Hermitage Capital lawyer Sergei Magnitsky, who recently died in a Moscow prison, aided the company's owner in a scheme to illegally buy and sell Gazprom stock, Russian investigators said Wednesday.
Magnitsky, 37, who was awaiting trial on tax evasion charges, died in the Matrosskaya Tishina pretrial detention center earlier this month. The Russian Prosecutor General's office said that Magnitsky died of a heart attack. A probe into his death has been ordered by Russian President Dmitry Medvedev.
Investigators said that Magnitsky had conspired with the hedge fund's head, Bill Browder, to establish dummy firms to illegally buy and sell Russian energy giant Gazprom's stock.
Russian Interior Ministry Investigation Committee spokeswoman Irina Dudukina named the companies involved as "LLC Dalnyaya Step and LLC Saturn Investment." She said the firms were established in 1996-98 in Kalmykia, in south Russia.
"Their real founder was the Hermitage fund located in the offshore zone on Guernsey Island," she said.
"The only activity of these companies was to buy, with loaned funds, Gazprom shares in violation of Russian legislation banning the purchase of Gazprom stock by foreign-based persons," the spokeswoman added. "[Magnitsky] was Browder's accomplice, as he helped him evade tax payments."
"During 2000, the Dalnyaya Step and Saturn Investment funds sold the Gazprom shares they owned, and were to have paid to the budget a profit tax of 35%, but in reality, the companies paid only 5.5%," Dudukina said.
From mid-1990s, Gazprom stock could circulate only on two Russian stock exchanges, and the participation of foreigners in Gazprom capital could not exceed 20%. Conversion of shares into ADRs was restricted. As a result, the cost of Gazprom shares on the domestic and foreign markets differed significantly.
In late 1990s gray schemes allowing foreign investors to buy Gazprom stock on the Russian market were widely used. In December 2005, after the state received full control over the energy giant, Russia removed restrictions on the purchase of Gazprom stock by foreigners and the price discrepancy was no more.
Magnitsky had been in jail since 2008 amid a tax dispute between the Russian authorities and Hermitage Capital, once the largest investment fund in Russia. Magnitsky's lawyer said he had demanded that his client undergo a medical examination before his death. The Interior Ministry says no request was made.
Browder, the subject of a tax evasion investigation by Russian investigators, told the BBC earlier this month that medical treatment was denied to Magnitsky because he refused to sign a confession.
MOSCOW, November 25 (RIA Novosti)