Hard Choices

Hermitage Fund's William Browder


My grandfather was the general secretary of the American Communist Party. And as I was finishing business school in 1989, I had a romantic attraction to the Soviet Union as it was opening for business. As an investment banker in 1992, I went to the Russian town of Murmansk to advise the managers of a state-owned fleet of 100 ships. Each ship cost $20 million, but the managers were being offered the chance to buy 51 percent of the entire fleet for $2.5 million. I realized that to make money in Russia, you had to invest directly in assets that were being privatized. In 1996, I moved to Moscow and set up the Hermitage Fund, which became the largest foreign investment fund in the country.

I figured that if I was buying at a heavy discount—and playing it out until Russia became a civilized country—I could eventually make 100 times my money. However, when Russia defaulted on its debt in 1998, the oligarchs started misbehaving. Our fund went from $1 billion to $120 million. I became a shareholder activist at companies like Gazprom, where we exposed that billions in assets had been stripped. We built the fund up to $4.5 billion.

However, my approach was hugely disliked: In late 2005, I was stopped in the Moscow airport after a business trip and denied reentry. The Russian police then raided my offices and perpetrated a fraudulent tax refund of $230 million. A lawyer we hired to stop the fraud, Sergei Magnitsky, was arrested and died in a Moscow prison in 2009. Not one of the Russian officials involved in his death has been arrested. Many have been promoted and given state honors. I'm lobbying governments to sanction these people and freeze their assets. I'm getting death threats, but I won't stop until we get justice.

I now live in London and am a global investor. My relationship with the world used to be about how much money I made or lost. Now it's more about humanity. Russia is becoming criminalized at an exponential rate. I wish I had not gone there.


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