Many readers have been following the legal saga of William Browder, Hermitage, and HSBC against Renaissance Capital and certain members of the Russian government alleging a $230 million fraud scheme. Now we've got our hands on a public filing from the case. As far as I am aware, this blog is the first to track down this declaration by the lawyer Neil Micklethwaite filed in the Southern District Court of New York supporting a foreign discovery claim on behalf of the plaintiffs. This is a public legal filing containing allegations which have not yet been ruled on in a court of law, which of course bear no relationship whatsoever to this blog or its authors. Click here to download the document, while below I are some excerpts.
From the Neil Micklethwaite filing:
7. The criminal conspiracy unfolded in multiple steps. The first overt act in the conspiracy was the seizure of corporate records from Hermitage's Moscow office and the office of Hermitage's local law firm. The seizure occurred in June 2007 during a raid by officers of the Russian Interior Ministry. It appears likely that thereafter, during the latter part of 2007, the seized original records were used to fraudulently re-register three of the Hermitage Fund's Russian investment companies (together, the "Hermitage Companies") from HSBC, as the Fund's trustee, to members of the Criminal Enterprise. Subsequently, three members of the Criminal Enterprise - each with previous criminal convictions - fraudulently replaced HSBC executives as the directors of the Hermitage Companies.
8. The Criminal Enterprise then forged contracts, dating from 2005, in order to create approximately U.S. $1 billion worth of fictitious financial liabilities against the stolen Hermitage Companies. These documents would have been impossible to prepare without access to the corporate records and financial documentation seized from Hermitage and its lawyers during the June 2007 raids by the Russian Interior Ministry. These liabilities were subsequently officially recognized by Russian courts in a number of judgments handed down between July 2007 and December 2007.
9. Even before all three judgments came into force, the Criminal Enterprise applied, on December 24, 2007, to the Russian tax authorities for a fraudulent refund of U.S. $230 million in taxes that had been paid by the Hermitage Companies to the Russian government in 2006. This refund request was granted immediately. Two days later, the equivalent of U.S. $230 million was paid by the Russian Treasury into bank accounts at two small Russian banks, including USB in Moscow, that had been opened by the Criminal Enterprise. The funds were subsequently converted into U.S. dollars. The funds were ultimately routed through two banks located in New York, Citibank, N.A. and J.P. Morgan Chase Bank (together, the "New York Banks"), to accounts that upon information and belief are controlled by members of the Criminal Enterprise.
10. The fraudulent rebate of U.S. $230 million was authorized by Russian tax officials despite the fact that HSBC and Hermitage had filed comprehensive criminal complaints with Russian law enforcement authorities alerting them to the misappropriation of the Hermitage Companies, fabrication of fictitious liabilities against them, and the sham court judgments three weeks before the fraudulent tax refund request was filed by the Criminal Enterprise.
11. Following the fraudulent tax refund, in June and July 2008, the Criminal Enterprise (in apparent collusion with members of the Russian tax authorities) filed petitions with Russian courts to liquidate and bankrupt the stolen Hermitage Companies. If these steps are fully implemented, essential evidence relating to the transfer of funds and the ultimate beneficiaries of the fraud will be destroyed. As discussed in greater detail below, HSBC and Hermitage are now challenging these petitions in Russia.
It is a pretty big accusation to say that Russia is a Criminal State. I am an American, and to me, I think Russia is still a Superpower nation to the world. I would really like to see Russia to be a model country and the relations between Russia and USA be a lot better. I see a day when this happens. If Russia and USA should have good relations like USA-GB... The smaller troubled nations like Iran, Korea, Pakistan, would look at this unity together can solve these nation's differences more easily. Do you see a long shot here happening? No, It is not as far off as you think. I for one choose to think Russia is not a criminal state... I do not believe it at all. Russia is improving its image every day. They have been making great progress
You should be proud that you are a citizen of a greatest country in the world. Everybody wishes Russia would be a nice place to live, but the reality is devestating. You will probably change your mind after having some working experience here.
And Russia is not a superpower nation anymore. It couldn't even delploy few tanks to Gorgia without the breakdown.