How to Become Putin’s Number One Enemy
In 2013 I went to London’s notorious libel courts to gaze with anger and despair on yet another case that should never had come to trial. Pavel Karpov was suing Bill Browder, an investment fund manager, who had launched a devastating campaign against corrupt officials who had driven him out of Russia, and tortured and murdered his lawyer, Sergei Magnitsky.
The retired major from Putin’s Interior Ministry Police was appalled to be on Browder’s sanctions list. His luxuriously expensive lawyers claimed that Browder had not only defamed Karpov, but caused “moral suffering” to his tender frame. With evident regret, the judge stopped the hearing. Karpov had no reputation in England and therefore could not sue. Less doltish observers were struck by the Putin paradox, which niggles at everyone who watches the Kremlin.
If you believe what you hear, you cannot believe what you see.
If you assumed the regime was telling the truth when it said Russia wasn’t a Mafia state, you wouldn’t see Putin’s cronies in the playpens of Manhattan and Mayfair. If you believed that Russia respected international law, you would not see its troops in Ukraine. And if you believed that Pavel Karpov was the honest cop he claimed to be, you would not see him spending close to $1 million on London lawyers and PR men, or driving one of his many sports cars around Moscow, or relaxing in one of his family’s collection of upmarket apartments.
In his new book, Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice Bill Browder writes the way he talks—which is always a good strategy. His autobiography is bracing, direct and honest, with only a little less swearing than you encounter in person. It is both a political thriller and an argument for morality in foreign policy that he could never have expected to make when he began his roaring career in finance.
in Browder came from a socialist family. His grandfather Earl Browder was leader of the American Communist Party in the 1940s. Earl was so loyal a comrade he carried on supporting the Soviet Union even after Stalin had expelled him from the Communist Party and denounced the “Browderist” ideological deviation as heresy. His grandson revolted in the most dramatic fashion imaginable, and became a capitalist.
Bill Browder also went to Russia. He found that shares in Gazprom and other companies were astonishingly cheap. Investors assumed managers were ransacking their companies’ assets. Browder bought shares for peanuts, and then his researchers exposed the corruption. As the authorities made their arrests, Browder’s shares shot up in value. He turned $25 million in seed capital into $1 billion. The financial press rated his firm, Hermitage, the best performing investment fund in the world in 1997.
Contemporary culture does not cast brash fund managers as heroes. But although Browder does not make a big deal about it, his defiance was heroic, and remains so. Browder and Hermitage’s staff had to show physical courage, as critics of the kleptocracy ended up dead. Early on, Browder realized Russian business was like a prison yard. “When someone is coming for you, you have to kill him before he kills you. That’s the calculus that every oligarch and every Russian politician goes through every day.”
So it is, but Hermitage’s success also depended on Putin’s blessing. When he took power in 2000, the oligarchs were his rivals. Every time Hermitage exposed a fraud, Putin’s officials intervened. Until, that is, October 2003, when Putin arrested Mikhail Khodorkovsky, Russia’s richest man and Putin’s most dangerous competitor.
Browder pictures what happens next.
“After Khodorkovsky was found guilty, most of Russia’s oligarchs went to Putin and said, ‘Vladimir Vladimirovich what can I do to make sure I won’t end up sitting in a cage?’ I wasn’t there, so I’m only speculating, but I imagine Putin’s response was something like this: ‘Fifty per cent’.”
Once the deals were done, the regime turned on Browder. Russia removed his visa, and Major Karpov led the secret police into Hermitage’s Moscow offices. The nature of the fraud they executed tells you all you need to know about Putin’s Russia. The gangsters could not seize Hermitage’s money. Very quietly, Browder had moved it from Moscow to London. Instead, they stole the company’s identity, postured as its legitimate representatives, and pretended to the tax authorities that the Russian state owed them a $230 million tax rebate. Bribed officials went along with the biggest tax fraud in Russian history and handed over the “rebate” within hours.
Putin’s supporters at home and apologists abroad justify his rule by saying that he is the nationalist leader who has made Russia strong again. Yet the Putin regime arrested and murdered Sergei Magnitsky, Browder’s lawyer. (Unlike everyone else associated with Hermitage, poor Sergei did not flee the country because he believed that good people must stay and fight for a better Russia.) The Foreign Ministry made stopping Browder one of its top priorities. The Russian judiciary presided over a crime I don’t believe even Stalin committed: it organized a posthumous trial of Magnitsky’s corpse and found it guilty of the very fraud Magnitsky had exposed. The FSB harassed Hermitage in London, and Russian police officers put Browder on an Interpol wanted list. They did all of this to protect gangsters who had weakened the Russian state by stealing its tax revenues. Their behavior shows in Russia that there is no state above the crime gangs. They are all one.
Browder earned their enmity by devising a sanctions campaign that fitted the 21st century. During the Cold War, whatever privileges and wealth the Soviet elite had, they could not enjoy them abroad. Their successors spend their money in Manhattan and Mayfair. Indeed, they have a paranoid compulsion to move money to Manhattan and Mayfair, in case the regime steals it, or in case the regime falls. By lobbying Western governments to freeze the overseas assets of dozens of officials, Browder had devised a means to deprive them of the enjoyment of their loot.
To anyone who harbors illusions about Obama’s foreign policy, Browder’s account of the struggle to get sanctions passed into US law will be a salutary lesson. He received staunch support in Congress. But the Obama presidency and the Clinton State Department opposed him until the last minute. Their resistance was a bleak tribute to their greatest foreign policy misjudgment. They imagined they could “reset” relations with Russia. If they were nice to Putin, Putin would be nice to them.
The Obama administration was participating in the immortal turn the “progressive” West took after Iraq. It reasoned the Bush presidency had been a disaster, and that was true. Apparently hostile forces, it continued, were a rational reaction to western provocation, which was at best a quarter truth. And if we removed the “root cause” of our aggression, our enemies would vanish, which was pure fantasy.
John Kerry displayed the double standards that followed while he was sucking up to Obama in the hope of becoming Clinton’s successor. In 2012, when he was still chairman of the Senate Foreign Relations Committee, he tried to prevent the Senate approving Magnitsky sanctions until superior political force overwhelmed him. America was not a perfect country, he said, and Russia had democratic “accomplishments”—wisely he did not list them. The US should be “very mindful of the need not to be always pointing fingers and lecturing”.
Thus self-criticism prohibits criticism of others. Thus American liberals can abandon Russian liberals, and feel righteous as they leave them to their fate.
As all Western leaders impose sanctions on a revanchist and expansionist Russia today, you can see the failure of the Obama doctrine. We are all Browderists now, and maybe Browder points to the future.
I have heard him say that Putin is not as powerful as he looks. He relies on the support of the Russian elite and if that elite’s opportunities for plunder vanish, it will desert him.
No one can give you the how or the when. But his grandfather Earl Browder is best remembered in my admittedly small corner of the Left for being on the receiving end of one of the finest putdowns in the history of the socialist movement. Still loyal to Stalin, despite being purged and denounced, Browder was defending the Soviet Union at a debate at the Carnegie Hall in 1950. The former Trotskyist Max Shachtman was incandescent. He told Browder he was only alive because he was beyond Stalin’s reach. He listed the communist leaders in the Soviet empire Stalin had shot or garrotted. “There,” he said turning from the audience and jabbing his finger at Browder, “there but for an accident of geography, stands a corpse.”
One day Bill Browder will be able to say the same of Putin.