This blog has carried several posts about the trials and travails of William Browder and Hermitage Capital in Russia, a surprising story about how the largest foreign holder of Russians stock and a highly regarded goodwill ambassador of the government became a victim of state theft, harassment, and even violence. Blogging over at Foreign Policy’s Passport, Blake Hounshell, who has been spending some time at the Salzburg Global Seminar’s session on Russia: The 2020 Perspective, argues that if Medvedev wants to work on improving rule of law and property rights, the Hermitage fiasco is a measure of just how much work he has in front of him.
So, what was going on? Hermitage alleges that “a more sinister agenda” was at work. The real purpose of the Kameya raid was for Moscow Interior Ministry officials to get their hands on documents that could be used to seize the fund’s assets. Here’s how the attempted scam worked.
The Moscow Interior Ministry official in charge of the “investigation” launched what Hermitage calls a “fishing expedition” to locate the fund’s assets — demanding all records from four foreign banks that might lead him to the prize. At the same time, somebody used the captured documents to fraudulently change the ownership of three investment vehicles owned by British bank HSBC, a Hermitage trustee. From there, it gets complicated, but the bottom line is that a mysterious team of lawyers representing “their” companies then assented to a fake court ruling that would have put the three HSBC entities on the hook for $380 million. Luckily for Hermitage, the vehicles were “dormant” and held no assets, so the would-be millionaires came up empty.”The more we learned, the more unbelieveable it became,” Hermitage says. The fund’s management passed along their findings to Russia’s finance minister in Davos, which were then put in front of President-elect Dmitry Medvedev and a pair of investigations has begun. The year before, though, Medvedev had personally assued Browder in Davos that his visa troubles would be cleared up, and he couldn’t deliver. Now, Hermitage says the officials involved in the attempted theft are making “spurious claims” and feeding misinformation about the fund to the press — so the fund is going public with the story.This case will be a key test for Medvedev, a lawyer by training who has vowed to tackle Russia’s property rights and corruption problems when he takes office in May. But as European Commissioner for External Relations Bentia Ferrero-Waldner put it to us in Salzburg this week, “Ultimately the world will assess Mr. Medvedev on his deeds, not just on his words.” It’s showtime, Dmitry.