Civil Practice Puts Russian Lawyers at Risk of Violence and Criminal Charges
Three highly regarded Russian lawyers thought they were representing Hermitage Capital investment fund in a routine tax case.
Now one of the attorneys is jailed and two others are in exile, after uncovering what appears to be a breathtaking fraud involving government officials who allegedly colluded to wrest control of affiliated companies from their rightful owner and wrongfully obtain a $230 million government tax refund, reports the Washington Post. Lawyers purporting to represent Hermitage, who were never hired by the company, collaborated in the scheme, the newspaper contends.
Such “raiding” of corporate ownership, especially concerning corporations owned by foreign investors, is so commonplace in Russia that the prices for arranging it—from as little as $10,000 to change a corporate registry to $300,000 for a corrupt court order—have been reported by local media, the Post recounts.
When one attorney at the Firestone Duncan law firm representing Hermitage objected to a 2007 search of its offices by Russian authorities, he was beaten so badly that he had to be hospitalized for two weeks, Jamison Firestone, an American who heads the Moscow-based practice, tells the Post.
And when the three lawyers representing Hermitage—Eduard Khayretdinov, 50, Sergei Magnitsky, 37, and Vladimir Pastukhov, 46—reported the apparent $230 million tax fraud, authorities focused their investigation on the attorney triumvirate, the article recounts. Two of the attorneys fled the country fearing criminal prosecution; Magnitsky is charged with helping a Hermitage company evade taxes in 2001. His lawyer says Magnitsky’s representation of the company began in 2002.
Although the Interior Ministry said in a written statement last month that it has resolved the $230 million tax fraud, the money is still missing and no officials have been charged, the Post reports. A convicted murderer listed on Hermitage corporate documents as an owner has been charged, however.
“I used to believe that if you were persistent and targeted, you could get results, even in the Russian courts,” says Pashtukhov, who now lives in London. “But I’ve changed my mind. I’ll never step into another courtroom again as a Russian lawyer.”
Earlier related coverage:
ABA Journal: “Russia Claws at the Rule of Law”
ABAJournal.com: “Supporters of Slain Russian Journalist to Seek Justice Elsewhere”
