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.
“My grandfather was the biggest Communist in America,” he said, “and I became the biggest capitalist in Russia.”
.. Bill Browder created his hedge fund, Hermitage, in 1996. The Kremlin turned on him hard in 2005, declaring him persona non grata. He had been a thorn in the side of Putin’s oligarchs.
In 2008, the authorities arrested Browder’s fearless and whistleblowing lawyer, Sergei Magnitsky — and tortured him to death.
.. I read an obituary of Felix Browder, Bill’s father. I then realized why Bill had asked me to be more specific when I asked, “Any relation?” Felix Browder was one of the greatest mathematicians in the world. (I don’t know from mathematicians.) He was, for example, chairman of the math department at Chicago.
Earl Browder had two more children, two more sons: Andrew and William. The former became the
- chairman of the math department at Brown; the latter became
- chairman of the department at Princeton. And there’s more Browder talent where that came from.
.. He was named after Shakespeare, having been born on the 400th anniversary of the writer’s birth (April 23, 1964).
.. Andrew’s daughter Laura, a professor at the University of Richmond, discovered something in the KGB archives: The dear nanny had been a spy, charged with keeping tabs on Earl. Of course.
.. Earl coined the famous (or infamous) slogan “Communism is 20th-century Americanism.” He ran for president in 1936, getting some 80,000 votes.
.. Communists in America were in particularly bad odor. In early ’41, the U.S. government sent Browder to prison on technicalities: passport fraud. But that summer, Hitler double-crossed Stalin, and the United States would soon be allies with Uncle Joe.
.. FDR commuted Browder’s sentence as a goodwill gesture.
.. After the war, Browder got on the wrong side of Moscow and was expelled from the American party. He died in 1973, having spent his last years with his son Bill in Princeton
.. Raisa, a Russian mother, and a mother of three sons. A Russian-Jewish mother at that
.. Felix entered MIT at 16. He had his bachelor’s degree in two years. By 20, he had his Ph.D. from Princeton.
.. One of his undergraduate professors testified that Felix was not a party member — and, moreover, that Felix had been the best math student in the history of MIT
.. Bill Browder affirms that his father was not a Communist. Rather, he was “a hard-core leftist professor,” like all the others. “I never met one who wasn’t,” says Bill.
.. Felix was indeed drafted into the Army. Not trusted with sensitive work, he spent two years pumping gas at Fort Bragg.
.. Felix worked on his math and, for the first and only time in his life, was around regular folks... Felix and his wife Eva had another child besides Bill: their son Tom. He entered the University of Chicago at 15. Today, he is a leading particle physicist, dividing his time between Hawaii and Japan, searching for the origin of the universe... Bill was a rebellious kid, and he figured out how to rebel against a family of leftists: become a capitalist. He majored in economics at Chicago, whose department was a den of free-marketeers.
.. In an act of shocking gall, the Russian state is investigating Browder for the murder of Magnitsky — and three other men. Thus do the murderers finger the champion of the murdered. Putin’s predecessors in the KGB would grin in admiration.