/magnitsky-report-july2011.pdf; on 6 May 2012, Physicians for
Human Rights issued another statement on the Magnitsky case, calling the destruction of tissue samples a “deliberate and
calculated attempt to prevent justice”.
121. www.itar-tass.com/en/c142/188404.html.
122. Interior Ministry case No. 311578, severed from and then merged again with case No. 153123 and later severed as
case No. 679591.
123. Amnesty International, “Russian Federation: The authorities must stop Sergei Magnitsky’s posthumous criminal
prosecution and bring to justice all those responsible for his death”.
39

 Doc. 13356 Report

156. In February 2012, the Moscow City Court refused an appeal from Mr Magnitsky’s mother against the
refusal by the Russian Investigative Committee to investigate mid- and high-ranking officials of different law
enforcement bodies for the false arrest, torture and murder of her son.
157. In March 2012, the Investigative Committee appointed a new investigator, Mr Strizhov,124 to continue
with investigating an overall case of Mr Magnitsky’s death.125 But investigator Strizhov has since then refused
numerous petitions of the family seeking access to information about the investigation and closed the case in
March 2013 for “lack of crime”. Between June and October 2012, the Investigative Committee, according to
the lawyers, had refused several other petitions to question essential eye witnesses and collect available
documentary evidence concerning this case.
158. Also in March 2012, the United Nations Special Rapporteur on Torture, Mr Juan E. Mendez, published
the results of his review of the case of Sergei Magnitsky, which had been requested by the NGO “Redress”
(based in the United Kingdom) specialising in accountability for torture victims. Mr Mendez called the Russian
Government’s response “unpersuasive” and stressed that Russia had failed to comply with international
obligations under the UN Anti-Torture Convention and with the United Nations Principles on Extralegal and
Arbitrary Executions.126
159. On 2 April 2012, the Investigative Committee dropped the charges against Dr Litvinova, one of the two
prison employees charged for negligently causing Mr Magnitsky’s death by “improper fulfilment of professional
duties”.127 Following legislative changes introduced in early December 2011, the limitation period was
reduced to two years. This made the charges brought in December 2011 time-barred.
160. In May 2012, the Investigative Committee opened a criminal case connected to the tax refund of a
portion of the equivalent of US$230 million via the Moscow Tax Office No. 28 in which Mr Magnitsky was
posthumously named as a perpetrator of the crime he had exposed. Complaints from the Magnitsky family’s
lawyer against this posthumous accusation were rejected.128 I was told that in Moscow in February 2013 that
the investigations were still ongoing. This case was opened in addition to another case (No. 678540) opened
on 1 July 2011 by the Russian Interior Ministry by the order of Deputy General Prosecutor Grin to investigate
the money laundering in relation to the US$230 million theft, in which Mr Magnitsky was also posthumously
named as an accomplice. Deputy General Prosecutor Grin also issued conclusions exonerating all Interior
Ministry officials who were responsible for the proceedings against Mr Magnitsky, finding no violations in their
actions. According to the Magnitsky family’s lawyers, the General Prosecutor’s Office refused to disclose his
conclusions and their reasons to them.
161. In October 2012, during the trial of Dr Dmitry Kratov, deputy director of Butyrka prison in charge of
medical services, Natalia Magnitskaya (Mr Magnitsky’s mother) drew attention in her testimony to the roles of
numerous other officials, none of whom had been charged. During the same trial, in November 2012, a
witness, former prison official Olga Grigorieva, reportedly stated in court that she had received death threats
against her mother and son several weeks before her testimony, that she was told that the case was “ordered”
and everything was “decided” and that she should not “talk”.
162. In November 2012, the United Nations Committee against Torture (UNCAT) noted that the case of
Sergei Magnitsky was “indicative” of a pattern of intimidation and killings not followed by adequate
investigations. In its final observation, the committee states: “In this regard, although authorities revived a
closed criminal investigation into the 2009 death in custody of Mr Sergei Magnitsky following a report of the
Moscow POC, only one relatively low-level prison official has been prosecuted in connection with his death to
date, despite the fact that the POC report concluded that a number of investigators and penitentiary officials,
including the lead investigator in the criminal case against Mr Magnitsky, should have been investigated as
well (articles 2 and 11).”129
163. Finally, in Moscow, on 28 December 2012, Dr Dmitri Kratov, the former Deputy Director in charge of
medical services at Butyrka Prison, who had been charged with involuntary manslaughter from negligence,
was acquitted by the Tverskoy court in Moscow. On 24 December 2012, as the trial neared its end, the

124. Whom I met in Moscow in February 2013.
125. Investigative Committee case No. 366795.
126. See article in The Moscow Times, 28 March 2012, “UN Official Slams Russia on Magnitsky Case”.
127. Investigative Committee case No. 713112.
128. Investigative Committee case No. 461115 (by separating materials of case No. 344212).
129. Advance unrevised report.
40

 Doc. 13356 Report

prosecutor conducting the trial against Dr Kratov had suddenly reversed course and sought acquittal. This
reversal followed a press conference of the President on 20 December 2012 where he reportedly stated:
“Magnitsky died. Died not from torture. He was not tortured. He died from heart failure.”130
164. On 27 April 2013, all the main television channels in Russia showed the Minister of Interior,
Mr Kolokoltsev, praise officers Karpov, Kuznetsov, Tolchinsky, Silchenko, Vinogradova and Droganov for the
good job done on the Magnitsky/Hermitage case and state that they should not be concerned with the fact
that their names were on the American “Magnitsky list”. On the same day, the Minister of Justice, Mr
Konovalov, praised Mr Prokopenko (Head of Matrosskaya Tishina prison) and Mr Komnov (Head of Butyrka
prison) for the job well done in relation to Magnitsky.
2.3.4. Global assessment of the causes of Sergei Magnitsky’s death
165. In light of the above, it is clear that Sergei Magnitsky’s tragic death has many causes, including the
health problems caused by the terrible detention conditions and the failure to provide necessary medical
treatment, which had become particularly acute on the day of his death, combined with the beatings he
suffered on his last evening following his arrival at Matrosskaya Tishina and the subsequent lack of medical
attention. Whether the combination of all these factors ultimately caused heart failure and/or potentially lethal
head injuries may never be established with certainty. But there is no doubt that some of the causes of
Mr Magnitsky’s death were created deliberately, by identifiable persons, others by negligence. The refusal to
grant Mr Magnitsky necessary medical treatment was decided by the investigator in charge of the case for
which Mr Magnitsky was placed under arrest, Mr Silchenko,131 precisely at the time when, according to a
previous diagnosis, he should have been given another ultrasound, followed by surgery. Mr Magnitsky had
previously given testimony accusing two colleagues of Mr Silchenko of complicity in the crimes he had
denounced, and which are now blamed on him. This would be a strong motive for increasing the pressure
already denounced by Mr Magnitsky to make him change his testimony. When this pressure did not produce
the desired result, did the investigators then decide to silence Mr Magnitsky altogether? What happened in the
evening of 16 November 2009 at Matrosskaya Tishina – the seriously sick man was beaten without any valid
grounds,132 and then left without medical or any other attention until he died, all in the presence of such
powerful motives for foul play as those described in this report – was this murder, or was it “only” yet another
case of the usual brutality against pretrial detainees with a tragic, but ultimately unintended outcome? In my
view, the manipulation of the initial “death act” is a strong indication for an official cover-up. So is the rejection
of the two requests for an independent autopsy made by Mr Magnitsky’s family on 17 and 19 November 2009,
and the testimony I received from one of Mr Magnitsky’s lawyers that a member of the Federal Prison Service
he had invited to testify in court refused to do so because she had been threatened. I feel that I still do not
know all there is to know,133 and it is in any case not my role to pass judgment on individual persons.
166. But those whose role it was to ensure that judgment be passed have done a dismal job, as I see it. The
belated, sluggish, and contradictory investigations led only to the indictment of two Butyrka doctors, one of
them for negligently failing to diagnose diseases that Mr Magnitsky never actually had, whilst exonerating all
others – including all those who were present when Mr Magnitsky died at Matrosskaya Tishina, those
responsible for the failure to treat his actual, diagnosed diseases, those responsible for the beatings and for
the numerous cover-ups. To top it all up, the proceedings against one of two indicted persons, Ms Litvinova,
were terminated due to a newly shortened limitation period, and Mr Kratov was acquitted on 28 December
2012 after a last-minute reversal of the position of the Prosecutor’s Office, against the political background of
the angry reaction of the highest Russian authorities to the adoption of the “Magnitsky Act” by the US
Congress.
167. This result – complete “impunity of the killers of Sergei Magnitsky”, as it is formulated in the title of the
motion underlying this report – is simply unacceptable. The official position, which I heard again at the
Prosecutor General’s Office in May 2013, namely that Mr Magnitsky’s death is merely the tragic consequence
of his being unable to withstand the normal rigours of detention, is unacceptable. This is true also of the

130. www.echo.msk.ru/blog/echomsk/973316-echo/.
131. See paragraph 121 above, reply by Mr Silchenko dated 2 September 2009.
132. See point 2.3.2.2 above.
133. In particular, I would have liked to speak with the prison doctors and guards, the members of the civilian psychiatric
emergency team and others whose testimony I could only refer to through written sources and thanks to the information
provided by the POC team and Mr Magnitsky’s lawyers. I had provided a detailed list of these persons to the Russian
authorities already before my first visit in February 2013, and again before my second visit, in May. These meetings never
materialised, despite several attempts from my side.
41

 Doc. 13356 Report

slightly nuanced view I heard at the Investigative Committee, namely that Ms Litvinova was not actually
exonerated of the accusation of negligence by the fact that the proceedings were terminated because of the
statute of limitation.
168. This result should first and foremost be unacceptable for the Russian people and the Russian State.
Sergei Magnitsky had denounced a gigantic robbery whose victim was Russia herself. He died because he
refused to give in to the pressure that corrupt mid-level officials had put on him in order to get away with their
crimes. Why, then, does the Russian State, and at such a high level, try so hard to cover up this crime? Why
do the competent authorities not simply investigate and expose the criminal conspiracy, put the perpetrators
behind bars and follow the “money trail” to get the stolen taxes back?
169. I have heard three possible explanations for the strange behaviour of the Russian authorities described
throughout this report. I should like to say right from the start that I do not subscribe to any of them, but I
presently have no other ideas myself.
170. The first is Mr Browder’s fairly simple thesis: in a mafia-style structure, the “boss” – on pain of losing his
position at the top – can never allow that his “underlings” are held to account by the Law, for whatever they
have done, as long as they remain loyal to him. This also explains, in his view, President Putin’s anger
directed at his lobby campaign in favour of targeted sanctions against corrupt officials.
171. The second approach, which I heard from other interlocutors, is somewhat more sophisticated: in this
view,134 Russia has a huge “parallel budget”, involving massive “black funds” used for stabilising and
expanding the elite’s power, in Russia and beyond, especially in the territory of the former Soviet Union:
power “purchased” in the style of Aldous Huxley’s “Brave New World”, versus power “enforced” as in George
Orwell’s “1984”. Such a parallel budget needs to be fed. According to my interlocutors, the funding methods
include large-scale tax reimbursement frauds (of the sort denounced by Mr Magnitsky), “contributions” of 20%
to 30% collected from bidders obtaining public procurement contracts, payments made by candidates for
potentially lucrative posts in the public sector, “off balance sheet contributions” by State-controlled firms (of the
sort that Hermitage tried to stop as a minority shareholder), and other methods. Sergei Magnitsky merely had
the bad luck to stumble on an operation (the US$230 million tax reimbursement fraud denounced by him) that
was part of this “system”, which had previously been threatened by the “Hermitage effect” (namely minority
shareholder activism denouncing inefficiency and graft).
172. Such an explanation would partly square with the astonishing statement by the outgoing head of the
Russia Central Bank,135 Mr Ignatiev, who said that according to Central Bank records, the equivalent of about
US$49 billion annually were transferred out of Russia illicitly, half of this apparently being the work of one wellorganised group. The “money trail” research done by the Novaya Gazeta journalists also confirms that tax
reimbursement fraud is very wide-spread – the relatively narrow sample of tax reimbursements they
investigated yielded the equivalent of US$1 billion in fraudulent tax reimbursements.
173. During my meeting with Mr Ignatiyev on 21 May 2013, he essentially confirmed what he had said in the
above statement, specifying that whilst the companies set up as initiators and final beneficiaries of money
laundering operations were frequently changed, the intermediary “way stations” often remained the same for a
long time, possibly for fear of the crooks getting lost in their own mazes. Efficient action by the State against
such fraud was hampered by the fact that information and competences to act were spread among numerous
State bodies, which had difficulties in co-ordinating their work. Whilst he had never heard of the notion of a
“parallel budget” or “black budget”, he seemed to agree with me that many Russian civil servants still lack the
sense of duty and loyalty towards their State, which they often treated as a mere cash cow.
174. The third possible explanation for the apparent official cover-up of the Magnitsky case is one that I
heard in political and diplomatic circles: the Russian leadership is so angry about the interference by
Mr Browder in the internal affairs of their country that they reacted in an irrational, even spiteful way. How
else, I was told, could it be explained that the adoption of Russian orphans (mostly handicapped children who
have little chance of adoption in Russia) by American families was blocked in retaliation for the “Magnitsky
Act”? A well-known Russian human rights defender thought that it would have made a lot more sense for the
Russian Duma to pass a “Guantanamo Act” imposing visa bans and account freezes against American
officials involved in the human rights violations committed there. But it would appear that orphans and their
would-be adoptive parents are still the preferred object of retaliation: I heard from an Irish fellow
parliamentarian that Russia had recently dissuaded the Irish Parliament from supporting targeted sanctions

134. Supported by “anecdotal evidence” received off the record.
135. See Bloomberg Businessweek, 20 February 2013, “Russia 2012 illegal outflow was $49 bn, Central Bank says”,
Financial Times, 20 February 2013, “Russia’s missing billions revealed”.
42

 Doc. 13356 Report

modelled on the “Magnitsky Act” by threatening to extend the adoption ban also to Irish families. But I was
also reminded that the high-level cover-up began right after Mr Magnitsky’s death, long before Mr Browder’s
campaign in favour of sanctions had gained any traction.
3. Conclusions
175. As indicated in my introductory memorandum in January 2013, I still see the case of Sergei Magnitsky
in the context of the need to fight corruption in the Russian Federation, of which this case would appear to be
a particularly impressive and well-documented example.136 The objective of this report is therefore not only to
help shed more light on the fate of Sergei Magnitsky and the responsibilities of different officials in this
respect, but also to contribute to a better protection of individuals against lawless behaviour of State officials in
future. The Magnitsky case is just one emblematic example of how helpless individual citizens are once they
are taken into custody. Many nameless detainees have suffered a similar fate without having had the
country’s best lawyers and a wealthy hedge fund manager to back them up. It is for the sake of these
nameless victims that the international community must not accept the outcome of this case so far. In the
interest of the Russian people themselves and of their State, corrupt officials must not be allowed to plunder
State property whilst brutally silencing those standing in their way, with impunity.
176. Should we send a strong message in this sense by supporting the call for targeted sanctions against
officials suspected of involvement in the crime and its cover-up? The argument put forward by well-known
Russian journalists and human rights and anti-corruption activists is interesting: if you really want to interest
our corrupt elites in turning Russia into a better place, you must sentence them to “life in Russia”, by
preventing them from taking out of the country what they value most: their money and their families.
177. But the publication of a list of “corrupt officials” who would be subjected to visa bans and account
freezes runs into considerable practical and legal difficulties: it would be necessary to establish a fair
procedure, implemented by an independent, quasi-judicial body giving suspected persons a fair chance to
defend themselves. The Parliamentary Assembly has previously found that the procedure in force at the
United Nations Security Council’s sanctions committee entrusted with establishing an “anti-terrorism black list”
does not fulfil minimum standards of procedural fairness. The European Court of Justice in Luxembourg
censored the Council of the European Union for similar violations.137 If we were to propose similar “targeted
sanctions against individuals, we would have to do better than that. To make a concrete proposal in this
respect would, in my view, exceed the scope of this report. I would therefore propose that we limit ourselves to
a more general appeal to member States to carefully consider putting into place what I would call “intelligent
sanctions”, taking into account different possible approaches, including informal ones such as that apparently
followed by the United Kingdom.138
178. The draft resolution also spells out clearly the areas in which investigations are still lacking and should
therefore be undertaken urgently, as a matter of the “duty to investigate” postulated by the case law of the
European Court of Human Rights in the presence of allegations of unlawful killings and torture.139
179. I should like to finish on a positive note: the vigorous reaction by Russian public opinion140 and civil
society, and especially the professional and fearless work of the Public Oversight Committee (POC) headed
by Mr Valery Borshov, strongly supported by the Presidential Human Rights Council, are as many reasons for
hope. The robust public mandate and independence of the POC, following a British model, is an achievement
that Russia can be proud of. Clearly, the outcome, to date, of the Magnitsky case, is not.

136. See US State Department Country Reports on Human Rights Practices for 2011 (published in May 2012); the report
on Russia states in its Section 4 on Official Corruption and Government Transparency: “Corruption was widespread
throughout the executive, legislative, and judicial branches at all levels of government. … When whistle-blowers
complained about official corruption, sometimes the same government official who was the subject of the complaint was
asked to investigate, which often led to retaliation against the whistle-blower, generally in the form of criminal prosecution.
A prominent example is that of Sergey Magnitskiy, who was prosecuted by the same Internal Affairs Ministry officers he
implicated in the theft of five billion rubles … through a fraudulent tax rebate scheme.”
137. See Resolution 1597 (2008) and Recommendation 1824 (2011) on UN Security Council and EU blacklists and
Doc. 11454 (rapporteur: Mr Dick Marty, Switzerland, ALDE).
138. The United Kingdom’s policy is to deny visas of entry to any persons suspected of having committed serious crimes
and/or human rights violations. But the authorities have so far refrained from publishing a list of such persons.
139. As the Assembly did in its report on the Gongadze case in Ukraine (Resolution 1645 (2008), Doc. 11686 (note 10
above).
140. Reportedly, more than 3 500 articles appeared in the Russian press between 22 November 2009 and 22 November
2011 alone.
43

 Doc. 13356 Report

180. I therefore call on the Assembly to send a clear signal to the Russian authorities that the cover-up must
be reversed and the true culprits must be held to account, by supporting the draft resolution preceding this
report.

44

 Doc. 13356 Report

Appendix 1 – Update in light of new information received141
1. Introduction
1.
At its meeting on 26 June 2013, the Committee on Legal Affairs and Human Rights held a general
discussion on a draft report and decided to return to the matter at its next meeting on 4 September 2013 for
the adoption of the draft resolution and invited all sides to submit further information in writing by the end of
July, having declassified the draft report.
2.
On 31 July 2013, I received three letters from the Russian Prosecutor General’s Office, the
Investigative Committee and the Ministry of Justice.142 On the same day, I also received a message from the
Russian delegation informing me that my request for copies of the first-instance judgments promulgated on 11
July 2013 against Sergey Magnitsky and William Browder finding them guilty of tax evasion could not be
fulfilled as the judgments would only become public after their entry into legal force.143 Finally, Open Society
Justice Initiative sent me copy of an addendum to the Forensic Report by “Physicians for Human Rights” with
numerous attachments (excerpts, in translation, from witness testimony and other Russian documents from
court proceedings), and I accessed documentation which became public following a court hearing on 24 July
2013 in London, concerning the libel suit by Mr Karpov against Mr Browder. In August 2013, I also received a
file from Mr Karpov’s lawyers.
2. Evaluation of the additional information received
2.1. Information received from the Russian authorities
1.
In view of the discussion at the committee meeting on 26 June and the letter I subsequently addressed
to the Russian delegation specifying the additional information I required, I am rather disappointed with the
information received, which does not include any new elements of proof or explanations beyond the material
on the basis of which I produced the draft report.
2.1.1. The letters from the Prosecutor General’s Office and from the Investigative Committee
1.
Regarding the need for providing additional elements to the committee, the letters from the Prosecutor
General’s Office and from the Investigative Committee apparently contradict each other. The former claims
that:
“Mr Gross himself has no knowledge of the documents of the criminal case at point and, despite the
offer from the General Prosecutor’s Office of the Russian Federation, has no wish to familiarise himself
with them”.
2.

By contrast, the Investigative Committee refused to provide any further evidence as they
“believe that a satisfactory amount of necessary documentation and information on the findings of the
investigation in this criminal case was submitted at working meetings with Andreas Gross. Given the
stance of the PACE committee delegation in this matter, we do not think that it serves any purpose to
submit any further documentary information”.

3.

The Investigative Committee’s letter concludes by stating that
“the other questions mentioned by Mr Gross fall within the remit of the Investigations Department of the
Russian Ministry of Internal Affairs”.

141. This appendix was initially issued as an addendum to the draft report (document AS/Jur (2013) 24). It presents
information received after the publication of the draft report on 25 June 2013. See also the synopses of the committee’s
meetings on 24-27 June and 4 September 2013.
142. In Russian; translation, by the Russian authorities, into French received on 10 August 2013.
143. I was also told that I could obtain a copy of these judgments from Mr Browder, whose lawyer had appealed the
judgments on his behalf. I contacted Mr Browder, who recalled that Mr Magnitsky’s family and he had boycotted the
posthumous, respectively in absentia proceedings from the beginning as they had no confidence in the fairness of these
proceedings and in the independence of the tribunals in these cases. They had no contact to the lawyer appointed by the
authorities and did not wish to enter into any communication with him now. I therefore have to accept that I cannot receive
copies of these judgments although I find it difficult to comprehend the explanation given by the Russian delegation that
the judgment (which was read out in full in open court) would only enter the public domain upon its entry into legal force. It
transpires from the media reports about these judgments that they concern only the “Kalmykia case” (tax evasion, draft
Report paragraphs. 55-72), whereas the investigation on the case concerning the US$230 million tax reimbursement fraud
denounced by Mr Magnitsky and Mr Browder and now blamed on them (draft report, paragraphs 73-114) is still continuing.
45

 Doc. 13356 Report

4.
The Ministry of Internal Affairs, in turn, did not respond at all to the call for additional information. To
sum up, the Prosecutor General’s Office does not wish to provide me with additional elements from the case
file because I have not shown a real interest, whereas the Investigative Committee considers that my interest
in additional elements of information goes too far because I already received everything they could give me.
5.
On substance, the letter from the Prosecutor General’s Office insists that the posthumous trial144
corresponds to the family’s request. This is rather surprising. I listened at length both to Mr Magnitsky’s widow
and to his mother, who expressed their strong opposition to the posthumous trial against him, complained
about harassment by the judicial authorities summoning them for questioning on Mr Magnitsky’s behalf and
showed me copies of several applications sent to the Prosecutor General’s Office to this effect. Ironically, the
same senior official who signed the letter to me of 31 July 2013 also signed the decision to reject the family’s
appeal against the posthumous reopening of the trial. The argument used in the letter addressed to me that
the family’s public affirmation of Mr Magnitsky’s innocence necessarily meant that they wanted the trial to take
place is unacceptable as it violates both the presumption of innocence guaranteed also in the Russian
Constitution and the right to freedom of speech. This argument is based on a misunderstanding of the
judgment of the Russian Constitutional Court of 14 July 2011 to which the letter refers and whose meaning
was expertly explained to me by the Constitutional Court’s former Vice-President.145
6.
Otherwise, the letter merely repeats the position of the Prosecutor General’s Office’s regarding the
innocence of various officials and the purported guilt of Mr Magnitsky and Mr Browder, as recognised in part
by the judgment of the Tverskoy District Court in Moscow of 11 July 2013. They were found guilty of tax
evasion, in line with the accusations already analysed in detail in the draft report (“Kalmykia case”).146
7.
Regarding the US$230 million tax reimbursement fraud, initially denounced by Mr Magnitsky and
Mr Browder and subsequently blamed on them,147 the letter reads as follows:
“It is quite clear from the report that Mr Gross is expressing his contempt for the decisions of the
Russian courts which have established in particular that it was the representatives of the Hermitage
investment fund who had themselves voluntarily re-registered the “Makhaon”, “Parfenion” and “Rilend”
companies in the name of other individuals, a fact that Mr Browder is seeking to conceal by shifting the
blame, without any foundation, onto the law enforcement agencies of the Russian Federation.”
8.
In the draft report, I have described in some detail why it is absurd that Messrs Magnitsky and Browder
themselves committed the fraud they had denounced in their detailed criminal complaints made before the
fraud actually happened. The judgments recognising the claims against the Hermitage companies effectively
annulling the profits for which Hermitage had paid the equivalent of US$230 million in taxes were obtained by
lawyers acting on behalf of the criminal conspiracy – on both sides of the court cases in question. They were
shown to have travelled frequently with some of the officials accused of being involved in the conspiracy. The
court ruling of 30 July 2007 in favour of the convicted criminal Mr Markelov, transferring to “Pluton” (a
company owned by Mr Markelov) the three Hermitage companies mentioned in the above quote from the
Prosecutor General’s Office, was based on false documents.148 Upon the discovery of the fraud, the lawful
owners of the Hermitage companies succeed in having the ruling of 30 July 2007 overturned, but then the
criminal conspirators came up with another plot: they claimed, in their appeal, that Mr Markelov (“Pluton”) had
acquired the Hermitage companies from a Mr Gasanov with whom he had purportedly signed an agreement
on the companies’ sale on 31 July 2007. Mr Gasanov died on 1 October 2007 and could no longer be
questioned. But why did Mr Markelov feel the need to buy the three companies on 31 July 2007 after he had
obtained a court ruling recognising him as the owner the day before, on 30 July 2007? The court of first
instance, which had looked into the merits of the case, had confirmed Hermitage as the lawful owners of the
three companies in September 2009. The criminal conspirators appealed this decision via an application from
Mr Markelov/”Pluton” – at the time when Mr Markelov was serving a five-year prison sentence for his role in
the US$230 million fraud! The conspirators succeeded in having the stolen Hermitage companies (Makhaon,
Parfenion and Rilend) liquidated by the time the appeal was heard. The appeal court then refused to
recognise the rights of Hermitage over the three companies on the ground that they had been liquidated and
that there was therefore no reason to consider the merits. This is, in short, the meaning of the court decisions,
copies of which the Prosecutor General’s Office handed to me during my second visit to Moscow and which I

144. See draft report, paragraphs 66-67.
145. Ibid.
146. Ibid., paragraphs 55-72.
147. Ibid., paragraphs 73-114.
148. I have received copies of sworn statements (“affidavits”) dated 5 June 2008 by the directors of the Hermitage Fund’s
subsidiaries who were the lawful owners of the three “hijacked” Russian companies.
46

 Doc. 13356 Report

referred to in the draft report.149 They show how the conspirators have succeeded in misusing certain
Russian courts for their purposes. It is really for the Prosecutor General’s Office to ask the rather obvious
questions following from this state of affairs rather than criticising those who point out the inconsistencies.
2.1.2. The letter from the Ministry of Justice
1.
The third and longest letter received on 31 July 2013 is that of the Ministry of Justice, which submits a
fairly detailed summary of the stay of Mr Magnitsky in different pretrial detention centres and of the evolution
of his state of health and the diagnostics and treatment carried out in detention. Despite its detailed character,
the submission skips over a number of salient facts, which are well established in official documents, for
example the frequent transfers of Mr Magnitsky between different cells in the same pretrial detention centre
and the use of rubber batons against him shortly before his death. The testimony by the civilian emergency
doctor, who found Mr Magnitsky dead after having been kept waiting for over an hour in front of the prison,
was completely ignored.
2.
Nevertheless, the Ministry of Justice deserves credit for accepting the fact that certain employees of the
prison administration had not carried out their duties satisfactorily, including Ms Litvinova, a hygiene expert at
Butyrska, and several other officials who, according to the letter, were demoted or otherwise sanctioned. This
said, the fact remains that the one prison doctor the authorities have recognised as having been guilty of
criminal wrongdoings – Ms Litvinova – could not be prosecuted successfully because of the statute of
limitation, which obliged the authorities to terminate the proceedings after they had dragged their feet for many
months. My impression is that Ms Litvinova, who was allegedly not even qualified to dispense medical
treatment, is a convenient scapegoat, whilst others, including Dr Gaus, the Matrosskaya Tishina doctor in
charge when Mr Magnitsky suffered a terrible crisis and died without any medical attention, have never been
indicted. The letter also fails to explain the U-turn by the prosecution in the case against Mr Kratov, the other
Butyrka prison doctor indicted for criminal negligence. Shortly after a public statement by President Putin
effectively exonerating all involved officials, the prosecution suddenly reversed course and requested
Mr Kratov’s acquittal, which was promptly granted by the court.
3.
The letter indicates that a number of other officials were disciplined or demoted due to Mr Magnitsky’s
death in detention, including Lieutenant Colonel Telyatnikov, Lieutenant Colonel Komnov and Major General
Davydov. But according to my information, Mr Davydov simply retired from his position as the Head of the
Federal Prison Administration for Moscow. Mr Telyatnikov, one of Mr Davydov’s collaborators, was made
governor of Burtyrka prison, which is arguably a promotion. Only Mr Komnov, who was the governor of
Butyrka prison during Mr Magnitsky’s stay, can be seen as having been demoted, as he was made deputy
governor of another prison in Moscow.
2.2. Information received from other sources
2.2.1. Additional medical information
1.
The lawyers assisting Mr Magnitsky’s mother, Ms Natalya Magnitskaya, with her application to the
European Court of Human Rights,150 have made available a Forensic Report151 and a significant volume of
materials from the Russian court proceedings against the medical staff prosecuted for negligence (witness
testimony, extracts from Mr Magnitsky’s medical file and other documents, including the results of the
ultrasound examination, translated into English).
2.
This additional information clearly confirms the assessment given in the draft report of the
circumstances of the deterioration of Mr Magnitsky’s health while in detention and in particular of the gross
mismanagement of the acute crisis just before his death.152

149. Paragraph 62.
150. Funded by the Open Society Justice Initiative, not by Mr Browder.
151. Addendum dated 16 October 2012 to PHR/IFP Report of June 28, 2011 on the Forensic Review of Sergei Magnitsky
documentation, by the Pathology Consultant of Physicians for Human Rights Forensic, Robert C. Bux, M.D. (IFP Case
No. RUSSEM20101216).
152. See draft report, paragraphs137-144 and165-166.
47

 Doc. 13356 Report

3.
The diagnosis of severe pancreatitis made following the ultrasound examination of the abdominal cavity
organs on 1 July 2009 (in particular, length of the pancreatic gland of 31 cm, the normal length being
12-15 cm) and its cause – gallstones (cholelithiasis)153 – is very specific:
“… the diagnosis is quite obvious and easy to make. Any practicing clinical physician would have been
able to see this from the ultrasound examination and address the problem by surgically removing the
gallbladder.”154
4.

The expert also stresses the dire consequences of this condition for Mr Magnitsky:
“Pancreatitis, whether acute or chronic, typically produces severe, to excruciating, unrelenting
abdominal pain and frequent bouts of vomiting.”155

5.

Treatment would have been straightforward. In the words of the forensic expert:
“Given that the pancreatitis was most likely caused by the gallstones, it would have been a relatively
simple surgical operation to remove the gallstones, which would have led to a swift recovery.”156

6.
But shortly before the scheduled treatment, at Matrosskaya Tishina, where the diagnosis was made,
Mr Magnitsky was transferred to Butyrka prison, which was not equipped for surgery, and despite his
numerous documented requests for medical assistance, he was not given any adequate treatment. In fact,
one of the drugs he was prescribed at Butyrka – Diclofenac – is actually know to worsen or even cause
pancreatitis.157
7.

In the words of the forensic expert, here is what happens when pancreatitis is left untreated:
“Left untreated, acute pancreatitis may continue to worsen or lead to chronic pancreatitis and can lead
to infection, including peritonitis (an infection of the abdominal cavity), septic shock (hypotension, which
can lead to cardiovascular collapse), and ultimately death.”158

8.

The following are the symptoms of septic shock, and the urgent treatment it necessitates:
“This medical condition is manifested by changes in behaviour and mental status including agitation,
confusion, lethargy, coma and death. Psychiatrists are trained to differentiate between behavioural
changes caused by mental illness and behavioural changes caused by an underlying medical condition
… The correct treatment for septic shock arising from untreated pancreatitis and/or peritonitis requires
immediate, aggressive resuscitation with fluids and electrolytes, especially calcium, antibiotics, if
indicated, and intense supportive care, which necessitates treatment in an intensive care unit until the
patient can be stabilised. Left untreated, a patient suffering from such symptoms will go into irreversible
hypovolemic shock and die.”

9.
These are precisely the symptoms Mr Magnitsky showed when he was admitted to Matrosskaya
Tishina, where he was transported by ambulance on 16 November 2009 following a critical deterioration of his
health at Butyrka. But instead of receiving the urgently needed treatment, Sergei Magnitsky was “tranquillised”
by a beating with rubber batons, handcuffed and thrown into a holding cell, alone and without any medical
attention. The civilian emergency medical team was kept waiting in front of the prison for over an hour and
could only state that death had occurred at least fifteen minutes before they were finally allowed in.
10.

The forensic expert’s assessment is very clear:
“Consequently, the decision by the authorities at Matrosskaya Tishina prison to physically restrain
Mr Magnitsky, keep him in a cell for two hours, while denying standard medical treatment, resulted in
his death.”

153. The ultrasound reports that the gall bladder contained no less than 6 stones of a diameter between 4 and 7 mm each.
154. Addendum to the PHR/IFP Report, op. cit., p. 3.
155. Ibid., p. 4.
156. Addendum to the PHR/IFP Report, op. cit.
157. Ibid., Appendix B, Extract from the medical record of the examination of Mr Magnitsky by surgeon Galustov, Analysis
of the medical documents and case materials, extract from the record of interrogation of N.N. Magnitskaya, the aggrieved
party, dated 22 January 2010; extract from the record of interrogation of T.N. Rudenko, witness, dated 20 October 2010;
extract from case history No. 318, the Federal Budgetary Institution Pretrial Detention Centre IZ-77/2, treatment sheet from
8 October to 12 November.
158. Ibid., p. 4.
48

 Doc. 13356 Report

11. There is nothing I could add to this except to recall that none of the “authorities” present at Matrosskaya
Tishina when Mr Magnitsky died in excruciating pain because he was denied standard medical treatment has
even been indicted.
2.2.2. Documents made public in the libel proceedings in London
1.
As mentioned in the report, one of the policemen accused of wrongdoings in the context of the
Magnitsky case, Mr Pavel Karpov, has launched libel proceedings against, inter alia, Mr Browder, before the
High Court in London. During a preliminary hearing this summer, a set of pleadings by Mr Karpov and a batch
of documents filed in their support have entered into the public domain. In August, Mr Karpov’s lawyers
handed me in Bern a file on the libel case against Mr Browder. Mr Karpov’s pleadings concern inter alia the
source of his and his family’s wealth, and the basis for his luxurious lifestyle which appear to be quite out of
proportion with his official salary. According to Mr Karpov’s own submission, his salary in 2011 (the last year
before his early retirement) was the equivalent of about €17 000 – per year. Mr Karpov explained that he had
supplemented his policeman’s salary by occasional work as an interior decorator in his mother’s business and
that the property acquisitions by himself and by his mother were financed by the proceeds of the profitable
resale of properties acquired earlier. I received similar explanations from the prosecutorial authorities in
Moscow. But the amounts do not add up at all, and I am also not convinced that the difference can be
explained by “gifts” from rich friends and ex-girlfriends, as Mr Karpov added. I would just like to highlight two
points resulting from the documents submitted by Mr Karpov in London:
2.
Firstly, according to the “conclusions of the internal inquiry on the application of D.R. Firestone”159 by
Interior Ministry Police Colonel E.S. Sibilev of 17 September 2010,
“Karpov has no other sources of income except his salary”.160
3.
As we have just seen, Mr Karpov explained in his own pleadings before the court in London how he
supplemented his police salary. He must have deviated from the truth either in the course of the internal
inquiry of law enforcement authorities in Moscow or in his pleadings in the libel case in London.
4.
Secondly, in a memorandum dated 18 November 2010, Police Colonel E.S. Sibilev, the author of the
above-mentioned “conclusions of the internal inquiry”, reported on a visit he had made on the same day to the
Interior Ministry’s Investigations Committee. Mr Sibilev indicates that
“Karpov refused to give additional explanations, saying that earlier during the probe he had given
detailed explanations. … According to Karpov’s words, his mother, N.F. Karpova, has refused to appear
at DSB of Interior Ministry of Russia to give explanations on the subject matter of the probe, as well as
to submit any statements on the subject matter of the application from Firestone”.
5.
In other words, both Mr Karpov and his mother refused to co-operate with the officer tasked with
carrying out the internal inquiry, and the inquirer just left it at that, for reasons of competence, as stated in the
above-mentioned “conclusions of the internal inquiry”:161
“Bearing in mind that close relatives of Karpov are not the serving officers of police, ascertaining the
state of their income and acquired valuable property is not within the remit of the Department of the
Internal Security of the Ministry of Interior of Russia.”
6.
This confirms my doubts as to the seriousness of the affirmation made by the representatives of the
authorities in Moscow that the allegations of suspicious wealth of Mr Karpov and other officials had been fully
investigated and that the assets in question had been acquired lawfully.162
3. Conclusions
1.
The information received following the committee’s invitation does not put into question the findings of
the report, to the contrary. The additional medical details received through the OSJI lawyers provide an
impressive illustration of Mr Magnitsky’s horrible suffering at the end of his life and the callous behaviour of
those directly responsible, none of whom has yet been held to account. The material published in the course

159. The law firm which had been Mr Magnitsky’s employer and which had lodged an application with the Russian law
enforcement authorities to investigate the suspect enrichment of Mr Karpov.
160. Supporting documentation attached to Mr Karpov’s pleadings, pp. 299-304 (at 301).
161. Ibid., p. 302.
162. See the report, paragraph 100.
49

 Doc. 13356 Report

of the libel proceedings in London corroborate my suspicion that the sudden enrichment of Mr Karpov and
other officials suspected of involvement in the crime denounced by Mr Magnitsky was never properly
investigated.
2.
My initial conclusion, namely that we are in the presence of a massive cover-up involving senior officials
of the competent ministries, the Prosecutor General’s Office, the Investigative Committee and even certain
courts finds itself further consolidated. But what are the reasons for this cover-up? This question still remains
unanswered.163

163. Ibid., paragraphs 169-174.
50

 Doc. 13356 Report

Appendix 2 – Timeline
1991: Federal Law on “Corporate Tax of Enterprises” (conditional tax reductions)
1999: Kalmykian tax law offering conditional tax reductions
2001: alleged underpayment of taxes by Hermitage in Kalmykia
2002: Kalmykian tax law adding an additional requirement to qualify for tax reductions and Federal tax law
abolishing the reduction foreseen in the 1991 law
3/2004: full tax audit of Hermitage’s Kalmykian companies (result: no underpayment of taxes)
10/2004: criminal case for tax evasion opened against Hermitage CEO Mr Browder (Kalmykia case)
12/2004: “repeat tax audit” (result: underpayment of taxes)
5/5/2005: criminal case (Kalmykia case) against Mr Browder closed for “lack of crime”
11/2005 : Bill Browder refused visa by Russia
5/4/2006: banker Mr Klyuev travels to Cyprus with investigator Karpov
1/1 and 16/1/2007: Ms Stepanova (head of tax office who would subsequently authorise fraudulent
disbursements) and banker Mr Klyuev travel to Dubai and Geneva (shortly after “Rengaz” fraud)
19/02/2007: suspect telephone call by Lt. Col. Kuznetsov to Hermitage
28/4/2007: Lt. Col. Kuznetsov and Mr Klyuev travel to Cyprus on Mr Klyuev’s private jet
28/5/2007: Kameya case opened against Hermitage
4/6/2007: search and seizure at Hermitage and Firestone Duncan offices (Lt. Col. Kuznetsov)
10/2007: Hermitage learns about the thefts of their holding companies and fraudulent court cases
against them
3/12 and 6/12/2007: detailed criminal complaints by Hermitage (with Mr Magnitsky’s collaboration)
about “company theft”
21/12 and 24/12/2007: application for USD$230 million tax refund by the company thieves”
26/12/2007: disbursement of the US$230 million tax refund to the “company thieves” (into a fresh
account in Mr Klyuev’s bank, which folds shortly after)
1/2008: Ms Stepanova and Mr Klyuev (and their spouses) travel to Dubai
5/2/2008: opening of a criminal case following the complaint on the “company thefts”
4/5/2008: opening of criminal proceedings against Hermitage’s lawyers for acting on false power of attorney
26/2/2008: Major Karpov, two subordinates of Lt. Col. Kuznetsov and an FSB officer travel to Kalmykia
27/2/2008: criminal case against Mr Browder (Kalmykia case) reopened
5/6/2008: testimony by Mr Magnitsky accusing Lt. Col. Kuznetsov and Major Karpov of involvement in
the company thefts and tax reimbursement fraud
23/7/2008: detailed criminal complaints by Hermitage about the fraudulent tax refund using the stolen
companies
20/8/2008: search of Hermitage lawyer’s premises and seizure of freshly delivered DHL package
7/10/2008: testimony by Mr Magnitsky before the Investigative Committee confirming that of 5/6/2008
27/10/2008: new detailed criminal complaint by Hermitage
6/11/2008: case denounced by Mr Magnitsky assigned to Lt. Col. Kuznetsov
12/11/2008: case against Hermitage/Magnitsky assigned to the same investigators
24/11/2008: Mr Magnitsky arrested at his home by subordinates of Lt. Col. Kuznetsov
51

 Doc. 13356 Report

25/11/2008: Mr Magnitsky added as co-defendant to the criminal case (Kalmykia case) against Mr Browder.
He was held in Temporary Detention Centre IVS-1, then in Detention Centre No. 5, both in Moscow
24/1/2009: Mr Markelov turned himself in for the US$230 million tax theft
10/4/2009: indictment of Mr Markelov
28/4/2009: conviction of Mr Markelov for the US$230 million tax theft, sentenced to five years in prison
4/2009: Mr Magnitiski transferred to Matrosskaya Tishina prison
1/7/2009: Mr Magnitsky diagnosed with pancreatitis and gallstones (at Matrosskaya Tishina prison)
25/7/2009: Mr Magnitsky transferred to Butyrka prison (shortly before scheduled surgery at
Matrosskaya Tishina prison)
11/9/2009: complaint by Mr Magnitsky about “organised physical and psychological pressure”
14/10, 11/11 and 12/11/2009: accusations by Mr Magnitsky of conflict of interest of his accusers
16/11/2009 (afternoon): Mr Magnitsky transported from Butyrka to Matrosskaya Tishina prison
16/11/2009 (evening): death of Mr Magnitsky at Matrosskaya Tishina prison
11/2009: President Medvedyev orders investigation of Mr Magnitsky’s death
28/12/2009: Public Oversight Committee presents results of its investigation
17/9/2010: Interior Ministry internal inquiry conclusions on Mr Karpov’s wealth
1/7/2011: opening of a posthumous criminal case against Mr Magnitsky (money laundering)
6/7/2011: Presidential Human Rights Council reports to President Medvedyev
14/7/2011: judgment of the Russian Constitutional Court allowing posthumous trials on the request of the
family for rehabilitation purposes
18/7/2011: commencement of criminal proceedings against Butyrka prison doctor, Ms Litvinenko
30/7/2011: opening of a posthumous criminal case against Mr Magnitsky (tax evasion)
8/2011 and 9/2011: Mr Magnitsky’s mother and widow summoned for questioning
9/2011 and 10/2011: refusal of petitions from Mr Magnitsky’s relatives to stop his posthumous
prosecution
1/2012: new criminal complaints by Firestone Duncan against law enforcement officials suspected of
corruption (following earlier, unanswered complaints in mid-2010)
3/2012: appointment of a new investigator (Mr Strizhov) to continue investigating Mr Magnitsky’s death
2/4/2012: charges against Butyrka prison doctor Ms Litvinova dropped (prescription)
4/3/2012: early release of Mr Markelov from prison
5/2012: opening of a criminal case against Mr Magnitsky (posthumously) for the US$230 million tax
refund exposed by him
28/11/2012: indictments (posthumously) of Mr Magnitsky and (in absentia) of Mr Browder for tax
evasion (Kalmykia case)
20/12/2012: press conference by President Putin (Magnitsky was not tortured, he died from heart failure)
24/12/2012: in the trial against Mr Kratov (Butyrka prison Deputy Director in charge of medical services),
prosecution reverses course and requests acquittal
28/12/2012: acquittal of Mr Kratov
3/2013: case on circumstances of Mr Magnitsky’s death closed for “lack of crime”
22/3/2013: start of posthumous/in absentia trial of Mr Magnitsky and Mr Browder (Kalmykia case)
52

 Doc. 13356 Report

27/4/2013: on television, Interior and Justice Ministers praise officers for job well done in the Magnitsky/
Hermitage case
11/7/2013: Tverskoy Court finds Mr Magnitsky and Mr Browder guilty of tax evasion (Kalmykia case)

53