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).

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