20 Nov 2020
Swiss prosecutors are close to ending a decade-old probe into alleged money laundering tied to a $230 million tax-fraud case pursued by Sergei Magnitsky, whose death in a Russian jail prompted the U.S. to enact laws targeting those responsible.
The Swiss federal prosecutors outlined their intention to close the case soon in a Nov. 6 letter to Hermitage Capital Management, a London-based firm founded by Bill Browder, which made the allegations in the wake of Magnitsky’s 2009 death.
Before his 2008 arrest in Russia, Magnitsky had been investigating what he believed was a conspiracy to take control of three Hermitage companies and then fraudulently claim back $230 million in refunds from taxes Hermitage had previously paid. The Magnitsky Act was passed in 2012 and allows the American government to punish people it sees as human-rights violators by freezing their assets and denying them entry to the U.S.
The Swiss prosecutors said they intend to confiscate as much as $4 million from Swiss bank accounts controlled by entities in the case. Those are the same entities that Hermitage Capital says are controlled by Russians who laundered $24 million in proceeds from the tax scheme through Swiss banks.
Hermitage Capital’s status as plaintiff is also to be reviewed following challenges from third parties in the case, the prosecutors said.
Hermitage Capital said it will challenge the decision to confiscate such small amounts and also request further investigation before a Dec. 8 deadline. Swiss prosecutors are ducking their responsibility and trying to prematurely wrap up the case, the firm says.
“The Swiss General Prosecutor’s office also wants to avoid being held to account,” Hermitage said in a statement. “In the same letter, they also wanted to kick Hermitage off of the case so we could not challenge them.”
In a statement, the Attorney General’s office said that it was justified to close the case against “persons unknown” after concluding its investigation. It planned to order the forfeiture of money “insofar as a link can be established” between the assets in Switzerland and crimes committed in Russia, it said.
By Hugo Miller, Bloomberg, 19 November 2020
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