Red Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice (11 page)

Beny pulled into an empty slip, tied off the boat, and had a rapid-fire exchange with the harbormaster in French about mooring for the afternoon. When Beny was done, we made our way to the parking lot, where a pair of armed security guards ushered us to a waiting black Mercedes. The car climbed up through winding roads to one of the highest points above Villefranche. We eventually entered the grounds of a sprawling private residence, which I later learned was the most expensive house in the world. This was La Leopolda. It looked a lot like the Palais de Versailles, the difference being that here dozens of ex-Mossad bodyguards in black tactical gear patrolled the grounds with Uzis and SIG Sauer pistols.

We got out of the car and were escorted through a colorful garden with a splashing fountain surrounded by pointed cypress trees. We were shown into a vast and ornate living room overlooking the sea. The walls were covered with eighteenth-century oil paintings in gilt wooden frames, and a huge crystal chandelier hung high overhead. Safra wasn’t there, which was not surprising. I’d learned by then that standard billionaire etiquette was for guests to arrive, get settled, and be ready to start the meeting before the billionaire arrived so as not to waste his time. Since Beny was lower in the billionaire pecking order, he was subjected to this treatment as well.

Fifteen minutes later Safra entered. We stood to greet him.

Safra was a short, bald man with a pudgy face, rosy cheeks, and a warm smile. “Hello, Mr. Browder,” he said, speaking with a thick Middle Eastern accent. “Please, sit.”

I had never seen Safra before, even in pictures, and he looked nothing like the square-jawed, archetypal Master of the Universe that most people might have imagined. He was dressed casually in a pair of tan trousers and an elegant, handmade Italian shirt with no tie.
The Chips and Winthrops of the world were playing dress-up in their pressed suits, red suspenders, and Rolexes. None of that stuff mattered to a man like Safra. He was the real deal.

Beny gave a short preamble and then I took Safra through my standard presentation. He had a short attention span, and every five minutes or so he would either take a call or make one that was completely unrelated to the topic at hand. By the end of our meeting, I had been interrupted so many times that I wasn’t sure if he had taken in any information.

When I was done, Safra rose, indicating that the meeting was over. He thanked me for my time and bid me farewell. That was it.

One of Safra’s assistants called a taxi to take me back to the airport, and as I waited in the gravel driveway, Beny said, “I thought that went well.”

“Really? I didn’t.”

“I know Edmond. That went well,” Beny said reassuringly.

The taxi pulled up; I got in and went home.

The following Friday was the day of the Salomon task force meeting. I went to work and made my way directly to the boardroom. I was surprised that they had booked such a large space. As 10:00 a.m. approached, the room began to fill and within a quarter of an hour forty-five people had arrived. Most I had never seen before. There were senior managing directors, managing directors, directors, senior vice presidents—and me. As the discussion got under way, a big argument broke out about who was going to get the economic credit for this new Russian business. It was like watching a cage fight, and it was impressive to see how people with absolutely nothing to do with this new business in Russia could make such persuasive arguments for why they were entitled to a share of any future earnings. I had no idea who would win this fight, but I was absolutely sure who would lose it, and that was me.

The meeting was so upsetting that I couldn’t sleep properly for several nights. I hadn’t made five times my salary for the firm, I had
made
five hundred times
my salary, and I wasn’t going to let some empty-suited corporate hacks steal this business away from me.

I made my decision. The Monday after the meeting took place I went to work, sucked up my gut, walked into the head of sales and trading’s corner office, and quit. I told him I was going to Moscow to start my own investment firm.

I would call it Hermitage Capital.

1
 GUM was a major department store like Macy’s.

2
 The founder of Tiger Management Corp., one of the industry’s most successful hedge funds.

3
 The founder of Templeton Asset Management, one of the largest mutual fund companies in the world.

4
 If this sounds notable, there were probably more vice presidents than secretaries at Salomon.

While I was certain that leaving Salomon was the right thing to do, I couldn’t help but worry that life on the outside would be much tougher. Would doors open for me without my Salomon Brothers’ business card? Would people take me seriously? What was I taking for granted by going out on my own?

These questions swirled in my head as I burrowed away in my Hampstead cottage, typing up a prospectus and a presentation for my new fund. When these documents were in good shape I bought a super-saver ticket to New York and started calling investors to set up meetings.

The first one was with a jovial Frenchman named Jean Karoubi. Jean was a fifty-year-old financier who ran an asset management firm specializing in hedge-funds. We had met on a flight to Moscow the previous spring and he told me to look him up if I ever set up my own fund.

I went to his office in the Crown Building on Fifth Avenue and Fifty-seventh Street, just down the block from Bergdorf Goodman. When I arrived, he greeted me like an old friend. I pulled out my presentation and placed it on the table in front of him. He put on his reading glasses and carefully followed along as I went through it page by page. When I was done, he lowered his glasses to the tip of his nose and gave me a satisfied look. “This is very impressive, Bill, and I’m interested. Tell me, how much money have you raised so far?”

“Well, none, actually. This is my first meeting.”

He rubbed his chin pensively. “I’ll tell you what. If you can raise at least twenty-five million, I’m in for three. Okay?”

His offer was entirely sensible. He didn’t want to invest in a fund that wasn’t going to get off the ground, no matter how promising the underlying investments might be. All of my meetings in New York went almost exactly the same way. Most people liked the idea and some were interested, but no one wanted to commit unless I could guarantee that I had raised a critical mass of capital.

Basically, I needed someone to write me a giant check to get my start-up off the ground. In a perfect world, that someone would have been Edmond Safra, but Beny had gone completely silent since the meeting at La Leopolda. This meant I needed to find another anchor investor, so I cast my net wide.

A few weeks later I got my first solid lead from a British investment bank called Robert Fleming. Flemings, as it was known, had been successful in emerging markets and was toying with the idea of investing in Russia, so they invited me to meet several members of the senior management team in London.

The meeting went well and I was invited back to make a similar presentation to one of its directors. I returned the following week and was met at the entrance by a security guard, who escorted me to the boardroom. The room looked exactly the way an interior decorator might have thought an old-world, blue-blooded British merchant bank should look. There were dark Oriental carpets, an antique mahogany conference table, and oil paintings of different members of the Fleming family adorning the walls. A butler in a white coat offered me tea in a china cup. I couldn’t help but feel that this whole display of upper-class Englishness was designed to make people like me feel like unsophisticated outsiders.

A man in his early fifties appeared a few minutes later, offering me a limp handshake. He had gray hair and dandruff on the shoulders of his slightly creased, handmade suit. We sat and he pulled a memo out of a transparent folder and placed it carefully in front of him. I read the title upside down: “Browder Fund Proposal.”

“Mr. Browder, thank you very much for coming in,” he said in an English accent that was an exact replica to that of George Ireland, my former officemate at Maxwell. “My colleagues and I are quite impressed by the Russian opportunity you presented last week. To move forward, we’d like discuss your salary and bonus expectations.”

Salary and bonus expectations?
Where in the world did he get the idea that I was here for a job interview? After subjecting myself to the vicious snake pit of Salomon Brothers, the last thing I wanted was to be a servant for a bunch of upper-class amateurs pretending to be businessmen and whose main expletive was the word
quite
.

“I’m afraid there must be some misunderstanding,” I said, keeping my voice steady. “I’m not here for a job interview. I’m here to discuss the possibility of Flemings becoming an anchor investor in my new fund.”

“Oh.” He looked confused and fumbled with his briefing paper. This was not part of his script. “Well, what kind of deal were you hoping to do with us?”

I looked directly into his eyes. “I’m looking for a twenty-five-million-dollar investment in exchange for fifty percent of the business.”

He glanced around the room, avoiding my gaze. “Hmm. But if we get fifty percent of the business, who gets the other fifty percent?”

I wasn’t sure whether he was serious. “I do.”

His face tightened up. “But if the Russian market goes up as much as you say, you would make millions.”

“Yes, that’s the point—and so would you.”

“I’m terribly sorry, Mr. Browder. That type of arrangement definitely wouldn’t fly around here,” he uttered, without a flicker of recognition about how ridiculous this sounded. In his eyes, it seemed that enriching an upstart outsider was so far beyond the rules of the antiquated English class system that he would rather pass on the opportunity than make his bank a fortune.

We ended the meeting on a polite note, but as I left I vowed never to return to one of these stuck-up banks again.

I had a number of other false starts and dead ends over the following weeks before finally coming across a promising prospect: American billionaire Ron Burkle. A former Salomon broker, Ken Abdallah, had introduced me to Burkle, hoping to get a cut of the deal for making the introduction.

Burkle was a forty-three-year-old California bachelor with sandy brown hair and a nice tan. He was one of the most prominent figures in private equity on the West Coast. He had done a series of successful leveraged buyouts on supermarkets and had gone from a checkout bagboy to one of the top Americans on the
Forbes
list. In addition to his business success, he was regularly pictured in the society pages with Hollywood celebrities and political heavyweights such as President Clinton.

I arrived in Los Angeles on a bright sunny day in September 1995. After getting my rental car and checking in at the hotel, I looked at Burkle’s address: 1740 Green Acres Drive, Beverly Hills. I got back in the car and cruised into the hills above Los Angeles, passing gated houses and front gardens overflowing with flowers. Trees were everywhere: palms and maples and oaks and the odd sycamore. Green Acres Drive was about a mile from Sunset, and 1740 was at the end of a cul-de-sac. I pulled my car up to the black iron gates, buzzed the intercom, and was told to come in and park. “I’ll see you at the front door, Bill,” a man’s voice said.

The gates swung open and I looped the car up a driveway guarded by lines of pointed cypress trees on either side. When I turned into the main lot, I was confronted by the most ostentatious mansion I had ever seen. La Leopolda may have been the most expensive house in the world, but Greenacres, which had been built by the silent-film star Harold Lloyd in the late 1920s, was the one of the biggest. The main house was a forty-four-room, forty-five-thousand-square-foot Italian palazzo, surrounded by manicured lawns, a tennis court, a pool, fountains, and every accoutrement of wealth imaginable. I’ve never been particularly awed by people’s possessions, but it was hard not to be impressed by Greenacres. Burkle was a regular guy
from Pomona, California, who had gone from nothing to living like a Saudi prince.

I rang the doorbell. Burkle answered it in person, and standing right behind him was Ken Abdallah. Burkle welcomed me in and gave me the short tour, then the three of us went to his study to discuss the terms of a deal. Burkle was surprisingly relaxed and basically accepted my terms: a $25 million investment for a 50 percent stake in the fund. On the less important terms such as start date, control of hiring decisions, and working capital for the office, he didn’t have much to say. For a guy with a reputation as one of the fiercest guys on Wall Street, he seemed downright laid-back.

After wrapping up, he took me and Ken to dinner and then to his favorite nightclub. I was struck by what a pleasant guy Burkle was. He had none of that Wall Street bravado that I had been expecting. As I was getting into my car at the end of the evening, he promised that his lawyers would draft the contract and send it to me in London a few days later. As I flew home the following day, I felt that I’d cleared the main hurdle to starting my business. I drank a glass of red wine on the plane, silently toasting my good fortune, watched part of the movie, and drifted off to sleep.

As promised, four days later, the fax machine in my Hampstead cottage spat out a long document from Burkle’s lawyers. I grabbed it nervously and started reading to make sure everything was in order. The first page looked fine. So did the second page, the third, and so on. But then I got to the seventh page. In the section entitled “Fund capital,” where it should have read, “Yucaipa
¹
commits $25 million to the fund,” it read, “Yucaipa will use its best efforts to raise $25 million for the fund.” What did “best efforts” mean? This wasn’t what I had agreed to. I reread the contract to make sure I wasn’t making a mistake. I wasn’t. Burkle wasn’t committing any of his own money, just a promise to raise the money if he could. In exchange for using his
best efforts
, he wanted 50 percent of my business.