| Bill Browder (photo credit: Peter Lindbergh) |
Bill Browder’s life sounds like something out of a Hollywood movie — and the erstwhile hedge fund manager is indeed hoping that his story will hit the big screen soon. In his new book, Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice, Browder chronicles his unusual journey from slacker grandson of the American Communist Party founder, Earl Browder, to wildly successful private investor in Russia to noted human rights activist. The last transformation took place after Browder’s lawyer, Sergei Magnitsky, died amid appalling conditions in a Russian prison, prompting Browder to put money management on the back burner in favor of seeking justice for Magnitsky. Browder, the founder of the long-running hedge fund firm Hermitage Capital Management, set up shop in Moscow nearly 20 years ago, where he became one of the earliest investors in Russia’s then-fledgling capital markets. Browder’s bold bets made him fabulously wealthy, enabling him to build Hermitage up to a peak of $4.5 billion in assets. But Browder eventually made some powerful enemies when he began to expose corruption and rampant asset stealing at some of Russia’s largest companies. In 2005, Browder was tossed out of the country after being detained in Moscow on a return trip from London.
Then things took a turn for the truly sinister. Hermitage’s Russian offices were raided, and several of its holding companies were stolen in a convoluted plot to steal taxes Hermitage paid to the government. Russian authorities eventually charged Hermitage itself with the theft, and Magnitsky, who uncovered the scandal, was thrown in jail on trumped-up charges. While in jail, he developed pancreatitis and was denied medical treatment. On November 16, 2009, after being beaten by guards, Magnitsky died at the age of 37.
Since then, Browder has fought to achieve justice for Magnitsky, though it has been impossible to obtain within Russia. In 2013, Browder was tried in absentia for tax evasion and found guilty by a Russian court; Magnitsky was tried posthumously and also found guilty. So Browder instead turned to the U.S. and Europe in an attempt to hit the people behind Magnitsky’s death where it would hurt the most: in their pocketbooks. After years of struggle, he and other activists were finally able to persuade Congress to pass the Sergei Magnitsky Rule of Law Accountability Act, which imposed stiff U.S. travel and economic sanctions on nearly three dozen people involved in Magnitsky’s death.
“If you’re a Russian bad guy and you’ve been enjoying the fruits of your crime by traveling to the West, vacationing in the West and so on, and all of a sudden you’re on a U.S. sanctions list, you are basically considered a financial pariah everywhere in the world,” says Browder. “No bank will open an account for you, and no international company will want to trade with you. It’s not the equivalent of being sentenced to 20 years for murder, but it’s better than absolute impunity.”
Browder’s other goal has been to tell Magnitsky’s story to as wide an audience as possible — and to spread his conviction that Russian president Vladimir Putin is the person ultimately responsible for the lawyer’s death. Having relocated Hermitage’s offices to London after being exiled from Russia, Browder managed money for several more years but eventually returned capital to outside investors to focus full-time on his campaign, which included writing Red Notice. Browder says that writing the book was “probably the hardest thing I’ve ever done in my life,” but that he is thrilled with the reception it’s gotten.
“This book has been read by an audience much wider than just the Russia crowd or the hedge fund crowd or the Washington crowd,” he says. “Since my objective is to share this story with as wide as possible an audience, I’m very gratified that it is succeeding in doing that.”
Next, Browder is working on getting a version of the Magnitsky Act implemented in Europe, and he plans to work on adapting Red Notice into a feature film. He hopes this will introduce even more people to the life and legacy of Sergei Magnitsky — and warn of the dangers the world faces while Putin is still in power. Browder recently spoke with Alpha Managing Editor Amanda Cantrell about Magnitsky, Putin and the latest high-profile assassination of a Putin opponent.
Alpha : Years ago you had a different assessment of Putin than you do now. When did you realize he was not the person you thought he was?
Bill Browder: My first impressions of Putin were positive when he originally came to power. It was right at the end of the Boris Yeltsin regime, which was when economic chaos reigned — the average Russian was highly impoverished. Twenty-two oligarchs had stolen everything. Putin showed up and said he was going to try to correct this imbalance, so I cheered him on, hoping that somehow this oligarch capitalism would come to an end.
For a few years he was more or less acting in what I would have considered to be some version of the national interest. But then he arrested the richest oligarch in Russia, Mikhail Khodorkovsky, and this set off a chain reaction of fear among the rest of the oligarchs. They all went to him and asked him what they should do to avoid being arrested, and his answer was, 50 percent [of the oligarchs’ assets], or something along those lines.
At that point, instead of getting rid of the oligarchs, he became the biggest oligarch, and then his behavior changed. And his behavior changed toward me. I was expelled from the country and declared a threat to national security. And then the real trouble began with the raids on my offices, the theft of my investment companies, the theft of taxes, the arrest of my lawyer, and then his torture and murder.
Since your book came out in February, the Russian opposition leader Boris Nemtsov was murdered, and it was announced recently that two men were charged. Do you think Putin is behind the murder?
Putin is the person at the top of my list of suspects, because of all the people in Russia, he had the greatest to gain from Boris Nemtsov not being around. Nemtsov was calling for people to come out in the streets to demand Putin’s resignation at a time when an economic crisis is setting in, and Putin is terrified of what might happen in a situation like that.
Nemtsov has been consistently exposing the massive stealing that Putin has been engaging in as he abuses his position of presidency. And Nemtsov was about to publish a report that would have exposed the lies that Putin has publicly made about the lack of Russian soldiers in Ukraine.
So there was a very strong incentive for Putin to not only get rid of this very inconvenient opposition politician, but also to send a message to all the other ones that the gloves are off now — that they’re going to go after everybody, and nothing is sacred. Anyone can be killed, and they can be killed not just in a dark hallway, but on the bridge leading right up to the Kremlin, which is probably the most secure place on the planet.
What do you make of some of the reasons that have been tossed out as possible motivation for the assassination?
The Kremlin is throwing out all sorts of crazy theories that the CIA was involved and the opposition did it. They even threw out this whole Muslim extremist theory. None of that holds any water with me. What I find so cynical is, every time there is any type of major, high-profile crime in Russia over the last 15 years, they go round up a few Chechens and blame it on them.
What makes it even more absurd is that this was a highly professional hit, done right in front of Red Square, in a place where there were multiple security cameras, which all happened to be switched off at the moment of the murder. It seems kind of absurd that some Chechens would have that power.
Much of the book details your struggle to get the Magnitsky Act passed in the U.S. You had less than positive things to say about Secretary of State John Kerry’s handling of the passage of the act, and you detailed how the Obama administration initially stonewalled its passage for fear of compromising relations with Russia. What is your assessment of their handling of relations with Russia since then?
I think they’re doing a lot better than they were before, which can be measured by the current sanctions that are in place against Russia for their invasion of Ukraine. These sanctions, which forbid Western lenders from refinancing Russian companies, are a devastating blow to Putin, and it really does make a difference.
However, they could be doing more, and they’re going to have to do more, because Putin is not going to back down. So the next type of sanctions they can impose would be unplugging Russia from the Swiss banking payment system. This was something that was done with Iran to great effect a few years ago.
The other thing they can do is freeze the assets of the top 100 oligarchs, who, in my opinion, are trustees for Putin, which would basically get to his personal assets. The final thing they could do would be to deploy weapons to the Ukrainians so they can have a chance to defend themselves.
So I think the Obama administration is scoring better now than they were a few years ago, when I was fighting with them to do anything about some sanctions. But there’s still a long way to go to be properly tough toward Russia. And I’m sure they’ll get there, whether it’s Obama or maybe the next president, because Putin is not backing down.
You have suggested that the U.S. should consider a policy of containment, which was the dominant foreign policy of the cold war. Why should we go back to that?
All the heads of state around the world — the Europeans, Obama, etc. — are hoping and praying that they can somehow bring Putin back to where he was before. Sort of return to the status quo, and thinking we’ll be okay. They have this fantasy that that’s somehow possible. So everybody having that in mind, they view the idea of a cold war as being something to desperately be avoided. But the real problem, in my analysis, is that there’s no chance that Putin is going to back down. He’s doing this for domestic political reasons, to make sure he doesn’t get overthrown. He had no ideology up until now and stole a lot of money, and the only way that he could carry on without being overthrown was to create a massive diversion, to create an ideology.
And so the ideology that he created was hard-core nationalism and an external enemy, and because of that, he’s not going to back down. In my mind, the idea of returning to the status quo is just unrealistic and naive. The only two options we have are the current option — which is happening as we speak, which is a hot war, where the Russians are actually invading Ukraine and will eventually be invading other countries — or a cold war, which is something that everyone wants to avoid. But I think that given the choices, cold war versus hot war, cold war is a far preferable situation.
What do you think the world needs to know about Putin?
Part of my message to the world through this book and through my speeches and other things is that we need to understand the true nature of Putin, which is that he is running a criminal enterprise with all of the powers of the sovereign state, but he has all the personal attributes of a Mafia boss. That requires a different type of foreign policy than one that we’re used to.
In addition to Magnitsky, a number of other people have challenged Putin and ended up dead. Do you still fear for your life?
Well, if Putin wants to kill me, he’ll kill me, and it doesn’t matter how many bodyguards I have. Which doesn’t mean I’m going to make it easy for him, but I don’t spend my life living in fear. I spend my life looking forward and looking to complete my mission, which is to get justice for Sergei Magnitsky. And I’ll continue doing that.
But obviously, it’s pretty terrifying if they can brazenly assassinate the most high-profile opposition politician in Russia in front of the Kremlin, with dozens of security cameras all switched off at the moment of the assassination.
But Putin is enjoying extremely high approval ratings in Russia right now, in part because of his military actions in Crimea and Ukraine, which you have said helped stoke a groundswell of nationalism.
I would question the approval ratings. Nobody in Russia will tell the truth to a stranger calling them up on the telephone and asking if they support the president or not. The same people who were giving him an 88 percent approval rating are standing in line overnight, trying to convert their rubles to dollars.
Second, whatever nationalist frenzy he has been able to stir up can easily turn on him in a moment if he takes a decision that’s seen by other nationalists as being too weak or stupid or not in the interests of Russians. It particularly becomes dangerous for him because Russia is entering an economic crisis, where people are starting to become financially insecure and hungry.
So I think he’s in a very precarious position, which could turn on a dime, and what looks like a solid support base could turn into a rioting and demonstration base, as it did in other countries like Ukraine.
What effect will the combination of the Western sanctions and plunging oil prices have on Russia’s economy?
It’s devastating. Russia is a one-commodity country, and the commodity is down 50 percent. At the same time, it survives to a great extent on $650 billion of foreign borrowing, which can no longer be refinanced in the West. They have nowhere near that amount of money in Russia to pay off a debt to these Russian companies, so you’re going to see bankruptcies. You’re going to see the central bank reserves getting depleted. You’re going to see hot capital and currency controls.
You’re going to see some Russians who used to live relatively comfortable middle-class lives being plunged into poverty, and all the subsequent political problems that go with that.
What would it take for Russians to finally enjoy a stable democracy?
Russia can change very easily if a good leader comes along. The problem is that because it’s such a brutal and harsh culture, the people who are potentially leaders, all of them have these bad instincts, going back to Genghis Khan, Ivan the Terrible, the czars, Stalin and Putin. There’s a lot of people who, when they get power, they abuse it, and they use it to its maximum possible advantage.
But it doesn’t mean that it’s impossible. In my opinion, there’s 140 million decent, hard-working, honest Russians, and there’s a million really bad ones, who are occupying the country and making life miserable for everybody, headed by one of the most bad ones. But that doesn’t have to happen. Good people can emerge, and they have in other countries at different times. It’s possible.
So I don’t think that one should say that Russia is doomed forever. Russia is doomed if it’s under the leadership of monstrous people. That doesn’t mean that they deserve that type of leadership or they’ll always have that type of leadership.
