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Judge Nicholas Evans: I was horrified by the level of corruption in Russia

Novaya gazeta

The London judge was shocked when he heard, at first hand, Russian investigators demanding bribes from Russian businessmen. We’re publishing the transcript and names of those involved in the unprecedented scandal.

Westminster Magistrates’ Court in London has dismissed the request of the Russian General Prosecutor’s Office for the extradition of Georgy Trefilov. It dismissed the request primarily because it recognised that Russian siloviki had extorted bribes in exchange for dropping his criminal prosecution. In addition, District Judge Nicholas Evans ruled that Trefilov be compensated for all the costs he had incurred in connection with his participation in the proceedings relating to the extradition request. These costs exceed a million dollars, and will be paid to Trefilov out of the UK’s state treasury. The UK, in turn, will file a recourse [claim] against Russia, demanding payment for this amount.

In 1992, Georgy Trefilov formed the holding company Marta, which was comprised of the retail networks Grossmart, Billa, Pur Pur (a total of more than 300 shops), enterprises and producers of packaging products and decoration materials. The developer group RTM was also owned by Trefilov. By 2008, the total value of assets owned by the businessman exceeded $1.5 billion.

Trefilov started encountering problems in 2008. But when he contacted the Internal Affairs Department for Central Administrative Okrug, Moscow to report a corporate raid seizure of OAO RTM, which he owned, and assets of the company Marta, he ended up under investigation himself. The Investigation Department (at that time it was still the Investigation Committee), instigated a criminal case No. 152974 under Art.176 of the Criminal Code (unlawfully obtaining credit). Two years later, on 23 September 2010, the criminal case was re-qualified under Art.159 of the RF Criminal Code (Fraud).

According to the investigation authorities, Trefilov committed theft of funds from Rus-bank, the Tver branch of Sberbank, Trade Finance Bank, Alpha Bank and Surgutneftegazbank, from which he received loans worth more than 1.3 billion roubles. There were a total of 16 counts of fraud in the criminal case. It is alleged that, when obtaining the loans, on every occasion Trefilov “granted a charge [to secure the loans] over property which had either previously been charged or which did not belong to him”. Although, according to Trefilov’s lawyers, the charge was written in such a hurry that there are counts concerning loans that have already been repaid, and in relation to some [counts] the banks have recovered their losses by selling the property over which a charge had been granted, and even made money on it. No expert reports were carried out in relation to the majority of the counts, and those that were carried out did not indicate any fraud, or even any abuse.

On 16 September 2010 the investigator issued a decree on charging Trefilov as an accused under Art.159. On 23 September he was summoned for questioning and in order to bring the charges against him. But Trefilov was abroad at the time. Furthermore, ten days earlier there had been a “leak” from the Investigation Committee under the Ministry of Internal Affairs of Russia to the effect that the investigation authorities had issued a decree on placing Trefilov on the international wanted list and charging him with fraud.

On 16 November 2010, Tverskoy District Court, Moscow, delivered a decision in absentia ordering the arrest of Trefilov. At first, he was officially placed on the federal wanted list, and then on the international one, since he’d made no secret of the fact that he was in London.

Russia’s request for Georgy Trefilov’s extradition, signed by deputy general prosecutor Aleksandr Zvyagintsev, arrived in London on 19 September 2011. After the first preliminary court hearing, which took place on 14 February 2012, Trefilov was released on bail. District Judge Nicholas Evans scheduled the substantive hearings to commence on 15 October. They were held over a period of three days, following which he called for a break in proceedings in order to prepare the court decision.

The verdict that was delivered was both sensational and unprecedented. Henceforth, when considering extradition requests from Russia, all courts in Great Britain will take into account the decision of London’s Westminster Magistrates’ Court. And Russia should be prepared for the fact that, if the arguments set out in the extradition request are not very convincing, not only do they risk damaging their reputation, but they could also suffer financial losses.

On behalf of the General Prosecutor’s Office, Alexander Zvyagintsev guaranteed that Trefilov “…would enjoy all legal remedies available in Russia, including legal advice, and would not be subjected to torture or to cruel, inhuman or degrading treatment or punishment.” In addition, it was emphasised that “the extradition request is not based on a politically motivated charge against this man”. However, District Judge Nicholas Evans decided that Russia had not provided proof that the criminal prosecution of Trefilov was well-grounded. What’s more, the judge “was horrified by the level of corruption” in Russia (quote from the court decision. – I.M.).

Serious arguments for these conclusions were provided by audio recordings submitted to the court, featuring a conversation between Trefilov’s representative Georgy Usupashvili and a man who he named in his testimony as Viktor Gvozdev, a senior official at the General Prosecutor’s Office, who supervised the activity of the Investigation Department of the Ministry of Internal Affairs of Russia.

One can conclude from the audio recordings that the criminal case against Trefilov was “financed” by those who “squeezed him out” of his business. In order to have the criminal prosecution dropped by reclassifying the “fraud” charge under a less serious article, Usupashvili’s interlocutor proposed that the businessman pay one million dollars, $500,000 of which was allegedly intended for Pavel Lapshov (at that time a deputy department head from the Investigation Department of the Ministry of Internal Affairs of Russia), while Gvozdev himself, and his colleagues at the prosecutor’s office Sergei Churashkin and Valery Ignashin (deputy department head for supervision of the section for investigation of cases of particular importance, General Prosecutor’s Office) were to get $100,000 each. According to his interlocutor, the rest of the money was go to officers “on the ground”, including investigator Irina Konovalova, who was in charge of the criminal case.

District Judge Nicholas Evans wrote in his decision: “The level of corruption revealed in the transcript of these audio recordings is horrifying. Georgy Usupashvili’s testimony, the transcript of the audio recordings (in Russian and English) and the CD with the recordings (the conversation are of course in Russian) were presented to the Crown Prosecution Service, and it seems that it sent all this material to Moscow”.

I managed to get in touch with Georgy Trefilov. This is what he said about these audio recordings:

“As soon as the case had been instigated, and especially after its reclassification under Article 159 and my arrest in absentia, “intermediaries” began approaching me and my lawyers offering to “help”. I knew for sure that I was not going to have any negotiations along these lines. I took such a position as I knew I was completely innocent, and I did not want to accept the “rules of the game” being imposed on me. This is how they do business – at first they create problems, then they valiantly resolve them. Needless to say, they won’t do this for free. The case is instigated in the interests of and at the expense of a “sponsor”, and to close [the case] you can “request” money from someone else. At first, we couldn’t manage to get on record the “offers to help and to solve all the problems.” In actual fact, it was Konovalova, the investigator in charge of my criminal case, who was particularly active in this. It was she who introduced me to Gvozdev as an “intermediary”. That he would turn out to be an officer of the General Prosecutor’s Office was the last thing my lawyers and I expected. Nor did we expect him to be very talkative.

Today these audio recordings have been posted on the internet, but according to Trefilov, he has even more interesting material in his possession.

“I want to see in which direction this ‘wave’ will move, and how they will actually fight these corrupt officials in this particular case”, the embattled businessman told Novaya Gazeta.

Trefilov does not believe that the extortionists will be punished severely.

“However, I think that they will charge Gvozdev alone, although I truly feel sorry for him. Because he is simply a scapegoat in this collective ‘trough’ system. They will hand him a suspended sentence and say: ai-ai-ai! But if they untangle the entire chain, which, incidentally, Gvozdev has mentioned several times and given names, and he will be given immunity for collaborating with the investigation authorities – that would be a good thing. But I don’t have faith in such outcome of the events…And nothing is going to change in my criminal case either. The system cannot fight itself. It is genetically programmed like that. “We will not surrender our own!”

Trefilov’s Russian lawyer Vagram Kalachyan is also not particularly optimistic when it comes to the prospects of criminal prosecution of ‘werewolves in epaulettes’.

“When the Crown Prosecution Service forwarded the materials to the General Prosecutor’s Office of Russia, a criminal case was instigated under Art. 159(4) of the Criminal Code of the Russian Federation. The case was instigated by the Investigation Department of the Ministry of Internal Affairs of Russia, and by the looks of it will be investigated by the same people who are investigating the criminal case in respect of Trefilov”, Novaya Gazeta’s lawyer said. “As if the Prosecutor’s Office doesn’t know that in accordance with Art. 447 of the Criminal Procedure Code of the Russian Federation, the investigator Konovalova , her superior – the deputy head of the investigation section of the Investigation Department of the Ministry of Internal Affairs of Russia, the supervising prosecutor Gvozdev, and other employees of the General Prosecutor’s Office, fall into the category of persons in whose respect a special procedure for conducting criminal cases is applied. On the basis of Art. 151 of the Criminal Procedure Code of the Russian Federation, preliminary investigation in their respect may only be carried out by the investigators from the Investigation Committee of Russia. This was the first time I have come across a case where a case in respect of ‘special subjects’ is investigated by the Investigation Department, and, moreover – by the same department where the supposed persons named in the case are employed.

Despite the pessimistic outlook on the criminal prosecution of siloviki, Georgy Trefilov is still hoping to return to Russia.

“And I am not just hoping – I am doing a lot to make sure that I can return and feel confident in Russia”, Trefilov said. “I would like to return to the country where citizens don’t feel defenceless before the system. To the country where the people’s basic rights and freedoms are guaranteed. To the country where the law-enforcement officials carry out their primary duties instead of using their position and power for personal enrichment.

Regardless of how the situation develops, Georgy Trefilov will not be brought to Russia in handcuffs. Because the verdict of the Westminster Magistrate’s Court in London refusing the extradition request is final and is not subject to appeal.

P.S. Novaya Gazeta has sent an enquiry to the media communications department of the General Prosecutor’s Office of the Russian Federation asking for information on the progress of the checks carried out in respect of the information contained in the audio recordings of conversations between the employee of the General Prosecutor’s Office of the Russian Federation Viktor Gvozdev and Trefilov’s representative Georgy Ustupashvili. Who is conducting these checks precisely? What are the prospects of these checks?

We have received a response to our enquiry stating that it has been forwarded to the “relevant structural subdivision of the General Prosecutor’s Office of the Russian Federation”.

However, we have managed to find out that the criminal case under Art. 159(4) of the Criminal Code of the Russian Federation, in which Viktor Gvozdev (who retired in April of this year) has been named as a suspect, was instigated back on 12 December. And on 15 December Moscow’s Tverskoy Court sanctioned Gvozdev’s arrest, he was sent to a pre-trial detention centre provisionally until 15 February 2013.

Gvozdev’s lawyers are doubting the authenticity of these audio recordings. However, they prefer not to comment on the fact that the “negotiations” in relation to the termination of Trefilov’s criminal prosecution were held via Skype. The Skype recording was also studied by the Westminster Magistrate’s Court in London (Novaya Gazeta’s editors have a copy) and casts no doubt over its authenticity.

From the decision of Westminster Magistrates’ Court
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19. The most telling evidence in support of GT’s [Georgy Trefilov - ed.] opinion was given by Witness A. The witness can be described as a whistleblower. (…) he/she had first-hand information about the investigation, which was not carried out fairly or in accordance with the standards procedures, which should have been carried out, and Irina Konovalova (see my paragraph 5) “agreed that in the case there was no real evidence of any crime…” (…)

20. Thus, Witness A confirms, on the basis of his/her direct knowledge, that the prosecution was instigated “to order” and that the FSB had undue influence from the very beginning. As a result:

i. The investigation in respect of GT was carried out unfairly and unlawfully, it was deliberately inconsistent with factual and legal matters, and the work and analysis performed were insufficient.

ii. No opportunity was given to obtain the expert reports needed to prove the fraud.

iii. The investigators did not even carry out basic checks of the evidence gathered in terms of the movement of funds, as is the standard practice.

iv. GT’s former business partners may have paid money to senior members of the Investigation Committee or the FSB, thereby ensuring that the investigation continued.

v. The initial charge against GT was unfairly changed to a more serious charge, solely in order to increase the term of imprisonment.

vi. Several Investigation Committee investigators openly admitted that there was no real evidence of any crime, but that they acted “in accordance with instructions”.

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30. Mr Georgy Usupashvili (GU) submitted a 12-page statement. He is a friend of TG, has known him for 12 years, and is in a relationship with TG’s sister. He claims that in February 2012, he agreed to meet with senior prosecutor Viktor Gvozdev (VG) from the General Prosecutor’s Office (GP) in Moscow. VG told him that for a separate payment he could “help” GT reduce the term of the charge [sic] or have the charge dropped altogether. (…) A number of meetings were held. During the meetings VG tried to get GT to pay $1 million, which would have made it possible to have the term of the charge [sic] reduced. The evidence of corruption, which he provides, is worthy of condemnation. (…) he was “wired-up” for these meetings and recorded the conversations on 22 pages. The level of corruption revealed in the transcripts is horrifying. GU’s testimony, the transcripts (in Russian and English) and the CD with the recordings (the conversation are of course in Russian) were presented to the Crown Prosecution Service, and it seems that it sent all this material to Moscow”.

31. It was thought that GU should testify at the extradition hearings. At the last moment, GU had problems obtaining a visa, and was unable to come. Mr Jones (the lawyer representing the Russian Federation in court, ed.) did not object to his [GU's] testimony being read out. Considering that GU cannot testify in relation to the audio recordings (see paragraphs 32-42 below), this was very reasonable and considerate of Mr Jones.

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57. For the reasons presented above, I acquit GT (…).