Bankruptcy proceedings against former Browder's company completed
MOSCOW – The Commercial Court of the Republic of Kalmykia has completed bankruptcy proceedings against a firm believed to be formerly controlled by William Browder’s Hermitage Capital Management, according to court records.
The court has granted a petition lodged by Kirill Nogotkov,
a bankruptcy manager of the former Browder’s company.
In November 2019, the Sixteenth Commercial Court of Appeals
upheld recovery of 388,400 rubles ($5,200) from HSBC Bank and HSBC Management
in favor of Dalnaya Step, denying granting its claim in full. Dalnaya Step
therefore lost an appeal filed against a lower court’s ruling of August 16
ordering the two companies to pay Dalnaya Step this sum instead of 125.3
million rubles (nearly $2 million) demanded by the claimant.
According to Nogotkov, these costs accumulated during review
of his claim on recovery of 1.2 billion rubles ($16 million at the current
exchange rate) in debts of the Dalnaya Step from the HSBC Management and HSBC
Bank (RR).
In June 2017, the plaintiff filed a claim to collect funds
totaling to 1.2 billion rubles, $255,500 and £1,800,000 from the defendants,
who were formerly in control of the company. In August of that year, the
Commercial Court of the Republic of Kalmykia granted the lawsuit.
The Sixteenth Commercial Court of Appeals upheld the ruling
in October 2017. However, in November, the North Caucasus District Commercial
Court reduced the amount to be collected from the defendants in favor of
Dalnaya Step by $255,500 and £1,800,000 respectively.
On March 21, 2016, the court ruled to resume bankruptcy
proceedings with regard to Dalnaya Step. According to an acting manager back
then, proceedings were still in effect and there was a need to make former
controllers of the company accountable.
In 2015, the department of Russia’s Federal Tax Service
(FTS) for the Republic of Kalmykia filed a motion with the court to declare
void a decision made in October 2007 to complete the liquidation of Dalnaya
Step. The FTS department said the reason for the petition was that Russia’s
Interior Ministry was investigating Alexander Dolzhenko, a former bankruptcy
manager at Dalnaya Step, on suspicion of premeditated bankruptcy.
Criminal cases
The conflict between Russian authorities and Hermitage
Capital CEO William Browder is long-lasting.
In December, Browder was arrested in absentia as part of a
new criminal case over organizing a criminal network. Browder is to be detained
for two months from the day of his potential arrest, extradition or
deportation. The defendant did not show up for the hearing as he lives in Great
Britain.
The new case was launched against Hermitage Capital CEO on
November 16. Browder is charged with organization of a criminal community and
faces up to 20 years in prison. According to Russian law enforcement, the
defendant is on the international wanted list and the damage he allegedly
caused is estimated at 10.5 billion rubles ($142 million at the current
exchange rate). Investigators believe that Browder created and leaded an
organized criminal group to make grave crimes in Russia including tax evasion,
fraud, deliberate bankruptcy, money laundering.
In December 2017, a Moscow court sentenced Browder to 9
years in prison in absentia for deliberate bankruptcy and tax evasion. His
business partner Ivan Cherkasov received 8 years in prison. The defendants were
also fined 200,000 rubles (about $3,000) each. Moreover, Moscow’s Tverskoy
District Court granted a civil lawsuit and recovered 4.3 billion rubles (about
$65 million) from the defendants in favor of the Russian Federation. In June,
the sentence was upheld.
In 2013, a Russian court sentenced Browder in absentia to 9
years in a penal colony. It was found that between 1997 and 2002, Hermitage
Capital auditor Sergey Magnitsky created and applied an illegal tax evasion
scheme in the interests of Browder.
Magnitsky worked for Firestone Duncan and represented
Hermitage Capital, which the Russian authorities accused of tax evasion.
Magnitsky was arrested on fraud charges in November 2008 and found dead in a
Moscow detention center in November 2009. The lawyer’s death provoked an international
outcry, including international sanctions against Russia.
In July 2013, Moscow’s Tverskoy District Court found
Magnitsky guilty of tax evasion and closed the case due to his death. According
to the case materials, Magnitsky’s and Hermitage Capital director William
Browder’s actions cost Russia over 500 million rubles (about $7 million at the
current exchange rate).
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