A salutary tale of robbery and redress

Contemporary Russia

Red sky in the morning

A salutary tale of robbery and redress

Jan 31st 2015

Red Notice: A True Story of High Finance, Murder and One Man’s Fight for Justice.By Bill Browder. Simon & Schuster; 373 pages; $28. Bantam Press; £18.99. Buy from Amazon.com, Amazon.co.uk

BILL BROWDER was a happy man in 2003. He had the perfect job and was making himself rich. He bought underpriced shares in badly run Russian companies and chivvied the management into behaving better so the share price would go up. It worked. Between the depth of Russia’s financial crash in 1998 and the end of 2003, his investment fund had grown more than 12-fold. What could go wrong? Plenty, it turned out, including expropriation, beatings, intimidation and death.

“Red Notice” is a sizzling account of Mr Browder’s rise, fall and metamorphosis from bombastic financier to renowned human-rights activist. Born into a leftish academic household (his grandfather led the American Communist Party), he rebelled by turning to capitalism. He spotted the potential of eastern Europe before it became fashionable, took big risks and reaped the rewards. He describes the exhilaration of buying scruffy little privatisation vouchers with suitcases of cash and watching their value soar when everyone else cottoned on to the size of the enterprises involved. He learned how to use the media to voice concerns about corruption, hit back at tycoons who tried to bully him, and to promote Russia as a vastly under-valued market. Some journalists can still remember Mr Browder’s hectoring late-night phone calls.

The book begins with Mr Browder’s surprise deportation from Moscow in late 2005. It was not the first sign that something was awry in Russia, but the first time it affected him. The intervention came directly from the FSB, the state security service. Russian officials then raided his offices, beat up someone who unwisely resisted them and confiscated documents.

Mr Browder rightly assumed that he had overstepped the mark in his lambasting of Russian tycoons for corruption and asset-stripping. He secretly liquidated his holdings and shifted his investments to other countries. But his downfall in Russia was the beginning of the story, not the end. Corrupt officials were interested in the fact that Mr Browder’s companies had been some of the country’s largest taxpayers. Using the stolen documents and a bewildering series of phoney lawsuits, they took over the companies and wiped out the previous year’s profits, allowing officials to reclaim the tax paid. The $230m refund, the largest in Russian history, was paid out in a single day.

All this would have remained a mystery, had it not been for the dogged efforts of Mr Browder’s Moscow tax lawyer, Sergei Magnitsky, who pieced together what was happening and began to seek redress. In response Magnitsky was arrested and told that he would be freed only if he gave evidence against his client. He held out for a year while he was kept in pre-trial detention in abominable conditions. On November 16th 2009 Magnitsky died of untreated pancreatitis, aggravated by a severe beating. In a particularly grotesque touch, the Russian authorities then prosecuted him posthumously for perpetrating the fraud he had uncovered.

Mr Browder’s obsessive streak, a fault in other circumstances, has made him a formidable adversary for the regime in Russia. He blames himself for Magnitsky’s death and has paid for a mammoth (and continuing) investigative effort that has been more successful than anything tried by Western intelligence agencies and police forces. He has shown how the money was stolen, who did it and, more to the point, how they laundered it in the West. He has publicised these findings in documentary films and spread them in acres of news coverage. When one of the culprits, a seemingly humble policeman, hired one of London’s swankiest law firms to silence him with a libel suit, Mr Browder succeeded in having it struck out, making a footnote in legal history. When the Kremlin tried to use Interpol to have him extradited to Russia on trumped-up fraud charges, he fought back, bringing about another change in the rules.

Mr Browder has lobbied lawmakers to impose visa sanctions and asset freezes on the beneficiaries of the fraud and on Magnitsky’s persecutors. Congress ignored the timorous Obama administration and pushed through sanctions in the “Magnitsky Act” in 2012. Other countries followed suit. Seeing your stock go up ten times is the “financial equivalent of smoking crack cocaine”, writes Mr Browder. But visiting the European Parliament with Magnitsky’s widow and son in April 2014 and watching Europe’s largest lawmaking body unanimously back his campaign was “orders of magnitude better than any financial success I have ever had”.

Ably ghostwritten, “Red Notice” reads more like a financial thriller than a real-life story. But it skates over some mistakes, including the author’s initial failure to see that Vladimir Putin’s authoritarian kleptocracy was far from an investors’ paradise. He blames himself for being “completely naive” and “not paying attention” and for assuming that as a foreigner, he was “somehow exempt” from the informal rules that applied to locals. “I believed I could do things that a Russian in my position would never have been allowed to do.” Another view would be that Mr Browder was blinded by greed and his own ego; he did not want to see deeply troubling trends that others had already decried.

Yet two central messages of the book are moving and simple. The first is that Mr Browder and his team have made Magnitsky’s fate into an international cause célèbre. The second is that the book exemplifies both the corrupt and brutal way in which the Putin regime does business at home and the cynical help it gets from foreigners when it launders profits abroad. Mr Browder says he has changed. He has befriended human-rights activists and others who have given him “a whole new perspective on humanity”. His life in finance, he says, was like watching television in black and white. “Now I’ve installed a wide-screen colour TV and everything in my life is richer, fuller and more satisfying.” In short, the perfect job: making himself poorer, but the world a better place.

From the print edition: Books and arts

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