Sergei Leonidovich Magnitsky (Сергeй Леонидович Магнитский, ; Сергій Леонідович Магнітський; 8 April 1972 – 16 November 2009) was a Russian tax advisor responsible for exposing corruption and misconduct by Russian government officials while representing client Hermitage Capital Management.
2005
Hermitage's company co-founder, American Bill Browder, was expelled from Russia in November 2005 as a purported national threat; Browder arrived in Moscow, was told his visa had been annulled, and was deported the next day.
Browder has said that he represented a threat only "to corrupt politicians and bureaucrats" in Russia, and believed that he was removed to leave his company open for exploitation.
2007
On 4 June 2007, Hermitage's Moscow office was raided by about 20 Ministry of Interior officers.
The offices of Firestone Duncan were also raided.
The officers had a search warrant alleging that Kamaya, a company administered by Hermitage, had underpaid its taxes.
This was highly irregular, as the Russian tax authorities had just confirmed in writing that this company had overpaid its tax.
In both cases, the search warrants permitted the seizure of materials related only to Kamaya.
But, in both cases the officers illegally seized all the corporate, tax documents and seals for any company that had paid a large amount of Russian taxes, including documents and seals for many of Hermitage's Russian companies.
In October 2007, Browder received word that one of the firms maintained in Moscow had a trial against it for an alleged unpaid debt of hundreds of millions of dollars.
According to Browder, this was the first time he had heard of this court case and he did not know the lawyers who represented his company in court.
Magnitsky was assigned to investigate the case.
In his investigation, auditor Magnitsky came to believe that the police had given the materials taken during the police raids to organized criminals, who used them to take over three of Hermitage's Russian companies and who fraudulently reclaimed $230m (£140m) of the taxes previously paid by Hermitage.
He also claimed police had accused Hermitage of tax evasion solely to justify the police raids, so they could take the materials needed to hijack the Hermitage companies and effect the tax refund fraud.
Magnitsky's testimony implicated police, the judiciary, tax officials, bankers, and the Russian mafia.
In spite of the initial dismissal of his claims, Magnitsky's core allegation that Hermitage had not committed fraud—but had been victimized by it—was eventually validated.
A sawmill foreman pleaded guilty in the matter to "fraud by prior collusion", though the foreman would maintain that police were not part of the plan.
Before then, however, Magnitsky became the subject of investigation by one of the policemen against whom he had testified as involved in the fraud.
According to Browder, Magnitsky was "the 'go-to guy' in Moscow on courts, taxes, fines, anything to do with civil law."
According to Magnitsky's investigation, the documents that had been taken by the Russian police in June 2007 were used to forge a change in ownership of Hermitage.
The thieves used the forged contracts to claim Hermitage owed $1 billion (~$ in ) to shell companies.
Unknown to Hermitage, those claims were later authenticated by judges.
In every instance, lawyers hired by the thieves to represent Hermitage pleaded guilty on the company's behalf and agreed to the claims, thereby obtaining penalties for debts that did not exist; all while Hermitage officials were unaware of these court proceedings.
The new owner, based in Tatarstan, turned out to be Viktor Markelov, a convicted murderer released two years into his sentence.
The company's fake debt was used to make the companies look unprofitable in order to justify a refund of $230 million in tax that the companies had paid when they had been under Hermitage's control.
2008
His arrest in 2008 and subsequent death after eleven months in police custody generated international attention and triggered both official and unofficial inquiries into allegations of fraud, theft and human rights violations in Russia.
His posthumous trial was the first in the Russian Federation.
Magnitsky alleged there had been large-scale theft from the Russian state, sanctioned and carried out by Russian officials.
He was arrested and eventually died in prison seven days before the expiration of the one-year term during which he could be legally held without trial.
In total, Magnitsky served 358 days in Moscow's Butyrka prison.
He developed gall stones, pancreatitis, and a blocked gall bladder, and was denied medical care.
A human rights council set up by the Kremlin found that he had been physically assaulted shortly before his death.
His case became an international cause célèbre.
2012
The United States Congress and President Barack Obama enacted the Magnitsky Act at the end of 2012, barring those Russian officials believed to be involved in Magnitsky's death from entering the United States or using its banking system.
In response, Russia condemned the Act and claimed Magnitsky was guilty of crimes.
Nearly a dozen other nations, as well as the European Union, have subsequently implemented or considered Magnitsky legislation.
2013
In early January 2013, the Financial Times wrote that "the Magnitsky case is egregious, well documented and encapsulates the darker side of Putinism".
Magnitsky was an auditor at the Moscow law firm Firestone Duncan, working for its owner, Jamison Firestone.
He worked with Firestone Duncan client Hermitage Capital Management, an investment advisory firm accused of tax evasion and tax fraud by the Russian Interior Ministry.
Over the years of its operation Hermitage had, on a number of occasions, supplied to the press information related to corporate and governmental misconduct and corruption within state-owned Russian enterprises.
