Last Thursday, Sergei Magnitsky was convicted of tax evasion. The only problem was he was not there to hear the verdict read. Magnitsky was killed in Moscow's Butyrka prison in 2009, likely as a result of beatings and a lack of medical treatment. His crime was uncovering a $230 million tax fraud involving members of the government while working as a lawyer for William Browder (an American investor who was also convicted in absentia).
But Magnitsky's conviction is not simply an example of the capricious nature of the legal system in Russia; it is a view into how the use of money laundering, financial laws, and Russia's financial intelligence unit are used to control political dissent.
Recently, Putin launched a much publicized "de-offshorization" campaign aimed at fighting corruption and countering the flight of money from the country, much of it acquired illicitly. This initiative was launched in response to revelations that Russia was losing vast sums of money every year (estimated at $56.8 Billion in 2012), and that many state officials--from the heads of security agencies to the chair of the Russian Duma's ethics committee--had significant overseas assets (including condos in Miami, worth an estimated $2 million). Much of this wealth was being sent to offshore tax havens in Europe and beyond. Russian holdings in Cyprus amounting to over $30 billion (largely the proceeds of corruption or deposited as a form of tax avoidance) also inspired this campaign. (This scheme of tax avoidance is called "round tripping," whereby the proceeds made in Russia are registered with a shell company based in Cyprus, then repatriated to Russia avoiding taxes due to a taxation agreement between the two countries). These revelations gave Putin the expedient cover with which to launch "de-offshorization," which included banning state officials from having overseas assets. The idea is that, by forcing Russian elites to hold their money inside the country, Putin can cement their loyalty by threatening their bank accounts.