By Lucy Komisar
Feb 19, 2019
The European Parliament‘s tax committee a few weeks ago invited an admitted tax cheat, William Browder, and welcomed him as an honorable guy who could tell them how to solve the problem that he, evidence shows, represents. It seemed surreal.
The European Parliament created the Tax3 committee to deal with issues raised by the Panama Papers, Luxleaks, Paradise Papers and the like. And Browder, who set up his Russian investment fund on a network of offshore shell companies in Cyprus and the British Virgin Islands, including two listed in the Panama Papers, was the chief expert at the Jan 29 hearing.
Browder built his Hermitage Fund on shell companies that were set up in Russia, owned by shells in Cyprus, and at the top, held by offshore companies set up by Mossack Fonseca in the notorious home of shell companies, the British Virgin Islands.
So, let‘s go through Browder‘s testimony and answers to questions.
He starts with December 2007 when $230 million in taxes his companies paid were stolen from the Russian government.
That is true. It was a scam in which colluding lawyers accused companies of cheating them, the accused said we did it and we will pay, and then the winners went to the Treasury and demanded refund of their taxes, because the payments they had to make in the case zeroed out their profits. Browder‘s companies were not the first involved in such scams. But he said they had been stolen, that he had nothing to do with it.
Curiously, in his book, Red Notice, he relates a conversation with Igor Sagiryan, president of Renaissance Capital, which did the same scam a year before, and suggests he can help Browder liquidate the companies (and the paper trails). But that is another story.
Then, Browder told the committee, Sergei Magnitsky, “my lawyer,” investigated the crime, discovered the scam, testified against the officials, was arrested and tortured for 300+ days.
Except that is an invention. Let‘s start with Browder admitting in a U.S. court deposition that Magnitsky never went to law school or had a law license. Though Browder continued to say Magnitsky was his lawyer in 2017 testimony before the U.S. Senate Judiciary Committee, in his testimony in the US government‘s Prevezon case, Browder told a different story.
He was asked if Magnitsky had a law degree in Russia.
“I‘m not aware that he did,” Browder said.
Did he know if Magnitsky “went to law school?”
“No,” Browder answered.
Why lie about him being a lawyer? Because Magnitsky, an accountant, had worked for him for ten years doing his tax-evading accounts. On his Russian testimonies, Magnitsky is listed as an auditor, higher education: economist.
There is no evidence Magnitsky discovered the tax refund scam. Rimma Starova was a “nominee” director of one of the implicated shell companies. When she read in the papers in April 2008 that authorities were investigating them, she was concerned she might be implicated and went to police to make a report to put herself in the clear. See her Russian testimony. And English translation.
She said that there had been a fabrication of certificates of debt in the amount of 13.5 million rubles. That would be the companies‘ profits. She would return July 10 to state that the companies seemed to have stolen 5.4 billion rubles from the state. That would be the demanded refund of the $230 million they had paid in taxes.
A Browder lawyer filed a document about the scam July 20, 2008. Browder gave the story to the NYTimes and Vedemosti. No mention of Magnitsky as the one who discovered the fraud. Magnitsky‘s testimony, given in the Browder/Hermitage tax evasion investigation in June 2008, did not mention the fraud, though he did in October, after it was already public.
But Browder is on a campaign to accuse Russians officials of the fraud as a way to muddy the waters and throw attention off his own tax evasion. He had been found guilty in Russia of tax cheating for, among the charges, claiming he hired disabled workers for his shell companies and taking millions of dollars in tax cuts.
But he hadn’t; the shells didn’t have workers, and the people he listed were manual laborers, not stock analysts. They later admitted he paid them for the use of their documents.
In a deposition he gave in the Prevezon case in 2015, Browder was asked, “Who came up with the idea that you could use this tax regime?” “[W]e were advised by Arthur Andersen [which would also advise Enron how to cook its books], Firestone Duncan [where Magnitsky worked], Ernst & Young and various other firms that this was a proper way of organizing our affairs,” Browder replied.
But other companies who used the deduction were NOT claiming workers they didn’t hire. The committee could have inquired about that. And about how Browder used his “Panama Papers”-exposed Mossack Foseca companies to launder the profits on which he evaded taxes.
Using the tax refund fraud case — which he admits took no money from him — to build his fake Magnitsky-the-whistleblower story and deflect attention from Magnitsky as the accountant who managed his tax evasion, Browder sends complaints to countries throughout Europe charging recipients of the fraud. Those papers, of course, are confidential.
Browder says the Swiss froze $11 million based on his documents. Years have passed, bank records are available, and nothing has happened on the Swiss case. The only place his accusations got to court were against the Russian owner of Prevezon, a real estate investor, who he says got $1.9 million of the $230 million, but the US Justice Department could never prove it and settled with Prevezon in 2017.
Browder claims that 20 countries got illicit money from the case Sergei Magnitsky was “killed over” and that he has provided documents, but still nothing happens. Except that the British authorities are getting tired of his fake claims, and Browder, annoyed, revealed they think he is a “pain in the ass.” At least!
About the killing. Browder‘s began talking publicly about Magnitsky’s death, including this testimony May 2010 at the US Congressional Human Rights Commission, chaired by Rep James McGovern (D-MA). He said that after the 2007 office search he had hired “a young man named Sergei Magnitsky, a 36-year-old lawyer” to investigate. That of course was a lie as indicated above. The rest was a fantasy of how Magnitsky discovered corrupt officials behind the scam. And was arrested because of it. He said that Magnitsky died after being put in an isolation cell for 1 hour and 18 minutes. He said doctors stood outside and waited for him to die.
The death story didn‘t get enough traction, so after a few years, when Browder started promoting the Magnitsky Act to punish Russians he said were linked to the death of Magnitsky, the story changed. Now he would say that Magnitsky was beaten to death by eight riot guards with batons. Rep McGovern, House sponsor of the Magnitsky Act that passed in 2012, either didn‘t see this testimony or perhaps forgot Browder‘s earlier words. Or didn‘t think it mattered.
It became the centerpiece of Browder’s Magnitsky story, since the Magnitsky Act had to be based on an egregious human rights violation, not the jailing of a suspected accessory to tax evasion. By the time Browder testified before the Senate Judiciary Committee in July 2017, he declared: “…. they put him in an isolation cell, chained him to a bed, and eight riot guards came in and beat him with rubber batons.” Video.
But, there exists no evidence for that fable. The report of the US Physicians for Human Rights, Cambridge, Mass, to which Browder sent his “evidence,” concluded that he died after terrible medical care for a serious ailment.
Browder is unhappy that everyone isn‘t climbing onto his bandwagon. At the European Parliament hearing, he got nasty and declared that money was being paid to members of the British establishment to make sure things were not happening. Ie, authorities were not going after Browder targets. “We have found payments to members of the House of Lords.” He said senior members of the Swiss federal police were having inappropriate contacts. The deputy general prosecutor of Cyprus was having inappropriate relations with people in Russia.
With no evidence, he accused law enforcement in three countries of corrupt dealings. Pain in the ass would be a mild description!
Browder had a solution. He declared that every bank should be required to show legitimate business reasons for every transaction. Well, that sort of exists with rules to target suspicious transfers. Except “every transaction” goes to the multi-millions! Even billions! Really? Nobody questioned that.
He pointed out, “The bad guys look for the gaps in the system.” Yes, he did. Let‘s go back to 2006 when Browder moved his assets out of Russia through Cyprus shell companies so he could get the money out without paying taxes. Should one investigate how those those transfers involved his trustee HSBC, a known corrupt bank that ran money for Latin American drug dealers? And got off with a US fine, no jail time for anyone. He is blocking Russia’s attempts to get cooperation from Cyprus to follow the money trails.
The only parliamentarian who asked a question that showed he knew anything about Browder was a French member, Nicolas Bay, who then got viciously attacked by the poster child of offshore tax evasion. It was a stunning event. See the video. It‘s brief but powerful.
Bay talked about the film “The Magnitsky Act: Behind the Scenes” by Russian director Andrei Nekrasov which was going to be screened at the European Parliament in 2016 till Browder got his supporters to block it. He asked “why the screening was cancelled, even though film had gone through all the checks and controls in advance. Why are we seeing this censorship in area where we are supposed to have this perfect democracy?”
Bay cited his own investigation, which showed “inconsistencies in what Mr. Browder saying” a nice way of saying Browder was lying.
Browder exploded in rage: “I knew there would be question from the FSB [the Russian Security Agency] fed here.”
He accused Nekrasov, who in fact had done some films very critical of Putin, of making an FSB propaganda film full of lies and misrepresentations.
That fit with the underlying subject of the hearing, which was the bad Russians, who by the way were the victims of Browder’s $70 million tax evasion and illicit Gazprom stock buys. (Russian sales of Gazprom were limited to Russian nationals, so he used cutout companies to get significant ownership.)
Of course, the Nekrasov film is heavily documented. Browder provided no evidence of lies. And Browder appears in the film till he’s seen walking out in a huff after Nekrasov started asking tough questions. But nobody in the European Parliament except Bay appeared to care. Why bother to see a film if you want to attack it without seeing it? I was waiting for the Greens to speak up, but they were silent. Since Marie-Luise Beck, a prominent Green, had organized the banning of the film, I was not surprised. Though I wondered why a political group that speaks loudly against offshore tax evasion gives a pass to one of the world‘s most prominent offshore tax evaders.
Browder got an endorsement from another person at the event, Guenther Schirmer of the Parliamentary Assembly of the Council of Europe (PACE), a sister organization of the EP, who said the Nekrasov film was crass disinformation. Schirmer is now in charge of the PACE Browder/Magnisky report written by Andreas Gross, who was later banned from the assembly for refusing to appear before a commission of inquiry.
The Gross report was rejected by US federal court Judge William Pauley in the Prevezon case as not credible, because it was based only on Browder‘s information. See my article in Le Temps, the Geneva daily.
Even after Bay spoke, the others continued to tell Browder how wonderful he was. They did not seem like a group seriously concerned about offshore tax evasion.
A postscript: The Panama Papers stories have never reported the offshore operation of the world-famous fighter against corruption, I believe, because Browder is protected by ICIJ, the journalism organization that spear-headed those stories.
I have asked numerous times why they don‘t write about him as a major Mossack Fonseca/Panama Papers figure. No reply or they say they are busy. Simon Bowers of ICIJ just wrote an article criticizing the European Commission, whose outgoing president is Jean-Claude Juncker of Luxembourg, for not investigating LuxLeaks tax deals. Fair question. Juncker could ask why Bowers, to whom I sent detailed information, doesn‘t write about William Browder and his Mossack Fonseca Panama Papers shells.
I believe the answer is the influence of is OCCRP in ICIJ. This Sarajevo-based investigative reporting group has strong links to Browder, who admitted in his testimony that they collaborated on the documentation he would give the U.S. Justice Department in the US Prevezon case, central to his Magnitsky fabrication.
It is funded by the US State Dept, the UK Foreign Ministry, and the George Soros Open Society foundation, among others. So, the U.S. pays OCCRP, it works with Browder to prepare documents he gives to the US to file a case against a Russian-owned company, Prevezon, that American journalists channeling Russiagate will write (with no evidence) is linked to Putin. And it writes articles seen by Americans arguing that everything Browder says is right. There used to be a U.S. law against the government paying for propaganda directed to the U.S., but apparently no longer.
See the video!
Postscript: March 11, the European Parliament voted 146-134 against a proposal by the EPP Group to modify the plenary agenda by renaming the debate concerning “a European human rights violations sanctions regime” to “towards a EU Magnitsky Act.” The EPP comprises mostly Christian Democratic, conservative and liberal-conservative politicians. Liberal in the neo-liberal right-wing economic sense, not the U.S. liberal sense. Browder called it a defeat of our motion. When did he become a member of the European Parliament?