Last week, 37-year-old Sergei Magnitsky, a lawyer for Hermitage Capital, died in a Moscow pretrial detention center.

William Browder, head of Hermitage Capital and a talented financier, did a lot to improve the investment climate in Russia in the 1990s. We learned much from Browder about the way Gazprom is structured, and he was the first to inform the world about the existence of the Eural Trans Gas company, which traded gas from Central Asia through Ukraine to Europe.

In 2005, Browder investigated the ownership structure of Surgutneftegaz, a company that political analyst Stanislav Belkovsky claims actually belongs to Prime Minister Vladimir Putin. As a result, Browder was forced to leave Russia, and Hermitage Capital’s office was raided in June 2007. Heading the search was Lieutenant Colonel Artyom Kuznetsov, an official with the tax inspection department of the Interior Ministry.

As Magnitsky later stated in testimony that may have been his death sentence, “Kuznetsov was present during the search of the branch office … and said that if we had met with him earlier as he had suggested, none of this would have happened.”

During the raid, agents seized official company stamps for three companies through which Hermitage, like any participant on the Russian market, traded shares with the goal of optimizing tax liability. Then, control of those companies was transferred to Moscow tax inspection offices Nos. 25 and 28. Next, a few phony firms brought hyped-up lawsuits against them in St. Petersburg that resulted in the former Hermitage companies being charged with a debt of 5.4 billion rubles ($187.5 million). The new owners of the three companies then requested that the tax inspectors refund that sum in profits tax that they had previously overpaid.

The tax inspectors quickly transferred money that had been converted to cash by using the small Universal Savings Bank controlled by Dmitry Klyuyev, a famous name in the world of corporate fraud. He was given a three-year suspended sentence for his role in a scam involving shares of the Mikhailovsky mining works.

What’s more, Klyuyev had a distant relationship with the security service of the Renaissance Capital investment bank, which, as Browder explained, suffered the same type of raid that the Hermitage subsidiaries suffered.

Renaissance did not lodge a formal complaint for understandable reasons. It was obvious that any group capable of making a tax refund using phony structures had ties that are better left unchallenged. Renaissance understood that crossing the siloviki could be very dangerous.

Browder, however, had nothing to lose. He was faced with an outrageous situation. The firms stolen from him during the raid, regardless of how small or bogus they were, were used to cheat the state out of 5.4 billion rubles. Browder went public with his accusations. What happened after that is incredible: Browder’s lawyer was put on the most wanted list, and the prosecutor began trying to prove that it was actually Browder who had stolen the 5.4 billion rubles.

For all intents and purposes, Magnitsky was tortured to death to extract testimony against Browder. Magnitsky’s death marks a new stage in Russian history — its has definitely become a Third World country.

Before, investors complained while sipping cocktails after work how siloviki stole their assets. Now, they complain how the siloviki kill their colleagues during pretrial detention.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.