Hermitage Capital, once a leading portfolio investor in Russia, has alerted prosecutors and other government agencies of what could be eight new major tax frauds committed by the same group that it says damaged its business two years ago.
“It’s a duty of any citizen, both individual and corporate, to report a crime that they become aware of,” a Hermitage spokesman said Friday.
On behalf of Hermitage, London-based law firm Brown Rudnick sent letters about what it called fraud to the Prosecutor General’s Office, the Investigative Committee, the Central Bank, the Finance Ministry, the Federal Tax Service and the Audit Chamber on Friday, the Hermitage spokesman said.
Hermitage says a criminal group instigated a criminal case against it, prompting a police raid on its Moscow offices in June 2007. It says police seized company records, seals and tax certificates, which were later used to steal two Hermitage subsidiaries and defraud the government of 5.4 billion rubles ($183.5 million) in tax refunds.
Hermitage now says it has exposed two further companies, formerly owned by Renaissance Capital, that it said were used by the same group to defraud the government of 2.9 billion rubles in a similar tax refund sham.
The refunds were wired to Universal Savings Bank, which closed in June 2008, Hermitage said in the new letter to Russian officials.
The letter, copies of which were obtained by The Moscow Times, also identifies the people whom Hermitage suspects of playing a role in the suspected fraud, including tax officials.
Hermitage said in the letter that it had become aware of at least eight other money transfers from the federal treasury to Universal Savings Bank in 2006 and 2007 worth nearly 3 billion rubles.
“The receipt of such large sums from the Russian treasury … raises the substantial suspicion that all such payments were the result of systemic tax frauds,” the letter says. “We request that you review our letter and the submissions made … and conduct a detailed investigation into the activities of the criminal group described above.”
Renaissance Capital has said it was not involved in the alleged fraud.
The Hermitage spokesman said the letters arrived at their destinations by FedEx express mail Friday.
None of the government agencies confirmed or denied receiving the letter Friday afternoon when contacted by The Moscow Times.
Audit Chamber chief Sergei Stepashin is unlikely to read the letter before Wednesday because he was in Moscow only in passing on Friday, going from one trip to another, said Alan Uzhegov, a spokesman for the government’s budgetary watchdog.
Upon reading the letter, Stepashin could assign an auditor to decide whether an audit is required, Uzhegov said. Such an audit, if any, is unlikely to happen this year, he said.
The other government agencies that were supposed to receive the letter declined immediate comment Friday afternoon and requested that questions be e-mailed or faxed.
The Hermitage spokesman said the affair has damaged Hermitage’s confidence in property rights and the rule of law in Russia and contributed to its decision to reduce its investment in the country to an “insignificant” amount.