Investigative Reporting Network Follows the Money—And Strikes Gold

Apr 262013
  • The OCCRP has created an international network of investigative reporters tracking and exposing organized crime across Eastern Europe and the former Soviet Republics.

  • OCCRP reporters helped reveal the fate of millions missing from Russia’s treasury in a famous tax fraud case known as the "Magnitsky Affair."

Russian lawyer Sergei Magnitsky may not have died in vain.

ICFJ’s Organized Crime and Corruption Reporting Project (OCCRP) is helping reveal the fate of millions missing from Russia’s treasury—money that Magnitsky contended Russian tax officials stole in a scheme with organized criminals.

OCCRP’s 13 member organizations include investigative reporting centers and news organizations throughout Eastern Europe cooperating to help people in the region understand how organized crime and corruption affect them.

In late 2008, officials accused Magnitsky of stealing the $230 million that he had uncovered as missing had him arrested. He was held nearly a year without trial and died under hazy circumstances in November 2009. It is suspected he was beaten in prison, tortured and denied adequate medical care. The ensuing controversy badly damaged Russian-U.S. ties.

Last summer, reporters at the Bosnia-based OCCRP, working with Russian newspaper Novaya Gazeta, discovered that more than $130 million of the missing funds were sent through banks in at least eight countries via shell companies registered in the United Kingdom, the British Virgin Islands and Belize. Half these countries have started investigations, the latest of them Lithuania. Bloomberg Businessweek and Britain’s The Independent are among news outlets crediting OCCRP with finding the money.

So how does a small organization with limited resources help crack multinational, multimillion-dollar embezzlement cases?

It’s all about the network, explains Serbian OCCRP reporter Stevan Dojcinovic: “At least once a week, you really need some information from some business registry in Romania or some court documents from Bosnia because all these stories are cross-border stories. ... So you rely on the journalists there, who know how to work there, so when we do these big, huge stories that consist of a couple of countries, we can put all our documents together.” Executive Director Paul Radu briefed the European Parliament on his team's methods earlier this month.

The reporters produce in-depth investigative stories and revealing infographics to connect the dots of missing millions, phantom companies and shady investors. Cross-border communication—and reporters’ dogged “follow the money” strategy—have made the Magnitsky episode just one of the latest OCCRP success stories.

  • In November 2011, an OCCRP series detailed how a New Zealand company laundered nearly $700 million through a bank account in Latvia. When Latvia complained to the EU, it dropped New Zealand from its banking and corporate “white list.”

  • While Hosni Mubarak ruled Egypt, his friend, business magnate Hussein Salem, became wealthy. Last February, OCCRP identified a Turkish national, Ali Evsen, who had helped Salem hide assets in offshore companies. Egypt soon added Evsen to Interpol’s “Most Wanted” list. He was arrested in Spain in July.

  • Last May, OCCRP published articles on corruption in Montenegro as it jockeyed to join the EU. A few days later, the EU gave the country an ultimatum to clean up its act or lose its candidacy—which is still pending.

  • OCCRP investigated Serbian money launderer Zoran Copic, an associate of the infamous Montenegrin drug lord Darko Saric. In a taped interview with the reporters, Copic confessed to even more crimes than previously known. A week later, he was arrested. Reporters later learned police had bugged the room. In August 2012, he was convicted and sentenced to five years in prison.

OCCRP reporters have won many awards including the International Women’s Media Foundation’s “Courage in Journalism Award,” and the Daniel Pearl Award, and are on the short list for the European Press Prize, but not everyone is happy about their success.

A Baku reporter, Khadija Ismailova, suffered a vile smear campaign last year. Azeri officials also are suspected of being behind massive spamming of OCCRP’s Facebook page and its editors’ email accounts after it named President Ilham Aliyev 2012’s corrupt “person of the year.”

But, says Dojcinovic, the stories are worth it. “Now the public knows much more about these mafia things, about these groups, about where the money was going. … Now, people know that these things are happening, so I think in the long term it will really affect all the bad guys who are making these deals.”

The Magnitsky affair has heated up the airwaves—and chilled the U.S.-Russian relationship. In December, President Obama signed into law the Magnitsky Act, which bans visas and freezes the assets of Russian officials allegedly involved in torturing or killing Russian whistleblowers.

On January 25, the Obama administration ended a civil society dialogue with Russia that began during 2010 talks between Obama and then-President Dmitry Medvedev to “reset” the countries’ relationship. The State Department said that given new Russian pressures on civil society, the talks no longer seemed “useful or appropriate.”

As the political situation deteriorated, the question about Magnitsky’s accusation lingered: Where was the money that vanished in the largest tax-fraud case in Russian history? Thanks to OCCRP’s team, the truth and Magnitsky’s vindication are emerging.