58 pages • 1 hour read
Bill BrowderRed Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice
Nonfiction | Autobiography / Memoir | Adult | Published in 2015A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Chapters 16-21Chapter Summaries & Analyses
Chapter 16 Summary: “Tuesdays with Morrie”
By January 2000, with foreign investment dried up, the oligarchs no longer have any lingering incentive to treat outsiders well. Instead, they begin stealing from their own companies: “They engaged in asset stripping, dilutions, transfer pricing, and embezzlement, to name but a few of their tricks” (144).
Browder gives a speech to the American Chamber of Commerce in Moscow about cheating at Yukos Oil. There he meets Elena Molokova, who works for Yukos: “I was about to rake her company’s biggest client over the coals and they had sent someone to assess the damage” (145). He feels an attraction: “there seemed to be a spark between us” (146). Later, he calls and asks her to lunch; reluctantly, she accepts.
The lunch begins awkwardly, but Browder discovers that “Elena was not merely beautiful but incredibly smart” (147), with two PhDs from Russia’s top university. He adds, “That she was working for the enemy made her fiercely attractive to me” (147).
If you were a westerner with money, “Russian girls would throw themselves at you” (147), but Elena, already well off, remains aloof. Browder invites her to dinner, where he declares that the oligarchs are monsters, but this insults Elena. The night ends on a chilly note.
To repair the damage, he sends her his copy of a book, Tuesdays with Morrie, about a dying man who carefully says goodbye to the world, with a note suggesting that the book might speak to her, as she had lost her father suddenly without being able to say goodbye. A week later, touched by his gesture, she calls Browder to thank him. They begin dating regularly; the relationship is warm but chaste. In May 2000, they vacation together in Paris, where romance finally blossoms.
Chapter 17 Summary: “Stealing Analysis”
Energized by the love affair with Elena, Browder focuses anew on the ongoing theft of natural resources by the oligarchs, especially at oil giant Gazprom. These thefts threaten Heritage’s investments: “If I didn’t do something, the fund would be left with absolutely nothing” (154). He interviews people who have dealings with Gazprom and learns that entire gas fields, with reserves as great as those of major western oil companies, have been stolen, “[b]ut how could we verify anything in Russia?” (157).
The Hermitage team discovers that many databases with information on Russian companies are available for cheap from street hawkers. The data is highly detailed because the Russian government, still following the long-standing Soviet tradition of economic planning, keeps extensive records. They learn it’s open season on natural resources, with huge blocks of oil and gas firms being sold off for tiny fractions of their worth. Even the company auditors are in on the thefts: “Gazprom had effectively given away reserves equivalent to the size of Kuwait’s. Full-scale wars had been fought over far less” (159).
Then they realize that Gazprom still has immense reserves of oil and gas that have not been sold off: “more than 90 percent was still there—and no one else knew it” (160). Hermitage quickly invests heavily in Gazprom, then alerts the media. In October 2000, the news gets out, and by early 2001, a shocked Russian parliament calls for an investigation. Unfortunately, the government review and a Gazprom internal audit both whitewash the Gazprom sales.
President Putin suddenly steps in and fires Gazprom’s CEO, replacing him with a man who promptly sets about to halt the underhanded sales “and recover what had been stolen” (162). Gazprom’s stock price soars, and by 2005, Heritage’s investment in the oil company’s shares has skyrocketed: “Not 100 percent—one hundred times” (162).
Chapter 18 Summary: “Fifty Percent”
In Moscow, Browder stops his car to assist a stricken man lying in the street. He learns the hard way that in Russia, if you try to help, the police will show up and threaten you: “the price for intervention would be punishment, not praise” (164). Browder escapes trouble, but he wonders whether his efforts on behalf of injured Russian companies might also get him into difficulties.
Regardless, he continues his campaign: “I went after UES, the national electricity company, and Sberbank, the national savings bank, to name just two” (165). Each time, he does careful research, then notifies the media: “[O]nce the campaigns reached a fever pitch, Putin’s government would generally step in to flex its muscles” (165).
Putin, recently elected to a first term as leader of Russia, must wrest power from the oligarchs, and Browder’s efforts give the new president the cover he needs: “[W]hen it came to me and my anti-corruption campaigns, Putin was operating on the political maxim of ‘Your enemy’s enemy is your friend’” (165).
One main reason why Browder has not been assassinated by the oligarchs is that they suspect he is working for someone much higher up: “I had never met Putin in my life. But because everyone thought I was ‘Putin’s guy,’ no one touched me” (166).
By the end of 2003, Heritage finally breaks even, and Browder’s five-year struggle to recover his investors’ losses comes to fruition. The victory, however, is short-lived; “Mikhail Khodorkovsky, the CEO of Yukos and Russia’s richest man, had been arrested” (167), and within several days the market drops 26%. The Russian government seizes Khodorkovsky’s stock in Yukos.
It turns out that Khodorkovsky has been seeding opposition parties; Putin roots them out. In June 2004, Khodorkovsky and an ally are sentenced to nine years in prison for fraud, tax evasion, and theft. Shortly after, all the other oligarchs make peace with Putin, who acquires large portions of their empires. Putin has, “by many estimates, become the richest man in the world” (169).
Browder’s anti-corruption campaign now threatens Putin’s newly-acquired financial interests; the two men are no longer aligned. Browder continues undaunted, lately coming to believe that as a foreigner, he is somehow immune from threats. He is mistaken.
Putin doesn’t want the bad press of killing a foreign investor; instead, in November 2005, he simply has Browder detained at the airport and deported.
Chapter 19 Summary: “A Threat to National Security”
Browder contacts the British foreign office and chats briefly with ambassador to Russia Tony Brenton, who agrees to look into Browder’s expulsion. A week later, they get a reply from the Russian Foreign Ministry: Browder’s visa has been canceled because he is considered a threat to national security: “Someone serious wanted me banned from Russia” (173).
Chapter 20 Summary: “Vogue Café”
In December 2005, a pregnant Elena suddenly goes into contractions; Browder rushes her to the hospital, where she gives birth to a baby girl, Jessica. The holidays are blissful for the family.
In January, Browder’s Moscow assistant, Vadim, reaches Russia’s minister for economic development, who looks into the visa situation but gets warned off. Ambassador Brenton also hits a dead-end. Vadim meets with a mysterious insider, “Aslan,” who claims the entire anti-Browder operation is run by the Russian secret police (the FSB), who are now interested in “depriving Hermitage of its assets” (178). Even Vadim has been marked for arrest. He leaves quickly for London.
Journalists, having heard rumors, begin to call Browder, who can’t comment, lest he anger the Russians. The news breaks anyway, and Browder’s hopes for a visa renewal vanish.
Chapter 21 Summary: “The G8”
Browder manages to get endangered members of the Hermitage staff and their families out of Russia. With help from a discreet Russian trader, Hermitage also quietly sells off its Russian holdings and moves the proceeds out of the country: “With our people and money safe, we had eliminated the main levers that the Russian government could use to harm us” (185).
Browder is no longer on the ground in Moscow, where he can glean information about Russian investments, and his investors begin to redeem their money from Hermitage. As much as 20% of his fund will evaporate this way.
Back-channel efforts by the British foreign office continue in an attempt to get Browder’s visa reinstated. The hope is that Prime Minister Tony Blair will have a chance to bring it up with Putin at the July G8 summit in Moscow. The summit gets distracted by an erupting Israeli-Lebanese ground war, and Blair never brings up the visa issue. When a reporter asks Putin about it, he feigns ignorance but says, “I imagine that man may have violated our country’s laws” (188). Browder realizes this means “I am now instructing my law enforcement agencies to open up as many criminal cases against him as possible” (189).
Chapters 16-21 Analysis
It’s a case of jumping from the frying pan into the fire: Potanin’s threat pales in comparison to the risk from Putin, whose interests soon veer away from Browder’s. Where once Putin benefits financially and politically from the Hermitage anti-corruption crusade, the assets and power he has wrested from the oligarchs will suffer under continued legal attack. Putin has every means at his disposal to make that problem go away. He starts by having Browder deported, then threatens further legal action against Hermitage and its team.
Though it’s arguable that Putin’s reign has benefitted Russia—year after year, he remains popular with the Russian people—it’s also clear that under his regime, an organized system of theft is in place to benefit people at the top of the political food chain. This kleptocracy slows the growth of the Russian economy, and when sanctions are imposed in subsequent years by the West—accompanied by a simultaneous meltdown in the price of Russia’s prime commodity, oil—the Russian economy will falter.
Hermitage’s government mole uses the name Aslan, which is also the name of the heroic lion in C.S. Lewis’s children’s novels, The Chronicles of Narnia; the lion Aslan looks for outside help to try to save Narnia from those beings that would hurt it.
