Andrei Nekrasov's presentation at the 7th OffshoreAlert Conference in London, November 13, 2018
OffshoreAlert Conferences are financial intelligence and investigations events held in Miami Beach and London.
I'd always thought it was normal to be reasonably sceptical about extraordinary claims, grand moral claims, which can be demonstrably traced to a vested interest; but the Magnitsky case taught me that all scepticism evaporated if the claims were about that nightmarish dystopia, that kafkaesque hell, also known as Russia. The claims have been made by Bill Browder who has a vested interest in the financial case he named after Magnitsky.

I think some 100 min plus, the length of my film about the case, is the minimum time needed to counter the facile logic and hackneyed morality of Browder's Magnitsky Case, and I've also written a book on the subject. But my film, supported by only mainstream Western European film and TV organisations, has been all but banned, and 15 minutes is all I have now.

In his Magnitsky narrative Browder omits many facts of his eventful life in Russia, and the early noughties tax evasion case in particular. I think that's mainly because he can't claim a human rights high moral ground in tax evasion, while he does present himself as a one of the world's most prominent human rights activists. The human rights element is one big red herring of Browder's narrative. Sergei Magnitsky, Browder's accountant, died in a Moscow jail, and tragic though that death was (and there's no evidence to support Browder's claim Magnitsky was beaten to death), it has nothing to do with the cause-effect chain in the financial plots Browder was a main protagonist of. The case should actually be called the Browder case, not the Magnitsky case - another red herring.

I am saying this as a consistent critic of Russia's human rights record, and of its corruption too. But while my criticism has been, for years, in my filmmaking and journalism, as well as in my activity in the Russian opposition organisations and parties, the motivation of Mr Browder's criticism is somewhat more intriguing. While the Russian Air Force was pummelling Chechnya and I was making films about human rights violations there, he was making super-profit and evading tax in the neighbouring Kalmykia. Yet he now attempts to claim that the Russian prosecution of his financial misdeeds was politically motivated. "Any time you challenge the regime they immediately put a stamp on you - tax evasion" - Browder tells us. Well, have a look at how Browder was challenging the regime, and that already after the authorities started probing his tax evasion.

Here's one of his PowerPoint presentations, from 2005. He essentially defends the Russian government on all of its major policies of the time.
In 2004 The Washington Post described how Browder considered Putin to be a true reformer.
There's a lot of evidence of Browder's enthusiastic support for the Russian government.
The Moscow Times published a panegyric to Putin signed by Browder personally.
Browder's tax evasion came to the attention of the authorities in 2002, but he continued to praise the government for many years to come, until the charges against him became too serious to ignore and cover up. So the timeline is clear: Browder was first investigated for financial misdeeds, and then he appointed himself "Putin's Nr 1 enemy". Not, as he claims, the other way around.

Moreover under the Magnitsky act in the US and its equivalent here in Britain, those who've investigated Browder are put on a sanctions "Magnitsky" list. A remarkable mechanism, whoever dares probe you, is named and shamed, denied visas etc.

Here's a quick recap of what Browder's Magnitsky Case essentially is.

An honest U.S. born hedge fund manager goes to Russia in the 90s, makes a killing, and eventually corrupt officials, the brutal Russian police decide to fleece him. Thankfully the hedge fund manager, Mr Browder, has moved the money out of the country by then. But the corrupt cops have an idea, though Browder doesn't know what it is yet. The police raid his offices - with an objective of seizing the original corporate documents of his companies. They then steal - secretly re-register - those companies: and these are the companies through which Browder has made his investments and profits in Russia. The Russian criminals then apply on Browder's behalf for a refund of taxes the companies have paid. And, still unbeknownst to Browder, they get $230 million back from the Russian treasury.
OK, what is true and what's false here? There's one fact no-one denies, neither Mr Browder nor the Russian authorities. Someone did steal $230 million in a tax refund fraud. Another undeniable fact is that the companies which had paid that tax in the first place were controlled by Browder (formally HSBC Management Guernsey was the trustee).

What Browder claims, however, is that he lost control over the companies first, - Russian criminals stole them that is, - and only then the refund was wired to the companies.

The three companies that received the refund fraud money are Parfenion, Makhaon and Rilend. I'll be calling them "The companies". I will also use "Browder organisation" or "Hermitage" as an abbreviation for a group of people that share a certain knowledge and interests fronted by the Magnitsky case brand.
So the story is basically divided into two chapters. First the "Theft of the Companies", second "The theft of the Money, on behalf of those Companies".
    Bill Browder
    • FIRST my companies - Parfenion, Makhaon and Rilend - were stolen.
    • THEN the taxes were fraudulently refunded to the companies.
    Andrei Nekrasov
    The claim that the companies were stolen is fiction.
    That is to say the Browder organisation did not lose control of the companies, and it was involved in the preparation of the tax refund. I can't prove they actually received the 230 million dollars because they operated through figureads and offshore structures, but I can prove that their story of the company theft is false, and false stories are not knowingly told without a reason. It is also of course hugely important that the false story has been used as a foundation for major laws and policies, and a moral banner in global politics.

    Let's look at other key claims that make up this thrilling plot.

    The next two essential propositions have to be considered together because there's a strict cause- effect link between them.
      Bill Browder
      • Police searched Browder's and Firestone's offices in order to impound the original incorporation documents of the companies.
      • Only a bearer of the original documents (e.g. Articles of Association) could re-register the companies.
      Andrei Nekrasov
      That's not true. In reality - the original corporate documents, are not required for company re-registration.
      The Russian law on company registration valid at the time makes it clear that it would be impossible to re-register companies on the basis of bearing the companies' documents.
      The Russian federal Law on State Registration of Companies and Individual Entrepreneurs:

      The following physical persons may apply to register a company:

      • director
      • owner/founder
      • bankruptcy receiver

      To register changes to the constituent documents of a company with a registering authority, the following is to be submitted:

      • a letter of application
      • a decision to enter the changes
      • the list of changes
      • the receipt of the fees paid
      Moreover, the registration is just a formality, done on the basis of a SAP agreement. And - the companies were actually formally and legally sold to new figurehead owners, on 31 July 2007.

      Here is the Sales and Purchase agreement for one of the three companies in question.
        The Sales and Purchase agreement was made on the basis of a power of attorney given by the parent companies in Browder's control (on 2 July 2007), to a certain Oktai Gasanov.
          There were some denials of the validity of the powers of attorney given by the Browder organisation to a middleman to sell the companies: the figureheads who signed the powers of attorney made contradictory statements as to the authenticity of their signatures. In Cyprus they apparently claimed they had not signed the powers of attorney, but in a U.S. court case under oath they admitted they had no reason to doubt the signatures were genuine. What is important, at any rate, is that the powers of attorney, valid or not, never featured in Browder's story. Nor does he ever focus on the sale of the companies. Why? Because it is completely obvious that one does not require the documents the police took away during the search of Browder's (and Firestone Duncan), to sell and buy a company. The whole cause-effect chain of the police's plan to raid the offices, to seize the documents, to steal the companies, to have the tax refunded - falls apart.

          Now - the very notion of theft of the companies, has an important psychological effect: companies stolen from whom? William Browder. HSBC, sounds important. Stolen by whom? Some Russian criminals Browder could have never had anything to do with.
            In reality before and after this transfer of ownership, the formal owners and directors of the companies were nominees, figureheads. Except that before the sale the figureheads were British, residents of Guernsey, and thereafter - some Russians. But Russians had been used as figureheads earlier too. In the case of a fraudulent tax refund, anyway, a change of ownership would be a prerequisite for the operation, as otherwise people clearly traceable to the old owners, HSBC, Mr Browder and others, would have been blamed for the fraud.

            A Western fund manager would of course not go himself looking in the streets of Moscow for some shady Russian figureheads. There's a service industry for such frauds, and one approaches a specialist, who will deliver, or perhaps fail, but all those dubious Russian figureheads are included in the package.
              British/Guernsey nominee owners/directors:

              Bill Browder
              Paul Wrench
              Martin John Wilson
              Grant Patrick Felgenhauer

              Cyprus nominees:

              Yianna Alexandrou
              Chrystalla Argyridou
              Russian nominees before
              the transfer of ownership:

              Ivan Cherkasov
              Sergei Magnitsky
              Russian nominees after
              the transfer of ownership:

              Viktor Markelov
              Vyacheslav Khlebnikov
              Valery Kurochkin
              Rimma Starova
              Bill Browder
              My colleagues and I had no idea our companies had been appropriated by others.
              Andrei Nekrasov
              That's not true. Hermitage must have known about the formal change of ownership of the companies, and about the preparations for the tax refund fraud.
              Before the so called theft of the companies, law suits were filed against Browder's companies. In eight or so law suits almost a billion dollars was claimed from Hermitage. Here, curiously, is another rare fact everyone agrees on. There was a series of lawsuits, all fake in the sense that the litigating parties were controlled by the same people. The aim was to artificially wipe out the profit the companies had made and paid the tax on. So that one can go back to the tax man and ask for the tax to be refunded.

              The question is who did all that.

              Normally the default position would be that Browder was and remained in control of his companies, and the burden of proof that he lost it is entirely on him. But in the real world he is not required to prove his story, especially if it has something to do with human rights and Putin.

              If the Browder organisation had not known about the preparations for the refund fraud, about those law suits in particular, the question is when and how they found out about them eventually. If I sue someone I need to notify those I sue. In Russia the plaintiff notifies the defendant, and so does the court. The notification is sent by registered mail, signed by the defendant, and the law suit goes ahead. The law suits against Browder's companies did go ahead, in the summer of 2007, before the so-called theft - re-registration - of the companies in September that year.

              The law suit notifications were sent to the correct addresses of the companies, I'm sure Jamison still remembers, Staropimenovsky 13. The letters were signed on reception and returned. Which means the Browder organisation must have known about the law suits.

              One could claim, however, that the criminals had sent the notifications to a wrong address under their control, and persuaded many different officials to do the same, Russia's so corrupt. But there are problems with that explanation. If the criminals had the plan Browder says they had, the police raid, the secret re-registration of the companies and then the tax refund, why did they not re-register the companies first? (And the companies were of course re-registered, but later). The re-registration gives one a new address beyond Browder's reach. It simply makes no sense suing someone for a billion dollars for artificial criminal reasons, which requires secrecy by definition, when you are suing a real company, with a real address, under control of Messrs. Browder, Magnitsky and Firestone.

              But it gets worse.

              Magnitsky, out of all people, states on the record that he did receive those law suits notifications. But he says he received them on 16 October.

              That is two and a half months after the beginning of the law suits and a whole month after the companies' re-registration or theft. For some extraordinary reason the criminals sent the notifications to the correct address where Magnitsky and Browder would get them. Even after the address was changed at the public companies registry! Why would the criminals be notifying - alerting - the real old owners about the sham law suits when they could have sent the letters to their new addresses where the Browder organisation would have never found them? Alerting the old owners - Browder, Magnitsky - means ruining the whole operation!

              None of this makes sense. The only logical explanation is that the Browder organisation got all the letters as they normally would, the law suits went ahead with their knowledge as lawsuits normally would, and the company theft story was made up later.

              But even if one accepts that the Browder organisation only found out about the multimillion law suits on 16 October, one wonders why they did nothing to thwart those lawsuits for many weeks still to come. Magnitsky claimed they were determined to send a lawyer, Mr Khairetdinov, to the next hearing the moment they found out about this attack against their companies. The next hearing was on the Monday October 22. Well the court records show, and Khairetdinov confirmed to me, that no one showed up for Hermitage. The first time Browder's lawyers did show up, was in the next year, well after the money was stolen.

              The Browder organisation claims that they filed complaints to the authorities about the company theft in December. Firstly, that's way too late, - if someone steals your companies and sues you for hundreds of millions of dollars would you wait for weeks and do nothing? And secondly, the letters ("complaints") they sent to the authorities were not really about the theft of the companies. It was about an attempt to steal money from them. Most letters were not even proper criminal complaints. The one which was did not have a return address of the plaintiff and no information about the companies in question. Strangely unprofessional. A red herring, an attempt at alibi, as far as I can see.
                Who did report the crime first?
                If you look up Magnitsky on the internet, you will read that he was the whistleblower who investigated, uncovered and reported that very 230 million dollar scam. Well, he did not. There's not a shred of evidence of Magnitsky uncovering anything of the kind. Amazingly, the Browder organisation was able to present transcripts of police questioning Magnitsky as the evidence that Magnitsky had reported the crime. The transcripts show that it was the police who were investigating, not Magnitsky, and the whole world having been bamboozled into believing Magnitsky is a whistleblower, alongside Chelsea Manning, Snowden and others, is a very disturbing phenomenon.

                So the police was investigating, and there were various proceedings against Browder, but the 230 million theft investigation was triggered by a crime report by a certain Rimma Starova filed on 9 April 2008.
                  The first crime report, dated April 9, 2008, connected to this case was filed by Rimma Starova, a nominee director of the companies (Parfenion, Makhaon, Rilend)
                  In fact Starova did not mention the 230 million itself, but she did report that the old owners of the scam companies, that is the Browder organisation, had initiated those fake lawsuits, whereby they were essentially suing themselves. Starova became the nominee director of the scam companies, after they were sold yet again, after the scam, probably for liquidation.
                    Hermitage mentions Starova's crime report.
                    The Browder organisation acknowledged this crime report in a press release at the time, calling it a false accusation, and that's how I found out about Starova: a Russian translation of the press release was knocking about the internet. There seemed to be no English original anywhere, but I used the Wayback machine archive and found it.

                    Browder deleted the news of Starova report about the same time he first mentioned Magnitsky in his presentation, not yet as a whistleblower though. But a new story was clearly under construction and Starova's crime report (even described as a "false accusation") was by now a wrong thing for the public to know about.

                    The maturation of Magnitsky-the-Whistleblower myth took some time, and, for example, when Magnitsky was arrested on 24 November 2008, allegedly for his whistleblowing, Browder who's so good at press-releases and presentations, didn't bother to inform the public of such a dramatic development. Not a single news outlet reported the arrest of the hero-whistleblower by the Putin regime.

                    Now Browder compares Magnitsky to Nelson Mandela and Andrei Sakharov, and at least once I heard Browder publicly calling Magnitsky God. I am not an expert in theology, but I can certainly disprove another of Browder's claims, that Magnitsky was a lawyer. He was an accountant with Firestone Duncan from 1995, at least.
                      Magnitsky was not a lawyer
                      In order to be a lawyer in Russia one needs to have a law degree and become a member of a Bar association, the Lawyers' Chamber. None of that applied to Magnitsky.
                      Magnitsky was trained accountant, with a finance degree from the Finance and Economics Academy.
                      Magnitsky's diploma from from the Finance and Economics Academy in Moscow, Department of Finance and Credit.
                      Magnitsky worked for Browder since 90s
                      The reason why Browder calls Magnitsky a lawyer is that he does it in conjunction with another false claim. He says he hired the best lawyer in Moscow specifically to investigate what was behind the police raiding his office, in 2007. That diverts attention from the fact that the police had investigated Browder together with his accountant Magnitsky for tax evasion in the early two thousands already.

                      We all want to believe there are heroes out there despite all cynicism and selfishness around us, and in us. Catering for that quasi-religious sensibility brings a lot of benefits for your social status and career. And if you unmask lies, better do it to someone in the past, so that no live interests are threatened. My situation is obviously different. It's all happening now. Please watch my film before Browder takes it down again.
                      Magnitsky's official employment record. Employed by Firestone Duncan from 1995 in the accounting department.