LONDON—Switzerland will return millions of stolen dollars to sanctioned Russians accused of taking part in one of the world’s most notorious frauds, according to a court order seen by The Daily Beast.
The Swiss authorities have rejected an appeal against the decision to send back the stolen loot despite the knowledge that their investigation into the crime was corrupted by a Russian influence operation orchestrated by the notorious Trump Tower lawyer Natalia Veselnitskaya.
Veselnitskaya held secret meetings with a consultant to the Swiss Federal Prosecutor’s Office who was fired and convicted after it emerged that he had been gifted luxury Russian vacations—including a bear hunting trip—while he was working on the case. On one such trip he was joined by Swiss prosecutor Patrick Lamon and attorney general Michael Lauber, who posed for a photo together with senior Russian officials.
All three of the Swiss officials were involved in investigating the Magnitsky affair; a $230 million fraud uncovered by Sergei Magnitsky, who was jailed, beaten, and left to die in a prison cell after blowing the whistle on a massive tax scam against Hermitage Capital that implicated a number of Russian officials.
Since Magnitsky’s death, Bill Browder, the CEO of Hermitage, has led a global campaign for justice, which has succeeded in introducing anti-corruption sanctions laws in numerous countries including the US and the UK
Several of the key players in the scam have since been sanctioned under those laws for playing a part in what many Western governments describe as a huge criminal conspiracy. “An organized criminal group was involved in serious corruption through the misappropriation of the equivalent of $230m of Russian state property,” according to the UK government.
The sanctioned individuals include Olga Stepanova, a senior Moscow tax official who signed off on documents relating to the fraud, and her husband, as well as Dmitry Klyuev, a banker who the UK government says planned the entire fraud.
All three of them will receive cash that was frozen in Switzerland by officials who were supposed to be tracing the stolen money.
Despite the conclusions made in London and Washington, DC, Swiss authorities have gone along with Moscow’s claim that there was no “criminal organization” running the operation, which means they will not seize the totality of funds that have been traced from the frozen Swiss bank accounts to the massive fraud.
“It would not have been possible to ascertain the existence of a criminal organization, or a gang involved in all the operations,” reads a Swiss Federal Criminal Court Order issued on Nov. 23 and seen by The Daily Beast.
Switzerland will return 55 percent of the frozen funds to the Stepanovs, totaling $5.5 million, and 100 percent of the money frozen in Klyuev’s account ($37,673).
They will also return 99 percent of the money traced to an account belonging to Denis Katsyv, the son of a Moscow government official, who was employing Veselnitskaya during her infamous attempt to lobby the Trump campaign back in 2016. She was in New York at the time as part of another trial related to the same $230 million fraud. Katsyv ultimately agreed to pay the US $6 million to settle the suit which alleged he had laundered some of the stolen proceeds through his company Prevezon.
Veselnitskaya was later indicted for obstruction of justice when it emerged that she had secretly helped draft a supposedly independent statement from the Russian prosecutor’s office submitted to the court during the Prevezon case.
The Swiss, by contrast, are happy to send back $8.1 million to Katsyv.
The dilution of the forfeitures is part of the lax Swiss regulations on money laundering, which go against United Nations best practice and lessens the amount that can be seized every time the illicit cash is funneled through another account.
Mark Pieth, a former member of the G7’s Financial Action Task Force on Money Laundering and head of section on economic and organized crime at the Swiss Federal Office of Justice, said the way the punishment was watered down demonstrated the weakness of the Swiss system. “In a nutshell the main challenge for Swiss prosecutors and courts is that they apply a theory that lets the forfeitable funds shrink continuously with every stage of laundering. The Swiss judiciary therefore privileges the cunning launderer, this on top of the general risks this country poses!” he told The Daily Beast.
The court also deprived Hermitage of victim status in the case, which means the company’s voice can no longer be heard in the process, even though Swiss officials originally said they had opened the probe because of the evidence presented to them by Hermitage.
“Through this decision, Switzerland has truly gone to the dark side. At a time when everybody is coming down hard on Russia, the Swiss are moving in the other direction,” Browder told The Daily Beast.