A dirty business: Bill Browder made millions in Russia until Putin came after him, with fatal consequences

Browder’s gripping memoir tells of the huge fortune he made from Russian privatisations and how the Kremlin eventually came after him – with fatal consequences.

Members of the Russian protest group Pussy Riot and American politicians at a press conference in the US Capitol to discuss the Magnitsky Act, legislation intended to punish those responsible for the Show more

Bill Browder has lived three lives: the one he inherited, the one he made for himself and the one he had thrust upon him. His book Red Notice is less one person's memoir than three: a grandson, a mogul and a crusader.

Browder had been born into a family with an unusual sort of pedigree: Franklin Roosevelt had personally intervened to have his grandfather imprisoned. Earl Browder had been a labour organiser and a true believer in the Soviet cause who became the head of the Communist Party in the United States. Roosevelt had Earl Browder jailed during the Second World War.

Earl’s son Felix eschewed the political realm, receiving a PhD in mathematics and eventually becoming the head of the maths department at the University of Chicago. Young Bill was not cut from the same political cloth as his grandfather, nor was he inclined to academia. So how do you rebel in a family whose paterfamilias had been jailed by the president of the United States? The answer was counterintuitive: “I would put on a suit and tie and become a capitalist. Nothing would piss my family off more than that.”

Browder was a trainee with the Boston Consulting Group, fresh out of Stanford’s business school, when he was assigned to work on the restructuring of a Polish bus company. He knew little about business and less about Eastern Europe, and was pained at the prospect of telling them the obvious: that the company would need to lay off much of its workforce to be competitive in the post-communist global economy. While in Poland, he stumbled across the first privatisations of formerly state-owned businesses, and realised there were fortunes to be made: “If you invested in this company and it stayed in business for six months, you would effectively make your money back.”

Browder moved on to Salomon Brothers and to working in Russia, where he took a penny-­ante consulting assignment to assist a company called the Murmansk Trawler Fleet. Russia’s privatisation model allowed the company to buy a 51 per cent stake in its shipping fleet for US$2.5 million (Dh9.2m). Browder, asking basic questions and running the numbers, realised the fleet was worth approximately $1 billion, and he began to wonder: “Is this deal unique to the Murmansk Trawler Fleet, or is the same thing happening all over Russia? And if it is, how can I get involved?” Browder managed to talk one Salomon executive into putting $25m into Russian investments, and soon was going into business for himself, recruiting billionaire Edmond Safra as an investor.

Red Notice audibly bursts with enthusiasm for the wide-open investment opportunities of the post-communist era. It is, for its first half, a superb handbook to the savvy investor's always-on mentality. Browder elegantly unfurls the painstaking research necessary to finding truly amazing bargains. Having headed back to Russia with some of Safra's money in his pocket, he stumbles on a heretofore unrecognised distinction in the Russian stock market between common shares and preferred shares, the latter both vastly cheaper and paying out substantially greater dividends. Browder goes through a checklist of possible pitfalls: "Was the ownership restricted to workers? No. Could the higher dividends be arbitrarily changed or cancelled by the company? No. Did they represent only some minuscule part of the share capital? No. There was no explanation." The book is compulsively readable and engaging as a financial primer, even though Browder includes a description of what must be every single family vacation he ever took.

Browder describes the “tingling greedy tension in my gut” that surfaced whenever an inexplicably good deal emerged. Post-Soviet Russia’s economic haze contributed to the tingle; how could an oil company named Sidanco that no one had ever heard of control the same amount of oil and gas as BP, but trade for 60 times less? In a rational market, it couldn’t, but pockets of lingering Russian irrationality meant that fortunes could be made in an ­instant.

Russian irrationality of a profoundly different sort marks the unexpected turn at the halfway point, in which ­Liar's Poker gives way to a combination of All the President's Men and The Gulag Archipelago. Browder's financial acumen – by this point, his company, Hermitage Capital Management, was the single largest foreign investor in Russia – made him an attractive target for the new oligarchs empowered by Russia's new president, Vladimir Putin. Two of Browder's companies were secretly snatched away from him, re-registered, and then hit with a $71m bill. Browder and his colleagues could not fathom the purpose of this move, until they realised that the transactions were meant to cover up enormous tax rebates the fraudsters were to receive from the government.

Putin had imprisoned the oligarch Mikhail Khodorkovsky for challenging the regime, and Browder’s insistence on fighting back against financial chicanery turned the malicious attentions of the Russian government against Hermitage. Browder was held at the Moscow airport for a nerve-racking night before being allowed to return to London; his Russian lawyers, too, fled the country.

Only Browder’s tax lawyer Sergei Magnitsky refused to leave: “The law will protect me. This isn’t 1937.” It wasn’t 1937, but Russia was not the West, and Magnitsky was to be the target of a revenge scheme against the absent Browder. He was arrested on tax evasion charges and moved from one filthy cell to the next. Far worse, the prison officials left Magnitsky’s gallstones, caused by the conditions of his imprisonment, untreated. “When did you come to us? Only one month ago!” a nurse remonstrated with him. “What do you want? To be treated every month?” Magnitsky died in November 2009 at the age of 37, the conditions of his imprisonment no doubt hastening his death, at the very least.

Magnitsky’s imprisonment marked the opening of a new chapter in Russian politics, one whose cynicism and duplicity finds numerous echoes in the recent Crimean debacle, and possibly the assassination of politician Boris Nemtsov. “I learned about it in fits and starts over several months,” Browder writes feelingly of Magnitsky’s ordeal, “but it’s an ordeal that I have never stopped thinking about.” This would be mere authorial hyperbole were it not for the powerful final third of the book, which outlines in stinging detail Browder’s efforts to seek justice for Magnitsky. The pursuit of justice takes over his life so thoroughly that Browder casually mentions in an aside that Hermitage – the entity whose birth and growth dominates the first half of the book – was abandoned in favour of his new crusade.

Browder roams Washington in the hopes of punishing the Russian officials responsible for Magnitsky’s death. Recruiting a bipartisan array of senators and a congressional staffer named Kyle Parker, racked with guilt over his failure to assist Magnitsky when he was still alive, this grandson of a Communist oversaw the passage of the Magnitsky Act, which required visa sanctions and asset freezes against any Russian officials held accountable in Magnitsky’s death. “I was walking on air,” Browder says of the bill’s passage through a Senate committee. “I had spent every day of my life since November 16, 2009, working in the service of Sergei’s memory. On this day in June 2012, it felt as if there wasn’t a person in Washington … who didn’t know the name Sergei Magnitsky.”

The effort for justice for the Magnitsky family takes numerous twists and turns, which I will not spoil here. (The Russian ban on American adoptions was generally understood to be a ham-fisted response to the Magnitsky Act’s passage.) Browder’s tenacity is matched, step by step, by Putin’s, and by the end of the book, Browder’s gloomy assessment that “there is a very real chance that Putin or members of his regime will have me killed someday” comes off as more than bluster.

Browder, a scion of communism who transforms himself into a triumphant capitalist, is himself transformed by tragedy into something his grandfather might have simultaneously loved and hated: an agitator for truth and justice – against Russia. Did Browder give any thought to being part of the great capitalist engine that helped undo the communist system – or to the ways in which capitalism, too, proved a profoundly unjust disappointment to everyday Russians? Red Notice is understandably too consumed in its own story to take in the wider sweep of the Browder family. But couldn't some enterprising novelist work wonders with the story of three generations of an American family wrestling manfully with Russian hope and Russian perfidy?

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Saul Austerlitz is a frequent contributor to The Review.