by Luke Harding
Stuck in London, he hired a team to investigate back in Russia. It included an idealistic young anti-corruption lawyer called Sergei Magnitsky. In 2008, Magnitsky found out where the stolen money had gone. He filed a complaint to Russian prosecutors. The same officials who had carried out the fraud, including an investigator at the interior ministry, Major Pavel Karpov, had Magnitsky arrested. He was tossed into a freezing cell and refused medical treatment.
Magnitsky suffered from pancreatitis and gallstones, and spent months in pain. The officials wouldn’t allow his family to visit. This state-sanctioned torture was meant to make him withdraw his testimony. He didn’t. Threats were sent to Hermitage in London; one of Browder’s colleagues received a text, quoting from The Godfather Part II, which said: ‘History has taught us that anybody can be killed.’
In Moscow, Magnitsky’s condition grew critical. In November 2009, guards put him in an isolation cell. There, they beat him to death. He was thirty-seven, married, the father of two small boys, and a representative of Russia’s decent middle class. He had believed that the law would protect him, that Russia had said farewell to its Soviet ghosts. It was a tragic misjudgement. At least three other people who testified against the fraud in Russia died in unclear circumstances.
Browder began a global campaign to bring Magnitsky’s killers to justice. Since they occupied mid-ranking positions in the interior ministry and FSB there was no prospect of this happening inside Russia’s own legal system.
Perepilichnyy, meanwhile, was facing big problems of his own. His job, it appears, had been to offer semilegal financial services to a range of clients, including corrupt ones.
During the 2008–9 financial crash he lost much of his clients’ funds. They accused him of robbing them and demanded he repay their market losses. One of them was said to be Dmitry Kovtun, Litvinenko’s killler. Kovtun and Perepilichnyy may have had business together. More probably, though, Perepilchnyy’s enemies invoked Kovtun’s name in order to frighten him.
Perepilichnyy fled Russia and moved with his family to Surrey. In July 2010, he sent an anonymous email to Hermitage under a false Spanish name, Alejandro Sanches.
The email began:
Dear Sirs,
Let me, first of all, express deep respect for your basic civic stand concerning events connected with the Hermitage case.
I am ready to donate some information and documents concerning compensation received by the management of a tax inspectorate for the illegal return from the Russian Federation budget of more than 5 billion roubles.
Perepilichnyy signed off as ‘Sergei’. He said he couldn’t give his real name ‘as my relatives live in Russia’.
His information was astonishing – details of an alleged money-laundering ring involving the Russian mafia and state. It included the identities of those who had pulled off the fraud, print-outs from the Stepanovs’ secret bank account with Credit Suisse, and an explanation as to where the money had gone – on Range Rovers, Moscow real estate and tacky properties in Dubai.
One mansion bought by the Stepanovs was on Palm Jumeirah, the world’s largest man-made island, reclaimed from Dubai’s coast. The island forms the shape of a palm tree as viewed from the air: some residents lived on its ‘trunk’, others on ‘fronds’. The Stepanovs’ villa, number 48, was on Frond F – out of the way by Palm standards, and at the end of a sun-bleached and desolate cul de sac. There are few shops and amenities here. Barriers, cones and a Filipino security guard keep out the uninvited.
At first, Hermitage was suspicious of this unknown Russian. Jamison Firestone, a US lawyer and ally of Browder’s who had hired Magnitsky and knew him well, sent emails back. There was no immediate answer. In August, however, ‘Alejandro’ gave further details. And offered to meet in London.
The rendezvous took place in the upscale surroundings of the Westbury in Mayfair. The five-star hotel is close to Grosvenor Street and the scene of Litvinenko’s twin poisonings. Firestone was waiting in the Polo Bar. Security guards had taken up positions undercover; they had already waved a Geiger counter up and down. Perepilichnyy sauntered in – now a chunky, somewhat dowdy figure, wearing a tracksuit and no tie. He was distinctly underdressed for his posh surroundings and not quite the ‘minigarch’, or minor oligarch, they’d expected.
According to Jamison, Perepilichnyy began by saying in Russian: ‘It’s really terrible what happened to your colleague. I admire your work.’
Gradually it became clear that Perepilchnyy was genuine, and someone from the inside. Someone with a grudge. Stepanov had used his wife’s tax connections to destroy Perepilichnyy’s business empire – and now Perepilichnyy was retaliating. ‘This was a move in a war to get the heat off, to get them [the Stepanovs] to back down,’ Jamison said. ‘It was a business dispute between partners. Perepilichnyy wanted to rip the legs from under them.’
There were further meetings in the same bar in London, over green tea and biscuits. According to Ivan Cherkasov, a Russian lawyer working for Browder, who fled Russia, Perepilichnyy was uninterested in his surroundings. ‘He was someone who existed in a world of maths and logic,’ he said.
Perepilichnyy turned over more documents. They included statements showing payments of several million euros to Stepanov’s private Credit Suisse bank account. The money came from a Cyprus-based company, Arivust Holdings, also belonging to Stepanov. One source, who met Perepilichnyy several times, said: ‘He was a nice chap. He was bright. He seemed rational.’
Hermitage gave this material to the Swiss attorney general. Some sources say Perepilichnyy ignored advice from his brother-in-law in Moscow to drop his complaint. Swiss prosecutors then froze Stepanov’s account, containing €8 million. Other ‘investors’ using the same dubious schemes also saw their funds seized.
Soon afterwards, the threats from Moscow began. In 2011–12 Perepilichnyy told his Hermitage contacts that his situation was looking dangerous. ‘He tried to be cautious. He was a bit fatalistic,’ the source – who doesn’t want to be named – said. Perepilichnyy’s name turned up on a hit list recovered from a group of Chechen assassins arrested in France. The gang had a pretty accurate dossier on Perepilichnyy’s whereabouts in the UK, though some details were out of date.
More warnings followed. Perepilichnyy met in Geneva with someone who presented himself as an informal representative of Russia’s interior ministry. The representative passed on a message: that Perepilichnyy was to make a public statement saying that the wire transfers to Stepanov’s offshore accounts were completely legitimate. Failure to do so would result in the authorities in Moscow opening a money-laundering case against him.
In May 2012, Perepilichnyy held talks with Stepanov’s lawyer, Andrei Pavlov. Pavlov was on his way back to Russia; the venue was a café on the upper floor of London Heathrow Airport terminal five. It’s unclear what they discussed – though Pavlov claims that Perepilichnyy said he wanted a reconciliation with the Stepanovs and other unhappy former customers in Russia.
As for Stepanov himself, he denies wrongdoing. In a public letter in 2011, he said that he and Olga were divorced. He claims that the value of his designer mansion near Rublyovka – Moscow’s most exclusive district – has been overstated. Of Perepilichnyy, he said: ‘This man owes me a lot of money. As a matter of fact not only to me but to scores of other creditors. He cheated me by pocketing my money and assets.’
On 5 November 2012, Perepilichnyy held his last meeting with the team from Hermitage. ‘He was casually dressed. The photos of him are accurate, but the final time I saw him he was looking a bit skinnier,’ the source said. Like Litvinenko in Spain, Perepilichnyy had agreed to testify in a forthcoming trial in Switzerland into the $230 million fraud, where he would be the star prosecution witness.
Next, Perepilichnyy took the Eurostar to Paris. He spent three or four days there. Some sources suggest Ukrainian women were involved. Perepilichnyy appears to have worried about his security. He booked into three different hotels: the five-sta
r George V, the Bristol, and a three-star guesthouse. He spent €1,200 in a Prada shop.
He returned by train to London. Back at home, his wife cooked him some sorrel soup. He told her he was feeling somewhat groggy. He decided to run this feeling off. And then he collapsed.
*
Detectives in Surrey were slow to grasp Perepilichnyy’s story – his links with shadowy figures in Moscow, his name on a Russian death-list, the emissaries and warnings. Instead, they treated his death as routine. There was, after all, no proof that this was murder. Nor were there any obvious suspects. Their assumption, it appears, was that Perepilichnyy’s death was due to cardiac arrest.
For those who knew FSB methods, however, the case looked deeply suspicious.
Before Litvinenko’s death, it might have seemed improbable verging on incredible that Russian assassins might murder someone on the streets of London. After Litvinenko, these doubts disappeared. Such murders had happened and were happening. The question for police was: was this one of them?
To Browder, the Perepilichnyy case looked like Litvinenko II. A week after his death, Hermitage’s lawyers wrote to the police detailing their concerns and asking for extensive toxicology tests to be carried out. The police didn’t reply. Another week passed. In frustration, Browder leaked the story to the Independent, owned by Alexander Lebedev, the Russian businessman and former KGB intelligence officer who had worked in the 1980s at the Soviet embassy in London.
There were many possible lines of inquiry. Hermitage’s lawyers urged the police to cooperate with the French authorities, and to obtain video surveillance in Paris and from Weybridge. Other avenues to examine included the movements of members of the Klyuyev group (the criminal gang headed by fraudster Dmitry Klyuyev), some of whom had travelled to the UK. There was Perepilichnyy’s possible dispute with Kovtun. And the fact that Eastern European contract killers were still entering the UK with ease.
Seven months earlier, a Moldovan assassin had ambushed another Russian in Canary Wharf in east London. The assassin, Vitalie Proca, had fired six shots into German Gorbuntsov, a 44-year-old Russian banker, as he returned home to his flat in Byng Street. Proca was caught on CCTV, gun raised. Gorbuntsov had fled to Moldova and then the UK after falling out – like Perepilichnyy – with wealthy clients in Moscow. They allegedly included senior figures in Russian Railways and the Solntsevo mafia gang. Gorbuntsov was badly wounded but survived.
The Surrey police investigation into Perepilichnyy’s death continued for some months. Toxicology tests conducted after twenty-two days drew a blank. Two post-mortems failed to uncover a cause of death. In 2013, detectives announced that there was no evidence of ‘third-party involvement’. The case – tragic, but apparently not homicide – was passed on to Surrey’s coroner. Browder was furious. ‘I’m certain he was murdered. The police kicked it into the long grass. This is a travesty of justice,’ he told me.
It wasn’t until spring 2015 that Browder’s suspicions were confirmed, and in quite spectacular fashion. Shortly before his death, Perepilichnyy insured his life for £3.5 million. He took out a flurry of policies. One, with Legal & General, worth £2 million, became active just eight days before he died. The insurer was reluctant to pay out. It asked a plant expert at the Royal Botanic Gardens in Kew, south-west London, Professor Monique Simmonds, to conduct her own tests.
Simmonds was a figure who might have sprung from the pages of Agatha Christie – a distinguished botanist in late middle age, thin, dressed in a severe black trouser suit and with short cropped hair. She had previously been involved in some extraordinary cases. In 2001, the limbless and headless body of a boy had been found floating in the river Thames. Forensic tests at Kew revealed traces of the toxic calabar bean in the lower intestine. The plant trail led to West Africa, where witch doctors use the bean to paralyse their victims. The police concluded the boy – aged five or six – had been ritually murdered.
Simmonds’ latest findings were similarly sensational. They were revealed at a pre-inquest hearing in Woking. She had tested samples taken from the dead man against a range of deadly plants. Perepilichnyy had been poisoned. He was the victim of a twining climber found in scrubby mountain forests.
The poison came from one of five possible varieties of the lethal gelsemium plant. The plant contains gelsemine, a compound similar to strychnine. The plant is a weapon of choice among Chinese and Russian assassins. Simmonds discovered traces of an ion linked to gelsemium in Perepilichnyy’s stomach. The most toxic variety is Gelsemium elegans. It grows only in Asia. The poison’s last known victim was Long Liyuan, a Chinese billionaire who died in 2011 after eating cat meat stew believed to have been laced with Gelsemium elegans.
This was a dramatic development. The focus now was on Perepilichnyy’s last meal. What was it and who was his dining companion? There were clear parallels with Litvinenko – here, once again, was an apparent reprisal killing of someone with potent enemies in Moscow.
But there were differences, too. Perepilichnyy’s widow Tatiana insisted her husband wasn’t murdered. There was no direct evidence, she said. She accused Hermitage of peddling ‘lazy stereotypes’. Not every Russian exile who dropped dead was the victim of foul play, she added.
The case went on, disputed and unresolved, into 2016. Surrey Police continued to insist Perepilichnyy’s death was wholly ordinary. At the same time, however, it refused to release forty-two documents, on the grounds of national security. Three years on, this was a surprising move. It raised another possibility. Before his murder, had Perepilichnyy talked to Britain’s spy agencies?
*
In March 2009, the US secretary of state and future presidential candidate Hillary Clinton presented her Russian counterpart Sergei Lavrov with a small green box tied with a ribbon. The venue was Geneva; the mood was warm; there were smiles and handshakes from the American and Russian delegations.
Lavrov opened the box. Inside it was a red button on a yellow background, and the word peregruzka. As Lavrov noted with some glee, the word ‘peregruzka’ actually means ‘over-charged’. The Obama administration had meant to write perezagruzka – the Russian noun for ‘reset’.
The blooper was emblematic of how US know-how on Russia had degraded in the post-Cold War era, as Washington became distracted with international wars (Afghanistan, Iraq); grappled with the hydra-headed threat after 9/11 of radical Islamist terrorism; and assumed that Russia, its defeated Cold War adversary, was moving slowly towards liberal democracy. It wasn’t. The US State Department still had Russian area specialists, of course. But it appeared that none of them could spell.
During the presidencies of George W. Bush, relations with Moscow sank. Putin supported the US-led war in Afghanistan but opposed Iraq. The Russian president’s list of grievances against Washington grew. Briefly summarised, they included Nato expansion, the US’s putative missile defence programme in Europe, and the pro-western and pro-reform revolutions in Georgia and Ukraine, which Putin claimed were an American-inspired plot.
Relations reached a nadir in August 2008, when Mikheil Saakashvili, Georgia’s president and a US ally, tried to seize back the rebel province of South Ossetia using military force. Russia responded with a full-scale invasion. It was a brutal lesson in regional geo-politics. And a practical articulation of the Kremlin’s new big power doctrine: that it had ‘privileged interests’ in its post-Soviet back and front yards.
The Obama administration’s decision to ‘reset’ relations with Russia was pragmatic. The goal was not to turn Russia into a progressive law-based state – an unlikely prospect that could only be achieved by Russians themselves – but to secure Moscow’s co-operation on key international challenges. These were Obama’s first-term priorities. They included Iran’s nuclear programme; Afghanistan; the common threat from Al Qaida; and – as the Arab Spring took hold – the disastrous war in Syria.
The White House’s calculus was strategic, though there was an element of wishful thinking too. Between 2008 a
nd 2012, Dmitry Medvedev – an ex-lawyer who grew up in the 1970s and was a fan of the British rock group Deep Purple – was Russia’s titular president. Leaked US diplomatic cables show that the US was keen to treat the liberal-seeming Medvevev as a genuine interlocutor. In reality, it was the hawkish Putin who pulled the strings.
When Browder turned up in Washington it was unsurprising that the state department responded coolly to his plan to punish Magnitsky’s killers. Browder was seeking to use an obscure law passed by President Bush in 2004 that allows the US to impose visa sanctions on corrupt foreign officials. He lobbied senators, journalists and anybody who would listen to him. His aim was to pass into law a Magnitsky act. The act would freeze the assets of those involved in his lawyer’s death.
Browder had found Putin and co.’s Achilles heel. In Soviet times, the politburo lived quite a bit better than the average Soviet citizen. It had special shops and holidays on the Black Sea. In Putin’s Russia, however, the difference was vast. Top bureaucrats, including the Klyuyev gang, were worth millions. They enjoyed international lifestyles. What was the point of stealing all that money if you could only spend it in Sochi, with its scruffy pebbly beach?
In December 2012, weeks after Perepilichnyy’s death, Congress passed a landmark Magnitsky law. It blocked eighteen Russian officials from entering America. Most importantly, the law denied them access to US banking facilities.
The law drew an apoplectic, asymmetric response from Putin. He ended the adoption of Russian babies by American couples. And, in a twist that might have been written by Gogol, the Kremlin put Magnitsky on trial. That he was already dead was apparently not an obstacle. In summer 2013, a judge convicted him of tax evasion, announcing a surreal verdict to an empty barred cage.