Switzerland ‘freezes’ Russian accounts in tax probe: firm

Swiss authorities have frozen the Credit Suisse accounts of the husband of a Russian tax official who allegedly embezzled millions from a top Western investment fund, the company’s head said on Friday.

“We have been made aware from sources close to the investigation that the accounts have been frozen,” William Browder, the founder of Hermitage Capital investment fund, told AFP from London.

His comments came after the US finance magazine Barron’s reported on Thursday that Swiss prosecutors had frozen accounts at Credit Suisse bank as an “emergency” measure, citing sources.

Hermitage Capital is suing Russia, claiming it was a victim of a tax swindle in which officials stole identities of companies belonging to it and claimed back hundreds of millions of dollars in tax refunds, which were then laundered.

Russia responded by investigating the investment fund for tax violations and arresting company lawyer Sergei Magnitsky, who died in jail in 2009 from untreated illnesses while awaiting trial.

Hermitage Capital’s claims, uncovered by Magnitsky, centre on the former head of a Moscow tax office, who now works in a different state-controlled firm.

Browder said he had information that “dozens of accounts” had been frozen after the fund submitted criminal complaints about money at Credit Suisse belonging to the husband of the tax official.

“We indicated that a number of accounts at Credit Suisse belong to Vladlen Stepanov, the husband of Olga Stepanova, the former head of Moscow Tax Office No. 28,” Browder said.

“Based on information coming out of Switzerland, we believe these accounts were frozen.”

Swiss authorities only confirmed Friday that they had opened an investigation against person unknown on suspicions of money laundering on March 7.

“The investigation was triggered by information from the Money Laundering Reporting Office,” an official Swiss police coordination body, a spokeswoman for the Federal Prosecutor’s Office told AFP.

She added that the reporting office had received a complaint from attorneys at Brown Rudnick acting for Hermitage Capital.

However, she declined to give further details.

An architect last month identified Stepanova and her husband as clients who ordered an avant-garde mansion in the high-rolling Rublyovka suburb of Moscow.

Hermitage Capital also believes the former Moscow tax official has recently purchased villas in Montenegro as well as Dubai.

The fund claims that Russian police took control of its three subsidiary firms in 2007 and then used them to receive a refund of some 5.4 billion rubles (about $190 million) authorised by tax officials.

But security officials arrested Magnitsky instead of the Russian officers and accused him of the very violations he claimed to have uncovered.

Browder called news of the Swiss account freeze a vindication for Magnitsky, whose death exposed the dire conditions in which those charged with white-collar crimes were held before trial.

The scandal surrounding Magnitsky’s death also prompted President Dmitry Medvedev to introduce new legislation and call for sweeping police reforms.

The United States and the European Union have slapped travel bans on dozens of Russian officials over their involvement in Magnitsky’s case. His death is being investigated by Russia but so far no one has been charged.

“If we can’t get justice for Sergei Magnitsky inside Russia because of high level corruption, at least we are starting to get justice outside of Russia,” Browder said.

On Wednesday, a Moscow court approved a request from police investigators to issue an arrest warrant for a Russian executive in the fund, Ivan Cherkasov, who is working in London.

Russian investigators have said they believed that Cherkasov had failed to pay taxes on some two billion rubles ($71.95 million at Friday’s exchange rate) in company profits in 2006 in a separate probe opened against Hermitage.