Professional Documents
Culture Documents
September 2009
PRIVATE BRIEFING
DOCUMENT, NOT FOR
On 28 May 2007 criminal case was opened against company Kameya advised by Hermitage
Capital. On 4 June 2007 Moscow Interior Ministry raided offices of Hermitage and its lawyers
Led by
Lieutenant Colonel
Artem Kuznetsov
Seized documents
2
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DISTRIBUTION OR
Seized documents were used for the illegal re-registration of three Hermitage Fund
companies (Rilend, Makhaon and Parfenion) for the benefit of convicted felons
Original Certificates of
Original
OriginalCertificates
Certificatesof
Registration with the of Original Charters
Registration with the Original
Registration with the
State Registrar Corporate Seals OriginalCharters
Charters
State
StateRegistrar
Registrar
Original Certificates of
Original
OriginalCertificates
Certificates of
Registration with Tax of
Registration
Registration with Tax
with Tax
Authorities
Authorities
Authorities
Victor Markelov
Trustee to Hermitage Fund
100% 100%
OOO Pluton,
(Kazan, Tatarstan)
V. Markelov
100%
OOO Pluton,
(Kazan, Tatarstan)
Source: St. Petersburg, Moscow and Kazan Arbitration Courts and EGRUL database
PRIVATE BRIEFING
DOCUMENT, NOT FOR
The same documents were used to forge backdated contracts, file lawsuits against three
Hermitage companies and obtain illegal judgments totaling to $974 million*
Fake agreements
General Director
19 Sep Power of Grand Active
OOO Parfenion, Attorney
2005 Moscow
Regional General
representative $$$ Director
Kozlov M.V. Sheshenia
Source: St. Petersburg, Moscow and Kazan Arbitration Courts database , * Moscow Arbitration court award US$ 312 mln; St Petersburg Arbitration court award US$ 376 mln; and 5
Kazan Arbitration court award US$ 575 mln;
PRIVATE BRIEFING
DOCUMENT, NOT FOR
Even though HSBC and Hermitage were unaware of these lawsuits, the three Hermitage
stolen companies were represented by lawyers who had never been appointed by the
Hermitage Fund using fake powers of attorney
100% 100%
aware Rilend’s Lawyer
“Defense” Lawyers
“Hereby, the defendant confirms that he
understands the charges, doesn’t have any
Fake POAs to lawyers objections and fully accepts the claims.”
from Rilend, Parfenion
and Mahaon
Advocate
A.A.Pavlov
Rilend Lawyer
Advocate
Y.M Mayorova
Makhaon Lawyer Judge Orlova
7
Source: St. Petersburg, Moscow and Kazan Arbitration Courts database
V. Judges issued $974m award to three
PRIVATE BRIEFING
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DISTRIBUTION OR
The courts issued illegal judgments of $974 million against the three stolen companies
500
General Director
OOO RILEND,
mln
US$
400
$322 Instar
300
Moscow
200
$71
General Director 100
OOOParfenion,
0 Grant Active
Award against Makhaon Award against Rilend Award against Parfenion
Moscow
Fake liabilities backed by illegal judgments were used by criminals to offset previous
profit of three Hermitage Fund companies and illegally refund $230 million
Profit “Adjustment” via Fake Losses Taxes Paid vs. Tax Refund
Source: St. Petersburg, Moscow and Kazan Arbitration Courts database and hermitage Fund financials
PRIVATE BRIEFING
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Then the stolen Hermitage Fund companies were re-registered to Moscow Tax
inspections № 25 (Rilend) and № 28 (Makhaon & Parfenion)
Rilend
Makhaon
Parfenion
Tax Inspections
Tax Inspection № 10 and № 15
Source: EGRUL statements
№ 25 and № 28
PRIVATE BRIEFING
DOCUMENT, NOT FOR
Universal
Savings Bank
$230 million
Amended Tax Return Tax Inspections
for year 2006 #25 and 28 Intercommerz
Bank
11
PRIVATE BRIEFING
DOCUMENT, NOT FOR
After the discovery of the crime, Hermitage filed complaints with eight Russian
government authorities
Russian General
Prosecutor’s Office
Russian Interior
Affairs Minister
FSB
Russian Finance
Minister No
Hermitage
Complaint re
$230 Million
Theft
response
Federal Tax Service
On 16 April 2009, the Russian General Prosecutor Office convicted Victor Markelov
for the fraud
The trial documents portrayed Markelov as the main perpetrator and the Moscow Tax
Authorities № 25 and № 28 as victims of the $230 million fraud
No.
Victor Markelov
Sawmill Employee, Saratov Victor Markelov
region
Stages of 2007 Theft of Hermitage Fund Companies and $230 Million
?
Tru stee to Hermitage Fun d
Cyprus C yprus
documents of lawful accounts declarations and
Court:
100% 100% 100%
What role did the Tax Authorities play in the DOCUMENT, NOT FOR
DISTRIBUTION OR
Tax officials of Moscow Tax Authorities 25 and 28 claimed they knew nothing about the
$230m theft:
“See no Evil” “Hear no Evil” “Speak no Evil”
Officials from the Moscow Tax Authorities No 25 and 28 claimed they checked
whether the claims of losses by Markelov were genuine and legitimate
“Due to the large amount submitted What did Tax Authorities have to check
for reduction, a tax audit in camera during the audits?
was conducted in respect of the
submitted revised declaration” Real Profit Reported
by Hermitage in 2006
$1,200
$958m
$900 Rilend,
Rilend
$321m
$312m
$600 Parfenion
Parfenion,
$575m
$581m
$300
Makhaon
Makhaon, $0
US$ $71m
$71m
$0
mln Makhaon
Makhaon,
-$71m
-$71m
-$300
Parfenion
Parfenion,
-$575m
-$581m
-$600
Rilend
Rilend,
-$900 -$312m
-$321m
Source: Kazan Court, Witness Statements of Sergei Zhemchuzhnikov, Deputy Head of Moscow Tax Inspection No 25 from 30 July 2008 and of Olga Tsymai, Head of In Camera Audits
Division No 1 of Moscow Tax Inspection No 28 from 29 July 2008
17
PRIVATE BRIEFING
How did the Moscow Tax Authorities check if the DOCUMENT, NOT FOR
DISTRIBUTION OR
The Tax authorities first needed to check if the counterparties to the contracts had
reflected the large receivables on their balance sheets
Hermitage Companies “Liabilities” “Counterparties’ Receivables”
19
Source: Kazan court, Witness Statements from the Moscow Tax Authorities #25 and #28
PRIVATE BRIEFING
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What did the Moscow Tax Authorities claim they had learned about the counterparties’
contracts?
$312 M
“The replies we received confirmed
the existence of the organisations,
submission by them of reporting
that was different from zero.” $71 M
Grand Logos
Aktive Instar Plus
20
Source: Kazan court, Witness Statements from the Moscow Tax Authorities #25 and #28
PRIVATE BRIEFING
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Did the tax authorities really check with counterparties? No. The counterparties
never reported any claims on their balance sheets
Real Reporting by Counterparties
Submitted to Tax Authorities and Reported to
the State Statistics Committee
Receivables Reported by the
Counterparties
0 0 0
The Moscow Tax Authorities claimed they had checked with the banks where Rilend,
Parfenion and Makhaon held cash and securities from 2005 to 2007
2 DISTRIBUTION OR
No. HSBC, the bank where Rilend, Parfenion and Makhaon held accounts confirmed it
never received any requests from the Moscow tax authorities
Source: HSBC Confirmation Letters dated 15 October 2008 regarding Rilend, Makhaon and Parfenion
23
Checks with the Moscow Interior
PRIVATE BRIEFING
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3 DISTRIBUTION OR
Ministry QUOTATION
The Moscow Tax Authorities claimed they have checked with the Moscow Interior
Ministry prior to approving the $230 million tax refund
3 DISTRIBUTION OR
No. Three weeks prior to the fraudulent tax refund, on 3 and 10 December 2007,
Hermitage and HSBC had filed six 255-page criminal complaints notifying the Interior
Ministry, the General Prosecutor and the Russian State Investigative Committee of the
existence of the fraud and outlining its details
“All is fine.”
Six 255-page
Criminal Complaints
Confirmed transfer of
criminal complaints to
the Moscow Interior
Ministry for review
4 Checks of contracts
DISTRIBUTION OR
QUOTATION
The Moscow Tax Authorities claimed to have checked the authenticity of contracts
26
Source: Moscow, St Petersburg and Kazan courts, Witness Statements from the Moscow Tax Authorities #25 and #28
PRIVATE BRIEFING
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Were the contracts authentic? No, anyone would immediately recognize from any
simple reading of the Company Files and Corporate Registry (EGRUL) maintained by
the tax authorities that these contracts were forgeries
27
PRIVATE BRIEFING
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Astonishingly, the refund was approved within one day and paid out
two days later
$230 Million Tax
Refund Requested
Refund Requested.
Refund Approved Refund Paid
24 December 26 December
2007 2007
Source: Kazan and Moscow Courts, Witness Statements from Tax Authorities #25 ad #28
28
PRIVATE BRIEFING
The refund was approved before the court judgments DOCUMENT, NOT FOR
DISTRIBUTION OR
Tax authorities were in such a hurry to refund $230 million that they ignored the fact
that the court judgments in respect of the fake liabilities did not come into effect until
24 days later
Moscow Court
Moscow Tax Authorities (Instar Award against
(No. 25, No. 28) Rilend for $312 Million)
17 January 2008
Instar Award Comes
24 December 2007 into Force
Source: Kazan and Moscow Courts, Witness Statement of Sergei Yurievich Zchemchuznnikov, Deputy Head of Moscow Tax Inspection No 25
29
Another very similar tax refund took
PRIVATE BRIEFING
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DISTRIBUTION OR
In the mid 2006, the Moscow Tax Authorities #25 and #28 re-registered 2 former
Rengaz companies, Selen Securities and Financial Investments, and then refunded them
$107 million previously paid in taxes Selen Securities
Financial Investments
Re-registered
Moscow Tax
Inspections
# 25 and #28
30
Source: EGRUL statements
PRIVATE BRIEFING
DOCUMENT, NOT FOR
US$
million
2006
Source: Fake lawsuits, Rengaz’s companies financials 2006 31
PRIVATE BRIEFING
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First, fake losses were created by filing fake lawsuits against the former Rengaz
companies of in different Russian jurisdictions
The Rengaz Lawsuits
Rengaz Holdings
Limited
(Cayman Fund)
(listings in Bermuda, London)
100% 100%
49%
Funding
Arrangements
Persey Securities Limited
100%
(Russia) Lawsuit
Lawsuit
Lawsuit
Lawsuit 51% 100% Lawsuit
Financial Investments Ltd Selen Securities Ltd
(Russia) (Russia)
Kazan Moscow
5 lawsuits were filed in March and April 2006 in the
Moscow and Kazan Arbitration Courts
Total Claims: US$ 980 million, awarded US$ 525 million 33
Source: Moscow and Kazan Arbitration courts filings 2006
PRIVATE BRIEFING
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DISTRIBUTION OR
In Kazan, the lawsuit alleged that on 1 November 2005 Financial Investments sold to
Poleta 10,250,500 Sberbank Preferred shares and did not deliver, which caused a
cancellation of this agreement on 30 November 2005, resulting in forgone profit due to
Poleta (The same was done with UES shares in February 2006)
1 November OOO
OOORILEND,
Financial
Moscow
Investments,
Poleta
2005
General Director $$$
Anisimova L.V.
30 November OOO
OOORILEND,
Financial
Forgone Profit Poleta
Moscow
Investments,
2005
General Director $$$
Anisimova L.V.
The General Director of Financial Investments and Selen Securities acknowledged the
claims and accepted liability in full
“Hereby, Financial
Investments accepts the
claims in full and doesn’t
have any objections”
The Moscow and Kazan Arbitration Courts awarded US$525 million against Financial
Investments and Selen Securities
250
mln
US$ 200
150
$104
100
50
OOO Selen Securities, 0
Poleta
Moscow
Award against Selen Securities Award against Financial Investments
OOO Financial
New account
Investments, December 2006 Bank formed: 28.02.2002
Moscow Region: Moscow
Equity: $1.5 mln
Total Assets: $25.6m*
Ranked No. 920 **
Central Bank records showed that the Russian tax authorities refunded the capital gains
taxes to the two Rengaz companies, Financial Investments and Selen Securities, in the
period from December 2006 to March 2007
38
Source: Central Bank database,
PRIVATE BRIEFING
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DISTRIBUTION OR
Summary QUOTATION
The perpetrators in the Rengaz fraud are the same people involved in the fraud with the
companies stolen from Hermitage
Similarity Rengaz fraud Fraud vs Hermitage
Andrei Pavlov
Alexei Sheshenya
Gennady Plaksin
Summary QUOTATION
Fraudulent Fraudulent
Tax Rebate Tax Rebate
Universal Universal
Savings Bank Savings Bank
41
Source: Central Bank database,
… and looking at the USB’s data other PRIVATE BRIEFING
DOCUMENT, NOT FOR
$35
Tax Inspections
Millions US$
$30
$25
$24 mln
$20
$16 mln $16 mln Total: RUR 2.98 Bln
$15
$10
$6 mln $6 mln $7 mln
+
$5 $2 mln Rengaz fraud: RUR 2.9 Bln
$-
USB acc USB acc USB acc USB acc USB acc USB acc USB acc USB acc
+
40702 810
7…229
40702 810
6…088
40702 810
6…086
40702 810
5…092
40702 810
4…215
40702 810
2…295
40702 810
2…211
40702 810
0…356 Fraud vs Hermitage: RUR 5.4 Bln
43
PRIVATE BRIEFING
DOCUMENT, NOT FOR
1) Why did you approve the tax refund for such a large amount (US$230 million, or 5.4
billion roubles) in one day?
2) How many similar tax refunds did you make during last 5 years?
3) Why did you approve the refund in the absence of any records of receivables in tax
filings of counterparties? In the absence of any bank transfers to confirm liabilities?
Before the court judgments came into force?
4) How could it be that two independent Tax Inspectorates approved and paid large
amounts from the Russian budget simultaneously – exactly on the same day?
5) Why didn’t you conduct a full audit to make decision on such a large tax refund?
6) What information did you receive from the Moscow Interior Ministry regarding the
refund (given that they were in possession of the Hermitage complaints about false
liabilities and theft of their companies on 14 December 2007? And given that all the
persons making refund applications (Markelov, Kurochkin and Khlebnikov) had prior
criminal records?
44
PRIVATE BRIEFING
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7) Why did not the Federal tax Department make additional checks when the tax rebate
request came from the lower level Tax inspectorates for such large payments? Taking
into account that the tax rebate is related to 2006 year not 2007 when the rebate was
paid.
8) How did it happen that besides US$ 230 million (RUR 5.4 billion) related to tax fraud
against Hermitage, you apparently refunded another $108 million the year before the
fraud against Hermitage? and then another US$ 112 million (RUR 2.98 billion) during in
the same period – so in total more than US$ 470 million or RUR 11.2 billion?
9) Are you investigating at least these two tax refund frauds now?
10) How you could explain the fact that two different officials from two different tax
inspectorates on different dates provided identical (word by word) witness’ statements
about the tax frauds?
45