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Bill Browder Tries to Shut Down Film About Magnitsky and $230 Million Theft

In what has become yet another shameless display of desperation on the part of U.K. businessman Bill Browder, those behind The Magnitsky Act:  Behind the Scenesa film about Browder’s narrative surrounding the death of Russian accountant Sergei Magnitsky and a $230 million tax theft, are once again fighting Browder’s attempts to censor the movie.  After it was posted on Vimeo last month, attorneys from Carter-Ruck (for more on Carter-Ruck and toxic dumping along the Ivory Coast see WikiLeaks) and Hermitage Capital sent letters to the online video hosting service demanding that they pull the film; Vimeo, in turn, asked Piraya Film to remove the movie.  According to Browder, a capitalist who made most of his money in Russia during the early post-Soviet days and then renounced his U.S. citizenship to avoid paying taxes on his new-found wealth, the film contains false and defamatory statements about himself and Magnitsky.

This isn’t the first legal wrangle that director Andrei Nekrasov and producer Torstein Grude of Piraya Film have had to deal with.  Released in 2016, Browder’s attorneys thwarted the film’s premier at the European Parliament in Brussels, on ARTE European TV channel, and finally, at a festival in Norway. You’ve always been able to contact Grude for a private link to the film regardless of Browder’s free press issues but on September 14, 2018, it appears that Piraya Film isn’t taking these latest intimidation tactics lying down.  On the contrary, Grude posted on Twitter a letter sent from Piraya Film’s attorney to Vimeo disputing their decision,

“Despite his [Browder’s] contentions about the ‘illegality’ of the documentary, he has never succeeded in any legal suits to that effect.  His only legal suit against Piraya Film…failed, as the City Court decided that the publication of the film was protected by free press.”

And,

“In other words, this is a normal case of critical journalism, where persons – in this case highly public figures – who are subject to a critical light, try through censorship to stop the critical questions from being posed, rather than actually facing and answering the questions.

This is, of course, quite contrary to how freedom of the press works in Europe, the United States of America (USA) or in any other democratic society.”

So, despite the threatening letters, the censorship, and Browder’s public denunciations of the film, proving defamation in court would likely be an impossible argument for Browder to win, hence the reason he’s so afraid of the film.

 

BROWDER’S STORY
“It’s like a film script about Russia written for the Western audience.”  – Nekrasov

On June 4, 2007, Russian officers from the Ministry of Interior, including Major Pavel Karpov, raided the offices of Bill Browder’s company, Hermitage Capital, and its accountant, Firestone Duncan.  They seized the corporate stamps, seals, and documents to three of Browder’s shell companies and allegedly beat one of the employees, Victor Poryugin, in the process. However, Poryugin doesn’t seem to actually exist and although Browder maintains that the raid was conducted as a way to steal his companies’ corporate seals and documents, Nekrasov soon realized that Browder’s story was all “smoke and mirrors.”

Browder alleges that the police stole the seals so they could re-register (steal) his shell companies.  However, according to Nekrasov, corporate raids might be a dime a dozen in Russia but you don’t need official corporate seals or even documents and stamps to steal a company.  It’s apparently quite easy to get one’s hands on copies.  And although it’s not mentioned in the film, this happened during Browder’s 2015 deposition,

Q:  “And one of the things that you’ve said is the seals were used in the fraud, right?”

Browder:  “Yes.”

Q:  “The seals that were seized by the Ministry of Interior were used in the fraud. You said it repeatedly, right?

Browder:  “I’ve said the stamps, seals, and certificates were used in the fraud.”

Q:  “But you said the seals were used in the fraud, correct?”

Browder:  “Correct.”

Q:  “But you’ve known for many years that there are — that there is an analysis that shows the same seals were not used in the fraud.  Isn’t that true?”

Additionally, Browder seems to forget that Magnitsky told Russian officials that Hermitage Capital had copies of the corporate seals made mere weeks after the raid,

“New seals substituting those withdrawn by officers of the Main Investigative Directorate at the Central Internal Affairs Directorate for Moscow on June 4, 2007 were manufactured in the end of June — beginning of July 2007.  From this moment new seals only were the real seals of the aforementioned companies [Hermitage’s three shell companies that were allegedly stolen]….”

So wait, the seals that the police seized were not used to steal Browder’s companies plus Browder had copies of the seals made before his companies were stolen…with the seals?  Hmm.  There’s also the little-known fact that Magnitsky told authorities that Major Pavel Karpov, a Russian officer who now resides on the U.S. sanctions list strictly because of Browder’s version of events, was willing to return the corporate seals and documents but Hermitage Capital associates, Vadim Kleiner and Ivan Cherkasov, refused to take them.  Folks, that’s coming from Sergei Magnitsky.

And if you haven’t seen the film yet, Browder was under investigation for years prior to the raid; in 2004, he was investigated for abusing tax exemptions and forging a document that was never issued by the Minister of Investment Policies.  In 2007, another investigation was opened because 498 million shares of Gazprom held in another one of Browder’s shell companies were sold and the profits moved out of the country — after Browder bailed on paying fifty million dollars in taxes on them.  Sorry for the spoiler.

Thus, when Russian officials raided Hermitage and Firestone’s offices, it was part of a criminal investigation into Browder’s shell company.  Even Magnitsky stated,

“I learnt from the copy of the search record that the search was launched as part of the criminal investigation into the activities of Kameya…”

This isn’t a Putin or Russian issue that should create hysteria.  This is a “Browder is a convicted criminal and stole a shiz ton of money from the Russian people” issue.

 

THE STOLEN COMPANIES AND $230 MILLION THEFT
“I called the smartest lawyer I knew…”  – Browder

Sergei Magnitsky

After the raid, Browder told Nekrasov that he immediately called the “smartest lawyer” he knew, Sergei Magnitsky.  However, he may have called Magnitsky after the raid, but it wasn’t the first time they had worked together.  In fact, Nekrasov uncovered documents showing that he had been working for Browder since the 1990s!

After hiring Magnitsky apparently years before the raid, Browder claims that it was Magnitsky who discovered that the corporate seals seized by the officers were used to re-register (steal) three of Browder’s shell companies (Parfenion, Rilend, and Makhaon), and that the criminals who did it subsequently opened “obscure” bank accounts.  There had been an “enormous spike in deposits” within those accounts that curiously matched Hermitage Capital’s tax payment:  $230 million.

So what began as a raid, according to Browder, turned into a scam to steal Hermitage’s $230 million tax payment via Browder’s shell companies.  And it was Magnitsky who allegedly testified against the Russian police officers he believed were behind the theft.  But is this really what happened?  And as a side note, if the companies were stolen from Browder, how did Magnitsky manage to see the companies’ bank deposits?  But whatever.

 

THE DECEMBER COMPLAINTS
“That was our alibi – to prove we’re not implicated in that crime.”  – Khareitdinov

Khareitdinov

On December 3, 2007, six months after the raid, Hermitage Capital filed their first criminal complaint and unlike what Browder told us, Sergei Magnitsky’s name doesn’t appear anywhere in the documents. Rather, it’s signed by Browder’s attorney, Edward Khareitdinov, who refused to be interviewed for the film.  However, earlier in the film Nekrasov was able to speak with him at one of Browder’s book signing events.  Here’s what he said,

“Three weeks before the big [$230 million] theft I wrote complaints, delivered them personally to the General Prosecutor’s office.  I told them, get on with it.  We give you enough to go by.  That was our alibi – to prove we’re not implicated in that crime.”

Alibi?  Before the crime happened?

Here’s the thing:  After reading Hermitage’s complaint, Nekrasov discovered that it didn’t mention anything about Browder’s three companies being stolen but rather, “The company documents confiscated in the search [raid] during the criminal proceedings were used in an attempt to steal more than nine billion rubles!”  That would have been approximately $380 million in 2007.  And if Khareitdinov had reported the theft in early December 2007, as he said he did, how is it then, asked Nekrasov, that the theft still occurred only a few weeks later?  And speaking of things that don’t add up, the date on the card Hermitage Capital had been given after filing the complaint looked as though it had been tampered with because the date was scribbled out and re-written.

On December 6, 2007, Hermitage filed a second complaint that also failed to mention stolen companies and instead stated, “assets of those companies were stolen through a series of frauds, occurring in the period between July and September 2007…”  So weeks before the big heist, Hermitage filed a second complaint about assets being stolen and yet, at the beginning of the film Browder told Nekrasov that he had moved all of his companies’ assets out of Russia in 2006.  He said the same thing in his book.  And here’s the kicker:  In the English (translated) version the complaint says that assets were stolen but in the Russian (original) version, it states that there was an attempt to take assets but no actual theft occurred.

And what’s with the $380 million and the dates between July through September 2007?  It’s like Browder and his cronies were planning to pull off this enormous crime but for whatever unknown reasons were forced to deviate not only from the original plan but on how to cover their asses.  The bottom line here is that six months after the raids, at the end of 2007, absolutely no one had reported Browder’s companies stolen nor the $230 million.

 

RIMMA MIKHAILOVNA STAROVA AND MAGNITSKY’S TESTIMONY
“They killed my lawyer.”  –  Browder

Browder and Director Andrei Nekrasov

One of the biggest bombshells in the film is when Nekrasov discovers that neither Magnitsky nor anyone else from Hermitage Capital ever reported the $230 million theft to the authorities.  I know, crazy, right?  They reported other things but Browder has spent almost a decade trying to convince you that Magnitsky is the whistleblower in this story but that doesn’t appear to be the case.

Here’s the “Behind the Scenes” scoop…

On April 8, 2008, and almost four months after Browder’s shell companies were used to steal the $230 million, a woman by the name of Rimma Mikhailovna Starova went to the police and filed a complaint reporting that HSBC and Hermitage Capital had stolen state treasury funds.  Browder never denied the report to Nekrasov, chalking Starova up to a lowly pensioner paid to create a “smoke screen.”  However, after speaking with Nekrasov directly, he informed me that he obtained Staravo’s complaint after the film was completed and it appears she was more than just a smokescreen.

Starova didn’t report the “$230 million theft” per se but she did report HSBC and Hermitage Capital’s involvement in the re-registration of Browder’s companies, forged documents used in court cases to obtain large settlements that gave the appearance of “massive debt,” and the fact that millions were likely made from this scam.  Many of us have long suspected this was the case and the fact that Browder has always maintained it was the re-registration of his companies that led to the theft of state funds makes Starova’s complaint that much more intriguing.

As for Magnitsky, Browder stated an ungodly number of times throughout the film that he testified twice against the police and their involvement in the theft, once on June 5, 2008, and once on October 7, 2008.  However, as you can see, even Magnitsky’s June 5th “testimony” was months after Starova’s complaint.

However, here’s another kicker:  Magnitsky never “testified” against the police or even reported the crime like Browder claims.  He was summoned and subsequently interviewed by the police because Hermitage Capital, Browder et al were under investigation.  And missing in Magnitsky’s June 5, 2008 interview is the $230 million theft because allegedly he wasn’t even aware of it at the time and that’s according to Browder’s own website, russian-untouchables.com.  Additionally, he only mentioned the Russian police officers as it pertained to who was at the raid on June 4, 2007, not who stole the $230 million.

Nekrasov also discovered that even the media reported the crime before Magnitsky or Browder.  On September 23, 2008, a Russian newspaper not only reported it but mentioned the “police probe into it.”  Now, when Magnitsky was questioned by the police in October, what do you think they wanted to talk about?  Exactly.  The theft and powers of attorney.  But I’m getting ahead of myself.  And during the second round of questioning, Magnitsky didn’t mention the police at the raid let alone that they had stolen Browder’s companies or $230 million.  Don’t believe me?  Read Magnitsky’s “testimony” for yourself HERE.

Rimma Starova, an appointed director to Browder’s three “stolen” shell companies after the $230 million theft, appears to be the real whistleblower in this story.  The bottom line is that the thefts were never reported by Magnitsky and Browder’s “Sergei the whistleblower” story didn’t exist until almost a year later in March 2009 when Hermitage released a “private briefing document” in which Magnitsky is described as an analyst (the whole “Sergei was my lawyer” thing came later).  So it was only after Starova’s complaint that Browder’s story about Magnitsky miraculously appeared.

 

POWER OF ATTORNEY
“It’s like saying instead of ‘my car was stolen,’ you say, ‘We suspect that the car was driven to an empty house to lure some things that didn’t exist.'”  – Nekrasov

Nekrasov

Let’s humor Mr. Browder for moment.  If his companies were actually stolen and used to steal millions in Russian tax dollars, how exactly were they stolen? Nekrasov investigated that very question.  First, let’s examine how Browder’s companies were set up:

Hermitage/HSBC controlled → Kone Holdings (Cyprus) controlled → Stolen shell company Makhaon

Hermitage/HSBC controlled → Glendora Holdings (Cyprus) controlled → Stolen shell companies Rilend and Parfenion

As Nekrasov points out in the film, it would have been absurd for Magnitsky to tell Russian investigators that someone stole the companies’ seals and then used them to steal the companies because they would have known that you don’t need the seals to steal the companies.  So what did Magnitsky tell them? For one, he talked about power of attorney, something Nekrasov noted Browder never mentioned.

On July 31, 2007, a man by the name of Octai Gasanov was given power of attorney to enter into a purchase agreement with a company called Pluton. The owner of Pluton was Viktor Markelov.

HSBC/Hermitage controls → Kone and Glendora (which controls Browder’s three shell companies) → Gives power of attorney to Octai Gasanov → Gasanov sells Browder’s three shell companies → Viktor Markelov, owner of Pluton

So why would Browder allow someone from one of his companies to give Gasanov power of attorney to sell (not steal) his shell companies?  Remember Browder’s lawyer, Khairetdinov, who filed the December complaints, refused to be interviewed for the film, but spoke to Nekrasov at Browder’s book signing party?  Viktor Markelov, owner of Pluton, claimed when questioned by the police that Khairetdinov and another Hermitage associate were involved with the re-registration of Browder’s companies.  He also claimed to have seen Gusanov with Magnitsky and when questioned by authorities about his relationship with Gusanov, Magnitsky refused to answer the question.

Unfortunately, the police can’t question Gasanov because he was found dead a few months after the purchase agreement; dead men obviously can’t talk.

What makes the situation even shadier is that Browder has never mentioned Gasanov or his power of attorney nor has he denied that he was given it. The subject did come up in March 2009, when Hermitage argued in court that Gasanov’s power of attorney should be disqualified and yet even then Hermitage never claimed that the document was forged, leading the court to deny Hermitage’s request.

Nekrasov described Browder’s train wreck of story like when someone steals your car and if something happens, you’re not responsible because it was stolen at the time.  Browder says much of the same thing when it comes to his shell companies and the $230 million theft but remember those December complaints where Hermitage never mentions stolen companies?  Instead they claimed that someone tried to steal their assets which had already been moved out of the country a year prior.  As Nekrasov put it, “Even if we believe the car was stolen, they didn’t let the authorities know, they didn’t call the police…”

 

MAGNITSKY’S DEATH
“I didn’t know how the film should end.  I rewrote my script many times as there were different versions of Magnitsky’s death.”  – Nekrasov

On November 24, 2009, a little over a month after Magnitsky was interviewed by investigators for the second time, he was arrested in his home by Russian police.  According to Browder, he was tortured and spent 358 days in detention writing complaints about his treatment and prison conditions.  And even though none of us are likely to argue that Russian prisons are like a day at the spa, even Nekrasov, a film director who has spent years criticizing the Putin regime, does not believe that Magnitsky was tortured.

Browder, however, maintains that he was, the reason being that officials wanted Magnitsky to recant his testimony — testimony that wasn’t testimony at all.  So, I have to wonder then why other prisoners were living under the exact same conditions particularly since it’s noted in the film that Magnitsky wrote he wasn’t treated any better or worse than the others.  Perhaps a simpler explanation is that Russia and its prison systems are guilty of human rights violations, much the same as other countries including the United States.

On November 16, 2009, he was moved to a hospital at Matrosskaya Tishina prison in Moscow due to illness.  The doctor who examined him claimed that Magnitsky became erratic and violent so he was handcuffed and moved into an isolation cell by prison officers.  He died shortly thereafter.

Immediately following his death, Browder appeared on national news claiming that Magnitsky had been jailed, tortured, and murdered by Russian police after he accused them of stealing $230 million.  He insisted that on the night of his death, Magnitsky had been beaten by eight riot guards for an hour and eighteen minutes despite the fact that Nekrasov couldn’t fit seven, let alone eight riot guards in a room the size of Magnitsky’s cell.

Magnitsky was in terrible health at the time of his death and it stands to reason that neglect is what ultimately killed him.  According to Russian officials, the marks on his wrists and legs were from the police handcuffs and his own lawyer believes the marks on his knuckles were from banging on his prison door. Nekrasov interviewed Magnitsky’s mother who believes that her son died from medical neglect.  But even if it was medical neglect, criminal negligence to be more specific, and not eight riot guards, one could still argue that the doctor and/or prison guards murdered him.  But, that in no way proves or disproves that he and Browder were involved with the $230 million theft.

 

THE CRUX OF BROWDER’S STORY
“Browder and company are lying – blatantly and constantly.” – Karpov

Karpov and Nekrasov

Major Pavel Karpov, one of the Russian officers accused by Browder of the tax theft, was interviewed by Nekrasov and it’s perhaps one of the most insightful parts of the film.  Here’s what Major Karpov said,

“As for Sergei Magnitsky, why would I kill him?  Magnitsky supposedly accused me of that crime.  Allegedly I was involved in the theft.  But I haven’t seen a single document signed by Magnitsky – accusing me of the theft of companies, or the theft of 230 million dollars from the Russian treasury.  Browder claims he hired a lawyer to investigate, the lawyer exposed us, we locked him up.  But if there’s no sign of him exposing us, their story falls apart.”

And that, as Nekrasov puts it, is the crux of Browder’s story — being shred to pieces by a Russian officer, no less.

It was after the scene with Karpov that Nekrasov decided to go back and examine Hermitage’s criminal complaints, Magnitsky’s “testimony,” and other documents more closely.  Thus, if you’ve already seen the film you’ve already realized that I didn’t follow the film’s chronology but rather how the events actually unfolded.  Also, there is quite a bit of this film that I didn’t cover like the political ramifications of Browder’s story so consider this a “Behind the Scenes” lite version not meant as a substitution for the real thing.  Watch the film.  Last but not least…

 

INTERVIEW WITH BROWDER
“I’d be really careful about going out and trying to do a whole, sort of, thing about Sergei not being the whistleblower…”  – Browder

Browder

A little more than halfway through the film, Nekrasov met with Browder at Hermitage Capital’s office to discuss some of the inconsistencies in his story. Nekrasov recalled, “being torn between the political comfort zone of the official Magnitsky story and logic pushing me into the uncertain and lonely future of an unwelcome investigation.”

The scene opens with Nekrasov’s film crew already in place when Browder walks into what appears to be a conference room wall-papered in newspaper stories about Browder.  It’s grotesquely narcissistic and I can only assume that the staff is forced to refer to it in some sort of sacred terms like, “Good evening, Mr. Nekrasov, Mr. Browder will meet you in the Chosen One’s room just down the hall on the left.”  And it’s not the first time he’s made people interview him in there.  See herehere, here, and here.  So absurd.

As Browder settled in for what he perhaps assumed would be an easy interview filled with softball questions, Nekrasov dove right in by asking him about the discrepancies in Magnitsky’s “testimonies” which appear to be more like “answers to investigative questioning,” than anything else.  He also brought up the book that Browder managed to get published back in 2015, Red Notice, and how it stated that Magnitsky set up the meetings with investigators, implying that he was not summoned by the police.  Naturally, Browder doesn’t remember who set up the meeting or whether it was Hermitage Capital that asked him to go.  Bottom line is that there were no meetings, only summons.

Browder then doubled-down on his narrative that in both of Magnitsky’s “testimonies” he named the police officers involved in the raid which eventually led to the tax rebate fraud.  Nekrasov’s response,

Nekrasov:  “But on the 7th of October I found no names.”

Browder:  “But if you look at the testimony the names were named in June and he was reaffirming his testimony on the 8th of October.”

Nekrasov:  “On the 5th of June, it was not really known about the tax fraud.”

Browder:  “So he didn’t name their names on the tax fraud, he named their names on the company theft and then in July, the…I…I…I’d have to go back to our records…”

And as to whether or not Magnitsky was the whistleblower in the case, Browder no longer appeared so sure of himself,

Browder:  “I…I…I’d have to go back to our records to figure out who was the first one but we had a team approach to the whole thing so it could have been Magnitsky, could have been any one of our other lawyers but, um, ah, there was an ongoing investigation which led to the discovery of the tax rebate fraud.”

The interview ended with Browder making some disturbing statements to Nekrasov which sounded more like veiled threats,

“Anybody who says that Sergei Magnitsky didn’t expose a crime before he was arrested is trying to white wash the role of the Russian government…

I’d be really careful about going out and trying to do a whole, sort of, thing about Sergei not being the whistleblower because it’s not going to do well for your credibility…I mean, it’s just not true, this is sort of the subtle FSB version…”

Okay, first, I mentioned this earlier, Nekrasov has long been a critic of Putin’s Russia through his work like Disbelief (2004) and Rebellion:  The Litvinenko Case (2007).  It’s absurd to categorize Nekrasov as some sort of Putin sympathizer especially coming from a guy like Browder and yet it seems you can’t even question high finance crime these days without some capitalist calling you an FSB agent.  But regardless of Browder’s threats, he still didn’t answer any questions directly or at least in a manner that made any sense — just like his 2015 deposition during the Prevezon case.

 

WATCH THE FILM

As I stated before, there is quite a bit of information from the film that I didn’t cover like the political ramifications of Browder’s story and a disturbing video of a Homeland Security agent’s deposition during the Prevezon case which highlights the lackadaisical investigation into Browder’s story.  I highly recommend you watch the film in it’s entirety.  Despite finding himself in the uncomfortable position off investigating an individual he originally believed as authentic and risking his reputation by digging into the Magnitsky case, Nekrasov conducted an impressive investigation and directed an extraordinary film.

Additionally, the fact that Bill Browder is once again trying to censor this is a fight we should all get behind regardless of whether or not you stand behind Nekraso’vs findings.  As the legal firm for Piraya Film stated, “This documentary is obviously well within the protection of press freedom” and that censorship of the film is “quite contrary to how freedom of the press works in Europe, the United States (USA) or in any other democratic society.”

If you would like to watch The Magnitsky Act:  Behind the Scenes, please reach out to the producer and writer of the filmTorstein Grude.  Also, they are currently working on a second part of the film so if you would like to help fund it or help with legal fees, please go to .

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