The scheme allegedly allowed the embezzlement of $230 million worth of tax refunds which were issued illegally using documents from companies belonging to Hermitage Capital. Allegedly this was the biggest unsolved tax fraud in Russia’s modern history.

As the investment fund’s investigation found out, law enforcement employees and tax agents managed to steal three companies belonging to Hermitage Capital and used their documents to carry out the complex operation – through Raiffeisen Bank.

Austrian authorities, however, denied all accusations.

“Austria’s financial market authorities have found out officially that there is no ground for suspicion against Raiffeisen. There has been no money laundering in RZB regarding this case,” said Gregor Bitschnau, a spokesperson for Raiffeisen Bank Austria.

In 2006, Raiffeisen faced criticism after the head of a Russian bank it was dealing with was convicted for attempting to steal $1.6 billion from a mine. In June 2010, after the request of a prosecutor in Vienna, Raiffeisen said it was conducting its own internal investigation.

Lack of cooperation from the Austrian authorities leaves the Hermitage Capital case dead in the water. Still, the investigation in Russia is ongoing, and they hope that if it will reveal anything significant, Austria will have to consider the issue once more.

The case is closely connected with that of Sergey Magnitsky, who was the lawyer operating on behalf of Hermitage. Magnitsky died in November 2009 in custody after he claimed that members of Russia’s law enforcement system were involved in the alleged tax fraud.

Russian President Dmitry Medvedev ordered an investigation into the case.