Tax evasion case against Mogilevich reopened

A district court in Moscow reopened yesterday the hearing of a tax fraud case against Russia's top cosmetics retailer, Arbat Prestige. According to the investigators the company evaded 115m roubles (about USD$3.6m) of income tax and VAT by creation of sham structures.

Vladimir Nekrasov, the company’s owner and general director, and Semyon Shnaider, also known as Semion Mogilevich, were charged with the crime. The latter is wanted by the U.S. Federal Bureau of Investigation for alleged fraud, money laundering and racketeering, and was named by various media as one of the most influential criminal leaders in the former Soviet Union.

Arbat Prestige used to be one of the largest retail chains of cosmetics with a hundred shops in Russia and Ukraine.

Criminal investigation against its official owner and Semion Mogilevich, who is believed to be the real beneficiary, started in January 2008. Both spent 1.5 years in jail but in July 2009 they were released because the maximum term for keeping in custody had expired. In the mean time Arbat Prestige went bankrupt and de facto ceased to exist.

Arbat Prestige – and its real or ‘shadow’ director – is being held responsible for its suppliers which are considered by the investigators as sham structures created for tax evasion purposes. Similar actions were taken against other large companies: Eldorado Group, Moscow Oil Refinery, Svyaznoy, a mobile phone retailer, MIAN, a real estate agency, Moscow McDonald's, Basic Element, an aluminium giant.

It is also remarkable that the state does not accept compromise. As long as the investigation started it cannot be closed by paying the tax demanded, in this case a comparatively small one.

 

 

September 8, 2009

 

 

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