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Russians gripped by YouTube video claims of government role in hedge fund scam

Date: Tuesday, October 13, 2009
Author: Guardian.co.uk

Thousands of Russians are watching a YouTube video that accuses their government and officials of high corruption.

A Russian version of a video by Hermitage Capital, the London-based hedge fund claiming to be victim of a $230m (146m) scam, has attracted over 12,000 hits, and is the most viewed news clip on YouTube in Russia, the site shows. The English version has had almost 8,000 viewings.

William Browder, head of Hermitage Capital, hopes the video's international impact will put pressure on the Russian authorities to listen to his claims of theft, gangsterism and government corruption.

"It's a true Kafka-esque type of situation," Browder says in the video. "It's one thing to be victimised by a crime, it's another thing to be blamed for the crime that you're a victim of."

Browder has been banned from entrance to the country and has removed his staff from the fund's offices in Moscow after police raids. However, one lawyer working for Hermitage, a 37-year old father of two, is still in prison.

Hermitage alleges that its position as Russia's largest foreign investor two years ago made the establishment nervous, leading to Browder being denied entry to the country. His petition for a new visa led to a string of threats that ended up with the police raiding Hermitage's Moscow offices, seizing all its documentation.

The video contains reconstruction of the raids and also the transcript of a telephone call from a tax official which the company alleges contains blackmail threats.

The Russian interior ministry is still seeking to have Browder returned to Russia for questioning, Irina Dudukina, a ministry spokeswoman told Bloomberg News by phone today. The executive was placed on the ministry's international wanted list on charges of tax evasion.

However, according to the fund, the criminals used a network of corrupt lawyers, police and judges to fake transactions and simulate that three profit-making Hermitage subsidiaries had turned a profit into losses for which they demanded a tax rebate. The new owners of the stolen companies received Russia's biggest ever rebate within two days, the video claims.

"The $230m which belonged to the Russian people had been stolen by the criminals in an organised conspiracy supported by corrupted officials in the higher reaches of the Russian state," the video says. "The story sounds like a thriller but isn't and it's being repeated every day."

Hermitage has several legal suits opened in Russia and plans to continue its battle: "We will overwhelm them with transparency. Evil tends to wither under the bright light of publicity," Browder says.