Bill Browder’s visit at the Tate Lecture Series Tuesday began with reminiscences of becoming one of the most successful investors in the world.
Browder grew up in a family that had dedicated itself to the teachings of communism. His grandfather, Earl Browder, served as General Secretariat for the Communist Party U.S.A. His grandfather ran against Franklin Delano Roosevelt twice, and was eventually imprisoned in 1941 for his activities related to the party. When the younger Browder was deciding what he wanted to become, he reflected upon his grandfather and what his family life had been like.
“I’m going to try and become the biggest capitalist in the world,” Browder said when he was discussing how he rebelled against his family.
Browder worked for the American investment firm Salomon Brothers after his 1989 graduation from the Stanford Business School. Browder’s first client was a Russian fishing company. He then became intrigued with the investment climate in Russia. His time with the Russian company coincided with Premier Gorbachev’s perestroika and glasnost reforms. These were aimed at privatizing companies and reversing decades of Soviet-era market doctrine.
However, Browder took his investment in Russia to another level. Following the dissolution of the Soviet Union, the economy of Russia also tanked. By 1992, the economy had a total valuation of only $10 billion, and Browder knew it was time to act.
He pestered anyone he could at Salomon Brothers until he was invited to its New York office where he was given $25 million to invest in Russia. Browder invested in entities within the energy sector, most notably Gazprom, the largest natural gas producer in Russia.
By the late-90s, Browder had left Salomon Brothers and started his own investment firm, the Hermitage Fund. Following excellent growth in its first year, the Hermitage Fund made Browder the most successful financial manager in 1997.
In 1998 the Russian economy collapsed and the political landscape began to shift. Boris Yeltsin, Gorbachev’s successor, continued to battle his declining health along with the struggling Russian economy. The oligarchs, the wealthiest members of Russian society, began to pillage any assets they could as the government lost control.
When he realized his presidency was ending, Yeltsin announced that the young KGB officer Vladimir Putin would succeed him. At the same time, Browder became a shareholder activist to make sure the oligarchs who had stolen hundreds of thousands in assets were dealt justice.
Putin began a campaign to restore order in Russia by cracking down on oligarchs who had poisoned the country’s capitalism. Fortunately for Browder, Putin’s agenda was aligned with his own, and for a time, Browder found some success.
In 2003, the oligarchs that Browder pursued were the bad guys. But by 2005, Browder went after the cronies of Putin. On Nov. 13, 2005, Browder was arrested, deported and declared a threat to Russian national security.
“The Russian government doesn’t just kick you out; they go after you with extreme prejudice,” Browder said.
Following his deportation, Browder worked to get his employees out of Russia knowing Putin’s government would come after them next. All but the office manager were safely removed from the country, and Browder was able to sell off the assets he had invested.
On Dec. 23, 2007, Browder had unexpectedly received a large tax refund from the Russian government. He hired Russian lawyer Sergei Magnitsky to look into it. Less than a year later, Magnitsky was arrested and tortured for his involvement with Browder. On Nov. 16, 2009, Magnitsky was beaten to death in his jail cell, and Browder has since dedicated himself to pursuing justice for Magnitsky.
In 2012, President Barack Obama signed the Magnitsky Act into law. The law targeted Russians loyal to Putin by freezing visas and other assets of those associated with the murder of Magnitsky. In 2016 this evolved into the Global Magnitsky Act. The act allows the United States to more aggressively pursue human rights offenders and ban them from entering the country.
Browder still faces trouble when travelling internationally and Vladimir Putin has insisted that he would like to question Browder numerous times. Browder has avoided travelling back to Russia, but that doesn’t mean Putin hasn’t tried to get him back.
In the back of the Spanish police car going to the station on the Russian arrest warrant. They won’t tell me which station pic.twitter.com/Xwj27xC7Zd
— Bill Browder (@Billbrowder) May 30, 2018
