Bill Browder: from investor to enemy of Russian state

“Would you like a drink?”

It’s a fairly standard question when you meet someone, but when you’re about to sit down with a man who is on Vladimir Putin’s personal blacklist you think twice. Alexander Litvinenko believed he was just having a cup of tea.
“I don’t spend a lot of time agonising about what could happen,” shrugs Bill Browder with a grin. “But unfortunately, I am a personal enemy of Vladimir Putin’s, and he has the ability, and the will, to carry out assassinations so you never know. We’re all eventually going to die, so I’m not going to stop what I’m doing out of fear. And like I wrote in the book, if I’m killed, you’ll know who did it.”
Browder certainly doesn’t strike you as your average fugitive. Impeccably besuited and poised, the affable Chicago-born businessman is highly articulate and exudes confidence; a far cry from a few days earlier, when he was forced to flee through the snow-covered streets of New York City to escape a subpeona served on behalf of the Russian authorities.
Over coffee in the Radisson Hotel, on a whistle-stop visit to promote his book Red Notice, he takes Hot Press through how he went from being the largest foreign investor in Russia, as CEO of Hermitage Capital, to being targeted as an enemy of the state.
As manager of a hedge fund worth some $4.5bn, Browder was himself in the business of making money. But since the collapse of communism, the sprawling country’s immense wealth had been siphoned off by a group of 22 men – powerful oligarchs, who have ruthlessly exploited Russia’s huge natural resources to amass vast fortunes, while poverty remains rampant in what is a deeply dysfunctional society. Even with the guts of $5bn at his disposal, Browder felt marginalised and threatened. Against that backdrop, at first, the rise of Vladimir Putin seemed like a good thing.
“Putin said he would wrest the power from the oligarchs and take it back for the State,” he recalls. “I cheered – and everyone else did too. I thought Russia was going to become a normal country, where people could live with some dignity instead of the horrific situation where nurses had to become prostitutes and professors become taxi drivers, just to make ends meet. I never met him, but he was happy that I was taking on his enemies. We had an alignment of interests from 1999 to 2004.”
While many in the west questioned Putin’s motives, Browder applauded the arrest, in 2003, of Mikhail Kodorkovsky, an oil baron who was the wealthiest man in Russia, with a fortune estimated at $15bn.
“He arrested the richest oligarch,” Browder reflects, “and I thought ‘Good: one down, 21 to go.’ But while he arrests the biggest oligarch in Russia, he pays the next biggest $13bn for his company, and makes him governor of a region. Putin himself was now the biggest oligarch, and was developing a taste for kleptocracy. Russia went from being chaotic and scary to centralised and evil.”
At the time Browder travelled to London every week to see his son, who was living there. In 2005, returning to Moscow on a routine trip, he was detained at Sheremetyevo Airport. At first it seemed like a case of mistaken identity; the truth, as he tells it, was far more sinister.
“I was expelled from the country and declared a threat to national security,” he explains. “I was doing what I thought was a public service for Russia by publicly going after the bad guys. I’d been living there for 10 years, and had a fully established life. I had no idea that I was about to have that life turned upside down: it came as a complete surprise.”
It didn’t take long for Browder to realise that he was in deep shit. As quickly and quietly as he could, he moved to liquidate all of the fund’s assets, and evacuate his staff from Russia.
“I thought that would be the end of the story,” he recalls. “It turned out to be the start of the biggest nightmare you could imagine.”
What followed was the stuff of a Hollywood script.
“The police raided our offices, and seized all the documents of our investment holding companies,” Browder recounts. “Those documents were then used to fraudulently re-register our companies under the name of a man convicted of murder and let out of jail early. What the authorities then did – which is truly remarkable – is use these documents to create $1bn of fake contracts, to say that our company owed three empty shell companies.”
The man was Viktor Markelov, who was associated with what has been dubbed the Klyuev Organised Crime Group, aka The Russian Untouchables.
“Those companies then sued us – three lawyers that we hadn’t hired turned up to ‘defend us’ in those lawsuits, but all pleaded guilty to the liabilities. So they took those liabilities and said that the tax we paid the previous year was incorrect. The billion dollars of profits was actually zero. They got a $230m tax refund, just one day after applying. It’s the largest tax refund in the history of Russia.”
Apparently, it is a mechanism that has been used in other cases, using State money to enrich individuals.
“We’ve been able to prove that these exact same people, using the same scheme, stole a billion dollars,” Browder insists. “And that’s only what we’ve been able to prove.”
The investigative work was largely done by one man, Sergei Magnitsky. Described by Browder as an idealistic accountant and auditor who worked with a Moscow legal firm, he alone among Browder’s key professionals refused to flee Russia. His bravery was rewarded with death. He was arrested, held for almost a year without charge in Butyrka Prison, and died in custody.
“He’s a guy you’d want to have on your team,” Browder sighs. “He stayed, testified against those who did wrong, and was then arrested by those people. He was imprisoned, tortured and killed. At any time, he could have signed a confession saying that he stole the money at my instruction. But he wasn’t going to do it, even to save his own life.”
For his part, Browder has been waging an intensive campaign both to clear his name and to expose corruption in Russia, which he says goes right to the top. He lobbied for the introduction of the Magnitsky Act, which would deny visas to and freeze assets of those involved in Sergei’s murder. Russia responded in kind.
“First, they banned American adoption of Russian babies,” he says. “But to retaliate against Sergei’s name, and against my part in the law, the government put us both on trial, me in absentia, and Sergei posthumously. They had never, in their history, put a dead man on trial before. Even under Stalin, they never put a dead man on trial.”
Magnitsky was found guilty of tax evasion. Browder was also found guilty of tax fraud to the tune of $17 million and sentenced to nine years in prison. Meanwhile Victor Markelov remains free. It is an issue around which international tensions have been building, as Browder continues his campaign, supported by various human rights groups.
“Just two weeks ago, the Global Magnitsky Act was launched in the Senate and the House of Representatives,” Browder proudly reports, of a bill that would allow for sanctions against named individuals, accused of human rights violations worldwide, including a number of Russians. “I think it’s going to go through because who can really stand up and say we should allow torturers and murderers to come to America?”
However, Browder remains angry at the reluctance of the Obama administration to take what he considers the necessary action against Russia.
“I’m disgusted. Barack Obama has had a shameful response towards Russia. His ‘reset’ policy, supposed to reset relations, is really just appeasement towards Putin. When history writes about his relationship with Russia, it will be similar to Neville Chamberlain waving his sheet of paper signed by Hitler. He’s the most powerful man in the world; sometimes, you need to just lead, rather than follow focus groups.”
Browder insists that Obama and the United States aren’t the only ones guilty of sleeping on the job.
“Europe is no better,” he insists. “Look at France, who are trying to sell Russia warships. A lot of cynicism and greed is what leads us to this place where Putin is destroying the security of Europe. But eventually, because we’re in a democracy, people will be replaced by those who can handle the situation. It’ll happen more quickly than you think, too, because the situation will escalate. Russia may not have the power to go to war with everybody, but they certainly have the power to make military mischief all over, and ruin alliances like NATO and the European Union.”
Browder clearly believes the influence of Vladimir Putin is a poisonous one.
“Putin is a Mafia boss, while running a sovereign state with nuclear weapons,” he argues. “It’s not just a rogue state, it’s an evil, highly dangerous rogue state. He saw the President of Ukraine being overthrown, who had stolen about 2% of what Putin has. Putin thought, ‘If that can happen to him, then any day they could show up on Red Square with their pitchforks.’ By starting a war, anyone who is in opposition becomes a traitor.”
Browder is convinced that the invasion of Ukraine may ultimately backfire on Putin.
“As a result of the Ukrainian invasion,” he continues, “there’s huge sanctions. Combined with dropping oil prices, it’s made Russian people poor, and increased military spending will make them even poorer. And when people are poor, they get angry.”
Hoping for a regime change may involve wishful thinking. But if it happens, Browder will happily return to Moscow.
“I love Russia, and Russian people,” he says. “My beef is not with Russia, it’s with the criminals who have taken over. They need a leader that’s going to allow them to have normal lives, but they’ve never had that. Genghis Khan, Ivan the Terrible, the Tsars, Lenin, Stalin, Putin. They need a break.”