Introduction to Bill Browder’s story about Sergei Magnitsky, why it matters

By Lucy Komisar
March 5, 2020 -

The Fault Lines broadcast today is about two main elements of the Browder hoax, an introduction to the story.

First, Browder’s tax evasion: he took the 5% profits tax allowed by the Russia-Cyprus double taxation treaty for Cyprus investors when he wasn’t entitled to it.

Second, Browder set up the shell companies in the Kalmykia region, through which he bought and sold Russian shares. That is because Kalmykia gave a big tax write-off if 50% of a firm’s employees were disabled. Except Browder claimed the 50% were “stock analysts” when they were actually manual workers he had paid to use their work papers.

Third, he took a big tax cut for investing in the Kalmykia region when he just moved money from one shell to another.

Next, it promotes the fake claim that Magnitsky uncovered the tax refund fraud. That occurred when companies engaged in collusive lawsuits, “lost” the suits, and “agreed” to pay damages equal to their entire year’s profits. They then requested a full refund of taxes paid on the now zero profits. The scam was stopped after Russian authorities realized what was happening.

The declaration that Magnitsky discovered this was a lie, aimed at muddying the waters and deflecting attention from his role in Browder’s tax evasion.

The tax refund fraud was reported first in April 2008 by Rimma Starova, the figurehead director of Virgin Islands shell company Boily Systems which had taken over Browder’s Kalmykia shell companies.

A Browder/Hermitage director Paul Wrench filed a complaint about the theft of the Hermitage companies used in the scam in July, and Browder gave the story then to NYTimes and Vedomosti. But Starova had already reported it.

And Magnitsky didn’t mention it in testimony till October 2008.

The broadcast discussed how the Magnitsky Act was created to block the Russian from going after Browder for his tax frauds by, in part, targeting people it claimed were involved in the “criminal conspiracy” (ie the tax refund fraud) he uncovered. Except he didn’t uncover it.

It directed the U.S. president to determine who was involved in that conspiracy and freeze assets U.S. could get its hands on and order the targets banned from travel to the U.S. It’s in the best tradition of dictators, a Star Chamber with no due process, no evidence required, no way to challenge charges, no court of law.

Calling it a “human rights law” is an irony apparently lost on its supporters.

Originally published at The Komisar Scoop.