Posts Tagged ‘putin’
Russian undressing
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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Putin’s torturers: Blowing the whistle on government cronies who stole Russia’s riches
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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Bill Browder: the Kremlin threatened to kill me
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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Cameron Gets Tough With a Pick-Up Artist, But Not Putin’s Put-to-Death Artists
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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Putin Plays Hardball
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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Russian oligarch’s arrest a warning from Putin, says hedge fund boss
The arrest of one of Russia’s richest men last week was an attempt by President Vladimir Putin to protect himself from a palace coup, according to one of his most vocal critics.
Bill Browder, the hedge fund manager who has become a crusader against Russian corruption, said the arrest of Vladimir Yevtushenkov was intended to send a message to any oligarch plotting moves against Putin, as the value of their assets drops in the wake of western sanctions.
Yevtushenkov was released on Friday, after being put under house arrest for three days on charges of money laundering.
As the richest man to fall into the hands of the Russian justice system since Mikhail Khodorkovsky was arrested in 2003, Yevtushenkov’s detention heightened speculation that the Kremlin wanted to take control of his oil company, Bashneft – one of the few Russian energy companies still in private ownership.
Speaking before Yevtushenkov’s release, Browder said the arrest was “more motivated by paranoia than any demand for a particular asset”, because “Putin and his underlings can always steal these assets in any number of ways”.
“I don’t know if Yevtushenkov did anything more or less irritating to Putin than the other oligarchs. I just think [Putin] randomly picked one out to make sure none of the other oligarchs are going to start challenging him or start planning any palace coups.
“Now that their wealth has been diminished by Putin’s actions, they have a big incentive to act against Putin and he knows that.”
Russia’s main stock market, Micex, has lost 6% of its value since the west tightened economic sanctions against Russia in July over its threat to the sovereignty of Ukraine, and the value of the rouble has fallen to all-time lows against the dollar.
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Why Russia No Longer Fears the West
The West is blinking in disbelief – Vladimir Putin just invaded Ukraine. German diplomats, French Eurocrats and American pundits are all stunned. Why has Russia chosen to gamble its trillion-dollar ties with the West?
Western leaders are stunned because they haven’t realized Russia’s owners no longer respect Europeans the way they once did after the Cold War. Russia thinks the West is no longer a crusading alliance. Russia thinks the West is now all about the money.
Putin’s henchmen know this personally. Russia’s rulers have been buying up Europe for years. They have mansions and luxury flats from London’s West End to France’s Cote d’Azure. Their children are safe at British boarding and Swiss finishing schools. And their money is squirrelled away in Austrian banks and British tax havens.
Putin’s inner circle no longer fear the European establishment. They once imagined them all in MI6. Now they know better. They have seen firsthand how obsequious Western aristocrats and corporate tycoons suddenly turn when their billions come into play. They now view them as hypocrites—the same European elites who help them hide their fortunes.
Once Russia’s powerful listened when European embassies issued statements denouncing the baroque corruption of Russian state companies. But no more. Because they know full well it is European bankers, businessmen and lawyers who do the dirty work for them placing the proceeds of corruption in hideouts from the Dutch Antilles to the British Virgin Islands.
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Ukraine crisis: Russia is in no position to fight a new cold war
Putin and his allies have talked tough while enjoying the comforts of globalisation.
When the Soviet Union invaded Czechoslovakia in 1968, the Moscow stock market did not crash. That is because there was no Moscow stock market. By contrast, the news that Russian troops have taken effective control of Crimea was greeted, on Monday, by a 10 per cent collapse in shares on the Russian market.
This contrast between 1968 and now underlines why talk of a new cold war is misleading. The economic and political context of Crimea in 2014 is entirely different from Czechoslovakia in 1968. Russia no longer has an empire extending all the way to Berlin. The pain of that territorial loss is part of the reason why President Vladimir Putin is fighting so hard to keep Ukraine in Moscow’s much-diminished sphere of influence.
Just as important, the world is no longer divided into two mutually exclusive, and hostile, political and economic systems – a capitalist west and a communist east. After the collapse of the Soviet system, Russia joined the global, capitalist order. The financial, business and social systems of Russia and the west are now deeply intertwined. A new east-west struggle is certainly under way today but it is being fought on entirely different terrain from the cold war – and under different rules.
The Kremlin may assume that the west’s business dealings with Russia work in its favour. President Putin, the former KGB agent, probably still believes the old Soviet maxim that western foreign policy is dictated by capitalists – who will not allow their financial interests in Russia to be endangered. The west’s supine reaction to the Russian military intervention in Georgia in 2008 may have strengthened this impression. Ben Judah, author of a recent book on Russia, argues that the eagerness of western business people and former politicians to do business with Russia has made Mr Putin “very confident that European elites are more concerned about making money than standing up to him”.
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A Good Week for Some Political Prisoners in Russia… a Bad One for Russian Democracy
Last week was a good week for some political prisoners in Russia: Mikhail Kodhorkovsky and Pussy Rioters Nadezhda Tolokonnikova and Maria Alyokhina are free. It was a terrible week for Russian democracy, a proof that prison terms are handed out and cancelled not as a result of fair and open trials, as a result of the ruling by independent courts, but as a decision by its president, who rules as he feels fit. The timing of the amnesty smacks of old school: a major international event coming up [the Sochi Olympics], open the jails, suggest that there is humanism, disarm critics. Just like during Soviet times, before major talks. But have no doubt, Putin’s message is that its all happening because “I took the decision”, because ” I want it to happen”, and I could decide otherwise as I please.
Putin seemingly feels invulnerable. He did pull off some big stunts this year : Snowden (not his natural ally), Syria (by default). He is for sure proud of how he used the liberal New York Times to chastise the West. He looks down on Western leaders as weaklings. Mr.Putin mistakenly thinks that a temporary lack of strong leadership in the West is a sign of decline. He has no idea about the resilience of our societies, that our weak moment will pass, like the flu. He sells anti-western sentiments in Russia and the world, not admitting to himself that this rhetoric is way past its “sell by date”, and like relabeled, but bad perishable food perhaps quells hunger, but soon causes severe stomach ache. He surely knows, (it used to be his job to figure it out) that the west is no military threat to Russia. Of course he also knows, that the real threat to his everlasting position as president are the decaying economy, the spread of values of democracy and freedom, transparency and the rule of law, the apparent suffocating of creativity, freedom of speech and organization.
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