Police and anti-fraud agencies have been criticised by the alleged victim of a multimillion-pound international fraud for ignoring dossiers of evidence – including death threats and intimidation – linking the crime with the UK, months before a witness connected to the case was found dead in unexplained circumstances.
The body of Alexander Perepilichnyy, 44, was found outside his Surrey home on 10 November. His cause of death is described as “unexplained” following two postmortems, with further toxicology tests to come.
He was a key witness in a fraud case involving the theft of £140m in tax revenue from the Russian government. The alleged fraudsters are said to have stolen three companies from a UK-based investment firm, Hermitage Capital, and used them to perpetrate the fraud – leaving Hermitage in the frame for the criminal acts.
The case is known as the “Magnitsky case”, after one of Hermitage’s Russian lawyers, Sergei Magnitsky, who was found dead in a Russian prison in 2009 with his body showing signs of torture. A motion from the parliamentary assembly of the Council of Europe said Magnitsky had been “killed … while in pre-trial detention in Moscow after he refused to change his testimony”.
Bill Browder, the founder of Hermitage Capital, has been trying to secure convictions for the death of Magnitsky, as well as those implicated in the alleged fraud against his company, for four years.
Documents seen by the Guardian show that in January and February Browder’s lawyers passed a criminal complaint to the City of London police, the Serious Fraud Office (SFO), the Financial Services Authority (FSA) and Serious Organised Crime Agency (SOCA).
The complaint alleged Britain had ties to the alleged criminal conspiracy from its earliest stages: a UK citizen, Stephen John Kelly, served as a nominee, or “sham” director, for British Virgin Islands-based offshore companies involved in liquidating the companies used to claim the allegedly fraudulent tax refunds. Separately, a crucial couriered package of evidence, used as a pretext to raid offices in Russia, was sent from UK soil.
And, significantly, the complaint alleged lawyers working in the UK for Hermitage on the case had been subject to death threats made by phone, and intimidation via surveillance of their offices.
Hermitage claim the alleged theft of the companies was carried out using documents taken from their offices during a police raid, then “representatives” of the companies engaged in an elaborate series of steps to secure a tax rebate of about £140m. The three firms, now with no assets and more than £600m of debts, were then sold on and liquidated via the British Virgin Islands.
The Conservative MP Dominic Raab wrote to the same police and anti-fraud agencies again in August also encouraging an investigation, after being contacted by Hermitage with respect to their complaints.
Raab had previously urged action in the House of Commons against individuals allegedly implicated in Magnitsky’s death, mirroring a US bill that was formally passed by the Senate on Thursday evening.
Raab also informed the Home Office last month that one of the alleged leaders of the Russian criminal gang had apparently travelled to the UK on two occasions in 2008, despite having previous convictions in relation to a multimillion-pound fraud, and asked them to investigate. He also passed details of 60 individuals allegedly involved in the plot to UK authorities to assist in monitoring of their movements.
Raab said the lack of information from any UK authorities was troubling.
“The first thing is, we don’t know about Perepilichnyy and his cause of death,” he said. “But we do know there was some sort of hit-list in Russia with his name on it and he’s obviously given evidence in these money-laundering proceedings.
“I think the key thing is the Home Office give the police all the support they can. At the moment, there’s a lack of transparency, it’s very difficult to know. We’ve got no idea if anything’s been actioned, or even how many people linked to the case have been travelling in and out of Britain. We just don’t know.”
City of London police said they had met Hermitage but had found no evidence of UK involvement in the alleged offences.
“Detectives met with the company’s solicitors and having reviewed the complaint concluded there was no evidence of criminality in the UK and would be taking no further action,” said a spokesman”.
The SFO, FSA and SOCA declined to comment, citing policies barring them from confirming or denying the existence of any specific investigations.
A spokesman for the Home Office confirmed they had been contacted by Raab and were looking into his queries, but said they did not comment on individual visa cases.
Surrey police have still been unable to establish a cause of death for Perepilichnyy, who collapsed and died outside his luxury home in Weybridge, Surrey. He had been out jogging, his wife Tatyana said, and was found in the street wearing shorts and trainers.
Perepilichnyy appears to have been part of the alleged criminal group but to have fallen out with other members of the syndicate. He fled to Britain three years ago, taking with him bank documents, details of Credit Suisse accounts and other evidence.
In the UK Perepilichnyy kept a low profile, with few Russians in the capital having heard of him. He passed a bundle of evidence to Hermitage Capital; Hermitage then handed the documents over to the Swiss police. As a result Swiss investigators closed down several accounts allegedly belonging to figures in the criminal gang.
Andrei Pavlov, a lawyer whom Hermitage’s investigations have revealed as counsel to some of those involved, told Kommersant, Russia’s leading daily, that Perepilichnyy appeared exhausted and frightened during two meetings the men had last year. “He wanted to make peace with [ex-partner Vladlen] Stepanov,” the lawyer said. Pavlov did not respond to repeated requests for comment by the Guardian’s deadline.
Stepanov, and his ex-wife Olga Stepanova, are among those accused by Hermitage of taking part in a complex scheme to illegally funnel Russian taxes from companies once owned by Hermitage. Information released by Hermitage, and uncovered by Magnitsky, shows how Stepanova, the former head of a Moscow tax office, and her husband bought wildly expensive properties in Moscow, Montenegro and Dubai.
In a video interview with Vedomosti, a respected financial daily, in May 2011, Stepanov attempted to explain his personal wealth, which he claims was gained through investing the money he made in the 1990s from tunnel construction and optics. He called Browder’s investigations “fabricated facts”. “With these fabricated facts, they have blamed me for everything – that there is blood on my hands.”
He also said he had fallen out with Perepilichnyy, calling him a man with “many problems”.
“He ran away. He’s not here. He doesn’t answer the phone. He’s hiding. It’s like he doesn’t exist.” Perepilichnyy is believed to have fled to the UK after becoming unable to pay back debts amid the global financial crisis.
In June 2011, Stepanov took out a full-page advertisement in RBK Daily, a Russian financial newspaper, addressed to Alexey Navalny, the country’s leading corruption crusader, who had recently commented on Browder’s investigations. “Let us now talk about Alexander Perepilichnyy ,” Stepanov wrote, explaining that Perepilichnyy had managed his money since 1995. “This man owes me a lot of money. As a matter of fact, not just me, but scores of other creditors. He cheated me by pocketing my money and assets.”
He said he knew that Perepilichnyy was the source of Hermitage’s information: “I am confident in the role Perepilichnyy played in notching up my ‘notoriety’ because of some details known only to him and nobody else.”
Russian officials have not commented on the death. An anonymous police source said in comments carried by the Interfax news agency that “Perepilichnyy has no relation to the so-called tax case regarding Magnitsky”.