Ah, the irony of it. When it comes to fans of Russia -- and in particular the policies of its controversial president, Vladimir Putin -- they don't come any more enthusiastic than Bill Browder, the CEO of Hermitage Capital Management.
Yet since Nov. 13, when Browder was turned back at Moscow airport after a routine trip to London, the fund manager, an American-born British citizen, has been blocked from entering the country. That's because he somehow wound up on a list of individuals deemed a threat to Russia's security. The news has come as a shock to the foreign investment community, raising disturbing questions about the functioning of Russia's state.
AUTHORITARIAN DRIFT. Browder, after all, isn't just any foreign investor. He's manager of the largest portfolio investment fund investing in Russia, with some $4.1 billion in Russian stocks. He's also one of the most prominent commentators about Russia in the West, typically arguing against the negative stereotypes that deter more people from investing in the country. It's more than a little mystifying, then, that he should suddenly find himself on a blacklist of undesirables plotting to undermine the Russian state.
On the surface, the incident could be taken as further confirmation of Russia's authoritarian drift. After all, Browder wouldn't be the first prominent Westerner to have been kicked out of the country on questionable grounds.
Last year, Robert Amsterdam, a Canadian lawyer acting for the jailed Russian businessman Mikhail Khodorkovsky, was summarily expelled after police turned up at his hotel room in the dead of night and revoked his visa. To begin with, Browder believed that the Russian authorities had simply mixed him up with William Bowring, a British human-rights lawyer representing Chechen clients, who has also been denied entry to Russia.
VOCAL SUPPORTER. When it comes to associates of Khodorkovsky, or of Chechen dissidents, it's easy to see why Russia's higher authorities might want to bar their entry, deplorable though that may be from the point of view of Russia's international obligations. But Browder's case is obviously different, and in many ways even more troubling for Westerners doing business with Russia.
Browder is actually a vocal supporter of the Kremlin's policies. During Putin's long-running campaign against the Yukos oil company, Browder stood out as a lonely Western voice explaining and defending the Kremlin's actions (and doing a far better job than Russia's own government). His efforts even came to the attention of Putin himself.
Last year the Kremlin asked permission to reprint one of Browder's presentations, entitled Seven Myths About Russia, and have 5,000 copies distributed to Russian embassies abroad. "This is definitely not Putin behind this, because I'm one of the biggest friends of Russia in the West, and he knows that," says Browder.
PRIVATE INTERESTS. So if the Kremlin, or other senior officials, weren't behind the decision to brand him a threat to national security, how did Browder wind up on the list? The obvious explanation, and the one that is universally accepted in the Moscow financial community, is that a business rival bribed officials to have him put there.
It's no secret that the services of Russia's state are often hijacked by private interests. Putin seems to be as troubled by the phenomenon as everyone else. In a January, 2006, article in Global Agenda magazine, the Russian President criticized "frequent violations of the rights of our business community [by law enforcement bodies], and sometimes a blatant racket on the part of state officials."
Nor would Browder be the first foreign businessman to have had his visa revoked after falling out with local rivals. One recent case involved U.S. businessman Frank Neuman, who used to be co-owner of a chain of furniture shops in Moscow. Neuman claimed $5 million in damages from former Russian partners after they forcibly seized control of the shops last January. Then, he was turned back at Moscow airport last February, and has been unable to enter since.
POWER STRUGGLE. Old Russia hands, meanwhile, remember the case of Boris Jordan, a well-known American financier, who had his visa temporarily revoked in 1997 at a time when he was involved in a high profile dispute with local tycoons.
Then there's the mysterious case of Moscow's Chief Rabbi -- Pinchas Goldschmidt, a Swiss citizen -- whose visa was unexpectedly revoked last September. Jewish media have speculated that the incident resulted from a power struggle within Russia's Jewish community.
Of course, the big unanswered question about Browder's expulsion is who exactly was behind it? Over the years the fund manager, who is noted for his aggressive corporate-governance campaigns, has tussled with many of Russia's largest companies, particularly the large state concerns Gazprom, UES, and Sberbank.
More recently, Browder was involved in a dispute with Surgutneftegaz, a privately-owned oil company. Hermitage, along with other Western investment funds, took Surgutneftegaz to court in order to challenge the company's shareholding structure, which they claim violates the rights of investors. If Browder has his suspicions about who's behind his visa troubles, he's keeping mum.
NO COMMENT. What's clear is that whoever's responsible has a remarkable amount of clout. It has been four and a half months since the expulsion. Since then, Hermitage has lobbied a raft of senior ministers and Kremlin officials, not to mention the British Foreign Office and U.S. State Dept., which have also taken up the case at the highest levels.
Senior Russian government officials are reported to be sympathetic to Browder's plight, though they haven't commented publicly. Clearly, Russia's own Foreign Ministry must understand the harm the case is doing to Russia's image abroad, while ministers responsible for economic policy must understand the damage caused to Russia's investment climate. Yet they're all strangely powerless to influence a matter that belongs in the purview of Russia's security agencies.
No doubt the only way the situation can be resolved (as with so many things in Russia these days) is if President Putin himself gets to hear about it and intervenes personally. Hermitage clearly expects this will happen sooner or later. But it's a sad advertisement for Russia that, without explicit orders from the top, its government so often seems strangely unable to function.
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