19 March 2013 Last updated at 12:48 ET

Q&A: The Magnitsky affair

Sergei Magnitsky died in custody in November 2009

The Magnitsky affair is one of the chief bones of contention between Moscow and Washington, casting a spotlight on corruption in Russia.

It has led to US sanctions on a group of Russian officials, retaliation by Russia and the bizarre spectacle of a dead man being put on trial. That trial is set to start on 22 March - but Russia has dropped its investigation into Sergei Magnitsky's death in prison.

Who was Sergei Magnitsky?

Mr Magnitsky was an auditor at a Moscow law firm when he discovered what he said was a massive fraud by tax officials and police officers.

He is said to have uncovered the alleged theft of $230m (£150m). After reporting it to the authorities, he was himself detained in 2008 on suspicion of aiding tax evasion, and died in custody on 16 November 2009 at the age of 37.

His colleagues at the firm, London-based Hermitage Capital Management (HCM), insist the case against him was fabricated to make him halt his investigations.

Despite his death Russian prosecutors are putting him on trial - a case dismissed as a "circus" by his family and by HCM founder Bill Browder, who is himself being tried in absentia. Mr Browder is now based in London.

How did he die?

Mr Magnitsky is said to have died of acute heart failure and toxic shock, caused by untreated pancreatitis.

An investigation by Russia's Presidential Human Rights Council also found that he had been severely beaten - an allegation made by his family too.

Mr Browder has alleged that Mr Magnitsky was subjected to torture and beatings in prison.

Did Russia investigate?

An official investigation by the Russian authorities was ordered in November 2009 by the then President Dmitry Medvedev, and several prison officials, including the deputy head of the Russian federal prison administration (FSIN), were fired over his death in December 2009. Initially, the officials said his death was caused by cramped conditions and failure to provide adequate healthcare.

In June 2010, the Russian Interior Ministry started an investigation into the improper imprisonment of Mr Magnitsky, but they did not name any suspects.

In 2011 one prison doctor was charged with involuntary manslaughter, but the charges were later dropped. Another doctor was charged with medical negligence, but later acquitted. No other suspects have been named.

In its July 2011 report, the Human Rights Council pointed to a conflict of interest in the case, as some of those investigating Mr Magnitsky were the very same people he had accused of massive corruption.

But on 19 March 2013 the Investigative Committee - Russia's version of the FBI in the US - dropped the investigation, saying Mr Magnitsky had been legally arrested and detained, and that he had not been tortured.

How did this start?

Bill Browder and his investment fund HCM was one of the largest private equity firms investing in Russia before the scandal broke.

In 2005, after he exposed the details of an enormous corruption scheme involving many high-ranking Russian officials, Mr Browder's visa to Russia was cancelled and he was deported from Russia, deemed to be a national threat. Despite his ban, he kept investigating corruption in Russia, working closely with Mr Magnitsky.

As part of his work for HCM, Mr Magnitsky discovered how some Russian companies were registered to new owners and, while money was changing hands, large rebates and VAT claims were allegedly laundered through Russian banks and appropriated by a group of tax and police officials.

His death prompted the compilation by human rights activists and HCM of the so-called Magnitsky list of some 60 officials - including some from the interior ministry, police, and tax authorities - who Magnitsky alleged were involved in the crime. The full list of names has never been released.

How does the US come into it?

Sergei Magnitsky's death had wide public resonance, not only in Russia, but also in the West. His case became a symbol of the fight against corruption in Russia.

In December 2012 the US Congress adopted the Magnitsky Act. It enables the US to withhold visas and freeze financial assets of Russian officials thought to have been involved with human rights violations.

The act replaced the outdated Jackson-Vanik amendment, introduced in 1974, which tied trade relations with the former Soviet Union to the emigration of Jews and other Soviet minorities, and which included a number of restrictions for Russian exporters.

How did Russia respond?

Just days after the US act was passed Russia retaliated by barring Americans from adopting Russian orphans.

The adoption ban was part of a tit-for-tat law which also blacklisted US citizens considered by Russia to have violated human rights.

Another clause suspended the activities of non-profit organisations that receive cash and other assets from the US and that engage in political activities in Russia. There are concerns that this will hit some human rights campaigners in Russia.