It was a digital conversation never intended for public consumption. Yet what it discloses is nothing short of damning evidence about a decade-old conspiracy between the Russian mob and officials in Vladimir Putin’s government to steal $230 million from the Russian people, then frame and kill the whistleblowing tax attorney who uncovered the crime.
But here it is: Evidence that leaves little room for doubt that Sergei Magnitsky, the murdered lawyer, was right all along. There was collusion between members of organized crime and the Russian government to perpetrate the original theft and then cover it up. In fact, the cover-up continued years after Magnitsky’s violent end in pretrial detention, where he was beaten to death.
To understand the evidence and its import—the extent to which it exposes the rot at the core of the Russian system run by Vladimir Putin—it’s necessary to revisit the admittedly complicated details of the conspiracy, at least as they have been corroborated by the U.S. Congress, the U.S. Department of Justice (PDF), and the European Parliament, all of which have upheld Magnitsky’s findings—even if his own government has not.
In June 2007, officers of the Russian Interior Ministry raided two offices in Moscow. The first belonged to Hermitage Capital, then the largest investment vehicle in the Russian Federation; the second was Hermitage’s law firm Firestone Duncan. The officers seized stamps and certificates for three subsidiaries belonging to the firm. In effect, with those bits of rubber, ink, and paper, they purloined those three companies, although no one knew it at the time.
Months later, Hermitage received a phone call from a St. Petersburg court informing it that it was liable for hundreds of millions of dollars in judgments levied against those same three stolen companies. At which point, Hermitage hired a young tax attorney at Firestone, Sergei Magnitsky, to find out what had happened.
He discovered that the documents seized by the Interior Ministry were actually used to re-register the Hermitage subsidiaries in three jurisdictions all over Russia and that a lawyer named Andrey Pavlov turned up in concurrent civil court cases representing the companies. Pavlov, who in another instance also represented the plaintiff company, pleaded guilty in the cases, costing the purloined subsidiaries more than $1 billion in phony liabilities. The subsidiaries then sought a collective tax refund for $230 million, citing losses from the previous tax year as a result of the liabilities. The entire refund was processed in 24 hours on Christmas Eve 2007.
This is the kind of thing that may sound complicated at first glance, but is quite easy to arrange if a government and a criminal enterprise are colluding.
When some of the details were exposed, the European Parliament sanctioned Pavlov as a member of the transnational Russian organized crime syndicate known as the Klyuev Group, headed by ex-convict Dmitry Klyuev. Members of this mafia, according to the U.S. government, include the very Interior Ministry policemen who raided Hermitage and its law firm, as well as the tax officials who processed the $230 million refund, and members of other law enforcement bodies assigned with investigating the fraud.
To date, no one credibly implicated in the conspiracy has been brought to book in Russia. Many members of the Klyuev Group have been awarded state honors or given promotions or reassigned or have taken early retirement.
Magnitsky, meanwhile, was arrested on charges of tax evasion, then blamed for the conspiracy he uncovered, then denied urgent medical care in pretrial detention, then beaten to death in an isolation cell in Moscow, as the Russian Presidential Human Rights Commission concluded in a summarily ignored post-mortem.
In the last several years, much of the $230 million—which, again, was taken not from Hermitage Capital but from Russian public coffers and therefore Russian taxpayers—has been located in a host of foreign bank accounts and real-estate markets, including that of Manhattan where an ongoing and increasingly surreal federal money-laundering case is being prosecuted by the U.S. Southern District of New York, until recently the demesne of Preet Bharara.
Key witnesses involved in the Magnitsky affair have gone silent. One Western government informant was poisoned in England. The lawyer representing the Magnitsky family mysteriously fell (or was pushed) out of his fourth-floor apartment building in Moscow a day before he was due to testify in Russian court about the latest developments in the case.
A landmark U.S. human rights law named for Magnitsky, meanwhile, has sanctioned 39 accomplices to the Magnitsky Affair.
Pavlov is not one of them. But Oleg Urzhumtsev, a senior Russian Interior Ministry official who allegedly helped orchestrate the Magnitsky affair, is. He left his government job in or around 2011, a few years after having investigated the tax fraud and questioned Pavlov (whom he did not charge with any crime) and after he signed decrees that shifted blame for the crime onto Magnitsky himself.
Which makes it all the more interesting that in a tranche of hacked and publicly leaked emails belonging to Pavlov, the alleged consigliere is shown conversing with Urzhumtsev in 2013 (six years after the original crime) and giving him instructions as to how to retroactively exonerate the Klyuev Group.
Pavlov confirmed the authenticity of the emails in a legal complaint he filed in Moscow to try and prevent independent newspaper Novaya Gazeta from publishing them. They contain several days’ worth of WhatsApp communications between the consigliere and the ex-Interior Ministry official, which go a long way toward vindicating Magnitsky’s gumshoe exposé.
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On Feb. 18, 2013, Andrey Pavlov messages his friend Oleg Urzhumtsev on the encrypted platform WhatsApp: “I have a very serious and important matter for you. Baldy told me that I should assign it to you.” Baldy here appears to refer to the glabrous Dmitry Kluyev. And the task is to tamper with state evidence in order to exonerate the Klyuev Group from any criminal activity. It entails commissioning a fake forensic “study” to demonstrate that the three Hermitage seals stolen by the Interior Ministry in 2007 did not match those used in Pavlov’s civil cases. If they didn’t, after all, the Klyuev Group can’t have been guilty of any financial fraud.
Gaining access to the confiscated seals, however, means navigating various competitive arms of Russian law enforcement including the courts, the sub-agencies and departments within the Interior Ministry, and the Investigative Committee. And that in turn means seconding a series of “small bosses,” or mid-level officials, who might not be so willing to grant such access for an elaborate and unlawful scheme.
What follows is a revealing five-day dialogue between Pavlov and Urzhumtsev, chronicling, often in colorful language, every vicissitude of their project to rewrite their own criminal histories.
On Feb. 18, Pavlov messages Urzhumtsev to tell him that all three seals are in an evidence box with the Russian Interior Ministry’s Department for the Central Federal District. “The documents are with the court in [St. Petersburg], as I remember you were the one who had seized them.” Urzhumtsev, now out of a job at the Interior Ministry, nonetheless replies that he thinks he can arrange for the study to be commissioned using active officers in the ministry, but that he isn’t quite sure how to get hold of the seals from the Central District.
Later that day, he appears to have figured out a way. He tells Pavlov that he has tasked someone called “the Cossack”—an epithet used in the exchange to refer to an unidentified officer in the Interior Ministry’s Organized Crime and Corruption Investigations Department—with overseeing the request for access and the photocopying of the seals.
Pavlov thanks Urzhumtsev for sorting out the scheme. “I’ve always known that if you want, you can kick the brains out of anyone. :) Thank you!”
Urzhumtsev affirms that he is “coaching” the Cossack on how to handle everything.
After a 48-hour delay, Pavlov expresses his frustration that even if the bogus study is successfully commissioned, Magnitsky family lawyer Nikolai Gorokhov and Hermitage Fund lawyer Alexander Antipov “have to be notified of it” and “it would be a clusterfuck.” No doubt this is because Gorokhov and Antipov would be in positions to examine and scrutinize this newly minted expert analysis and possibly discredit it.
Later, on Feb. 21, Urzhumtsev confirms that the Cossack “will come by in the morning, and will sign all the documents.”
Pavlov replies: “Oleg, you are saving me :). I owe you!”
The following day, Feb. 22., Urzhumtsev tells Pavlov that he spent the entire night composing “the full set of documents” for the Cossack required to gain access to the evidence box.
Later that day, Urzhumtsev confirms to Pavlov that “the full set of documents for the study is with Vityok,” referring, evidently, to the Interior Ministry officer overseeing the study. “The only thing, I haven’t had a chance to identify for him the objective for the study. But I think it could wait until [Monday.]” Pavlov replies: “He knows the objective, I told him, but it should be repeated,” thereby acknowledging that the conclusion of study has been predetermined.
The timing of the WhatsApp conversation, the transcript of which Pavlov emailed to himself, is also telling. It occurred exactly a month before Russia’s FBI-like Investigative Committee not only shuttered its case into the death of Magnitsky in custody, citing a “lack of crime,” but also charged the slain lawyer posthumously with perpetrating the very fraud he uncovered. Other Russian state officials, including judges and Interior Ministry officers now under U.S. sanctions for their role in the Magnitsky affair, are also referenced in Pavlov and Urzhumtsev’s discussion.
Even more disturbing is the allusion to Magnitsky family attorney Nikolai Gorokhov, who was either defenestrated or suffered an unfortunate and ill-timed accident on March 21 this year, a day before he was due to appear before the Moscow City Appeals Court to argue on behalf of a complaint filed by Magnitsky’s mother.
That complaint was to overturn a previous court ruling that Pavlov’s leaked emails, and this WhatsApp conversation in particular, didn’t constitute grounds to reopen the criminal investigation into her son’s suspicious death.
In an interview with Pavlov published last week in Novaya Gazeta, the outlet he has unsuccessfully tried to prevent from publishing his hacked emails, Pavlov told the newspaper: “But what do you see in [the WhatApp messages]? That both a lawyer and an investigator do know each other and discuss criminal cases? I see that some people are collecting material for the criminal case. Here is the most important question: was the expertise falsified or did someone just want it to be held?”
This quaint interpretation obviously elides the prima facie evidence demonstrated in the conversation: Pavlov, a former subject of a state investigation into the fraud against Hermitage, is asking Urzhumtsev, a former state official tasked with investigating that fraud—and therefore Pavlov, whom he interviewed and then exonerated as part of that investigation—to interfere with an existing case file four weeks before that case was definitively closed. No court in the world would deem this an innocent colloquy between “a lawyer and an investigator.” Novaya Gazeta remarked that during the course of the interview, Pavlov seemed to be offering the newspaper “a proposal to abandon the story of his emails in exchange for some valuable documents.”
What the WhatsApp conversation constitutes is hard documentary proof that Sergei Magnitsky died for being correct. He exposed a sophisticated and cynical swindle by the mafia state Vladimir Putin has spent close to two decades constructing and protecting.
The conversation also shows that Western legislatures, facing a fierce lobbying campaign by agents of the Kremlin and pushback from bureaucracies in their own governments, have been right to honor Magnitsky’s memory by blacklisting the crooks, thieves, and thugs responsible for bleeding their country dry while terminating this patriotic lawyer to save their own hides.