The hedge-fund manager has offered a fable for why the West should confront Putin.
.. Since the Magnitsky Act passed, the Russian government has charged Browder with myriad crimes, and has periodically tried to lodge warrants for his arrest via Interpol. “Their main objective is to get me back to Russia,” Browder has said. “And they only have to get lucky once. I have to be lucky every time.”.. In 2012, in Surrey, England, Alexander Perepilichny, one of Browder’s chief sources of information on the movement of the stolen funds, collapsed while jogging near his home and died. The case is still under investigation. Browder, who has taken to relating to as large an audience as possible the danger he faces, has called this “a perfect example of why you don’t want to be an anonymous guy who drops dead.”.. Browder, who is fifty-four, with a dusting of silver hair and rimless eyeglasses, has a forceful yet understated authority and a talent for telling a coolly suspenseful tale... As an anti-corruption activist, Browder has spoken out against the exploitation of offshore tax havens—for example, the ones detailed in the documents that were leaked from the Panamanian law firm Mossack Fonseca, in 2016. Many companies listed in the so-called Panama Papers were entirely legal. Still, Browder tends not to mention that Mossack Fonseca set up at least three firms for him and Hermitage... His singling out of Browder in Helsinki, McFaul told me, “only gives Bill a bigger global platform—it was a huge public-relations coup, which of course Bill will use.”.. His grandfather Earl Browder became active in socialist politics during the First World War and lived in the Soviet Union for five years before becoming the secretary-general of the Communist Party of America. Earl’s son Felix was a noted mathematician. William Browder took an interest in business while in boarding school in the seventies. “I would put on a suit and tie and become a capitalist. Nothing would piss my family off more than that,” he writes in “Red Notice.”.. This was the peak of the chaotic post-Soviet “Wild East,” a time of lawlessness and speculation. Over the next two years, Hermitage’s portfolio grew to more than a billion dollars, but it was nearly wiped out in August, 1998, when Russia defaulted on its sovereign debt, causing widespread panic. Browder was one of the few Western financiers who chose to remain in the country. Between 1998 and 2005, the price of oil quadrupled and the Russian stock index went up by nearly three thousand per cent... Browder gained attention for publicly criticizing the management of companies in which his fund had invested as a minority shareholder, in an effort to goad them into being more efficient and transparent. He held combative press conferences outlining Russian corporate malpractice and passed along to journalists dossiers that described the way venal oligarchs engaged in asset stripping, wasteful spending, and share dilutions... “I don’t think Bill started out with a passion for corporate governance. He found it to be an instrument that helped him and his investors make a lot of money. Ultimately, it became a sincere crusade.”
.. Steven Dashevsky, then the head of research at a Russian investment bank, Browder’s anti-corruption stance was a kind of “free marketing” for Hermitage.
.. Regulators had instituted a dual price structure for the company’s shares: one class of shares, priced relatively cheaply, could be held only by Russian citizens and firms; the second class, priced much higher, could be purchased by anyone. Hermitage got the cheaper price by buying Gazprom stock through companies it registered in Russia. It was a work-around used by a number of Moscow-based investment funds that, as Dashevsky put it to me, “fell into a gray zone: it was clearly against the spirit of the law, but never prosecuted or pursued.”
.. Browder also minimized how much Hermitage paid in Russian taxes. The government, in an effort to stimulate regional investment, had established a special zone in Kalmykia, a republic north of the Caucasus, that offered a lower tax rate. The rate went down even more if disabled workers made up a majority of a company’s employees. To take advantage of this, Hermitage hired disabled people for its companies in Kalmykia. A banker who managed a number of Russian funds said, “We’re not generally disciples of Mother Teresa, but Bill was singularly bottom-line focussed.” Other investors, the banker said, considered tax-avoidance measures like Hermitage’s hiring of disabled people “too risky, and borderline illegal, with the possibility of too much danger if revealed.”
.. Browder received a British passport in 1998 and, rather than become a dual citizen, renounced his U.S. citizenship. He has explained that he had been motivated by the discrimination that his grandparents faced in America during the McCarthy era as a result of their political activism for the Communist Party: his grandfather was forced to testify in front of the House Un-American Activities Committee, and his grandmother was threatened with deportation to Russia. “This type of thing could never happen in Britain, and that was the basis of my decision to become British,” he recently told an audience in Colorado. But those I talked to who knew Browder in the nineties assumed that the reasons were financial
.. “If there has been a consistent passion in Bill’s life over the last twenty or thirty years, it is not wanting to pay taxes.”
.. Vladimir Putin assumed the Presidency in 2000, and at first Browder was an ardent supporter
.. In 2003, when the billionaire head of the Yukos oil company, Mikhail Khodorkovsky, was arrested and charged for fraud and tax evasion, many saw it as evidence that Putin was becoming uncompromisingly authoritarian. But Browder welcomed the prosecution of Khodorkovsky, with whom he had clashed in the past. In 2004, he told the Times, “We want an authoritarian—one who is exercising authority over mafia and oligarchs.” He added that Putin “has turned out to be my biggest ally in Russia.”
.. He was told that his Russian visa had been annulled on national-security grounds.
.. “Logic dictates that it’s not in the national interest to ban the biggest investor in Russia and one of the biggest supporters of the government’s policy.”
.. In July, 2006, Putin was asked at a press conference about Browder. Putin said that he didn’t know the particulars of the case, but added, “I can imagine this person has broken the laws of our country, and if others do the same we’ll refuse them entry, too.” Browder instructed his Hermitage colleagues to sell off the firm’s Russian assets and moved key staff to London.
.. Actually, Magnitsky, then thirty-five, was a tax adviser who worked for the firm that had advised Hermitage for a decade.
.. police had used the impounded seals and stamps to reregister Hermitage’s companies in the name of low-level criminals, and those companies then applied for tax refunds totalling two hundred and thirty million dollars, the amount that Hermitage had paid in capital-gains tax. Two state tax offices in Moscow appeared to have approved the refunds the next day.
.. Magnitsky testified to Russian state investigators in June, 2008, after which his lawyer advised him to leave the country. He refused, and gave further testimony that October. Several weeks later, he was arrested on charges of abetting tax evasion through Hermitage, and held in pretrial detention.
.. In 2010, Browder went to Washington with a list of Russian officials he said were to blame. The Obama Administration placed sanctions on some of them, a routine procedure that barred them from entering the United States. McFaul, then in charge of Russia policy at the National Security Council, recalls, “Bill, to his credit, said, ‘That’s not enough. You didn’t make it public. You didn’t seize any assets.’ ” In “Red Notice,” Browder calls the Russia policy of the Obama Administration at the time “appeasement.”
.. “But what was unique here was Bill Browder,” he said—in particular, Browder’s ability to tell the story of Magnitsky’s suffering. “We were as outraged as he was,”
.. Browder gave testimony, said, “I think it boils down to one phrase I heard him use numerous times: ‘They killed my guy.’ He feels a responsibility and obligation to make sure Sergei didn’t die in vain, and it’s hard to argue with that.”
.. Even so, the Magnitsky Act might have languished had it not been for the fact that, in 2012, Russia was about to become a member of the World Trade Organization. In order to grant Russia what the group calls “permanent normal trade relations” status, Congress would have to repeal the Jackson-Vanik amendment, a 1975 measure aimed at the Soviet Union that penalized trade with countries that had restrictive emigration policies. Legislators did not want to rescind the law without sending the Kremlin a message about American toughness on human rights.
.. “the real question was whether Congress and the White House could find any substitute for Jackson-Vanik other than Magnitsky. The answer turned out to be no, they couldn’t.”
.. “It means his krysha doesn’t work,” Celeste Wallander explained. Krysha is Russian for “roof,” and in criminal jargon means the protection that a powerful figure can offer others. “It screws up his social contract with those inside the system,” she said.
.. But Canada, the Baltic states, and the U.K. have passed their own Magnitsky-style bills, and, last year, Congress passed the Global Magnitsky Act, which targets human-rights abusers worldwide. McFaul told me it had long struck him that “the spectre of the Magnitsky law and the noise around it are much more important than the law itself.”
.. The main evidence that the law is having an effect is how obsessed Putin is with it. I don’t get why he’s so obsessed, but the fact remains that he is, and that suggests it’s had a tremendous impact.
.. I met Veselnitskaya last fall in Moscow, at a café in the center of town; she is an imposing, glamorous woman with an exhaustive memory for dates and facts. She doesn’t speak English, is not licensed to practice law in New York, and, at the time the charges were filed, had never been to the United States.
.. She and the Baker Hostetler lawyers wanted Browder deposed as part of pretrial discovery. This would require a court subpoena; Browder had not voluntarily agreed to testify and, having given up his U.S. citizenship, was not immediately liable to the jurisdiction of a U.S. court.
.. According to multiple sources familiar with the Katsyv family’s legal strategy, the legal work on the Prevezon case and Veselnitskaya’s related lobbying carried costs of up to forty million dollars—a vast sum, considering that the U.S. government was trying to seize, at most, fourteen million dollars’ worth of property.
.. Veselnitskaya downplayed any ties she had to Yuri Chaika, Russia’s general prosecutor, but a researcher on the Prevezon case told me that she often took his calls.
Of course Omarosa has tapes
It’s hard to take Omarosa Manigault Newman’s word for anything. But Lordy, she has tapes, and they offer vivid proof that Donald Trump’s White House is part clown show, part nest of vipers.
.. she performed with Shakespearean villainy —
- lying,
- cheating,
- backstabbing,
- viciously advancing her own interests and
- sabotaging her rivals.
Trump evidently found all of this admirable, because he insisted on bringing her into his administration as a top-level adviser despite her utter lack of experience and qualifications. They deserve each other.
.. Omarosa’s recording of part of that meeting was aired Sunday on NBC’s “Meet the Press.” In it, Kelly is heard making what sounds very much like a threat:
“I think it’s important to understand that if we make this a friendly departure, we can all be, you know, we can look at your time here in the White House as a year of service to the nation. And then you can go on without any type of difficulty in the future relative to your reputation.”
If that wasn’t clear enough, Omarosa subsequently received a generous offer. She could receive $15,000 a month to perform vaguely defined duties for Trump’s reelection campaign. But she would have to sign a nondisclosure and nondisparagement agreement pledging not to say detrimental things about President Trump, Vice President Pence or their family members.
.. She declined the offer but kept the documents she was asked to sign — and showed them to The Post last week.
.. She never made it, never will. She begged me for a job, tears in her eyes, I said Ok. People in the White House hated her. She was vicious, but not smart. I would rarely see her but heard really bad things. Nasty to people & would constantly miss meetings & work. When Gen. Kelly came on board he told me she was a loser & nothing but problems. I told him to try working it out, if possible, because she only said GREAT things about me — until she got fired!”
.. Trump went on to complain that “the Fake News Media will be working overtime” to make Omarosa seem credible now that she is one of his critics. But that’s certainly not my intent. She strikes me as a rank opportunist whose only allegiance is to herself.
She claims to have realized only recently that Trump is a “racist, misogynist and bigot.” Yet she heard his bigoted attacks on Latino immigrants and still went to work for his campaign. She heard his misogynistic rant about how he sexually assaulted women and still took a job in his administration. She heard his many appeals to white racial grievance and still vigorously defended him, even after Charlottesville.
.. So no, I’m not inclined to believe anything she claims without documentary evidence to back it up. But the tapes and the documents have not been disputed. Omarosa may not have obtained them honorably, but the old saying is true: There is no honor among thieves.
.. We don’t know what else might be in the conversations with Trump that lawyer Michael Cohen taped. We don’t know how many other recordings Omarosa might have made. We don’t know who else in the White House might have been keeping their own unauthorized records of conversations and events.
What we do know is why people in Trump’s orbit feel they need such insurance: Dishonor and disloyalty start at the top.
Rick Gates Delivers a Public Lesson on Money Laundering and Political Corruption
.. his time on the witness stand provided an invaluable public lesson in how tax evasion, money laundering, and political corruption work.
.. The ability of rich people such as Manafort and his oligarchic clients to shuffle money across borders, beyond the purview of tax collectors and law-enforcement authorities, is a huge and intractable problem. In many places, these practices are
- denuding tax bases,
- corrupting a large class of professional enablers, and
- undermining public confidence in the political and financial systems.
.. roughly $7.6 trillion, or eight per cent of the world’s financial wealth, was held in offshore tax havens. In some countries, the proportion is much higher; in the case of Russia, it is more than half.
.. . In the United States, he has estimated, the annual tax loss is about thirty-five billion dollars.
.. It is only when there is a prominent court case or a leak—such as the 2016 Panama Papers, which exposed the dealings of the law firm Mossack Fonseca—that a light is shined on this system’s hidden mechanics. What Gates provided this week was a firsthand account of how the illicit game is played.
.. Manafort’s consulting firm was paid by Ukrainian businessmen close to Viktor Yanukovych, who was elected President in 2010. Many of these figures already had bank accounts in Cyprus
.. Gates described how he and Manafort used a Cypriot law firm to establish bank accounts in the name of shell companies that they controlled but weren’t publicly associated with.
“Did these companies sell a product?” Andres asked Gates.
“No,” he replied.
“Did they have any employees?” Andres asked.
“No,” Gates repeated. “The purpose of the companies was to accept payments and to make payments.”
.. The Cypriot law firm Chrysostomides “handled everything,” Gates said, including listing the names of locals, rather than the two Americans, as the directors of the shell firms into which the fees from Ukraine flowed.
.. he arranged to have money wired from the Cypriot accounts to vendors in the United States from whom Manafort had bought expensive clothes
.. problems arose, Gates said. So, again using the Cypriot law firm, he and Manafort transferred some money to bank accounts in the Grenadines, a chain of small islands in the Lesser Antilles. But, when the banks in the Grenadines were asked to transfer money to companies in the United States, they demanded invoices for the payments—something that the Cypriot banks hadn’t bothered with. At Manafort’s direction, Gates said, he created “modified invoices” and gave them to the banks.
.. “About 50% of the wealth held in tax havens belongs to households with more than $50m in net wealth,” Zucman, of Berkeley, noted in an article last year. “These ultra-rich represent about 0.01% of the population of advanced economies.”These were the type of people whom Manafort was working for in Ukraine, and it’s pretty clear from the life style he adopted that he wanted to join their ranks... he allegedly resorted to bank fraud rather than modify his spending patterns.Gates described how, in 2015, together with Manafort’s accountants, he helped put together bogus financial documents that Manafort then used to obtain bank loans... toward the end of Andres’s questioning of Gates, the prosecutor showed the witness an e-mail that Manafort wrote to Gates in November, 2016, shortly after Trump was elected. By that stage, Gates was working for Trump’s Presidential transition team. “We need to discuss Steve Calk for Sec of the Army,” Manafort’s e-mail said. “I hear the list is being considered this weekend.”
.. When he joined the Trump campaign, he’d long been known as the ultimate swamp creature. Thanks to Mueller and Gates, we now know more about how that swamp operates.
New Details About Wilbur Ross’ Business Point To Pattern Of Grifting
A multimillion-dollar lawsuit has been quietly making its way through the New York State court system over the last three years, pitting a private equity manager named David Storper against his former boss: Secretary of Commerce Wilbur Ross.
.. The pair worked side by side for more than a decade, eventually at the firm, WL Ross & Co.—where, Storper later alleged, Ross stole his interests in a private equity fund, transferred them to himself, then tried to cover it up with bogus paperwork.
.. It is difficult to imagine the possibility that a man like Ross, who Forbes estimates is worth some $700 million, might steal a few million from one of his business partners. Unless you have heard enough stories about Ross.
.. Two former WL Ross colleagues remember the commerce secretary taking handfuls of Sweet’N Low packets from a nearby restaurant, so he didn’t have to go out and buy some for himself.
.. One says workers at his house in the Hamptons used to call the office, claiming Ross had not paid them for their work.
Another two people said Ross once pledged $1 million to a charity, then never paid.
.. Many of those who worked directly with him claim that Ross wrongly siphoned or outright stole a few million here and a few million there, huge amounts for most but not necessarily for the commerce secretary. At least if you consider them individually. But all told, these allegations—which sparked lawsuits, reimbursements and an SEC fine—come to more than $120 million.
.. If even half of the accusations are legitimate, the current United States secretary of commerce could rank among the biggest grifters in American history.
.. Those who’ve done business with Ross generally tell a consistent story, of a man obsessed with money and untethered to facts. “He’ll push the edge of truthfulness and use whatever power he has to grab assets,” says New York financier Asher Edelman. One of Ross’ former colleagues is more direct: “He’s a pathological liar.”
.. Such machinations now seem pathetic. But his billionaire status was not lost on another person obsessed with his net worth. Donald Trump termed Ross a “legendary Wall Street genius” and named him to his cabinet.
“In these particular positions,” Trump explained to a crowd of supporters, “I just don’t want a poor person.”
.. The future cabinet secretary’s private equity funds were underperforming—one on track to lose 26% of its initial value and another two dribbling out mediocre returns—and the accusations were starting to pile up. Roughly two months before the 2016 presidential election, the SEC announced WL Ross was paying a fine and refunding $11.9 million it allegedly skimmed from its investors, including interest.
.. the firm was also charging its investors on money that it had lost. Here’s how it worked: If WL Ross made an investment of, say, $100 million that declined dramatically, in the final years of the fund the firm was supposed to charge management fees on the actual value of the investment, not the $100 million starting point. However, WL Ross allegedly continued collecting fees on the amount invested
.. When approached about the discrepancy, Wilbur Ross initially insisted his firm was calculating the fees correctly
.. What makes it all more than a typical “he-said, she-said” dispute is the number of similar complaints against Ross.
.. alleging that he and his firm charged at least $48 million of improper fees
.. It would be like a restaurant owner telling his employees that they can eat for free—while taking the meal money out of their paychecks.
.. Of the top seven firm leaders listed on the 2006 website, none of them have the same roles today.
.. the majority—consisting of Storper, Mullin, David Wax and Pamela Wilson—are all actively waging legal battles against their former boss, Wilbur Ross.
.. In a presidential cabinet plagued by ethical problems, it can be easy to forget about Wilbur Ross. Most of the attention tends to center around obvious abuses, like Scott Pruitt getting a $43,000 sound-proof booth in his office or Tom Price wasting $341,000 on jet travel. But while Ross’ antics are more complicated, they involve far more money.
.. The central matter in all of Ross’ legal issues is his own credibility. “Lying on an ethics disclosure form, to Congressional and Senate committees, and falsely reporting compliance with an ethics plan, is neither ‘commonplace’ nor part of the accepted rough-and-tumble world of politics,” David Storper, Ross’ former right-hand man, argued in a court filing. “They are just lies.” Adds another onetime colleague: “This is a public servant who can’t tell the truth.”