A Moscow court has exonerated the only person to be put on trial for the death of the Russian whistleblower Sergei Magnitsky, days after President Vladimir Putin publicly stated that the lawyer was not tortured in prison and in fact died of natural causes.

Mr Magnitsky died in Moscow's Butyrka prison in 2009, after being refused treatment for a pancreatic illness. The court found that Dmitry Kratov, a doctor at Butyrka who allegedly signed medical records detailing Mr Magnitsky's complaints but then refused treatment, had no case to answer.

Nobody has been charged for the fraud that Mr Magnitsky uncovered, despite evidence that a group of Russian officials conspired to defraud the state of around 5.4 billion roubles (£140m). Instead, he was locked up by the officials he was investigating.

The only case to have been opened with regard to the crimes Mr Magnitsky was investigating or to his death, aside from a posthumous inquiry into the lawyer himself, was the negligence case against Mr Kratov. In a highly unusual move, the prosecutors said they did not feel there was a case to answer and asked the judge to announce an innocent verdict.

At a press conference last week Mr Putin said Mr Magnitsky died of natural causes, a statement that could have been interpreted as a signal to halt investigations into his death. "There is no doubt that people responsible for Magnitsky's death are being protected by the President of Russia," said a representative of Hermitage Capital, the London-based investment fund for which Mr Magnitsky worked. "Russia normally has a 99 per cent conviction rate. In this case, there was overwhelming evidence of Kratov's involvement and his acquittal goes against any logic or concept of justice."

"I am sincerely sorry that Sergei Magnitsky died," Mr Kratov told the court yesterday. "But I had no possibility to affect his fate." The court said Mr Kratov could file for compensation for the unfair accusations.

Mr Magnitsky's mother, Natalia Magnitskaya, boycotted the court yesterday. "Participation in this court hearing would have been humiliating for me," she said. "I understand that everything has been decided in advance and everything has been pre-determined."

Arguments over the Magnitsky case have soured relations between Russia and the US. This month Washington passed the Magnitsky Act, banning Russian officials thought to be implicated in the lawyer's death from entering the US or holding American bank accounts. Yesterday, Mr Putin retaliated by signing a law barring a number of US officials from Russia and halting adoptions of Russian children by American families.

A recent poll found that more than half of Russians are in favour of the law, possibly because Russian state-controlled television has reported cases in which adopted children have been abused by their US families. However, the bill has been opposed by the urban intellectual class and criticised by senior government officials, including the Foreign Minister, Sergei Lavrov.

Mikhail Prokhorov, a billionaire politician, said that the 400 MPs who voted for the bill have "destroyed their reputations". He added: "The conflict between two different Russias, which has been developing gradually at a lower level has reached the elite. The diagnosis is clear: acute schizophrenia."

The Magnitsky case: what comes next?

Vladimir Putin became visibly angry when he was asked about Sergei Magnitsky's death during his annual marathon press conference last week. The Magnitsky case has now become a matter of national pride, and to back down now would be an unacceptably weak move in Mr Putin's eyes. So, the stakes are continually raised.

Instead of prosecutions of the officials involved in the fraud, there is a prosecution of the dead lawyer himself; and with his angry words about Mr Magnitsky's death last week, the Russian President in effect ended the only small piece of progress that Mr Magnitsky's supporters had made, in bringing the case against Mr Kratov.

Mr Putin hates being lectured by the West. The response to the Magnitsky Act shows that he will answer in kind, even if it is Russian orphans rather than American officials who will ultimately suffer. Shaun Walker

Russia's new law denies Preston a mum

Kim and Robert Summers had been just weeks away from bringing their newly adopted son to the United States when Russian President Vladimir Putin yesterday signed off on a bill in reponse to America's Magnitsky Act, which has stopped the process in its tracks.

Earlier this month, the couple from Freehold in New Jersey had been granted permanent guardianship of the boy they planned to name Preston, and were completing a mandatory 30-day waiting period in the US.

"As far as we knew… he was coming home with us," Ms Summers told the New York Times. The couple had spent almost three years and $50,000 on their dream of adopting a Russian child. They submitted to background checks, took parenting classes and visited the boy at the orphanage in Kaluga, according to the New York Post. They received permission to adopt in July.

"Our whole world changed – magnificently," Ms Summers said. "We couldn't believe we were getting this beautiful little boy…"

"Preston" is one of 46 children whose adoptions have been interrupted by the law, which has been criticised by senior members of the Russian cabinet who argue that it punishes orphans more than it does American politicians. Critics argue that the law has been passed in retaliation for America's Magnitsky Act, but supporters of the law say it will protect Russian children from abuse in US households.