Bill Browder: the man making Moscow squirm over the death of Sergei Magnitsky

Daily Telegraph

Bill Browder is a man on a mission. “I want to change Russia and change human rights advocacy in Russia in a profound way,” the hedge fund millionaire says with almost messianic zeal, in his sparsely furnished offices in London’s Golden Square.

It is, safe to say, an unusual ambition for a successful financier with $1bn of assets under management. But Browder has had an unusual time of late.

Two years ago, the founder of Hermitage Capital Management discovered a new calling. The catalyst was the tragic death of a colleague, Sergei Magnitsky, a 37-year-old tax lawyer and married father of two, at the hands of the Russian state. Until then, Browder’s activism had been limited to boardroom battles against corruption in Russia, where he had been the largest foreign portfolio investor with a track record for boosting shareholder returns by cleaning up companies.

Magnitsky’s death in prison, where he was detained on trumped-up charges for a year and beaten to death after developing a life-threatening illness – according to an official Russian report, changed everything. Browder’s powerlessness in the face of the state, his “inability to protect Sergei”, was a “curse that rattled around my brain”. He resolved that “the only way to deal with it was to get justice for him so his death wasn’t meaningless”.

Browder, a British citizen but American by birth and the grandson of the former leader of the American Communist party, has since reinvented himself as perhaps the wealthiest human rights activist in the world – his personal wealth has been estimated at up to £100m. And he has had the kind of success that would make Amnesty International weep with envy.

Last month, he scored his most remarkable victory yet. Hillary Clinton, the US Secretary of State, sanctioned a visa ban for 60 senior Russian officials whom Browder has linked to Magnitsky’s death – including the deputy general, the deputy interior minister, and the head of the economic espionage unit at the Federal Security Service (the successor to the KGB).

To put that in context, it would be like Edward Garnier MP, the UK’s Solicitor General, being barred entry to the world’s largest economy while still in post and enjoying the full confidence of the British Government.

Unsurprisingly, the visa ban unleashed a diplomatic hurricane. Moscow observed menacingly that the ban would “become a strong irritant in Russian-US relations” and, in a memo to US senators, Clinton warned that it “could have foreign policy implications that could hurt our international sanctions efforts on countries like Iran, North Korea and Libya, and jeopardize other areas of cooperation including transit to Afghanistan”.

The Kremlin responded with a tit-for-tat visa ban for US officials involved in the prosecutions of an alleged Russian gun-runner and an alleged drug trafficker. Last week, though, it retreated on its threat to withdraw support in the Middle East. Sergei Ryabkov, the Deputy Foreign Minister, said military cooperation with the US on Iran and Afghanistan was “not a favour or a concession”.

The US may be the scene of Browder’s most significant triumph, but his campaign has also found purchase in Europe. In December, the European Parliament voted overwhelmingly in favour of a resolution that freed European Union (EU) member states to introduce a visa ban and freeze the bank accounts of the same 60 officials. Moscow was so unnerved by the development that it sent a delegation to Strasbourg to lobby against the resolution.

It got little traction. Last month, the Dutch parliament defied a robust plea by the foreign minister and voted unanimously, 150-0, in favour of adopting the resolution. The scale of support has piled pressure on the Netherlands to introduce the bill. Should it do so, most of Europe would be closed to the 60 Russian officials due to the EU’s Schengen border control agreement, which decrees that if one Schengen country implements a ban it should apply across all Schengen nations.

Perhaps most remarkably, Browder has also convinced the Swiss authorities to freeze the bank accounts of some of the officials suspected of involvement in Magnitsky’s death, even though no case has been brought against them in Russia.

Browder is now turning his sights on the UK, which he laments has been slow off the mark. “I am a British citizen and Sergei was a lawyer working for a British company,” he says pointedly.

David Cameron is scheduled to visit Russia next month, and the media-savvy Browder is unlikely to miss his cue. He already has a number of back-bench MPs militating for action, including Tories Malcolm Rifkind and Julian Lewis, and Labour MPs Chris Bryant and Denis MacShane. Lord Lamont, the former Chancellor, may also play a role. He is on the board of Hermitage.

In the space of two years, Browder has become a one-man diplomatic timebomb for Russia. Moscow has barred him from entering the country, launched criminal charges of tax evasion against him, and sought his extradition. But nothing has worked. His voice has only grown louder, drowning out Russia’s attempts to rehabilitate itself on the international stage.

President Dmitry Medvedev has made great play of his crackdown on corruption in an effort to convince multinationals to come to Russia. At Davos this year, he shamelessly promoted Russia’s low tax, low regulation regime as he sought to portray Moscow as a future financial services super-city. He is also building Russia’s own silicon valley near the capital.

But Browder’s allegations of state-led corruption echo loud. Private US diplomatic cables released by Wikileaks last December described the country as a “virtual mafia state” in which “one can not differentiate between the activities of the government and organised crime groups”. The Kremlin, the cables claimed, lay at the summit of the system of kickbacks, bribes and protection money.

In that murky world, Magnitsky’s death in November 2009 lit the touchpaper of public resentment. “There had been a social contract in Russia, which was if you don’t get involved in Chechnya, human rights, or politics, you could enjoy the fruits of the authoritarian regime,” Browder explains. “Sergei was not a human rights activist, or political. He was just a simple tax lawyer, who saw a terrible crime had been committed against his country.

“For that, he was taken out of his upper middle class life and put into the worst prison in Russia. He never spoke to his children again and was slowly tortured to death. And that wasn’t acceptable.”
Browder may be overstating the social contract but there is no doubt that Magnitsky’s death struck a chord. In the week that followed, Russian newspaper editorials and radio talk shows fumed with the injustice of his demise. A play was performed in Moscow recounting Magnitsky’s struggle and a documentary, Justice for Sergei, made by Dutch film-makers. Neither was instigated by Browder. As he says: “The most powerful part of this campaign is how moving his story is.”

Magnitsky’s involvement began after Browder asked him to look into Hermitage’s affairs following a raid on his Moscow offices in June 2007 by police on claims of tax evasion. Magnitsky quickly established that the company’s affairs were in order and that the $230m of tax paid by Hermitage was, in fact, one of the largest by any corporate in 2006.

His investigations, though, soon took a more sinister twist. He discovered that two of Hermitage’s subsidiary companies had been “stolen” and, much to Hermitage’s surprise, were under new ownership. It was a transfer than could only have taken place using the seals and documents confiscated in the police raid.

Further digging revealed that the companies’ new owners had been rebated the entire $230m of tax Hermitage had paid. Magnitsky delved further, uncovering fake court claims, tracing the money, following the cover-up to the British Virgin Isles, and identifying the tax officials, police officers and lawyers whom he claimed must have been complicit in such a huge fraud.

But the tipping point did not come until his investigations revealed evidence that it had happened before on a number of occasions. Magnitsky had stumbled across a systematic and vast theft that appeared to be undetectable because the victim was not one individual but the Russian people as a whole, and the potential whistleblowers were the very criminals orchestrating the alleged fraud.

The same police Magnitsky had testified against then arrested him in November 2008 on charges of tax evasion and he was later incarcerated awaiting trial for 11 months before dying of complications relating to pancreatitis acquired in jail.

Browder had tried to secure his release by drumming up support overseas but, as he says, “nobody really cared about a bunch of crooks stealing from their own country”. Foreign ministers, including David Miliband, did raise the issue with their Russian counterparts, but nothing happened.

Browder’s first act after Magnitsky’s death was to prove pivotal. He released a 40-page letter written by Magnitsky to Russia’s general prosecutor, detailing in stoical, legal tones the squalid conditions he was forced to live in and his futile attempts to secure medical help as well as bail.

The “prison diaries” were printed in full in Russia’s Novaya Gazeta, the newspaper for which the murdered campaigning journalist Ana Politkovskaya wrote and owned by Evening Standard proprietor Alexander Lebedev. They proved so powerful that President Medvedev called for an investigation. Magnitsky’s allegations of fraud, though, are still not being properly pursued.

Seeking justice in Russia, though, Browder soon realised would not be fruitful. Since Magnitsky was jailed, and as a campaign ingenue (“I am a hedge fund manager not a human rights activist,” Browder says), he had been in regular contact with Human Rights Watch and Amnesty International. They had suggested lobbying government and provided some vital introductions.

So he turned to his homeland, the US. Five months after Magnitsky’s death, in April 2010, he flew to Washington. “The first meeting I had was with an old friend, a former state department official called Jonathan Winer. He told me there was an executive order, 7750, signed by George W Bush to deny entry to corrupt foreign officials.

“It just so happens, my next meeting was with the state department, the head of the Russia desk. I said we have a list of 60 officials linked to Magnitsky’s death or the fraud he uncovered, and I asked him to invoke executive order 7750.”

Needless to say, Browder was turfed out unceremoniously. His third meeting, though, was with Senator Ben Cardin, a Democrat to whom Browder had presented Magnitsky’s case the previous year in his efforts to have him released from prison. “I was visibly upset,” Browder says. “I was not able to keep my composure with Cardin. He said, ‘let’s see if the state department treats me that way’.”

Cardin proposed invoking the order and published the 60 names, which have since become know as the “Cardin list”. With the publicity that afforded, Browder was invited to testify before the House of Representatives human rights committee in July that year. His was one of several presentations that day, but the only one with a strong tale of personal injustice.

“At the end of the testimony, I asked Congressman Jim McGovern to support Senator Cardin. He said he would go one better. He would sponsor a piece of legislation to ban them entry into the US and freeze their assets.” Cardin then sponsored the same piece of legislation in the Senate, which then secured the backing of luminaries such as former presidential candidate John McCain.

The Justice for Sergei Magnitsky Act was submitted in October last year. “This lit up Moscow,” Browder says. “Dozens of other victims of human rights abuses then contacted the senators, wanting to get their persecutors added to the list.” As a result, in January, the legislation was broadened out.

It was the threat of such a broad and “ambiguous” human rights law that persuaded Clinton to act. She imposed the visa bans on the understanding that the act would be dropped. “Secretary Clinton has taken steps to ban individuals associated with the wrongful death of Sergei Magnitsky from travelling to the United States. The Administration, therefore, does not see the need for this additional legislation,” the state department memo says.

Browder’s persistence had paid off. But he wasn’t finished there. He has a team of nine building on Magnitsky’s original investigation – six Russian lawyers who have fled to the UK and three Hermitage staff who, he knowingly remarks, are “paid hedge fund salaries to do human rights campaigning”.

One particularly fruitful avenue has been new media. In an effort to publicise every fresh detail, Hermitage has sponsored a website called russian-untouchables.com, where it has posted youtube documentaries on the vast property riches apparently amassed by some relatively middle-ranking officials. The upshot has been “we get one or two whistleblowers a week”.

Some are misleading, but one whistleblower came up with campaign gold. They handed over to Hermitage the confidential Swiss bank account details of a number of those on the “Cardin list”. The accounts concealed millions of dollars and, so compelling was the evidence that the funds were acquired illegally, the Swiss attorney general ordered the assets to be frozen.

Browder promises more devastating revelations about the scale of corruption in the months ahead, revelations that will undoubtedly make Moscow squirm.

Browder is still in charge of Hermitage. The fund, once exclusively invested in Russia, is smaller than its peak of $4bn assets under management and has reinvented itself as an emerging markets specialist. Investors seem unperturbed by Browder’s obsession so long as Hermitage delivers and, so far this year, he is up respectable 5pc growth in the face of falling stock markets.

He doesn’t say it, but it’s clear his investors play second fiddle to his obsession for justice. One thing is for certain, though. Returns on his human rights campaigns are, in the hedge fund parlance, “alpha”. займы на карту срочно payday loan https://zp-pdl.com/emergency-payday-loans.php https://zp-pdl.com/online-payday-loans-cash-advances.php buy over the counter medicines