Hermitage Capital co-founder and CEO William Browder may face 9 years in prison if he ever crosses Russia’s border: a Moscow court found him and Hermitage Capital auditor Sergei Magnitsky guilty of tax evasion.
Hermitage Capital Chief William Browder. Photo: Jonathan Player / Rex Features
Moscow's Tverskoi District Court has sentenced Hermitage Capital co-founder and CEO William Browder to 9 years in prison after finding him guilty of tax evasion in absentia.
In addition, the court closed the case against Hermitage Capital auditor Sergei Magnitsky, who died at a detention center in 2009. Because he has also been found guilty of tax evasion, the court denied his rehabilitation.
According to Judge Igor Alisov, who presided over the hearing, the Browder-Magnitsky trial is justified and legal despite the fact that one of the defendants didn’t attend the hearing and the other was dead.
"Magnitsky claimed that his criminal prosecution was a repressive measure and did not plead guilty. At the same time, Magnitsky's guilt was confirmed by the evidence examined in the proceedings," the sentence read.
The court questioned the testimony Magnitsky gave during the pretrial investigation, in which he stated that the company was granted tax breaks legally and that it actually did employ people with disabilities, who were paid salaries.
According to the prosecutor, as an auditor Magnitsky invented a scheme to evade taxes following Browder's instructions, and the latter was aware of the tax breaks the firm had been granted unlawfully and signed fake documents.
An Interfax source said earlier that if Browder were to be convicted, Russia would immediately send an extradition request to the United Kingdom.
"As soon as Browder is convicted and the sentence takes legal effect, [Russia] will send an inquiry to London, where he is actually residing, to demand his extradition to enforce the court ruling," the source said. "The Western justice system is usually very skeptical about extradition requests from investigative bodies, but treats inquiries that are based on court rulings with great confidence."
"As soon as a sentence is handed down on the American businessman in absentia, his international legal status will change significantly," the source added. Browder will be put on the international “wanted” list and this will significantly limit his ability to move around the world, the source claimed.
A defense attorney for Magnitsky's mother considers the auditor’s trial and conviction on tax evasion charges unlawful.
"We see the proceedings as unlawful, we are not participating in them, and I will not comment on it," lawyer Nikolai Gorokhov, representing Magnitsky's mother, told Interfax.
At the same time, the prosecution is satisfied with the conviction of Magnitsky and Browder.
"The prosecution is content with the judgment and it complies with the law," Prosecutor Mikhail Reznichenko told journalists.
In his opinion, the case against Magnitsky was justifiably heard in his absence, as his relatives disagreed with closing the case for non-rehabilitation reasons. Even though they did not formally ask for the investigation to be reopened, the prosecution perceived numerous interviews by his relatives, in which they insisted on his innocence, as such a desire.
Reznichenko said that, as a court earlier sanctioned Browder's arrest in absentia, he would be arrested immediately upon crossing the Russian border.
The Tverskoi District Court took up the case against Browder and Magnitsky on December 10, 2012. The two had been indicted on charges of tax evasion amounting to over 522 million rubles ($16 million) obtained through the falsification of tax declarations and illegally taking advantage of tax breaks intended for the disabled.
According to the court’s statement, Browder had to be tried in absentia "as he is showing reluctance to appear before the investigative body, and the United Kingdom of Great Britain and Northern Ireland has refused to uphold international legal cooperation norms with Russia on this matter."
Magnitsky died at a Moscow pretrial detention facility on November 16, 2009.
The tax evasion case against Magnitsky was closed but later reopened based on a Constitutional Court ruling to the effect that the closure of the case was unconstitutional and violated the presumption of the innocence principle.
The Constitutional Court ruled that the case must be reopened if the defendants' representatives so demand. Attorneys for Magnitsky's mother protested the reopening of the case, arguing that this was not done at their request.
Moscow's Ostankinsky Court ruled on April 3, 2013, that the reopening of the criminal case against Magnitsky was legal even though the defendant was dead. The court took into account that, in making this decision, the Prosecutor General's Office had been motivated by numerous complaints by Magnitsky's mother in her interviews with the press, during which she insisted on her son's legal rehabilitation. The Moscow City Court upheld this decision and ignored the complaint made by Magnitsky's family.