The poster reading: "The Party Targets" is seen in front of Gazprom headquarters in Moscow.
Photo: Alexander Miridonov
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Tax Investigators Probe into Hermitage Capital
Tax investigators of Moscow Main Internal Department are probing into the companies linked to Hermitage Capital, one of the biggest western capital funds operating in Russia. The official concern of detectives is the breach of tax laws, but the market players say it is just the beginning of dealing with illegal schemes for Gazprom stocks’ acquisition, where major capital companies of Russia and the West were involved.
The probe into the firms linked to Hermitage Capital began half a year ago, said representatives of Moscow Main Internal Department. The firms under investigation used to transfer their huge profits to founders, the Cyprus-incorporated offshore companies. Benefiting from the double taxation agreement of Cyprus and Russia, those companies paid the tax of no more than 5 percent, while the actual rate stood at 15 percent.
The investigators say that in late 1990s, Hermitage Capital was setting up firms in Russia to buy stocks of fuel and energy companies, particularly of Gazprom, which purchase was restricted for aliens. Till the end of 2005, the respective permit could be obtained only through the sanction of the RF government.
At that time, Gazprom’s quotes on LSE, for instance, were twice as much as in Russia, so some foreign investors applied the cross-ownership schemes to the stocks. The general practice was that the stocks were first bought out by some Russian firms, while aliens were the end owners of such companies.
Exactly these methods are blamed on Hermitage Capital. By strange coincidence, a number of companies related to it were liquidated right before the checks.
But the actual reason of probing into Hermitage Capital could be of political nature. Hermitage Capital chief William Browder was banned from entering Russia in late 2005 and no explanation has been given so far.
www.kommersant.com
All the Article in Russian as of June 14, 2007
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