Investment Fund Tells Amazing Story of Official Russian Corruption

The story of Hermitage Capital, a Britain-based investment fund that was once one of the largest foreign investors in Russia, and what it encountered at the hands of corrupt Russian officials, "highlightsthe hazards of practicing law in Russia's corruption-ridden courtsdespite nearly two decades of reforms supported by hundreds of millionsin U.S. and European aid," Philip Pan wrote in an Aug. 13 piece in the Washington Post.

It also highlights the dangers of doing business in Russia for Western firms. Hermitage was apparently the victim of a brazen attempt by corrupt Russian officials to steal its assets, in an all-too-common practice known as raiding, or reiderstvo.But when the officials failed in their criminal scheme, thanks to a preemptive move by Hermitage to move its assets from the banks where they had been held, the firm says the Russianofficials "looted the Russian treasury instead, then went after thelawyers who caught them," as Pan reported.

At least one of the Russian lawyers who had represented Hermitage and helped uncover the schemeremains in Russian custody and criminal charges were recently brought against him. Hermitage latelast week released this video that tells their side of the story. The video is anapparent attempt to put pressure on the Russian government, gain therelease of their lawyer, and highlight the dangers of doing business in Russia.

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