Olympic sheen hides corrupt Russia, says businessman
Update: The 60 Minutes report "Enemy of the State" aired on Feb. 16, 2014. Scott Pelley is the correspondent. Henry Schuster, producer.
Browder wants the world to know that "the Russian regime is a criminal regime" because of the nightmare he says it put him and his lawyer through. He was deported suddenly after several years of running one of the largest foreign investment firms in Russia. Browder and his fund, Hermitage Capital, made a fortune investing in Russian companies formerly run by the government. Nineteen months after he was barred from the country, he says the enforcement arm of Russia's Tax Service raided his and his lawyer's offices in Moscow and stole the ownership documents to the companies. They were reincorporated under other owners and applications were filed for $230million in tax refunds -- a colossal scam that only government officials could pull off, says Browder. "This certainly must be a rogue operation with high-level people involved because to get a tax refund of $230 million...involves a minister-level person to approve it," says Browder.
His attempt to fight back, he says, resulted in the death of Sergei Magnitsky, his tax attorney and friend. Magnitsky identified members of the Tax Service and police, including a colonel, and tried to have them prosecuted. Instead, he himself was arrested and held without trial under harsh conditions that Browder says amounted to torture. Magnitsky, 37, died in a prison hospital of what Russian officials said was a heart attack; Browder believes he was murdered after being beaten by prison guards. Magnitsky's family requested an independent autopsy, but that was denied. His death resonated with many Russians fed up with corruption.
Browder launched his own investigation, spending part of his personal fortune on uncovering what happened. He says he's turned up evidence that members of the police involved in the raid now own expensive cars that cost far more than their salaries. And he's identified a Tax Service bureaucrat involved in signing off on the enormous refund as now owning three vacation homes in the Persian Gulf and a $20 million mansion outside Moscow. "These are people on a salary, a joint family income on $38,000 a year," says Browder, who backs up this statement by saying he has the tax returns provided by a whistleblower to prove their incomes. Browder has posted the results of his investigation on a website in both Russian and English.
A Russian court recently convicted Browder and Magnitsky of tax evasion, almost five years after Magnitsky's death. Browder, who was deported in 2005, was found guilty in absentia. When asked by Pelley whether part of his fortune was made by evading Russian taxes, Browder points to his evidence that police and tax officials making the case against him were the ones who stole $230 million. "It kind of destroys the credibility of any allegations they make," he tells Pelley.
The U.S. Congress has heard Browder's story and in response passed the Sergei Magnitsky Rule of Law Accountability Act of 2012, barring certain Russian officials and other individuals involved in the case from entering the U.S. And several months ago, the U.S. Department of Justice unveiled a complaint saying some of the money stolen in the Magnitsky case was being used to buy apartment buildings in New York City.
Browder says he has gotten death threats; the emails and texts say "things like: 'What's worse? Prison or death?'" He believes the corruption goes right to the top. "The president of Russia has basically gone on record and he's denied that there was any crime that was committed by any official, he's on the record saying Sergei Magnitsky was a crook... I'm a crook, he's clearly involved in the cover up." President Vladimir Putin denies Browder's allegations.