MOSCOW, March 7 (Reuters) - Russia on Thursday filed fraud charges against William Browder, head of London-based investment fund Hermitage Capital Management, over dealings a decade ago in shares in state gas firm Gazprom.
The charges were filed before Browder was due to be tried on Monday in absentia, along with Hermitage’s dead lawyer Sergei Magnitsky, in a separate tax evasion case that has stoked tensions between Moscow and the West.
The Interior Ministry said in a statement Browder had been charged with large-scale fraud after failing to respond to a summons for questioning. It estimated losses to the Russian state from the Gazprom deals at 3 billion roubles ($98 million).
The ministry had on Tuesday threatened to prosecute Browder, a U.S.-born British citizen whose fund at its peak managed $4 billion, for buying shares in Gazprom in violation of a ban on foreign ownership of the state gas firm’s stock.
Browder has called the charges an “absurdity” and said the offshore structures Hermitage used to buy Gazprom shares had received the blessing of Russia’s market regulator and the gas firm itself.
The new case against Browder dates back to the early 2000s, when investors speculated over whether Russia would lower a so-called “ring fence” on local shares in Gazprom, the successor to the Soviet Union’s gas ministry.
Hermitage and other funds created offshore “grey schemes” enabling investors to bet Gazprom’s local stock would catch up with its pricier London shares when the ring fence was scrapped, as it was in mid-decade.
Browder accuses President Vladimir Putin of retaliating over an investigation by Magnitsky that, Hermitage says, uncovered a $230 million tax fraud involving corrupt officials who seized control of companies affiliated to the fund group.
Magnitsky died in jail in 2009 after what his employer said was a severe beating, prompting the U.S. Congress last year to pass the Magnitsky Act, which imposes visa bans and asset freezes on Russians suspected of violating human rights.
Nobody in Russia has been held accountable for Magnitsky’s death. Putin in December accused Browder of “economic crimes” and the Russian parliament has enacted a ban on the adoption of orphans by American families.