Investor Bill Browder pulls back the curtain on Putin’s culture of corruption.
The jacket note for Bill Browder’s Red Notice calls it “a real-life thriller about an American-born financier in the Wild East of Russia, the murder of his principled young attorney, and his dangerous mission to expose the people responsible in the Kremlin.”
The description is accurate as far as it goes. Browder’s lawyer, Sergei Magnitsky, uncovered a $230 million fraud perpetrated by Russian government officials against one of Browder’s companies in 2008. He was jailed after disclosing the fraud and subsequently killed while in prison. Browder, who as founder and CEO of Hermitage Capital Management had made and lost billions of dollars in Russia, has devoted himself since Magnitsky’s death to exposing corruption and human rights abuses in Russia. For his efforts, Browder now finds himself subject to extradition to Russia, where the government has convicted him in absentia of tax evasion and sentenced him to nine years in prison.
But that’s only part of the story. The first half of Red Notice traces Browder’s improbable journey from prep-school washout through college, business school, and a series of consulting and Wall Street jobs before becoming Russia’s largest foreign investor.
The son of left-leaning academics and grandson of Earl Browder—the labor organizer and head of the American Communist Party—Bill Browder rebelled by becoming a capitalist. He recounts his early training through a series of pitch-perfect descriptions of J.P. Morgan recruiters, Boston Consulting Group managers, Salomon traders, and dealmakers such as Robert Maxwell, Ron Burkle, and Edmond Safra.
Whether consulting for a Polish bus company, advising a Murmansk fishing fleet, or finding undervalued, newly privatized companies in Russia, Browder encounters real-life opportunities and absurdities that read better than fiction.
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The riches of the former Soviet Union seemed an incredible opportunity for financiers such as Bill Browder, and so it proved when he moved to the ‘Wild East’ and found he needed bodyguards and armoured cars.
But it was when he crossed the henchmen of Russian president Vladimir Putin that the trouble really started, and Browder was thrown into a terrifying world of state-sanctioned criminality. He survived, but his loyal colleague, Sergei Magnitsky, was to suffer an horrific fate at the hands of the Kremlin’s goons, as Browder recalls in this gripping first extract of his extraordinary new book…
The terrifying message arrived on my voicemail shortly after midnight on November 14, 2009. It had been a trying day. My lawyer, Sergei Magnitsky, was being held in a hellish Russian prison on trumped-up tax-evasion charges, and he had endured another tortuous day in court.
Sergei was seriously ill with pancreatitis and gallstones, but the police were unsympathetic and had chained him to a radiator in a corridor at the court building. When he finally entered the courtroom itself, the judge treated him with equal contempt, dismissing every one of his complaints about the mistreatment he’d endured for months.
I was a world away in London, but I was desperately worried. Another Russian lawyer of mine, who was safe with me in the UK, had recently received a series of menacing texts. ‘What’s worse, prison or death?’ one said. Another was a quote from The Godfather: ‘History has taught us that you can kill anyone.’
I’d shared these with officers from Scotland Yard’s anti-terrorism unit, who traced the texts to an unregistered number in Russia. This was very disturbing. The only people with access to unregistered Russian numbers were the secret police, the FSB (Federal Security Service of the Russian Federation), who’d been after me for years. The FSB doesn’t just issue arrest warrants and extradition requests – it dispatches assassins.
But the message I received late that November night was worse than any that had come before. When I listened to that voicemail, I heard a man in the midst of a savage beating. He was screaming and pleading. The recording lasted two minutes and cut off mid-wail. I called everyone I knew. They were all OK. The only person I couldn’t call was Sergei…
Before all these problems in Russia, I was the founder and chief executive of Hermitage Capital Management, the largest investment advisory firm in the Russian stock market. I had left a safe job in the City of London and relocated to Moscow in 1996, when Russia was nicknamed the Wild East.
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I’m due to meet Bill Browder at Mari Vanna, a favourite hangout for rich Russians in Knightsbridge. But when we get there the restaurant, with its rustic dacha-style Russian decor, leaves us both feeling slightly spooked. So we wander across the road to an anonymous sushi bar. Browder’s reluctance to avoid bumping into anyone with Kremlin connections is understandable. As he explains, matter-of-factly: “They [the Kremlin] threatened to kill me. It’s pretty straightforward.”
American-born Browder is one of Vladimir Putin’s most prominent critics. For over a decade he lived in Moscow and ran the most successful investment fund in Russia. Initially, he was a fan of Putin’s. But in 2005 he was deported from the country. A corrupt group of officials expropriated his fund, Hermitage Capital, and used it to make a fraudulent tax claim. They stole $230m (£153m).
Stuck in London, Browder hired a team to fight his case. The same Russian officials arrested his lawyer, Sergei Magnitsky, after Magnitsky uncovered the money trail and made a complaint. They put Magnitsky in jail and refused him medical treatment. (Magnitsky suffered from pancreatitis and gall stones.) After he had spent almost a year behind bars, guards beat him to death. He was 37 and married with two small boys.
The incident had a transforming effect on Browder. “If Magnitsky had not been my lawyer he would still be alive,” he says. He describes Magnitsky’s death as “absolutely heartbreaking”. “If he hadn’t taken on my case he’d still be enjoying his life, being a father, looking after his wife. A young man whom I was responsible for died in the most horrific way because he worked for me.”
Browder’s memoir, published next week, recounts how Magnitsky’s death changed him from entrepreneur to global human rights crusader. Its title is Red Notice: How I Became Putin’s No.1 Enemy; and it reads like a non-fiction version of a Mario Puzo thriller. There’s a ruthless crime syndicate, a mafia boss – for Michael Corleone read Putin – and a growing tally of bodies.
Ever since Magnitsky’s murder in 2009 Browder has waged an extraordinary campaign to bring the officials to justice. Not in a court of law – there’s no prospect of a trial inside Russia – but in the wider court of international public opinion.
After footslogging round Washington, Browder succeeded in persuading US Congress to pass a groundbreaking Sergei Magnitsky law. The 2012 legislation imposed visa bans on the bureaucrats implicated in Magnistky’s murder. It denied them access to US banks. Putin was furious. In 2013 a Russian judge sentenced Browder in absentia to nine years in jail, and, bizarrely, “convicted” the already-dead Magnitsky. The Kremlin sent a Red Notice warrant to Interpol demanding Browder’s extradition. Interpol refused, but Moscow is currently putting together a third extradition bid.
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Russia’s Investigative Committee has refused to launch a probe into alleged mistreatment of Hermitage Capital auditor Sergei Magnitsky who died in 2009 in a Moscow pretrial center while awaiting trial on embezzlement charges, according to a statement released by Hermitage Capital on Friday.
Sergei Magnitsky’s mother claims that her son was handcuffed and beaten with rubber batons before he died. She insists that independent expert examinations confirmed that Magnitsky was tortured while in custody.
The fund’s statement says that the Investigative Committee nevertheless decided to refuse the probe again, based on “existing evidence” and decisions made by head investigator and prosecutor.
“The Investigative Committee’s resolution does not state the reasons why the individuals involved in using batons and handcuffs against Magnitsky before his death were not held liable”, the fund’s statement reads.
Magnitsky worked for Firestone Duncan and represented Hermitage Capital which was accused of tax evasion by Russian authorities. Magnitsky was arrested on fraud charges in November 2008 and found dead in a Moscow detention center in November 2009.
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Ed Miliband shared an intimate dinner with George Clooney and his wife Amal, a human rights lawyer, to discuss fresh sanctions on Vladimir Putin’s regime, The Telegraph can disclose.
Mr Miliband is now considering plans to block a ring of Russian judges and tax officials from entering Britain after discussing the proposals at a dinner with the Clooneys at the London mansion of a leading barrister.
The Labour leader was briefed on proposals to implement a “Magnitsky law” over a private meal with the Hollywood actor and his wife, Amal, the human rights lawyer.
Sergei Magnitsky was a Russian accountant who died after months of brutal beatings in prison after blowing the whistle on a vast fraud perpetrated by corrupt state officials against a Guernsey-based investment fund.
Under measures adopted by the United States, 34 police chiefs, judges and tax officials involved in Mr Magnitsky’s prosecution and death are banned from entering the country.
Campaigners now want to see similar measures imposed in Britain, which could be brought into law as an amendment to Theresa May’s Serious Crime Bill. The proposals are backed by a group of Labour and Tory backbench MPs.
Any amendment would have a far greater chance of success with the Labour leader’s support.
Mr Miliband was briefed on the campaign over dinner at the London home of Geoffrey Robertson QC, the human rights barrister who is campaigning for a Magnitsky Law in Britain.
Mrs Clooney is a barrister at Mr Robertson’s chambers, Doughty Street, and has represented clients at the International Criminal Court.
Bill Browder, whose firm Hermitage Capital Management was the victim of the £150 million fraud after being raided by Russian police, explained the details of the case to the Labour leader.
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On a balmy morning in August, Janna Bullock steered a light-blue convertible into the driveway of her oceanfront mansion in the swanky hamlet of Southampton on New York’s Atlantic Coast. Waiting for her was a man bearing a stack of documents.
Bullock, a prominent Manhattan-based real estate tycoon and socialite, accelerated toward the house, hopped out of the car and hustled for the door. The man gave chase and touched her with the documents, saying she’d been served with legal papers, according to a U.S. federal court affidavit.
The documents, part of a civil action lodged against Bullock by state-owned Russian banking giant Gazprombank, fell to the steps in front of the sprawling home and remained there as Bullock sequestered herself inside.
From the gilded shores of the Hamptons and the French Riviera to the London stomping grounds of the super-rich, Russia is pursuing ex-officials and entrepreneurs like Bullock who amassed wealth in Russia and then fled the country after falling afoul of powerful officials.
And despite Moscow’s chilled relations with the West over the Ukraine crisis, these efforts in recent months have yielded several favorable rulings for Russia in U.S. and European courts.
The targets of these legal campaigns claim they are victims of a corrupt Russian state, though some critics say they are merely assuming the mantle of political refugees to protect illicit gains purloined in murky business dealings.
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In a show of strength and leadership British Ministers have taken tough action against someone who is clearly a major threat to British national interests. The government has imposed a ban on entering into Britain of an American called Julien Blanc. But as he gets tough with a fellow citizen of President Obama, David Cameron remains resolutely aligned with President Putin’s view that his fellow citizens should not face similar sanctions to that imposed on Julien Blanc.
Blanc is an absurd sexist self-publicist who describes himself as a ‘pick-up artist.’ Britain is probably better off without his presence but in the same week, MPs of all parties gathered to commemorate the fifth anniversary of the killing of a British employed tax lawyer, Sergei Magnitsky. He died in agony on a Moscow prison floor five years after 12 months of being brutally treated by state officials working for President Putin.
The MPs are still waiting for David Cameron to take any action against those named as linked to his death.
Magnitsky was employed by a British firm, Hermitage Capital, to investigate the disappearance of $230 million which Hermitage paid in tax to the Russian equivalent of HMRC. He found the money had been diverted into the accounts of Putin’s tax police who are at the heart of corrupt business-political nexus that enriches politicians and favoured state functionaries.
The young father of two persisted in his demands that the money be accounted for. He was arrested, thrown into prison, and tortured to try and persuade him to drop the case. He refused and was then he was so badly treated he died.
Magnitsky’s employer, Bill Browder, an American born British citizen was so outraged he used his firm’s considerable resources to track down those responsible for his employee’s death and find out where they had bank accounts or assets overseas.
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This week marks the fifth anniversary of Sergei Magnitsky’s death in a Russian prison. He was 37 years old, a member of the emerging middle class who worked as a lawyer for a man named Bill Browder, the leader of the largest Russia-only investment firm in the world. Browder’s company, Hermitage Capital Management, started with $25 million during the Wild West-era of early Russian capitalism and had $4.5 billion in assets by the early 2000s.
Over time, Browder became an activist investor of sorts, exposing corruption in Russian companies and trying to make Russian capitalism more transparent. In doing so, he thought, he could both steer Russian companies a little closer to the Western model while also making money for his firm.
But, when Vladimir Putin became the president of Russia in 2000, he and his cronies were not interested in corporate transparency. How could they line their pockets if everything was transacted out in the open? So Browder became persona non grata. After a trip to Britain in 2005, he was refused re-entry. A few fictitious documents later, and Hermitage had $1 billion in “liabilities.” Then, a handful of officials involved in a takeover of Hermitage requested — and received within 24 hours! — a $230 million tax refund. It was a textbook example of the kind of corporate pillaging for which the Putin kleptocracy became infamous.
Browder pleaded with Magnitsky to flee the country, as his other lawyers had done. But Magnitsky insisted on investigating — and speaking out about — the fraud that had taken place. For his troubles, he was imprisoned in 2008. By summer of 2009, he had developed pancreatitis, which went untreated despite his pleas. He died that November. Browder says that when he learned of Magnitsky’s death, it was “the worst news I had ever received in my life.”
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A cross-party group of MEPs has urged the EU foreign service to stop ignoring the European Parliament on Magnitsky sanctions.
Sergei Magnitsky, a Russian anti-corruption activist, died in jail in 2009 in what EU Council chief Herman Van Rompuy once called an “emblematic case” for lack of law and order in Russia.
The EU parliament has urged EU diplomats in four resolutions over the past four years to follow the US in blacklisting the Russian officials implicated in the killing.
This week, 23 MEPs from centre-right and liberal groups in the EU assembly urged foreign relations chief Federica Mogherini to “present a proposal to the Council of Ministers to sanction these 32 individuals”.
They said in a letter, seen by EUobserver: “As the new head of the European External Action Service, what nearest actions do you plan to undertake … to make sure there is no further impunity in the Magnitsky case?”.
MEPs have no formal powers on foreign affairs.
But Mogherini’s spokeswoman, Maja Kocijancic, told EUobserver the letter is “a new opportunity to consider the case”.
She noted that top EU officials, such as Van Rompuy and Mogherini’s predecessor, Catherine Ashton, on several occasions urged Russia to take action on the issue.
“So far we have not seen a satisfactory response”.
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