Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice

by Bill Browder

It bears mentioning that in Russia there is no respect for the individual and his or her rights. People can be sacrificed for the needs of the state, used as shields, trading chips, or even simple fodder. If necessary, anyone can disappear. A famous expression of Stalin’s drives right to the point: “If there is no man, there is no problem.”

Since I wasn’t interested in academics but was interested in skiing, I looked up schools that were close to ski areas and found a tiny one called the Whiteman School, located in Steamboat Springs, Colorado.

Everyone at Stanford had killed himself to get there, working eighty-hour weeks at places like Bain, poring over spreadsheets, falling asleep at their desks, sacrificing fun at the altar of success.

Stanford didn’t allow you to show your grades to potential employers. All hiring decisions were made on the basis of interviews and past experience. The upshot of this was that the normal academic competition was replaced with something that none of us expected: an air of cooperation, camaraderie, and friendship.

After the JP Morgan experience I couldn’t stop wondering why I subjected myself to being rejected by the Chips and Winthrops of the world. I wasn’t like them and I didn’t want to work for them. I had chosen this direction in life in reaction to my parents and my upbringing, but I couldn’t escape the fact that I was still a Browder.

(what I really wanted was to be Mel Gibson in The Year of Living Dangerously, my favorite movie).

I was amazed. These people had hired me to advise them on whether they should exercise their right under the Russian privatization program to purchase 51 percent of the fleet for $2.5 million. Two and a half million dollars! For a half stake in over a billion dollars’ worth of ships! Of course they should! It was a no-brainer. I couldn’t understand why they needed anyone to tell them this. More than anything, I wished I could have joined them in buying the 51 percent.

the government granted one privatization certificate to every Russian citizen—roughly 150 million people in total—and taken together these were exchangeable for 30 percent of nearly all Russian companies.

Traders aren’t known for their manners, but still. I called Bobby back. “Bobby, I’ve tried. Nobody will give me a desk. Can you please do something?” This time, Bobby was annoyed. “Bill, why are you bothering me with this? If they won’t give you a desk, then just work from home. I don’t care where you work. This is about investing in Russia, not desks.”

“Bill, I’ve been thinking a lot about the presentation you made in New York a few weeks ago. I’m in London and I’d like you to come over to the Four Seasons and meet some of my colleagues.” “When?” “Now.” Beny didn’t ask questions, he made demands.

Boris Yeltsin, Russia’s first democratically elected president, was running for reelection, but things did not look good for him. His plan to take the country from communism to capitalism had failed spectacularly. Instead of 150 million Russians sharing the spoils of mass privatization, Russia wound up with twenty-two oligarchs owning 39 percent of the economy and everyone else living in poverty.

Seventy years of communism had destroyed the work ethic of an entire nation. Millions of Russians had been sent to the gulags for showing the slightest hint of personal initiative.

There’s a famous Russian proverb about this type of behavior. One day, a poor villager happens upon a magic talking fish that is ready to grant him a single wish. Overjoyed, the villager weighs his options: “Maybe a castle? Or even better—a thousand bars of gold? Why not a ship to sail the world?” As the villager is about to make his decision, the fish interrupts him to say that there is one important caveat: whatever the villager gets, his neighbor will receive two of the same. Without skipping a beat, the villager says, “In that case, please poke one of my eyes out.” The moral is simple: when it comes to money, Russians will gladly—gleefully, even—sacrifice their own success to screw their neighbor.

This whole exercise was teaching me that Russian business culture is closer to that of a prison yard than anything else. In prison, all you have is your reputation. Your position is hard-earned and it is not relinquished easily. When someone is crossing the yard coming for you, you cannot stand idly by. You have to kill him before he kills you.

Tuesdays with Morrie.

It’s amazing how being in love changes things. When Elena and I returned to Moscow, I was totally reenergized. With Elena at my side, I felt as though I could take on any challenge.

Without knowing it, I’d stumbled upon one of the most important cultural phenomena of post-Soviet Russia—the exploding wealth gap. In Soviet times, the richest person in Russia was about six times richer than the poorest. Members of the Politburo might have had a bigger apartment, a car, and a nice dacha, but not much more than that. However, by the year 2000 the richest person had become 250,000 times richer than the poorest person. This wealth disparity was created in such a short period of time that it poisoned the psychology of the nation.

It was at that moment that we discovered the second most interesting cultural phenomenon in Russia—that it was one of the most bureaucratic places in the world. Because of Soviet central planning, Moscow needed data on every single facet of life so its bureaucrats could decide on everything from how many eggs were needed in Krasnoyarsk to how much electricity was needed in Vladivostok.

Putin replaced Vyakhirev with a virtually unknown man named Alexey Miller. No sooner had Miller taken office than he announced that he would secure the remaining assets on Gazprom’s balance sheet and recover what had been stolen. In response to that, the stock price went up 134 percent in one day.

By 2005, Gazprom was up a hundred times from the price at which the Hermitage Fund had purchased its first shares. Not 100 percent—one hundred times. Our little campaign had gotten rid of one of the country’s dirtiest oligarchs.

Anywhere that bad things happened, people would not get involved in order to save their own skin. It wasn’t that people weren’t civic-minded, it was just that the price for intervention would be punishment, not praise.

As with Gazprom, once the campaigns reached a fever pitch, Putin’s government would generally step in to flex its muscles.

You may wonder why Vladimir Putin allowed me to do these things in the first place. The answer is that for a while our interests coincided. When Putin became president in January 2000, he was granted the title of President of the Russian Federation, but the actual power of the presidency had been hijacked by oligarchs, regional governors, and organized-crime groups. As soon as he took office, it became his highest priority to wrest power from these men and return it to its rightful place in the Kremlin, or more accurately, into his own hands.

It was a completely lawless society where anything could happen, and where anything often did happen.

In the mind of an average Russian, it was inconceivable that an unassuming American guy who barely spoke Russian would aggressively be going after Russia’s most powerful oligarchs on his own. The only plausible explanation was that I must have been operating as a proxy for someone powerful. Considering how each of my battles with the oligarchs led to an intervention by Putin or his government, most people assumed that this someone was none other than Vladimir Putin himself. It was a ridiculous thought. I had never met Putin in my life. But because everyone thought I was “Putin’s guy,” no one touched me.

We had become the victims of something called a “Russian raider attack.” These typically involved corrupt police officers fabricating criminal cases, corrupt judges approving the seizure of assets, and organized criminals hurting anyone who stood in the way.

It was the largest tax refund in Russian history. It was so big and so brazen that we were sure we had them. This had to be a rogue operation, and we now had the evidence to expose it and bring these guys to justice.

my opinion, Vladimir Putin had authorized my expulsion from Russia, and he probably approved the attempts to steal our assets, but I found it inconceivable that he would allow state officials to steal $230 million from his own government. I was convinced that as soon as we shared the evidence of these crimes with the Russian authorities, then the good guys would get the bad guys and that would be the end of the story.

Sergei, on the other hand, was thirty-six years old and had come of age at a time when things had started to improve. He saw Russia not how it was but how he wanted it to be. Because of this, he didn’t realize that Russia had no rule of law, it had a rule of men.

The Russian authorities were so wrapped up in their cover-up that they ignored the most emotive aspects of Sergei’s story. He was just a middle-class tax lawyer who bought his Starbucks coffee in the morning, loved his family, and did his tax work in his cubicle. His only misfortune was to stumble across a major government corruption scheme and then behave like a Russian patriot and report it. For that he’d been plucked out of his normal life, incarcerated in one of Russia’s darkest hellholes, and then slowly and methodically tortured to death.

“It’s applicable here because the people who killed Sergei are obviously corrupt, and therefore would be captured under the proclamation. The secretary of state should ban their entry into the US.”

This was not what they wanted to hear because ever since Barack Obama had become president in 2009, the main policy of the US government toward Russia had been one of appeasement. The administration had even created a new word for it: reset. This policy was intended to reset the broken relations between Russia and the United States, but in practical terms it meant that the United States wouldn’t mention certain unpleasant subjects concerning Russia so long as Russia played nice in trade relations and nuclear disarmament and various other areas.

The first speaker was an advocate for persecuted journalists in Russia. She read from a statement and was knowledgeable, citing numerous facts and figures about killings and abductions of journalists who’d exposed the crimes of the Russian regime. I was intimidated by both the enormity of her testimony and her grasp of policy issues.

the Sergei Magnitsky Act.

While everyone talked, wrote, and blogged about the video, a group of Russian activists took matters into their own hands. They showed up at Kuznetsov’s building and pasted a picture of Sergei on every apartment door with the words Kuznetsov murderer! below his face. They also unfurled a massive banner on the high-rise facing his apartment with the same words.

The language was simple and direct—anyone involved in the false arrest, torture, or death of Sergei Magnitsky, or the crimes he uncovered, would be publicly named, banned from entering the United States, and have their US assets frozen.

The senators quickly realized that they’d stumbled onto something much bigger than one horrific case. They had inadvertently discovered a new method for fighting human rights abuses in authoritarian regimes in the twenty-first century: targeted visa sanctions and asset freezes. After a dozen or so of these visits and letters, Senator Cardin and his cosponsors conferred and decided to expand the law, adding sixty-five words to the Magnitsky Act. Those new words said that in addition to sanctioning Sergei’s tormentors, the Magnitsky Act would sanction all other gross human rights abusers in Russia.

This appeared to me to be a last-ditch attempt to silence our campaign, and it fit squarely into Putin’s instructions to his government. Days after he resumed office in May 2012 after having been reelected as president in March, he issued an executive order stating that one of his top foreign policy priorities was to stop the Magnitsky Act from becoming law in America.

Magnitsky is too much of a win-win for the leadership to schedule a vote.” “But we have full bipartisan support. This seems to be the one thing in Washington that everyone agrees on.” “That’s the point, Bill. Now that the election is in full swing, no one wants to talk about things that everyone agrees on. None of these guys can afford to make the others look good.”

However, this whole affair cost Putin something much dearer than money: his aura of invincibility. Humiliation is his currency—he uses it to get what he wants and to put people in their place. In his mind, he hasn’t succeeded until his opponent has failed, and he can’t be happy until his opponent is miserable. In Putin’s world, the humiliator cannot, under any circumstances, become the humiliatee. Yet this is precisely what happened in the wake of the adoption ban.

It was all a show, a Potemkin court. This is Russia today. A stuffy room presided over by a corrupt judge, policed by unthinking guards, with lawyers who are there just to give the appearance of a real trial, and with no defendant in the cage. A place where lies reign supreme. A place where two and two is still five, white is still black, and up is still down. A place where convictions are certain, and guilt a given. Where a foreigner can be convicted in absentia of crimes he did not commit.