Bill Browder

0:02With the breakup of the Soviet Union, Russia became a fertile place for many Western capitalists to invest. Perhaps the most successful of them was Bill Browder, who was actually the grandson of the head of the American Communist Party. Bill Browder built Hermitage Capital into one of the leading Western investors in Russia, but he ran afoul of the Russian government and had to leave the country. I had a chance to sit down with Bill Browder in Berlin to talk about what he's now doing and why he's trying to get assets of Russia frozen so that they might be used for the reconstruction of Ukraine.

0:30So I don't know if Vladimir Putin has a enemies list, but if he does, you're probably on it. How did you manage to get on his enemies list? Well, I'm definitely on it, high on it, certainly perhaps even the highest on it among foreigners. And the way I got on it was I lobbied for a piece of legislation called the Magnitsky Act. It's named after my Russian lawyer, Sergei Magnitsky, who was murdered by the Putin regime in Russian police custody. and the Magnitsky Act freezes the assets and bans the visas of human rights violators from Russia. And Putin is a human rights violator. He's a very wealthy man and he values his money more than human life.

1:13And so the idea that Bill Browder could get his money frozen was just the biggest insult ever to him. And for that reason, he's been chasing me around the world ever since. Are you not afraid of falling off of a building somewhere or being poisoned? All sorts of terrible things have happened to people around me in this whole conflict. Do I live my life in fear every day? The answer is no. Do I understand that there is a very real chance they could do something terrible to me? The answer is yes. Do I take precautions? Many. So this is Yevgeny Prigozhin. He was the head of the Wagner Group. He marched on Moscow.

1:53He humiliated Putin. And Putin waited like three or four months to kill him. And in fact, every day during that three or four months, everyone was saying, how is this guy still alive? And then one day, he was on his private jet with his entire senior team of mercenaries. They're flying from St. Petersburg to Moscow. And one of the wings exploded on their private jet. And it just so happened that there was somebody on the ground with their Apple iPhone, watching this plane careening to the ground. And this had two effects. One was that he killed this guy who humiliated him, which is a very important part of Putin's thing.

2:30But the second is they got this video, and they showed this video on Russian national TV and all over the world. During President Trump's first term, President Trump met with Mr. Putin at one point. And Mr. Putin, as I understand it, said, I'd like to get some things back from the United States, specifically I'd like to have Bill Browder brought back to Russia so that I can make sure he's properly treated in Russia under our justice system. Were you surprised that President Trump said, well, let me think about it for a couple of days? And were you surprised during that period of time that more people didn't jump up and down and say, this is outrageous that the president would even consider doing this?

3:11It was a pretty trying week of my life. So this was July 2018. The two presidents met at the Helsinki summit. It was the Monday after Robert Mueller, the special prosecutor, had indicted 12 Russian military intelligence officers for hacking the election. I've been on the top of Putin's mind since the Magnitsky Act was passed. But what was surprising was when the next question went to Trump and they said, what do you think of this offer? And without skipping a beat, he said, I think it's an incredible offer. To have the most powerful man in the free world offering to hand me over to a man who wants to kill me, that was very surprising.

3:51What did you do when you heard this? Did you go into hiding? I thought about getting on an airplane and leaving the United States. But my wife said, well, it's probably not going to all happen that quickly. And now the whole world wants to know who is this Bill Browder. So I think you should tell them. And so I spent the next few days on doing interviews and explaining the whole story. And there actually was a lot of outrage because in Washington, the big question was, do we want to hand over Bill Browder, who I know a lot of people in Washington who helped me with the Magnitsky Act, and they had this vote in the Senate, and the Senate voted 98 to zero not to hand me over.

4:30Now, you have never met Putin, but you must have studied him very carefully, obviously. Were you surprised that he decided to invade Ukraine a few years ago? Very surprised. So leading up to that invasion, the Russian troops all gathered on the border, and there was, I don't know, six or eight weeks of uncertainty about whether he would or wouldn't invade. And I said, no, he's just angling to get all concessions from the West. He's not going to go in because it would be insane to go in because there'd be unbelievable sanctions. His military is totally hollowed out. There's corruption. And then he went in.

5:06And so I was surprised and very surprised, actually. Are you surprised that it has taken this long for the war to keep going on? In other words, Ukraine, it was a thought at the time, will be taken over in three or four days. That was Putin's plan, as I understand it. Obviously, the war is now on its third year or so. There's no clear resolution as we talk. Do you see any way he might say, I'll back out, but I don't really want to do this? Putin is never going to back down. So I was surprised that the Ukrainians did as well as they did at the very beginning of the war. I think that everybody thought that they would lose very quickly.

5:41And the Ukrainians put up such a bold and really impressive fight that they pushed the Russians back. Once it wasn't a sort of three-day capitulation, and since that point, it's been clear to me that there is really no end to this war. And the reason there's no end to this war is that the Ukrainians are not going to surrender. And Putin can't back down, because if he were to back down, he would look weak, and he would probably lose power. And so for him, this war is a war to stay in power, and for the Ukrainians, this is a war of survival. So neither side is going to give up, and neither side has a definitive military advantage.

6:20Are you surprised that Donald Trump, who said he could probably get this war resolved within 24 hours, has not yet been able to get Putin, who he regards as a friend, able to come to the negotiating table? Or you're not surprised? I'm not surprised at all. Putin is doing this war in order to stay in power. He wants to stay in power to stay alive. There's nothing Donald Trump can offer him that will keep him alive and keep him in power. He's doing this because he needs a foreign enemy to distract the Russian people from their own problems. And so there's nothing Donald Trump can do for Vladimir Putin that's going to make him stop.

6:58Let's talk about the Browder family and how you came to become an investor in Russia. Your grandfather, for those who don't know, was a very prominent communist leader in the United States. His name was Earl Browder. Can you tell us about his background and how he came to such prominence in the United States? So my grandfather Earl was a labor union organizer from Wichita, Kansas. And he was so good at organizing the union that one day he was spotted by the communists. And they said, if you like labor unionism, you're going to love communism. Why don't you come to Russia and check it out? And so 1927, my grandfather Earl went to Moscow.

7:34When he got there, he met a young woman who became my grandmother. My father was born in Moscow. And then five years later, in 1932, they were sent back by the Communist Party so that my grandfather could become the general secretary of the American Communist Party. He ran for president twice against Roosevelt in 1936 and 1940 on the Communist ticket. He was arrested in 1941. And so there was demonstrations all over the inner cities of America to free Earl Browder. And then Mayor LaGuardia called up Roosevelt and said, you've got to let this guy go. And he was pardoned in 1942. He was eventually kicked out of the Communist Party in 1945 for being too much of a capitalist and then persecuted viciously during the McCarthy era.

8:21So what did he do the rest of his life? And did you ever meet your grandfather? You know, I didn't know him as a communist leader. I knew him as my grandfather. He passed away when I was nine years old. But I remember this sort of amiable old man with white hair and a white mustache who smoked a pipe in his office and had wise things to say from time to time. So where were you born? I was born in Princeton. And your father was at that time at Princeton? He was at the Institute of Advanced Studies where Einstein was at the time. And your mother, was she a mathematician? She was one of the first women to go to MIT, and they met when my father was an instructor at MIT.

9:03And when you were in nursing school and growing up, did people say your grandfather was a communist, or they say your father is the head of the math department? Growing up around the university, I was the son of Felix Browder, the chairman of the math department. So you graduated from the University of Chicago, and then did you say, I want to be in the investment world, I want to go to business school, what did you decide to do? My first job out of the University of Chicago was as a consultant at Bain & Company in Boston. They had a special sort of postgraduate program for two years. So you went to Bain, and how long were you at Bain?

9:34Two years, and then I went to Stanford Business School. I was really on the wrong track towards something that was not respected in my family to be a businessman. So you graduated from Stanford Business School. Then what did you do? Well, I graduated at a very interesting time. I become a capitalist, and I graduated Stanford Business School in 1989. And this is a very auspicious year because this is the year that the Berlin Wall came down. I'm trying to figure out what do I do with my life post-business school. And one day I had this epiphany, which is that if my grandfather was the biggest communist in America, I'm going to try to become the biggest capitalist in Eastern Europe.

10:06And that's what I set out to do. So you set up a firm called Hermitage Capital Management. I ended up moving to London. I have several jobs. I ended up at Salomon Brothers working on their Russian desk. And then how long were you there? I work on the investment banking side, and my first assignment was to advise a fishing fleet located in Murmansk on their privatization. I go up to Murmansk. I discover they have these enormous ships, 400 feet long, just gigantic. And I asked the guy who runs the fishing fleet, how much do these things cost? $20 million new. How many do you have in your fleet? $100.

10:44So$2 billion worth of ships. And I had been hired to advise them on whether to exercise their legitimate right under the privatization program of Russia to buy 51%. And I said, at what price is the government selling 51 %? Two and a half million dollars. And that was the moment I said to myself, I want to be an investor in this stuff, not an advisor on this stuff. So you quit Salomon Brothers? I actually was able to convince Salomon Brothers to invest in some of these things. We made a whole bunch of money. I decided to quit Solomon and do this on my own. And that's when I set up Hermitage Capital Management.

11:23Now, for those who don't know, Hermitage is the name of a museum in St. Petersburg. I assume you named it after that. You're one of the smart ones who figured that out. But yes, that's where they kept all the treasures in Russia. So you set up Hermitage Capital Management. Did you have any money to capitalize the business? I didn't have any money at all. One person in particular I developed a very close friendship with. That's a man named Edmund Safra, who was the owner of Republic National Bank of New York, the bank that all the billionaires and rich people at the time kept their money in. And Edmund said, I will put up the first$25 million in your fund, and if I like you, I'll get all my friends to invest with you.

12:01So I said, great, let's do it. You started investing, and I assume you did okay. It was the most fortuitous launch of an investment fund that's probably ever happened. In the first 18 months of my life as a fund manager, we were up 865%. So you were buying stakes in Russian government-owned companies that you could privatize and buy them at 10 cents on the dollar or even less? A lot less. So I was buying at a 99.7 % discount oil companies in Russia. How much did you have to manage at the peak? At the peak, we had about$4.5 billion. And you're investing in a discount, and you're earning really good profits.

12:46And how many years did you do this for? I got there in spring of 1996, and it was all going all very, very well. In November of 2005, I was coming back from a business trip to London, and I was stopped at Chermetivo Airport and I was arrested. And I was kept overnight at the airport detention center and then deported the next day and declared a threat to national security. And why were you declared a threat to national security? In this time that I was investing, one of the things I discovered was that the reason everything was so cheap was because these companies, you might have owned a share of a company, but you didn't really have a share of the profits because all the profits were being stolen out the back door by the oligarchs who controlled these companies.

13:33And so I started to try to figure out how do I stop these guys from stealing from the companies I was investing in. I was very good at doing research. I had a really great bunch of Russian, smart Russians working for me who could figure out all the stealing that was going on. And they did really beautifully. And then I would take that research and I would share it with the international media, with the Financial Times, with the Wall Street Journal, and so on. Normally, if you put out some bad thing a company is doing, the share price goes down. But these share prices were so low that you put out their bad stuff and people are saying, well, maybe they'll steal a little bit less and the share prices started to rise.

14:07Obviously, the people who are on the other side of these things, the people who are benefiting from these frauds that I was then exposing, were getting pretty mad. And I've been doing this for 10 years, and they finally had enough. And that's what led to my expulsion. So you're doing this. You're making money for your investors and presumably yourself as well. Putin is not happy, has you arrested. And then after you're arrested in the airport in Russia, they send you out of the country and they say you can't come back. Is that right? That's right. They could have killed me. They could have they could have imprisoned me or they could have deported me.

14:44And this was back in 2005. Putin didn't have the same degree of self-confidence he has today. I was the largest foreign investor in their country. I think killing me would have been a step way too far. As soon as you got out of the country, you, I assume, kissed the ground you got back in London, but then you told your employees to get out of the country right away? I called them up and said, you know, pack your bags tonight and bring your families. And I got all my people out. And then once they were out, I said, the next thing they could do is try to steal our money. And I said, we need to liquidate everything.

15:18and we were able to successfully sell everything. As we talk today, I think the U.S. government has not, nor have the European governments agreed to do that. I think the U.S. government has been willing to use the interest on that money, but the Europeans haven't quite agreed to that yet. So everybody's using the interest on that money. They're using it for defense. It's being used by the countries that are providing support to Ukraine. They're using the interest off of that money. It's about roughly$300 billion. If there is a settlement, Can you imagine that Putin would ever settle and allow that$300 billion in principle not to come back to Russia?

15:52No, under no circumstances would he allow that, which is why we should be confiscating it while we have custody of that money. But the idea of confiscating now is a bit of a difficult cause. You're working on it, but it's not easy to get done, right? Well, everyone said the same thing about the Magnitsky Act. Everyone said there's no way you're ever going to make that happen. Don't even try. And I'm 100 % sure that we will get these countries to confiscate that money for a very simple reason, which is it's either us paying for it or it's Putin paying for it. Not too long ago, there was another prominent American who was, I think, from Oklahoma who invested a fair amount in Russia, and he was imprisoned in Russia for some time.

16:29I think he's now been freed. Is he doing anything similar to what you're doing? The only thing similar to me that he's done is he's written a book. He wrote a book that's come out recently, which I haven't read yet, but I look forward to reading about his time. He actually spent some time in prison, which I think was pretty unpleasant. You did something that probably you'll be famous for more than anything else you've done, which is the act we talked about, the Magnitsky Act. Can you just explain, was Magnitsky looking for something for you at the time that he was in prison? I said I was kicked out of Russia in 2005.

17:02We liquidated everything, got our people out. except for one person. I had a secretary just sitting in the empty office in Moscow. And in June of 2007, my office in Moscow was raided by 25 police officers. And they seized from the law firm all the stamps, seals, and certificates for our investment holding companies, the companies through which we had invested all this money, which were empty at this point because we'd sold everything. And the next thing we know, we no longer own these investment holding companies. They've been fraudulently re-registered using the documents seized by the police.

17:37I had no economic stake at this point because our money was safe offshore. And so I go out and hire the smartest lawyer I know in Russia at the time, a young man named Sergei Magnitsky. He's a Russian citizen. At the time when I hired him to do this, he was 35 years old. And I said to Sergei, help me figure this out and help me stop whatever they're trying to do because I don't feel good about this. He started doing it, and then he was arrested. Is that right? Well, so what he discovered, and this is the crux of the whole story, is that the reason that they stole our companies was that when I was selling everything, we had a billion dollars of profit in that year, and we paid a tax bill to the Russian government of$230 million.

18:16dollars. And what Sergei had figured out was that the reason they stole our companies was to go back to the tax authorities and file an amended tax return. And the amended tax return said that these companies didn't earn a billion dollars. They earned zero. And therefore, they wanted the 230 million dollars of taxes that we had paid to the Russian government back, refunded to our companies that they had stolen. Sergei discovered this crime, a theft of 230 million dollars of taxes. That wasn't our money. This was the Russian government's money. And he filed criminal complaints to every different law enforcement agency in Russia.

18:52He testified against the officials involved. And instead of arresting the people who stole the$230 million, the people who stole the$230 million organized to have him arrested. So one part of the Russian government is stealing from another part of the Russian government, in effect. Correct. So he's arrested and he's put in jail. Does he get out on bail? No, they keep him in jail. And then they started to torture him to get him to withdraw his testimony. Eventually, what happened to him? Well, they kept on torturing him and torturing him, pushing him to try to withdraw his testimony. He just kept on saying, no, no, no.

19:25They put him in a cell, chained him to a bed, and eight riot guards with rubber batons beat him until he died. When did you hear about this? He was killed on November 16th, 2009. I got the news on the morning of November 17th. It was the most horrifying, heartbreaking, life-changing news that I could have ever gotten. I made a vow to his memory, to his family, and to myself that I was going to put aside everything else I was doing, and I was going to use all my time, energy, and resources to go after the people who killed him. So did you say to the Russian authorities, arrest the people that killed him?

20:01Or did you go to the American authorities and say, let's pass legislation that will prevent this from happening in the future? Sergei had documented all the stuff leading up to the night of his death in the form of 450 criminal complaints that he wrote and filed, documenting every last detail of the abuse. Once a month or so, he would write these out by hand. He would hand them to his lawyer. His lawyer would file them. We would get copies. And so the first thing I did after he was killed was I gave this information to one of the opposition newspapers in Russia, and they published it. And it was created a huge stir because people were shocked that this, most people in Russia didn't know that there was this whole sort of Stalin-like thing going on.

20:42And we thought that that would kind of jolt the Russians into at least prosecuting the low-level people, not the instigators. But that didn't happen at all. There was a total conspiracy of cover-up at every different branch of the Russian government. So the Russian government did nothing. You eventually decided to try to do something in the United States. What was that? And so I went to Washington, and I shared the story of Sergei Magnitsky with two senators, a Democrat from Maryland, Senator Benjamin Cardin, and Republican from Arizona, the late John McCain. And I told him the story of what happened to Sergei.

21:19And I said, can we freeze their assets and ban their visas? And these two senators said, yeah. And that became known as the Magnitsky Act. So this law passed what year? 2012 now exists in 35 countries. And most significantly, it doesn't just apply to Russian human rights abusers. It applies to human rights abusers anywhere in China and Venezuela and Nicaragua, wherever. So when Russia invaded Ukraine, the United States government froze assets of oligarchs who had not been involved in the decision to invade Ukraine, but were presumably benefiting from Putin's government. And so those assets were frozen.

21:58Was it under the Magnitsky Act they were frozen? I sort of cleared the path for the tool to be used. So the Magnitsky Act was something that was debated very hotly for two years in Washington. And eventually we came to this good outcome. As you got all of this done, this no doubt will be your great legacy, which is to have this policy put into place. Have you abandoned the investment world. I'm no longer managing money for anyone. So it's very difficult to be a money manager and be Putin's number one foreign enemy, a full-time human rights activist. But I still have my finger in the investment world.

22:33What is your next mission? Is it to let people know more about the things that are going on in Russia or other places? Well, one of the big things that has happened since all these countries have passed the Magnitsky Act was the invasion of Ukraine. It's terrible for everybody. But for me in particular, watching somebody else be victimized by Putin in such a dramatic way. And so I wanted to be helpful to the Ukrainians. And about a week after the war started, the West froze$300 billion of central bank reserves belonging to the Russian government. And so one of the conclusions I came to really quickly is that money should be used for the defense and reconstruction of Ukraine.

23:09And so for the last three and a half years, I've been using the same networks, the same politicians, the same government officials, the same everybody who I'd worked with on the Magnitsky Act, to try to convince them to confiscate that money to give to Ukraine. As you look back on your life, do you wish you had done something different? Yeah, people often say, you know, what would you do differently? And the answer is, when I finished Stanford, if I had stayed out in California, you know, a lot of people wouldn't have died. And, you know, I'd probably be doing just as well. This tragedy has given me a mission in my life, meaning, and I've done a lot of things to help a lot of people, which does give me some joy in spite of the dangers.

23:51Thanks for listening. To hear more of my interviews, you can subscribe and download my podcast on Spotify, Apple, or wherever you listen.