by Bill Browder
“Please excuse the alias, Mr. Firestone,” he said in Russian, “but I have to be careful.”
“I understand,” Jamie answered, also in Russian, wondering if all the other people in the bar were security personnel for Sanches.
“My real name is Alexander Perepilichnyy.”
Jamie motioned for the waitress as Perepilichnyy dropped into a chair. He ordered green tea as Jamie tried to size him up. Perepilichnyy did the same to Jamie.
The tea was served.
Perepilichnyy said, “Thank you for agreeing to see me.”
“Of course. We’re very interested in what you have to say.”
Perepilichnyy lifted the teacup and took a careful sip. He put the cup down. Both men stared at each other in awkward silence. Then Perepilichnyy said, “I got in touch with you because I saw the videos about Kuznetsov and Karpov. Magnitsky’s death was shocking. Every Russian accepts corruption, but torturing an innocent man to death is crossing the line.”
Bullshit, thought Jamie. He knew that these days most Russians didn’t operate on high-minded principles like these. Everything in Russia was about money. Making it, keeping it, and making sure no one took it. Jamie had no idea what Perepilichnyy’s real agenda was, but he was confident that the man wasn’t sitting here because he cared about Sergei.
“The information in your email is good but incomplete,” Jamie said. “Do you have any more documents?”
Perepilichnyy said, “Yes, but not with me.”
Jamie leaned back in his chair, the ice in his Diet Coke shifting as it melted. “Would you mind if one of my colleagues joined us? I’d like him to go over the documents you provided. When we’re sure we understand them, we’ll tell you what else we need.”
Perepilichnyy agreed. Jamie pulled his phone from a pocket and texted Vadim, who was waiting on New Bond Street right around the corner. Two minutes later, Vadim pushed through the entrance, made his way to the table, and introduced himself.
As Vadim sat, Jamie pulled out Perepilichnyy’s documents. Vadim leafed through them and asked, “Do you mind walking me through these?”
“Sure. This is a Credit Suisse bank statement for an account owned by Vladlen Stepanov, husband of Olga Stepanova.” Perepilichnyy indicated a line midway down the page. “Here’s a transfer for one point five million euros on May twenty-sixth. Here’s one for one point seven on June sixth. And here’s another for one point three million on June seventeenth.” He ran his finger over several other transactions. All told, in May and June of 2008, €7.1 million had been transferred into this account.
Jamie squinted at the documents. “Where did you get these?”
Perepilichnyy shifted uncomfortably. “Let’s just say I know some people.”
Jamie and Vadim didn’t like this, but they didn’t want to spook Perepilichnyy so they didn’t press him.
Vadim flipped through the papers. “This could be very useful, but I don’t see Vladlen Stepanov’s name in any of the bank statements. How are they connected to him?”
“That’s simple. The account belongs to a Cypriot company owned by Vladlen.” Perepilichnyy pointed to an ownership document with Vladlen’s name on it, but not his signature.
Vadim lowered his glasses. He’d been investigating corporate fraud for over thirteen years, and his standard practice was to assume everything was a lie until he saw evidence to prove otherwise. “Thank you. But without proof that Stepanov actually owns this company, there’s not much we can do with this. We need copies of these ownership papers with his signature.”
“I understand,” Perepilichnyy said. “This was just meant to be a first meeting. I can come back with what you’re asking for if you’d like to meet again.”
“Yes, that’d be great,” Jamie said. With that they finished the meeting and shook hands, and Perepilichnyy got up and left.
When Vadim returned to the office to report what had happened, I was suspicious and said, “It sounds like a scam.”
“Maybe. But if what he’s saying is true, this would be the first time we could show exactly how some of these people got money from the tax-rebate fraud.”
“Fair enough. Let’s see if Perepilichnyy can produce what he promised.”
A week later, they agreed to meet again. This time they would be joined by Vladimir Pastukhov, who, because of his near blindness, had an amazing sixth sense for people.
The following Tuesday, Vadim and Vladimir met Perepilichnyy back at the Polo Bar. True to his word, Perepilichnyy produced a copy of a signed document showing that Vladlen Stepanov owned the Cypriot company with the Credit Suisse bank statements.
When Vadim and Vladimir came back to the office and showed me the document, I was not impressed. It looked like a simple piece of paper with some illegible signatures on it. Anyone could have made it or forged it.
“What is this? I can barely read it.”
“This is from Stepanov’s auditor,” Vadim said.
It seemed to me that they were too ready to believe Perepilichnyy. “This could be anybody’s signature. Do you really think we should trust this guy?”
“I do,” Vadim said. “I think he’s for real.”
“What do you think, Vladimir?”
“I believe him too. He seems honest.”
They continued to meet over the following weeks, and we learned some interesting things. In addition to the Swiss accounts, Perepilichnyy told us how the Stepanovs had purchased a six-bedroom villa and two luxury condominiums in Dubai on the Palm Jumeirah, a massive man-made archipelago shaped like a palm tree. The market value of these properties was around $7 million. In Russia, the Stepanovs built a mansion in the most fashionable suburb of Moscow that was valued at $20 million. In total, they’d amassed bank accounts and properties worth nearly $40 million.
To help illustrate just how lavish and ridiculous these expenditures were, Vadim got hold of the Stepanovs’ tax filings, which showed that since 2006 their average annual income was only $38,281.
This information was so good that I was sure it would go viral if we produced another YouTube video. Adding Olga Stepanova to our collection of “Russian Untouchables” would shake the Russian elite right to the core.
There was one problem, though.
Perepilichnyy’s story wasn’t just good. It was too good.
It was entirely plausible that Perepilichnyy was working for the FSB, and that this was a well-planned operation to destroy my credibility. It was right out of their playbook: create a character with a believable story; have this person pass valuable information to his target; wait for the target to disclose this information publicly; then show how the information is false.
If this scenario played out, it would entirely compromise all the work we had done over the last three years with journalists and governments throughout the world. It wouldn’t take long for policy makers to ask, “Why are we backing this liar at the expense of our important relationship with Russia?”
If we were going to make a video about the Stepanovs, I had to be certain that what Perepilichnyy said was true—and I also needed to know how he’d gotten his information.
For a long time he was cagey on this point, but finally, he let down his guard. He told us the reason he had so many of these financial documents was that he’d been a private banker for a number of wealthy Russians, including the Stepanovs.
This vocation worked well for Perepilichnyy until 2008, when the markets crashed and he lost the Stepanovs a lot of money. According to Perepilichnyy, instead of accepting these losses, the Stepanovs accused him of stealing the money and demanded he repay them. Since Perepilichnyy had no intention of covering their market losses, Olga Stepanova used her position as head of the tax office to get a criminal tax-evasion case opened against Perepilichnyy.
Perepilichnyy promptly fled Russia to avoid arrest. He moved his family to a rented house in Surrey, a fashionable London suburb, where he lay low. He first watched the Kuznetsov and Karpov videos there and came up
with an idea. If he could get us to make a Russian Untouchables video about Olga Stepanova and her husband, then it could possibly compromise them to such an extent that it would make his problems go away.
When Vladimir told me this, it made sense, and I was finally ready to go ahead and use his information to make a video.
But just as we started to get comfortable with Perepilichnyy, we received a new message from our source Aslan: “Department K furious about Kuznetsov and Karpov videos. Large new operation being planned against Hermitage and Browder.”
We asked for clarification, but Aslan didn’t have any more details. My fears that Perepilichnyy was part of an FSB plot came roaring back. Maybe everything was going according to plan. It didn’t matter how compelling his information was. Before going forward I had to be doubly sure that we weren’t falling headfirst into an FSB trap.
36
The Tax Princess
One of our top priorities starting in the fall of 2010 was to be certain that Perepilichnyy wasn’t scamming us.
We began by verifying the property outside Moscow and quickly found that the sixty-four-thousand-square-foot lot that their suburban mansion was built on belonged to Vladlen Stepanov’s eighty-five-year-old pensioner mother. She had an income of $3,500 per year, but was somehow sitting on this plot of land with a market value of $12 million, and that was before anything had even been built on it.
But the Stepanovs had built something on it. They’d hired one of Moscow’s leading architects to design two hard-angled, modernist buildings totaling twelve thousand square feet. These were made of German granite, structural glass, and polished metal. When I saw the pictures of the houses, I thought they looked more like they belonged to a top hedge fund manager than a midlevel Russian tax collector and her husband.
Next, we turned to Dubai. Using an online property database, we confirmed that the villa there, which was bought for $767,123, was indeed registered to Vladlen Stepanov. Unfortunately, the other two condominiums, which together were worth more than $6 million, were still under construction and hadn’t been registered. We knew about them only because of some wire transfers from the Stepanovs’ Swiss accounts.
The Swiss accounts were the strings that tied everything together. Not only had they been used for these lavish purchases, but they also held more than $10 million in cash that, according to Perepilichnyy, was wired in after the tax-rebate fraud occurred. If we could confirm that these accounts were real, then we could make a Russian Untouchables video about Olga Stepanova and her husband that would light up the Moscow sky.
Everything now hinged on the authenticity of the Swiss accounts.
In an ideal world I could just have gone to Credit Suisse and asked if the statements were genuine, but Swiss bankers are so secretive that they would have told me nothing.
I could also have approached acquaintances at Credit Suisse, but they wouldn’t have helped. Divulging confidential client information was a fireable offense, and I didn’t know anybody well enough that he or she would take that risk for me.
Our only remaining option was to file a complaint with the Swiss authorities and see where that led. My London lawyer drafted the complaint, and when it was ready to go, I asked how long he thought it would take to hear back.
“I don’t know,” he said. “Anywhere from three months to a year.”
“Three months to a year? That’s way too long. Is there some way to make them go faster?”
“No. In my experience the Swiss authorities can take a long time. They’ll get to it when they get to it.”
January and February passed with no news, and March did too. By mid-March 2011, the Stepanova video was finished and was better than anything we’d done before. I wanted to move ahead, but the Swiss authorities were holding me back.
Then, in late March, we learned of an entirely new twist to the Russian cover-up. The Russian authorities convicted an ex-felon, a man named Vyacheslav Khlebnikov, for his role in the tax-rebate fraud. They could have put a hundred ex-cons in jail as fall guys for the crime and it wouldn’t have mattered to me, but what did matter was what was written in the official sentencing documents. The documents stated that the tax officials were completely innocent and had been “tricked” and “misled” into granting the single largest tax refund in Russian history in one day on Christmas Eve 2007.
Tax officials such as Olga Stepanova.
I decided, Enough is enough. They can’t continue lying like this. Perepilichnyy’s information is good. I know it, the Swiss know it, and soon the world will know it too.
The video went live on April 20, 2011. The reaction was immediate and huge—bigger than anything we’d done before. By the end of the first day, it had over 200,000 views. By the end of the week it had nearly 360,000. And by the end of the month, more than 500,000 people had watched it. Olga Stepanova became known around the world as the Tax Princess, and reporters from every corner of Russia harangued her and her husband. NTV, one of the state-controlled television stations, even staked out Vladlen Stepanov’s eighty-five-year-old mother, who lived in a one-room hovel in a Soviet apartment complex. When asked about the lavish property she nominally owned, she answered that she agreed to put it in her name in exchange for a cleaning lady to help her tidy up her apartment once a week. Her millionaire son wouldn’t even take care of his elderly mother properly.
Best of all, three days after we launched the video, the Swiss attorney general announced that he’d frozen the Stepanovs’ accounts at Credit Suisse. Unbeknownst to us, the Swiss authorities had opened a full criminal money-laundering case soon after they received our complaint.
I felt completely vindicated. Perepilichnyy’s information had been genuine and the money had been frozen. We’d hit the criminals in the place they cared about most—their bank accounts.
37
Sausage Making
Our YouTube videos caught these corrupt Russian officials completely off guard, but the real coup de grâce that would destroy the equilibrium of the Russian authorities would be passing sanctions legislation in the United States.
In the fall of 2010, just as we were establishing contact with Perepilichnyy, Kyle Parker finished drafting the Magnitsky Act. On September 29, Senators Ben Cardin, John McCain, Roger Wicker, and Joe Lieberman introduced the bill in the Senate. The language was simple and direct—anyone involved in the false arrest, torture, or death of Sergei Magnitsky, or the crimes he uncovered, would be publicly named, banned from entering the United States, and have their US assets frozen.
When the bill’s introduction was made public, the Russian authorities were furious and had to devise some way to counter what was happening in Washington.
They found their first opportunity on November 10, less than a week before the first anniversary of Sergei’s death. That date was National Police Day in Russia, and the Interior Ministry held an annual awards ceremony for their most outstanding officers. Of the thirty-five awards given, five went to key figures in the Magnitsky case. These included Best Investigator awards for Pavel Karpov and Oleg Silchenko, the officer who organized Sergei’s torture in prison, and a Special Award of Gratitude for Irina Dudukina, the Interior Ministry spokeswoman who’d loyally spouted all the lies about Sergei just after he’d died.
Then, to really push their point, five days later the Interior Ministry held a press conference to “reveal new details about the Magnitsky case.” Dudukina presided. Her bleached hair was a little longer and more teased out than it had been the year before, but she was still plump and tired-looking and still had a lower jaw that appeared to belong to a ventriloquist’s dummy. She unfolded a makeshift poster of twenty sheets of taped-together A4 paper and stuck it to a dry-erase board. Despite its being a jumbled mash of numbers and words, most of them too small even to be legible, this poster “proved” that Sergei had committed the fraud and received the $230 million tax rebate. When journalists started asking the most basic questions about her display, she had no credible res
ponses and it was clear to everyone present that it was a fabrication.
While these tactics were aggressive and crude, they confirmed that our legislation had touched a nerve. I wasn’t the only one who recognized this. Many other victims of human rights abuses in Russia saw the same thing. After the bill was introduced they came to Washington or wrote letters to the Magnitsky Act’s cosponsors with the same basic message: “You have found the Achilles’ heel of the Putin regime.” Then, one by one, they would ask, “Can you add the people who killed my brother to the Magnitsky Act?” “Can you add the people who tortured my mother?” “How about the people who kidnapped my husband?” And on and on.
The senators quickly realized that they’d stumbled onto something much bigger than one horrific case. They had inadvertently discovered a new method for fighting human rights abuses in authoritarian regimes in the twenty-first century: targeted visa sanctions and asset freezes.
After a dozen or so of these visits and letters, Senator Cardin and his cosponsors conferred and decided to expand the law, adding sixty-five words to the Magnitsky Act. Those new words said that in addition to sanctioning Sergei’s tormentors, the Magnitsky Act would sanction all other gross human rights abusers in Russia. With those extra sixty-five words, my personal fight for justice had become everyone’s fight.
The revised bill was officially introduced on May 19, 2011, less than a month after we posted the Olga Stepanova YouTube video. Following its introduction, a small army of Russian activists descended on Capitol Hill, pushing for the bill’s passage. They pressed every senator who would talk to them to sign on. There was Garry Kasparov, the famous chess grand master and human rights activist; there was Alexei Navalny, the most popular Russian opposition leader; and there was Evgenia Chirikova, a well-known Russian environmental activist. I didn’t have to recruit any of these people. They just showed up by themselves.
This uncoordinated initiative worked beautifully. The number of Senate cosponsors grew quickly, with three or four new senators signing on every month. It was an easy sell. There wasn’t a pro-Russian-torture-and-murder lobby in Washington to oppose it. No senator, whether the most liberal Democrat or the most conservative Republican, would lose a single vote for banning Russian torturers and murderers from coming to America.