Red Notice: A True Story of High Finance, Murder, and One Man's Fight for Justice (26 page)

And I certainly wasn’t going to retire. I was forty-two years old and had fire in my belly. None of my options seemed attractive, and the more I thought about my situation, the more hopeless it seemed.

The fact that Hermitage was probably going out of business was
even more upsetting for the people who worked for me. After all the excitement and impact from our activities in Russia, no one on our team wanted to disband and be forced to return to regular jobs at investment banks or brokerage firms.

As I pondered our strengths, it was obvious that we were good at finding undervalued investments. We were also experienced at protecting those investments from crooked managers. It seemed to me that we could take those two skills and apply them to other emerging markets.

I decided to put Vadim and four other analysts on planes to Brazil, the United Arab Emirates, Kuwait, Turkey, and Thailand to see if they could come up with interesting investing ideas. They met with representatives from the twenty cheapest companies in each country. They went to a hundred meetings, did serious analyses on ten companies, and ultimately identified three solid opportunities.

One was a phone company in Brazil that had a valuation of three times its previous year’s earnings, the lowest in the world for a telephone company; the second was a Turkish oil refiner that traded at a 72 percent discount to the asset price of other refineries; and the third was a UAE-based real estate company that traded at a 60 percent discount to its net asset value.

I began investing the firm’s money in these stocks and shared the analysis with my friend Jean Karoubi. I could always rely on him to be a good sounding board, and he had a much more positive reaction than I expected: “Bill, I like these ideas a lot. I think this is the type of business you should be developing more broadly.”

He was right. My skills were as an investor, and they could be applied anywhere, particularly in countries that faced issues similar to Russia’s. I didn’t need to be in Russia to succeed.

As I shared these investment ideas with other clients, most had the same reaction as Jean. By the fall of 2006, my confidence had grown so much that I started drafting a prospectus for a new fund called Hermitage Global.

The plan was to have this prospectus ready in time for the World
Economic Forum in Davos at the end of January 2007. There is no better place in the world to raise capital than Davos.

My fortunes had changed since my first foray there in 1996. I no longer had to sleep on the floor or linger in hotel lobbies hoping to meet important people. Since 2000 I had been a proper member of the forum and had been going every year since.

This time, I decided to bring Elena with me. She was in the first trimester of her second pregnancy, and I thought the interesting lectures and receptions of Davos would be a welcome break from looking after our one-year-old at home. We flew to Zurich and took the train to Davos, just as Marc Holtzman and I had done so many years back, and checked into the Derby Hotel. I began taking meetings almost as soon as we arrived.

As Jean predicted, investors were very receptive to Hermitage Global. On the second day, after going through the presentation with one of my old clients, he said, “Hey, Bill, are you going to the Russian dinner tomorrow night?”

“What Russian dinner?” I knew a large contingent of Russians were in Davos, but so many things were going on that I hadn’t heard about this event.

“It’s a big deal. All the main Russian officials will be there.”

“I doubt they’d allow me anywhere near it,” I said with a smile.

“That’s the beauty of it, Bill. It’s not the Russians who decide who goes, it’s the World Economic Forum. You can just sign up.”

This was an intriguing idea. After our meeting, I headed straight for the computer bank where you can sign up for events. I logged on and, with several clicks of the mouse, registered Elena and myself for the dinner.

The following evening we arrived ten minutes early, only to find that nearly every table was full. We scoured the room and took the last two empty seats that were together. Each table was hosted by a Russian VIP, and as I looked around, I was appalled to discover that our table host was the CEO of Gazprom’s export division. I could not have found a more awkward place for us to sit. Hermitage’s anticorruption
work at Gazprom was probably the catalyst that had led to my Russian expulsion, and here I was getting ready to have an elegant meal of veal escalope,
rösti
, and carrot cake with one of the company’s most senior officials.

The Gazprom executive and I spent the meal avoiding eye contact, and as dinner progressed, Russian officials and oligarchs took turns giving speeches. Each speech was more insipid, ingratiating, and full of platitudes than the last. The Russians have great skill in talking without saying anything, and this was on full display that evening.

Toward the end of the event, as silverware clinked and waiters came and went, there was a big commotion near the entrance as twenty tough-looking security men walked into the room, forming a mobile cordon around a small man. I couldn’t tell who it was until he reached his table—but it was none other than Dmitri Medvedev, the first deputy prime minister of Russia. Medvedev was running for president to replace Putin, whose second term would end in June 2008, and Davos was Medvedev’s first chance to present himself to the international community.

After the main course was cleared, Medvedev rose and took the microphone at the front of the room. He spoke for several minutes in Russian (I listened to the translation on an earpiece), and his speech was even more tedious and devoid of substance than the others. I couldn’t wait for it all to be over.

As soon as Medvedev finished, waiters glided across the room delivering plates of carrot cake and cups of coffee and tea. As I drank my tea and picked the icing off the cake, Elena tugged my jacket and whispered, “Bill, I’ve just had a great idea. Why don’t you ask Medvedev to help with your visa?”

I gave her a sideways glance. “Don’t be ridiculous.” I’d exhausted every possibility of getting my visa back, right up to Putin. After the G8, I considered that chapter in my life to be well and truly over. Moreover, I couldn’t imagine anything more humiliating than walking up to Medvedev to beg for my visa.

I tried to tell Elena this but she wouldn’t listen. She was insistent. “Seriously, look. No one’s talking to him. Let’s just do it.”

She stood and stared at me intently. Defying Elena was more frightening than having an unpleasant encounter with Medvedev, so I stood too. I reluctantly followed her across the room, and when we reached Medvedev, I stuck out my hand and said, “Hello, Mr. Deputy Prime Minister. I’m Bill Browder. Maybe you remember me?”

Elena translated. Medvedev stood and shook my hand. There was a general bustle as other people in the room took notice. If I could talk to Medvedev, then they could too. People started to stand and move in our direction.

“Yes, of course I remember you. How are you, Mr. Browder?”

“I’m fine, but as you probably know, I haven’t been allowed into Russia for more than a year. I was wondering if you could help me get my visa back?”

As I said this, a group of people, including a reporter from Bloomberg and another from the
New York Times
, pressed in on us. If Davos was Medvedev’s international debut, then this conversation was going to be one of the most interesting moments of the whole conference.

Medvedev glanced at the people gathering around him and had to make a snap decision. He could reject my request, which would be interesting and newsworthy, or he could be helpful, which would be less so. He paused for a moment before saying, “Gladly, Mr. Browder. If you give me a copy of your visa application, then I’ll submit it to the Federal Border Service with my recommendation to approve it.”

That was it. The reporters pressed in on Medvedev, and as Elena and I slid away from the crowd, she squeezed my hand. “You see? I was right.”

We went straight back to the hotel and got on the phone to London. Normally it takes three or four days to gather all the documents needed for a Russian visa application, but the team stayed up all night working on it, and by 8:00 a.m. the fax machine at the hotel spewed out the paperwork.

I had back-to-back meetings with investors that morning, so Elena went to a room at the conference center where Medvedev was due to give a speech and stood near the podium. With all the security, it was unlikely that she would be able to make direct contact with Medvedev, but she spotted Arkady Dvorkovich, Putin’s adviser who had tried to help me before. She asked if he would deliver the application. Dvorkovich took it and promised he would.

The forum ended the next day, and Elena and I returned to London, proud of our fortuitous high-level intervention.

The results took a few weeks, but on February 19 I received a message from Moscow about my visa. Only it wasn’t from the Federal Border Service. It was from a Lieutenant Colonel Artem Kuznetsov at the Moscow branch of the Interior Ministry. This was odd. The Interior Ministry dealt with criminal investigations, not visas. Since I didn’t speak Russian, I asked Vadim to return Kuznetsov’s call.

After Vadim explained that he worked for me, Kuznetsov said, “Okay. I’ll explain to you what the situation is.”

“Great.”

“As far as I understand, Mr. Browder sent in an application requesting permission to enter the territory of the Russian Federation.”

“Yes, yes, we sent those documents.”

“I just wanted to drop by and discuss it, if that’s possible,” Kuznetsov said casually.

“You see, the thing is, I’m not in Moscow right now,” Vadim responded. “So if you could send me the questions, then we could try to answer them for you.”

“I can’t just send them over, I’d prefer to discuss them in person,” Kuznetsov said testily.

This wasn’t a normal inquiry. In a legitimate investigation, Russian officials always sent their questions in writing. What had become apparent to me from my decade in Russia was that when an official asks to meet informally, it means only one thing: they want a bribe. In the many instances where officials had tried to shake me down, I’d uniformly ignored them and they always went away.

Kuznetsov finished the conversation by saying, “The sooner you answer these questions, the sooner your problems will disappear.”

As with similar requests in the past, I decided to ignore it.

This phone call might have upset me more if the launch of Hermitage Global wasn’t going so well, and I quickly forgot about it. One by one, my old clients and a number of new ones started subscribing to the fund. By the end of April 2007 I had raised $625 million. This didn’t replace the amount of money withdrawn from the Russian fund, but it meant that I had stopped the bleeding and that my company would stay in business.

On June 4, 2007, I was scheduled to present the results of the launch of Hermitage Global to our board of directors at the Westin Hotel in Paris. After all the bad news in the previous two years, it was the first time since I had been expelled from Russia that I had some good news to share with the board.

Ivan and I arrived on the evening of the third to get prepared. I got up at six the next morning, went to the gym, showered, and ate a light breakfast. By 8:00 a.m. I was on the phone arguing with my trader over a Dubai stock he was supposed to have sold several days earlier. There’d been a technical problem at the Dubai exchange that had held up the sale. Now the share price was plummeting, and I was furious that he hadn’t been able to sell it before we started losing money. He was making excuses and I was growing more and more agitated.

As he and I argued, my call waiting beeped. I looked at the caller ID only because I was worried that it might be Elena, who was due to give birth to our second child later in the month. It wasn’t Elena, though—it was Emma, the Hermitage Fund secretary in Moscow. Emma was a pleasant twenty-one-year-old Russian girl from the provinces who looked several years younger. She was honest and hardworking and managed the office vigilantly. She rarely called me directly, so I told the trader to hold on and clicked over. “Emma, can this wait?”

“No, it can’t, Bill,” she said in perfect English. “There are twenty-five plainclothes police officers raiding our office!”

“What?”

She repeated what she’d just said.

“Shit. Hold on.” I clicked back to the trader, told him I had to call back, and returned to Emma. “What are they after?”

“I don’t know but there’s a guy—Artem Kuznetsov—who’s in charge and—”

“Did you say Kuznetsov?”

“Yes.”

This had to be the same Artem Kuznetsov who’d tried to shake us down us a few months earlier! “Does he have a search warrant?”

“Yes. He showed it to me, but he won’t let me keep it.”

“Can you write down what it says?”

“I’ll try.”

I hung up and called Ivan to tell him what was going on. He was equally alarmed and called Emma back. Then I called my lawyer in Moscow, Jamison Firestone. Jamison—a fit, good-looking, forty-one-year-old American with bright eyes, brown hair, and an incredibly boyish face—was a Russophile who’d been in Russia since 1991. He was the managing partner of Firestone Duncan, the law firm he founded with another American, Terry Duncan. In 1993, during the attempted Russian coup, Terry had gone to the Ostankino TV Tower to help protesters. As the authorities opened fire on them, he tried to evacuate the wounded, but he was shot and later died. Afterward Jamison carried on by himself.

I liked Jamison from the moment I met him, not just because he was a straight-talking American, but also because unlike most lawyers he never overcharged me. We’d done a lot of business together over the years, and our stars had risen together.

As soon as he picked up the phone, I skipped all pleasantries. “Jamie, I just got a call from our secretary in Moscow. There’s—”

“Bill! You were my next call—”

“Jamie, there are twenty-five cops raiding our office!”

“You too?”

“What’re you talking about, Jamie?”