Bill Browder

See also William Browder (mathematician)

William Felix Browder (born 23 April 1964) is the Chief Executive Officer and co-founder of the investment fund Hermitage Capital Management and noted critic of Vladimir Putin.

Personal life

Bill Browder, born into a notable Jewish family in Chicago, is the grandson of Earl Browder, the former leader of the Communist Party USA, and the son of Eva (Tislowitz) and Felix Browder, a mathematician. He grew up in Chicago, Illinois, and attended the University of Chicago where he studied economics. He received an MBA from Stanford Business School in 1989 where his classmates included Gary Kremen and Rich Kelley. In 1998, Browder gave up his US citizenship and became a British citizen. Prior to setting up Hermitage, Browder worked in the Eastern European practice of the Boston Consulting Group in London and managed the Russian proprietary investments desk at Salomon Brothers.

Hermitage Capital Management

Bill Browder and Edmond Safra founded Hermitage Capital Management in 1996 for the purpose of investing initial seed capital of $25 million in Russia. The business was very successful, profiting from the wave of privatizations occurring in Russia at that time, and increased its investor base substantially. Following the Russian financial crisis of 1998 Browder remained committed to Hermitage's original mission of investing in Russia, despite significant outflows from the fund. Hermitage became a prominent activist shareholder in the Russian gas giant Gazprom, the large oil company Surgutneftegaz, RAO UES, Sberbank, Sidanco, Avisma and Volzhanka. Browder exposed management corruption and corporate malfeasance in these partly state-owned companies. He has been quoted as saying: "You had to become a shareholder activist if you didn’t want everything stolen from you".

In 1995-2006 Hermitage Capital Management was one of the biggest foreign investors in Russia and Browder has amassed a significant fortune through his management of the fund. For example, in 2006 he earned an estimated £125-150 million. In 2007 he earned a further £125-£150 million.

In March 2013, HSBC, a bank that serves as the trustee and manager of Hermitage Capital Management, announced that it would be ceasing the fund's operations in Russia. The decision was taken amid a libel court case in London and a trial in absentia for tax evasion in Moscow, both against Browder.

Conflict with the Russian legal system

In 2006, after ten years doing business in the country, he was blacklisted by the Russian government as a "threat to national security" and denied entry to the country. The Economist wrote that the Russian government blacklisted Browder because he interfered with the flow of money to "corrupt bureaucrats and their businessmen accomplices". Browder had been a supporter of Russian president Vladimir Putin before, though.

As reported by The New York Times in 2008, "over the next two years several of his associates and lawyers, as well as their relatives, became victims of crimes, including severe beatings and robberies during which documents were taken". In June 2007 dozens of police officers "swooped down on the Moscow offices of Hermitage and its law firm, confiscating documents and computers. When a member of the firm protested that the search was illegal, he was beaten by officers and hospitalized for two weeks, said the firm’s head, Jamison R. Firestone." Hermitage became "victim of what is known in Russia as 'corporate raiding': seizing companies and other assets with the aid of corrupt law enforcement officials and judges". Three Hermitage holding companies were seized on what the company's lawyers insist were bogus charges.

The raids in June 2007 enabled corrupt law enforcement officers to steal the corporate registration documents of three Hermitage holding companies, permitting them to perpetrate a fraud, claiming (and receiving) the $230 million of taxes paid by those companies to the Russian state in 2006. In November 2008 one of Hermitage's lawyers, Sergei Magnitsky, was arrested. He was charged with the very tax evasion that he had uncovered. Magnitsky died on November 16, 2009, after eleven months in pretrial detention.

In February 2013, Russian officials announced that Browder and Magnitsky would both be put on trial for evading $16.8 million in taxes. Furthermore, as announced in March 2013, Russian authorities will be investigating Hermitage's acquisition of Gazprom shares worth $70 million. The investigation will be focusing on whether Browder violated any Russian laws when Hermitage used Russian companies registered in the region of Kalmykia to buy shares. (An investigation by the Council of Europe's Committee on Legal Affairs and Human Rights cleared Browder of the accusations of improprieties that surfaced at this time.) At the time, according to the Russian law, foreigners were barred from directly owning Gazprom shares. Browder has also been charged with trying to gain access to Gazprom's financial reports. Browder admitted having sought influence in Gazprom but denied any wrongdoing; in his view, purchasing Gazprom shares was an investment in the Russian economy, while the desire to influence the Gazprom management was driven by the need to expose a "huge fraud going on at the company", and the scheme with Russian-registered subsidiaries entitled to tax advantages was practised by other foreign investors at the time and was not illegal. He also said that he believed the trial was in response to the United States passing the Magnitsky Act, which had blacklisted Russian officials involved in Magnitsky's death from entering the U.S. As claimed by The Financial Times, this trial was deemed to be the first in Russian history over a dead defendant. Amnesty International described the trial as “a whole new chapter in Russia’s worsening human rights record” and a “sinister attempt to deflect attention from those who committed the crimes Magnitsky exposed.”

On 11 July 2013, Browder was convicted in absentia by a district criminal court in Moscow on charges under article 199 of the RF Criminal Code (tax-evasion by organisations), and sentenced to nine years. In May 2013 and again in July 2013, Interpol rejected requests by Russia's Interior Ministry to put Browder on its search list and locate and arrest him, saying that Russia's case against him was "predominantly political".

In April 2014, the European Parliament unanimously passed a resolution to impose sanctions on over 30 Russians complicit in the Magnitsky case; the first time in the parliament's history that a vote has been held to establish a public sanctions list.

Red Notice

In February 2015, Browder published an account of his career, focusing on his years spent in Russia and the Russian government's attacks on Hermitage Capital Management. Browder's ongoing crusade against Russian corruption and the investigation into the death of his attorney Sergei Magnitsky are at the heart of Red Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice.