Red Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice

“I decided that I wanted to become the biggest capitalist in Eastern Europe.”

Browder rebels against his family’s communist roots and chooses a contrarian path, not merely as a capitalist, but as an investor in the very heart of Marxism: Eastern Europe. This is where his famous grandfather, Communist presidential candidate Earl Browder, began his political journey.

“I didn’t know it at the time, but this scene in the lobby of the Sunstar Park hotel was the infamous ‘Deal with the Devil,’ where the oligarchs decided to throw all their media and financial resources behind Yeltsin’s reelection. In exchange, they would get whatever was left of the unprivatized Russian companies for next to nothing.”

President Boris Yeltsin, struggling in his re-election bid, favors market reforms, while his chief opponent, Communist candidate Gennady Zyuganov, supports Marxist socialism and government ownership of industry. A Zyuganov win could undo the privatization efforts and the large-scale capture of industry by the oligarchs. The billionaires pool their resources to do whatever it takes to re-elect Yeltsin.

“People lie, politicians lie, everybody lies. Christ, you’re talking about a Russian politician. If I believed everything politicians said to me, Safra would be broke by now.”

Sandy Koifman, banker Edmond Safra’s right-hand man, expresses his doubts when a popular communist politician, Gennady Zyuganov, promises to a roomful of wealthy investors that, if elected president of Russia, he won’t re-nationalize the country’s fledgling corporations. It is a time of instability in Russia, only four years removed from the collapse of the Soviet Union, when a few dozen men have managed to game the system and acquire nearly 40% of all Russian industry. The Communists are by no means finished, and Zyuganov’s candidacy is an attempt to turn back the clock.

“Nearly every company in Russia had preferred shares and most of them traded at a huge discount to the ordinary shares. These things were a potential gold mine.”

By a quirk of the chaotic Russian privatization program, preferred shares in many of the new companies have no voting rights but pay big dividends, while ordinary shares can be voted but do not participate directly in company profits. It is Hermitage Capital’s purpose to uncover these opportunities and invest in them; the fund makes some of its biggest gains by doing so.

“Now here was Sidanco, sitting on a bit less oil than Lukoil, but not much, only it was six times cheaper than Lukoil. In other words, Sidanco was sixty times cheaper than BP! This was one of the most obvious investment ideas I had ever seen.”

Russia, the first Marxist nation, is also the first to reverse socialism and privatize its entire economy, and there are few rules for how to do this. Early in the privatization process, information is hard to obtain—in part due to the old culture of paranoia—and opportunities abound to find dirt-cheap companies, if only one is persistent. Browder and his team have that perseverance.

“Never mind that they’d made forty times more money than us: that a group of unconnected foreigners also had a big financial success was unbearable to them. This was simply not supposed to happen. It was not […] Russian.”

Foreign investors threaten the hegemony of the oligarchs; ruining the outsiders financially might serve to chase them away, even if this means diluting their own investments in the newly-privatized Russian firms.

“How am I going to take on an oligarch? How am I going to take on an oligarch? How am I going to take on a goddamn oligarch? By meeting him head-on, that’s how.”

Browder must confront one of the powerful billionaire oligarchs, Vladimir Potanin, who owns a majority stake in oil company Sidanco and has conspired to dilute the value of its shares, largely to ruin Hermitage and send its foreign investors fleeing. Browder has an obligation to protect his investors from such shenanigans, so he decides to take the fight public.

“This whole exercise was teaching me that Russian business culture is closer to that of a prison yard than anything else.”

Once a wealthy businessman has established himself through corruption and intimidation, he becomes a target for others who share his underhanded style. A prison yard is a good analogy, as most of its inhabitants are criminals who like to use threats and violence to achieve their ends. In either situation, any hesitation or weakness will quickly be sniffed out, and enemies will move in for the kill. For this reason, once a threat is made, the initiator cannot pull back for fear of losing everything.

“With the brakes off, the oligarchs embarked on an orgy of stealing. The tools they used were many and with no law enforcement to stop them, their imaginations ran wild.”

The Russian privatization program is one case where the old and sardonic saying that “every great fortune begins with a crime” is literally true. The Soviet economy and culture, long managed not on merit but on politics and graft, does not suddenly change simply because industries are being bid out to private ownership. The result is a festival of corruption where the best-connected, cleverest, and most ruthless win the day. These are the kinds of people, steeped in venality, that Browder and his team must confront.

“In Soviet times, the richest person in Russia was about six times richer than the poorest. Members of the Politburo might have had a bigger apartment, a car, and a nice dacha, but not much more than that. However, by the year 2000 the richest person had become 250,000 times richer than the poorest person. This wealth disparity was created in such a short period of time that it poisoned the psychology of the nation. People were so angry that they were ready to spill their guts to anyone who wanted to talk about it.”

One counterbalance to the ongoing Russian corruption is a decades-long socialist tradition of overall equality of income. It’s true that high-ranking Soviet apparatchiks could eat caviar and ride in limousines to work, but the sudden and outrageous ostentation of the new class of rich people is seen as deeply offensive. Browder acquires good intelligence on the oligarchs because many people connected to them resent this sudden wealth for the few.

“My skills were as an investor, and they could be applied anywhere, particularly in countries that faced issues similar to Russia’s.”

After his eviction from Russia, Browder’s investors begin to pull out, so he looks elsewhere in the world for undervalued companies. Browder discovers that the Hermitage team’s hard-earned investigative skills work anywhere, not just in Russia. He begins to travel the world in search of hidden financial gems for a new set of investors.

“Here was an innocent man, deprived of any contact with his loved ones, cheated by the law, rebuffed by the bureaucracy, tortured inside the prison’s walls, sick and becoming sicker. Even in these most dire circumstances, when he had the best possible reasons to give his tormentors what they wanted, he wouldn’t.”

Sergei Magnitsky, one of Browder’s Moscow attorneys, is arrested on trumped-up charges. When he becomes ill in prison, he is refused medical treatment. It’s assumed that the pain will cause him to relent and sign an affidavit that falsely connects himself and Browder to the very criminal conspiracy the Hermitage team has uncovered. Sergei surprises everyone with his persistent refusal to cooperate with his tormentors. His strength of spirit awes his compatriots and frustrates the authorities.

“My desire to reconcile my family’s communist background with my own capitalist ambitions had brought me to Russia, but, naively, I never imagined that this pursuit would result in a human tragedy.”

Sometimes the moral decisions we make, however well intentioned, can backfire and cause more harm than good. Browder’s rejection of his family’s controversial past is a decision made in the heat of youth, a time of easy and naive inspiration. His early successes bolster his confidence until he makes extraordinarily daring decisions that will come back to haunt him.

“But how does one get justice in the West for torture and a murder that took place in Russia?”

Browder decides to campaign elsewhere in the world for justice in Russia. He first turns to the US government in the hope that it can find some way to sanction the criminal behavior that has so devastated Browder and his team and so shocks the conscience of everyone who hears the tale.

“No matter how many lies the Russian authorities told, a person could always hold up a finger and say, ‘Yes, but if Kuznetsov and Karpov are not corrupt, then how did they get so rich? Can you answer that? How did they get so rich?’”

Browder’s YouTube videos showing Karpov and Kuznetsov’s lavish lifestyles attract over 400,000 hits in Russia, where ordinary citizens don’t take kindly to officials showing off their unexplained wealth. Russian authorities respond over and over by issuing denials and accusing Browder and the Hermitage team of the crimes, but a groundswell of protest begins to build among the Russian people.

“They had inadvertently discovered a new method for fighting human rights abuses in authoritarian regimes in the twenty-first century: targeted visa sanctions and asset freezes.”

US senators considering the case for sanctioning the conspirators in the Magnitsky killing begin to realize that such sanctions can be applied to a larger field. The Magnitsky Act’s wording is expanded to include all human-rights violators in Russia.

“Humiliation is [Putin’s] currency—he uses it to get what he wants and to put people in their place. In his mind, he hasn’t succeeded until his opponent has failed, and he can’t be happy until his opponent is miserable.”

As ruler of Russia, Putin is a master of intimidation, threats, and the use of violence to quell opposition. In his political world, it’s important not merely to defeat the enemies but to publicly abase them, so that they are thereafter unable to inspire opposition to the regime. This approach has a long history: in Soviet times, an opponent would be tortured into a damning and humiliating confession and then executed, leaving no proud memory of the victims and little chance they might be seen as martyrs, and thereby inspire new opposition.

“This is Russia today. A stuffy room presided over by a corrupt judge, policed by unthinking guards, with lawyers who are there just to give the appearance of a real trial, and with no defendant in the cage. A place where lies reign supreme. A place where two and two is still five, white is still black, and up is still down. A place where convictions are certain, and guilt a given. Where a foreigner can be convicted in absentia of crimes he did not commit. A place where an innocent man who was murdered by the state, a man whose only crime was loving his country too much, can be made to suffer from beyond the grave. This is Russia today.”

The case against Browder is fabricated, the trial a mockery of justice. In Russia, there are few rights for the accused and no presumption of innocence. Over the decades, show trials have served the state’s propaganda purposes. In this case, however, the trial alienates the very people in the West that the Russian authorities want to convince.

“They say there are five stages of grief and that recognizing the pain is the most important one. That may be true, but recovering from a murder where the people who were responsible are walking free and blatantly enjoying the fruits of their crimes made recovery that much more difficult.”

It takes Browder nearly a year before he can begin fully to mourn the death of Sergei Magnitsky. His grief is coupled with a resolve to seek justice as long as the perpetrators run free.

“The Russian authorities have been so brazen in pursuing me that they have ruined their standing with many international institutions.”

The absurd show trial that accuses Browder of the very crimes he has discovered, as well as the multiple attempts to have him arrested at international borders, bespeaks a Russian leadership so brazenly cynical as to embarrass even the most jaundiced politicians in the West. The Russians’ prison-yard logic of utterly destroying their opponent offends Western sensibilities, where at least a modicum of fair play is part of the culture.

“Like anyone else, I have no death wish and I have no intention of letting them kill me. I can’t mention most of the countermeasures I take, but I will mention one: this book. If I’m killed, you will know who did it. When my enemies read this book, they will know that you know.”.

The danger to Browder is real and ongoing. Russian officials will not rest until he is punished or killed for standing up to their corruption. One of Browder’s insurance policies is to publish and promote the tell-all book Red Notice: this might give pause to the Russian authorities before they try to assassinate him, as the resulting bad press would damage their other international efforts.

“I’ve met literally hundreds more people who have given me a whole new perspective on humanity that I would never have gotten from my life on Wall Street.”

The tragedy of losing Sergei Magnitsky leads Browder to his new career in human rights advocacy, where he works with people whose motives are much more heartening than the monetary ambitions of investment bankers.

“I now understand how completely naive I was to think that as a foreigner I was somehow immune to the barbarity of the Russian system.”

Browder’s youthful enthusiasm for a rebellious romp through the world of high finance, coupled with a brilliant mind and dogged persistence, inures him to the warning signs as he dives deep into the dangerous realm of the Russian oligarchs. He learns the hard way that there’s a high price to pay for opposing them.