The Fund Manager At The Center Of Russia’s Tragic Hermitage Saga Talks Putin And Corruption

Business Insider

Bill Browder was one of the first Westerners to make a fortune in post-Communism Russia.

After arriving in the country in 1997, his fund Hermitage Capital Management started with $25 million and was at one point thought to have invested $4.5 billion, making it one of the largest foreign investors in the country.

However, in 2005 that all changed. While Browder had initially supported Vladimir Putin, he found himself barred from entry to the country.

When he began to investigate, tragedy struck. In 2008, Sergei Magnitsky, a young lawyer who was working for Hermitage Capital, was arrested after he reported allegations of a huge tax $230 million fraud to the authorities. He found himself accused of the very crimes he was reporting, and was thrown into prison.

Magnitsky died in prison in 2009. A Russian report later found he had been “tortured, beaten to death”. Despite his death, Magnitsky remains on trial, and no one has been charged with his death.

Browder and Hermitage are now based in London, where they still control $1 billion in assets.

However, Browder remains active in Russian life. Last year he released this video of their corruption allegations, and his pressure was able to get visa sanctions from the US and Canada on the officials involved in the death of Magnitsky.

Ahead of the weekend’s upcoming Presidential elections, we spoke to Browder about business and politics in Russia.

A: So I guess we should start with the news that came out today was in regards to Sergei Magnitsky, the report that his prosecution would go on. Were you surprised by that at all?

B: No, what Hermitage Capital has discovered is that the entire apparatus of the government and the law enforcement system in Russia is circling the wagons in order to protect a number of officials involved in Sergei Magnitsky’s false arrest, torture and death. The way in which they’re doing that is by exonerating the guilty officials and then attacking the Innocent victim, and in this case the victim is dead.

In the history of Russia, there has never been a prosecution against a dead man, but they’re doing it nonetheless, and no matter how bad it looks from the outside, in their own twisted logic, this seems to be the way in which they intend to justify their actions internally. Perhaps their motivation is also to make a point to other people not to fight for justice in situations like this.

A: From your experience in Russia, do you think this case — although it received a lot of international attention — is day-to-day business; is this a particularly severe example?

B: No, this case is the tip of a very large iceberg, and the only thing unusual about this case is the mountain of documentary evidence available. When Sergei was incarcerated, he wrote 450 complaints in 358 days of

detention, and as a result, we have a record of everything that happened to him. Whereas most other human rights abuse cases have no record at all.

The other aspect of the Magnitsky story is that he worked for a Western investment company. The moment we learned that he had been murdered, we shared all of the evidence of his torture and murder with the international media. However, this kind of corruption and murder goes on all the time in Russia, and if you ask anyone who has any experience in Russia, they’ll all tell you similar stories, maybe not quite as harrowing as what happened to Sergei, but certainly in terms of the corruption and the cover-up and the threats, all that is pretty much standard operating procedure in Russia.

A: The documents you’ve already released show massive corruption in the tax system, with the police, in the interior ministry… do you think this level of corruption is condoned or even actively encouraged by the executive level: the Kremlin and the Prime Minister’s Office?

B: This case clearly goes right to the very top. You can’t have a fraudulent $230 million tax refund being approved in one day without the signature of a cabinet minister. You also wouldn’t have the entire high level government apparatus involved in a murder cover-up if the President and Prime Minister weren’t giving the instructions.

What is even more remarkable about this cover-up is that it is taking place in the face of damning international sanctions. It is hard to imagine that the Russian government would allow the country to pay such a high price in terms of losing their international reputation, scaring foreign investors, and inflaming opposition activists just to protect 60 Russian officials unless there was a clear decision taken from the top.

A: Hermitage Capital began investing in Russia in 1996. How do you feel the climate has changed for both investors and businessmen, and the average person since then?

B: When I first arrived in Russia, the valuations were much lower, and there was a wild west feel to the whole thing. You had chaos and potential danger from disorganized crime, but it was sporadic and not pervasive. You could become the victim of fraud and a host of other problems, but it was disorganized, and the valuations were so low, that any slight improvement would allow you to make a lot of money there.

But now in a world where valuations are much higher, and we now have what I call highly organized and targeted crime. It is organized at a very senior level in the government, and it is focused on any business that makes any profit. Because of that, there’s no way to avoid it if you operate a successful business in Russia. If you go to Russia, it is a near certainty that you’re going to be shaken down, forced into very

compromising situations by the government officials, and either you can fight it, and then you can end up like Hermitage and Sergei Magnitsky, or you can go along with it and you become a criminal in the West where you’re breaking the law by bribing government officials.

By operating in Russia, you’re forced into a compromising position one way or another’ you either compromise yourself by becoming a victim of their lawlessness, or you become a part of their lawlessness, then you’re breaking the law in the West.

A: Do you think the shift from disorganized crime to organized crime coincided with the arrival of Putin to the Kremlin, to the presidency in 2000?

B: Putin is absolutely responsible for that. When Putin came to power, it was all chaos. In the 1990s, the chaos was driven by the oligarchs, the 22 oligarchs who stole 50 percent of the country from the state, and the rest of the 143 million Russians lived in destitute poverty.

When Putin came in, his promise to the people was that he was going to disenfranchise the oligarchs from the economy, and the state would then function in the national interest. Instead, of disenfranchising the oligarchs, he basically took out the biggest oligarch, Mikhail Khodorkovsky, the former head of Yukos, and then scared the other oligarchs into submission.

Putin then became the biggest oligarch himself along with some of his law enforcement colleagues. And they’ve now consolidated their position to such an extent that Putin is likely to be one of the richest men in the world. микрозаймы онлайн займы на карту без отказа zp-pdl.com https://zp-pdl.com/online-payday-loans-in-america.php hairy girls