ICC Office of the Prosecutor Weekly Briefing – April 2012
Magnitsky Case Files Identify New Information on Russian Officials Involved In $230 Million Tax Fraud Cover-Up
Press Release
Hermitage Capital
18 April 2012 — New files from the posthumous case files against Sergei Magnitsky reveal the name of the main “expert” witness used to absolve Interior Ministry officers from liability for the $230 million corruption scheme uncovered by Sergei Magnitsky. The expert was Maxim Tretiakov, head of the legal department of Moscow Tax Office No 28, the office at the centre of the corrupt tax refunds scheme.
In return for his “friendly testimony”, the Interior Ministry officers who themselves had a conflict of interest, exonerated him and his colleagues and claimed that the $230 million tax refund was executed by a “sawmill employee” and a “jobless” individual, and that all bank records proving otherwise had burned in a truck explosion and cannot be traced. As a result, officials from the Moscow Tax Office Number 28 were able to continue with their corrupt scheme, and were recently shown to have executed $1 billion in fraudulent tax refunds over a four-year period from 2006-2010. Families of the tax and Interior Ministry officers involved in the scheme have become $47 million richer after the thefts and have been shown to invest in luxurious foreign real estate and foreign bank accounts.
“The fact that the head of the legal department at the tax office who oversaw the theft of the $230 million that Sergei Magnitsky uncovered would be the expert witness justifying the police actions sheds further light on the absurdity and complete breakdown of law in Russia. In any other country, revelations like this would lead to mass resignations of cabinet ministers,” said a Hermitage Capital representative.
Documents from the case files indicate that Maxim Tretiakov from the Moscow Tax Office No 28 provided “expert” testimony on 12 February 2008, two months after his Tax Office perpetrated the $230 million tax refund. His testimony was obtained by Pavel Karpov, Interior Ministry officer directly implicated in the $230 million tax refund. Pavel Karpov was named by Sergei Magnitsky and in Hermitage Fund’s complaints, along with officer Artem Kuznetsov, for their role in the illegal seizure of documents of Hermitage Fund companies that were used by Russian officials and criminals to fraudulently re-register those companies and perpetrate the tax refund scheme.
Maxim Tretiakov whose office approved the $230 million tax refund in one day, claimed that there was a legal justification for Interior Ministry officers’ actions. To confirm his expertise, Mr Tretiakov said in his testimony to investigator Karpov: “My job responsibilities include the representation of the interests of tax inspection in court, sanctioning of decisions, and clarification of current legislation.”
A year later, on 27 February 2009, Mr. Tretiakov gave further testimony in relation to the $230 million tax refund. He claimed he had not been aware that the refund was illegal and requested to be declared a “victim,” claiming his “business reputation suffered” from the refund. “On 19 February 2009 from the documents received from the Interior Ministry’s Investigative Committee we learned that the directors of Parfenion and Mahaon, earlier in 2007, presented to the tax inspection Number 28 in Moscow false documents to justify the overpayment of income tax for 2006 and thus received illegally budget funds and caused damage to the business reputation of tax office Number 28 and material damage for the refunded amount,” said Mr Tretiakov in his 27 February 2009 testimony.
On the back of Mr Tretiakov’s testimonies, the Interior Ministry’s investigation into the $230 million tax refund was closed in March 2011 concluding that the tax officials, including Maxim Tretiakov, were “tricked,” “mislead” and “unaware.” The only persons prosecuted by the Interior Ministry for the largest single tax refund fraud in Russian history, were a sawmill employee and an unemployed man. Both men had previous links to Interior Ministry officers Artem Kuznetsov and Pavel Karpov named by Sergei Magnitsky as involved in the scam (http://www.ft.com/cms/s/0/bdae02a8-e784-11df-b5b4-00144feab49a.html#axzz1sKATheoD) who were absolved from responsibility.
At the same time, Mr Tretiakov’s tax office was in the middle of a four-year $1 billion tax refund embezzlement scheme, according to the newspaper Novaya Gazeta (http://www.novayagazeta.ru/inquests/51924.html).
Tax Official Maxim Tretiakov is Number 45 on the U.S. Helsinki Commission List of officials involved in the torture and death of Magnitsky and the corruption he uncovered. Investigator Pavel Karpov is Number 21 on the list.
The scale and duration of the tax refund scheme has raised questions over the role of Alexei Kudrin, former Russian Finance Minister. Public questions were formulated by Andrei Illarionov, former economic advisor to the Russian president (http://echo.msk.ru/blog/aillar/875912-echo/).In Kudrin’s reply on 11 April 2012, he said that neither he, nor his subordinates at the Federal Tax Ministry and Treasury gave instructions to execute the illegal tax refunds (http://akudrin.ru/news/otvety-na-voprosy.html). This prompted further questions from Mr Illarionov on 12 April 2012 (http://echo.msk.ru/blog/aillar/877960-echo/questioning) who is challenging whether Mr Kudrin is fit to lead the Committee for Civic Initiatives, an organization he unveiled on 5 April 2012, which stated fighting corruption as one of its goals (http://akudrin.ru/news/zayavlenie-o-sozdanii-komiteta-grazhdanskikh-initsiativ.html).
For further information please contact:
Hermitage Capital
Chávez Decline Forecasts Instability for Venezuela, Military Forces Consolidating Power
by Emilee Gaebler
Impunity Watch Reporter, South America
CARACAS, Venezuela – As President Hugo Chávez continues his six month fight with an unspecified cancer, talks about the future of Venezuela circulate. A new article, by former Former Secretary of State for the Western Hemisphere Affairs, Roger Noriega, addresses the tenuous situation. The startling article, published just days ago on April 11, describes a complex power scheme that is currently playing itself out.
Noriega believes that the increasing visibility and operational roles of high-ranking military officials are indicators that the military is preparing to take control of the country. In one portion of his article Noriega even notes his belief that the military plans to instate martial law throughout the nation if necessary to gain control in an unstable situation.
“In my estimation, the approaching death of the Venezuelan caudillo could put the country on the path toward a political and social meltdown. The military cadre installed by Chávez in January already is behaving like a de facto regime determined to hold onto power at all costs…his lieutenants and foreign allies are behaving as if he were already dead — consolidating power, fashioning a “revolutionary junta,” and plotting repressive measures,” writes Noriega.
Other analysts express concerns with the recent promotional decisions by Chávez. In January, he named Diosdado Cabello as the leader of the ruling party and of the National Assembly. As reported by MercoPress, this was done to pacify a group of powerful military officers including; Defense Minister – General Henry Rangel Silva, Chief of Intelligence – Cliver Alcalá, and Chief of Military Intelligence – General Hugo Carvajal. All three men have been linked by US drug offices as having associations to the drug trade.
Noriega makes clear his belief that these military cadres will, “never surrender power and the impunity that goes with it,” and abide by the results of an election because it will never provide legitimacy for a “Venezuelan narco-state.” Noreiga forecasts an unstable Venezuela, with the fall of the Chávez administration, where men like Cabello, Silva, Alcalá, and Carvajal will not hesitate to use the billions of dollars in illegal drug money they have acquired and the force of the tens of thousands soldiers under their command to keep hold of power. Troubling statements by General Silva earlier this month hint at this.
“We are going to recognize whoever wins the October 7 elections. We’re not just going to recognize whoever says they won,” was Silva’s obscure comment. He has previously expressed a very strong stance that the Venezuelan military would never accept an opposition party taking control of the country.
The next presidential elections are scheduled to occur in just over six months, on October 7 of 2012. Chávez pledged earlier this year to be a candidate for them, but at a mass in his hometown last week, his statements indicated the gravity of his desperate struggle against cancer.
“Christ … give me life, because I still have things to do for the people and this country. Do not take me yet,” he said. Chávez made this statement just after returning from his third trip to Cuba to receive cancer treatments.
For more information, please see;
MercoPress – Revolutionary Junta to Consolidate Chavism, Forecasts US Expert in LatAm Affairs – 14 April 2012
In Sight – Is the Venezuelan Military Eyeing a Power Grab? – 13 April 2012
Washington Post – Hugo Chávez Rallies Thousands of Supporter Marking Return After 2002 Coup in Venezuela – 13 April 2012
CNN – Chávez Returns to Venezuela After Latest Round of Treatment – 12 April 2012
Foreign Policy – After Chávez, the Narcostate – 11 April 2012
Chinese Prime Minister Fights Corruption
By Greg Donaldson
Impunity Watch Reporter, Asia
BEIJING, China – Prime Minister Wen Jiabao is taking a stand against corruption within the Chinese government and its officers. Mr. Wen was quoted in the Qiushi (a conservative Communist Party journal) when he stated “the government must hold officials accountable for corruption that occurs on their watch and make the results of corruption investigations open to public inspection.”
Mr. Wen has taken strong stances against corruption since the February scandal surrounding former Chongqing party leader Bo Xilai. Mr. Bo’s wife, Gu Kailai, is accused of murdering Neil Heywood, a British businessman. It is believed that the Bo’s and Mr. Heywood had a good relationship until a financial dispute. It is alleged that after the financial dispute Gu Kailai arranged for the killing of Mr. Heywood.
As a result of Mr. Heywood’s death, Mr. Bo was removed from his political positions and party officials released a report which accused him of “serious disciplinary violations.” Government officials have hinted that Mr. Bo will have criminal charges filed against him in the future.
Analysts believe Bo’s case creates a major dilemma for top officials. If the government only reveals small portions of evidence against Bo it will lead many to believe he was removed solely for political reasons. If the accusations are very serious in nature, many will ask how Bo was able to become so powerful. Furthermore, people will begin to wonder how powerful other government officials are and what activities they may be involved in reports The Guardian.
Prime Minister Wen has proposed several focuses that he believes will help halt corruption in the government. In the article published by Qiushi, Mr. Wen demanded that priorities be given to the reforms in the administrative examination and approval system, the allocation of public resources, and many other services provided by the government.
One of the changes Mr. Wen hopes to see in the current system is local governments immediately responding to and investigating problems reported by the people and the media, and publicizing the results of various investigations in a timely manner.”
Mr. Wen explained the importance of upholding the law throughout the country. He explained “China is a socialist country ruled by law, and the dignity and authority of the law cannot be trampled… there is no special citizen before the law. It does not allow any special party members to override the law within the party.”
For more information please see:
International Business Times – Wen Jiabao Again Warns of Threat Posed By Corruption – 16 April 2012
New York Times – Prime Minister Calls for Corruption Crackdown in China – 16 April 2012
China Daily – Premier Wen Vows Greater Anti-Corruption Resolve – 15 April 2012
The Guardian – Wen Jiabao Promises Crackdown on Corruption in China – 15 April 2012
Beheadings, Torture, Murders continue in Mexico
By Brittney Hodnik
Impunity Watch Reporter, North America
MEXICO CITY, Mexico – Mexican authorities still have very little control over drug cartels and drug violence in Mexico. The groups are still kidnapping, torturing, and murdering civilians to show signs of their territory and to display other threatening messages. In the last 48 hours, 24 bodies were found tortured or beheaded in the western state of Michoacan.
According to the Latin American Herald Tribune, these acts are based around a local drug war between rival drug cartels.
The Washington Post describes the victims as each having a black plastic bag over their heads with a single gunshot wound to the back of their neck. Also, threatening messages accompanied the bodies. Just two days prior, nine bodies were found in another Michoacan town. The bodies had been tortured and beheaded. An Associated Press reporter saw police and soldiers carry away the bodies and heads.
The Washington Post reports that drug cartels often behead victims as a threatening message in itself, to intimidate rival gangs, usually over territory disputes. The most recent display was likely the work of the New Generation gang, according to The Weekly.
Along with these killings, eight taxi drivers were killed in northern Mexico and three bystanders were injured, according to The Huffington Post. Public security spokesman, Jorge Domene Zambrano said that four gunmen shot five drivers outside of a base office, and the other three men were killed later, a few blocks away. This is where the bystanders – including an 8-year-old girl – were injured, reports The Huffington Post.
Mexico continues to have many problems with violence. The major problem tends to be with drug gangs, but random civilian violence prevails as well.
For more information, please visit:
The Latin American Herald Tribune — Cartel Turf Battle Claims 9 More Lives in Western Mexico — 13 Apr. 2012
The Weekly — Seven Tortured, Bound Bodies Found in Mexican Port — 13 Apr. 2012
The Washington Post — Seven Tortured, Bound Bodies Found in Western Mexico Port City, With Warnings Signed by Drug Gangs — 12 Apr. 2012
The Huffington Post — Mexico Taxi Drivers Killed by Gunmen, 3 Bystanders Injured — 11 Apr. 2012