Press Release

25 June 2013 – Today, the Council of Europe’s Rapporteur, Andreas Gross MP, presented the results of a detailed six-month review of the torture and death of Sergei Magnitsky in Russian state custody and the state sanctioned cover-up which followed. His 41-page report entitled, “Refusing Impunity for the Killers of Sergei Magnitsky,” was presented to the Human Rights and Legal Affairs Committee of the Council of Europe this morning.

The report labels as “unacceptable” the ongoing impunity of those responsible for Mr Magnitsky’s death and for the largest known theft of public funds in Russian history that Magnitsky had exposed.

The Rapporteur condemns in strong terms the failure of the Russian authorities to conduct a proper investigation into Sergei Magnitsky’s torture and beating in custody, and calls the Russian government’s efforts “belated, sluggish and contradictory.” He describes as “legally unfounded” the tax evasion claims levelled posthumously against Sergei Magnitsky and against William Browder in absentia. He describes the Russian government’s latest allegations against Hermitage of the “theft” of Gazprom shares as “selective justice” and “politically motivated,” and finally he condemns the “cover-up” in this case organized at a “high level.”

“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?” asks the Rapporteur in his report.

Following fact-finding missions to Russia, Cyprus, Switzerland and the UK, the Rapporteur dismisses as “unconvincing” and “doubtful” the explanations offered by the Russian government authorities who exonerated officials for their role in the thefts and then blamed Sergei Magnitsky himself, after his death, for the crimes that he had uncovered.

The report cites evidence that the same persons and officials were involved in a series of thefts from the Russian budget during a long period of time, both before and after the $230 million theft, using the same Moscow tax offices.

“Thanks to the above-mentioned investigations of 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…) [did so] using the same Moscow tax offices No 25 and 28 and the same money-laundering paths… In my view, all these similarities cannot be mere coincidences.”

The Rapporteur relies on this evidence to reject the Russian government’s posthumous allegations that Sergei Magnitsky orchestrated the $230 million tax theft.

“A very strong argument against blaming the USD 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,” said the Rapporteur.

The Rapporteur also points out the lack of credibility of the Russian government’s version of the $230 million theft given that it relies on the alleged involvement of a person who died before the theft took place.

“The conclusions of the accusation [signed by Russian Deputy General Prosecutor Grin] 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. Such inconsistencies tend to undermine the credibility of Mr Markelov’s new testimony that Sergei Magnitsky was the one who gave him his instructions,” notes the Rapporteur.

The Rapporteur concludes:

“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 persons he had accused before these persons took him into custody, where he died.”

The Rapporteur criticizes the Russian government for their evasive and unconvincing responses.

“In light of this information [money trail], the attitude shown by the Russian authorities so far is not really convincing. …The spokesperson of the Ministry of the Interior, Ms Dudukina, publicly stated that the whereabouts of the tax money fraudulently paid into Universal Savings Bank could no longer be established because a truck transporting the bank’s documentation had accidentally burnt. My interlocutors at the Ministry of Interior and at the Investigative Committee evaded my question when I enquired about the credibility of this statement. Regarding the treasury funds ending up in Mr Stepanov’s account, I was told that this had been verified and that the funds…could be explained by his successful business activities, including building tunnels in Russia…But in my view, this does not explain that the same treasury funds, whose disbursement had been authorized by Ms Stepanova, ended up in her husband’s or ex-husband’s account, via the complicated path described above,” says the Rapporteur.

Concerning the case opened by the Russian Interior Ministry against Hermitage Capital’s client, Kameya, used to seize documents for Hermitage Fund’s companies and steal their $230 million tax payments, the Rapporteur finds that it was not a bona fide investigation:

“The Russian authorities did not deny to us 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. 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.”

Concerning the tax evasion accusation made during the posthumous trial of Mr Magnitsky and in absentia against Mr Browder, CEO of Hermitage Capital Management, the Rapporteur finds the claims by the Russian government to be legally unfounded:

“The Kalmyk law requiring an additional agreement 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.”

“The detailed and well-documented replies received have gone a long way to convince us that Hermitage did not violate the law. This was also confirmed by an audit carried out by the competent tax authorities… 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…”

“Legal pursuits for any tax underpayments concerning 2001 would also appear to be time-barred…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.”

Concerning the new case opened by the Russian government and accusing Hermitage Capital of “stealing” Gazprom shares, the Rapporteur finds it to be exemplary of “selective justice” and “indicative of politically-motivated cases”:

“The retrospective prosecution of the Hermitage executives for any violation of this decree would appear to violate the principle…enshrined in Article 7 ECHR…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.”

The Rapporteur examines the failure of the Russian authorities to investigate Sergei Magnitsky’s killing in custody and the subsequent cover-up, issuing a damning verdict:

“The belated, sluggish, and contradictory investigations lead only to 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.”

The Rapporteur finds that Magnitsky was beaten shortly before his death and brands “doubtful” the explanations presented by the Russian authorities to the contrary.

“I was told by several representatives of the authorities that Mr Magnitsky was not beaten upon his arrival at MT prison…I am not convinced by the explanations given to me during my second visit in Moscow that this document [the report about the use of rubber batons] is “out of context” and that the mentioning of rubber batons as part of the special measures used against Mr Magnitsky was purely “automatic.”… In addition, the autopsy, the testimony of Mr Magnitsky’s mother and photographs taken by family members when they were first permitted to see the body confirms that Mr Magnitsky had visible injuries on his body that had never been explained…It is therefore clear for 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,” concludes the Rapporteur.

“In my view, the manipulation of the initial “death act” [with reference to a suspected cerebral injury removed in one version] 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,” says the Rapporteur.

The Rapporteur condemns as “cynical” the cover up by Russian authorities of Sergei Magnitsky’s complaints from custody detailing his ill-treatment and cites a litany of complaints and their refusals by Russian authorities, including the decision by Interior Ministry officials to “archive” the complaint without any consideration.

“Officials in Moscow…told me that Sergei Magnitsky had neither complained about his detention conditions, nor about lack of health care provided to him in detention. …Mr Magnitsky’s mother and Hermitage provided me with a long list of the complaints.. The replies speak for themselves… The complaint was assigned for review to Major Silchenko who recommended it to be archived as this complaint was “not within our competence”. Mr Silchenko’s recommendation was approved by his superior, Colonel Karlov,” writes the Rapporteur.

“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…In my view this is unacceptable,” says the Rapporteur.

The Rapporteur points out that the objective of his report is to “contribute to a better protection of individuals against lawless behaviour of state officials in future.”

The Rapporteur states that the impunity of Magnitsky killers must be unacceptable for both the Russian people and the international community.

“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… This result should first and foremost be unacceptable for the Russian people and the Russian state,” says the Rapporteur.

“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,” says the Rapporteur.

During the course of the preparation of the report, Rapporteur Gross met with Magnitsky’s family, his clients at Hermitage Capital, Hermitage’s lawyers, as well as with Russian officials, including officials in the Russian Prosecutor’s Office, Interior Ministry, Investigative Committee, and Chair of the Russian Central Bank Mr Ignatiev.

In his report, the Council of Europe’s Rapporteur states that he had asked for meetings in Russia with many more witnesses and officials but these meetings did not materialize.

“I would have liked to speak with the prison doctors, guards, the members of the civilian psychiatric emergency team and others whose testimony I could only refer to through written sources…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 materialized,” says the Council of Europe’s Rapporteur in the draft report presented to the Legal and Human Rights Committee.

Andreas Gross (http://assembly.coe.int/ASP/AssemblyList/AL_MemberDetails.asp?memberID=3498) is a Swiss MP, chair of the Socialist Group of the Parliamentary Assembly of the Council of Europe, and a co-author of the 2012 report “The honouring of obligations and commitments by the Russian Federation” (http://assembly.coe.int/ASP/XRef/X2H-DW-XSL.asp?fileid=18998&lang=EN).

The report on the Magnitsky case will be discussed at the forthcoming meeting of the Council of Europe’s Human Rights and Legal Affairs Committee in the fall and used by the Parliamentary Assembly of the Council of Europe to decide on a resolution about how the Council of Europe should react to the impunity of officials in this case. The report will also be used by the governments of member states of the Council of Europe as they consider their own policy on sanctions, and other responses.

For further information, please see:

Law and Order in Russia