Hermitage Capital Press Release
Originally Sent April 11, 2012

In an extraordinary statement issued on his political website, former Russian Finance Minister Alexei Kudrin explained how it was not his fault that $1 billion was stolen from the Russian treasury on his watch between 2006 and 2010 through a corrupt scheme uncovered by Hermitage Fund’s Russian lawyer Sergei Magnitsky (http://akudrin.ru/news/otvety-na-voprosy.html#.T4Szz3lJri8.twitter).

In his statement referring to the illegal approvals of tax refunds for millions of dollars, Mr. Kudrin said: “Employees of the Treasury cannot challenge the appropriateness of such a decision. Neither the leadership of the Treasury, nor, especially, the leadership of the Ministry of Finance interfere in this process.”

This statement came in response to a series of 7 public questions to Kudrin from Andrei Illiarionov, an opposition politician, posted in his blog  on ‘Echo of Moscow’ website (http://www.echo.msk.ru/blog/aillar/875912-echo/), challenging Alexei Kudrin after an independent investigation by a Russian newspaper, Novaya Gazeta, uncovered that the same officers from the Federal Tax Service and the same organized criminals who were involved in the $230m theft that Sergei Magnitsky discovered, stole a further 11.4 billion Rubles in ($444 m) in 2009 and 2010. These thefts were in addition to another $240m that were stolen under the guise of “tax refunds” by the same group of officials and criminals in 2006 and 2007.

“It is remarkable that the man whose responsibility was to protect the finances of the Russian state could say that he shouldn’t interfere when crimes were going on under his nose, in which $1 billion was stolen directly from the Russian treasury,” said a Hermitage Capital representative.

Mr. Kudrin was also asked what he did when he learned about the theft of the $230m that Magnitsky discovered. He said: “I did not have this information in my possession then, but based on what I learned from the media reports at the time, I verbally asked the leadership of the Interior Ministry, if they were looking into it, and received an affirmative response… Neither the Ministry of Finance, nor I, at that time as Minister of Minister and Deputy Prime Minister, had the authority [to investigate the thefts].”

In fact, his statements about his lack of knowledge are directly contradicted by a series of petitions from Hermitage Capital seeking his intervention immediately after the illegal refunds were uncovered in 2008 and 2009. Hermitage Fund’s representatives wrote to Minister Kudrin providing detailed evidence of the involvement of tax officials in the thefts,  including 15 August 2008 (http://russian-untouchables.com/rus/wp-content/uploads/2012/04/D410.pdf) and again on 13 October 2009 (http://russian-untouchables.com/rus/wp-content/uploads/2012/04/D411.pdf). The first letter described evidence of the theft of $230 million via tax inspections No 25 and 28 in Moscow which took place within one day, on 24 December 2007. The second letter described 10 transactions used by the same tax inspections in Moscow to steal a total of $470 million from the Russian budget during 2006-2008. There was no answer to the first letter. The reply to the second letter signed by Deputy Finance Minister Shatalov on 28 October 2009 (http://russian-untouchables.com/rus/wp-content/uploads/2012/04/D412.pdf) said: “The Finance Ministry does not have authority to investigate the facts of budget thefts stated in your application.”This letter was sent 19 days before Sergei Magnitsky was killed in custody after exposing the officials perpetrating these thefts.

“It is notable that Alexei Kudrin fails to mention that not a single government employee had been charged or prosecuted for these successive crimes totaling $1 billion of budget funds over 4 years since they were discovered. It beggars belief that he thinks it is an acceptable explanation and he did nothing to stop the situation when he learned about it,” said a Hermitage Capital representative.

“This is further evidence that the Russian budget is no longer functioning for the Russian people, but is now an unrestrained source of financing for corrupt officials and organized crime,” said a Hermitage Capital representative.

For further information please contact:

Hermitage Capital

Phone:             +44 207 440 17 77
E-mail:             info@lawandorderinrussia.org
Website:          http://lawandorderinrussia.org

Facebook:        http://on.fb.me/hvIuVI
Twitter:           @KatieFisher__
Livejournal:     http://hermitagecap.livejournal.com/