Hermitage Fund Manager Faces Arrest In Russia

Mar 30 2010 | 1:47pm ET

Russia is seeking the arrest of another Hermitage Capital Management partner, four months after a lawyer for the London hedge fund died in prison.

The Russian Interior Ministry has issued an arrest warrant for Ivan Cherkasov. The 42-year-old has worked for Hermitage in London since 2006, but is a Russian national. Last year, Russia asked Interpol to place Hermitage founder William Browder—who has been barred from the country since 2005—on its international wanted list. Browder is a U.S. citizen.

According to Russia, both Browder and Cherkasov are suspected of tax evasion. Interior Ministry officials attempted to arrest Cherkasov on March 24 at his former home in Moscow.

A month after Russia began seeking Browder’s arrest, Sergei Magnitsky, a 37-year-old lawyer for Hermitage, died in prison almost a year after being jailed on tax fraud charges. Before his death, Magnitsky claimed he was mistreated in prison and said that Russian authorities had offered him his freedom in exchange for his implicating Browder and Hermitage, once the largest foreign investor in Russia.

“The officers responsible for Magnitsky’s death are now trying to find another hostage,” Hermitage said in a statement.

Hermitage said it received a decree from Russian authorities seeking Cherkasov’s arrest this month. But it says Russia’s own Federal Tax Service has found that Cherkasov’s taxes are in order.

Russia says Hermitage may be guilty of a US$16.9 million tax evasion. But Hermitage and—before his death—Magnitsky allege that the hedge fund has actually been the victim of a US$230 million scam, the money stolen using documents he says were seized by the Russian government. Browder has been an outspoken critic of Russian corporate governance.


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