LONDON—Switzerland knows its investigation into a $230 million Russian fraud was corrupted by Kremlin assets, including Trump Tower Russian lawyer Natalia Veselnitskaya, but it still plans to hand back almost all of the stolen funds to the men accused of taking part in one of the world’s most infamous financial crimes.
In a letter seen by The Daily Beast, the Swiss General Prosecutor’s office says it plans to return 99 percent of the frozen assets belonging to one alleged Russian fraudster and 100 percent of the assets belonging to an alleged Russian crime syndicate boss.
These illicit proceeds allegedly came from Russia’s biggest ever public fraud, which has resulted in a swathe of global anti-corruption laws that began when President Obama signed the Magnitsky Act into law in 2012.
A year before that, the authorities in Switzerland began to freeze more than $10 million that was funnelled into Swiss bank accounts from Russia. That money was part of a massive fraud and coverup that was discovered by Sergei Magnitsky, who was subsequently imprisoned and left to die after being beaten by the Russian authorities.
Anti-corruption laws in his name have now been enacted in seven countries, with legislation pending in several more, plus the European Union.
Veselnitskaya, who met with Donald Trump Jr., Jared Kushner and Trump campaign chairman Paul Manafort in June 2016, was also part of the plot to corrupt a Swiss investigation into the $230 million fraud.
One of the men accused of distributing the proceeds of the crimes, Denis Katsyv, was Veselnitskaya’s boss. She worked with senior figures in Moscow’s General Prosecutor’s Office who—together with friendly oligarchs—influenced senior Swiss officials with all-expenses paid vacations in Russia where they were fed with Kremlin propaganda, according to Swiss court documents.
Veselnitskaya met a former Swiss police officer in Moscow to set out the Kremlin’s version of the fraud uncovered by Magnitsky.
The former officer, who was a consultant to the Swiss Federal Prosecutor’s Office, was sacked and convicted after his dealings with the Russians were exposed. Among other things he was helicoptered in for a bear hunting trip in Russia’s far east, and put up in luxury hotels. In court the officer, who played an active role in the Russian fraud probe, was named only as Victor K.
On one of the disgraced ex-officer’s trips to Russia he was joined by Swiss prosecutor Patrick Lamon and Switzerland’s attorney general Michael Lauber—they were photographed together on a boat trip on the Baikal with senior Russian officials. All three have been involved in investigating or prosecuting the Magnitsky affair, which has become President Putin’s bête noire.
Lauber was forced to resign as Switzerland’s top prosecutor earlier this year after Swiss lawmakers complained about his backchannels to sanctioned Russian officials and he was accused of lying about secret meetings over the FIFA corruption scandal, in which Russia and Qatar were accused of using illicit means to win the right to host the World Cups in 2018 and 2022.
Under Lauber’s watch, no criminal charges were brought against the Russians accused of bringing millions of dollars in stolen funds into Switzerland in this case.
Lauber’s former department, the Swiss General prosecutor’s office, has not declared the money to be legitimate, quite the opposite. By seizing a proportion of the funds—however small—they are effectively confirming they have proof that there are illicit funds in the accounts linked to Veselnitskaya’s boss Katsyv and Vladlen Stepanov, a mysteriously wealthy Russian whose wife signed off on the $230 million fraud in her role as a senior Moscow tax official.
According to a letter sent on November 6 to Hermitage Capital, which was the victim of the fraud, Swiss prosecutors say they will not use that proof to confiscate the bulk of the funds. Instead they have employed sophisticated financial analysis to dilute the value of the laundered money so that most of it can be returned to the men they believe to be crooks.
The accepted method of identifying the proceeds of crime outlined by the United Nations Convention against Transnational Organized Crime clearly states that commingling the illicit funds with money from other sources does not impact the value of the funds which are liable for seizure.
The proposal from the Swiss prosecutors, however, will see 99 percent of Katsyv’s money returned to him. Stepanov can expect between 55 percent and 87 percent of his frozen assets returned by the Swiss authorities.
The letter also suggests that 100 percent of the frozen assets will be returned to Dmitry Klyuev, a convicted Russian businessman, who is on the U.S. sanctions list. Sen. John McCain once described the Klyuev Group, as a “dangerous transnational criminal organization.”
Bill Browder, the founder of Hermitage Capital, told The Daily Beast: “This reinforces the worst stereotypes of Swiss justice. To give so much money back to Russians who were involved in the Magnitsky affair while most other countries have sanctioned these individuals is a stain on Switzerland.”
The Office of the Attorney General of Switzerland (OAG) declined to answer specific questions from The Daily Beast but confirmed in a statement that the letter dated November 6 stated “the OAG is planning at this stage to order the closure of the Swiss investigation, together with the forfeiture of part of the assets currently under seizure.”
Prevezon, a company owned by Katsyv whose father is a Moscow official, previously paid almost $6 million to settle U.S. civil charges brought in New York where authorities claimed further proceeds of the massive fraud were laundered through American bank accounts and Manhattan real estate. Veselnitskaya was charged with obstruction of justice for colluding with the Russian Prosecutor General’s office to present false evidence to the U.S. court.