Injustice in Putin’s Russia

Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice by Bill Browder, Simon & Schuster, 2015, pp. 396.

By David Strom

David Strom
David Strom

SAN DIEGO — Red Notice is a book worth reading. It chronicles the life of Bill Browder, the grandson of the late American Communist Party leader Earl Browder. Bill Browder’s father Felix Browder is a brilliant mathematician who initially found it difficult to get a professional job because he was the son of the noted American Communist Party leader, Earl Browder. Bill was raised in the United States along with his brother Tom who became a physicist.

While Tom Browder lived on one end of the academic spectrum, Bill lived on the opposite end. When given the choice at the age of twelve to go with his parents on a year-long sabbatical or attend a boarding school, Bill chose the boarding school. The boarding school was a disaster. Bill was bullied and called names from the moment he arrived. He never told his parents how he hated the school or about the physical altercations he had some of the students. But he did survive. He learned how to smoke, drink alcohol and sneak out at night and bring alcohol into the dorms. At the end of the school year he was expelled!

He rebelled against his parents–a “not so unusual thing among” many teenagers.  His method of defiance was quite unique. He would dress in a suit and tie and act like a capitalist. This would “tick off” his radical Jewish family.

His high school grades were so poor that most universities would have rejected him. However, he was accepted into a well-known “party school” in the west. He joined a fraternity and continued his partying, which he eventually got tired of and then realized he better do some serious studying if he wanted to get into a graduate program at a “top rated” tier one university. He “buckled down” and was accepted into the Graduate School of Business at Stanford University.

Finding a job was not easy for Bill. Discovering what part of the business world suited his personality took some time. Eventually, while living and working in London, he found his interest in venture capitalism.

At this time in the early 1990’s, the Soviet Union had collapsed and much of Eastern Europe was rapidly moving away from the collectivization of state wealth to privatization of wealth. Few in Europe and the States took much interest in the privatization of Russia. Luckily, Bill Browder did.

After working for other firms and making them millions of dollars, Bill decided to open his own hedge fund and invest in Russia. After raising $25 million from key investors and marrying “a dark haired Jewish girl”… orphaned at birth and adopted by a poor family from East London,” they moved to Moscow.

Although Bill did not speak Russian, he hired Russians who were able to speak English and understood the newly growing market system. Through their knowledge, Bill was able to invest the $25 million wisely and see the investment grow rapidly in the hundreds of millions for his company, the Hermitage Fund.

After working in Russia since 1992, one of Bill’s associate’s office was handed a warrant on June 4, 2007 accusing the Hermitage Fund of tax crimes. The office was looted and a worker beaten and taken to the hospital. The firm was accused of “underpaying $44 million in dividend withholding taxes….” The police were holding Ivan, an employee for the Heritage Fund, because he administered the entity.

While the warrant was baseless, it still had to be dealt with.  Bill retained “the best tax lawyer he knew in Moscow, a thirty-five-year-old attorney named Sergei Magnitsky.”

Sergei requested all the relevant tax documents from the Russian Interior Ministry, looked them over thoroughly and declared: “Ivan’s done nothing wrong.”

Doing nothing wrong is not a reason for not being arrested in Russia. Two of the men closest to Bill in Russia fled, as they feared for their own and their families’ lives. When Bill asked Sergei to leave, he refused. He responded: “There’s no reason for me to leave.”

Sergei trusted in the law and maintained it would protect him from any possible danger. He was wrong. Sergei was arrested on November 24, 2008 for the “crime” of “seeing Russia not how it was but how he wanted it to be.” Sergei was shifted from jail to jail, not allowed bail, unable to see wife, mother or children, denied access to legal counsel, deliberately denied adequate living space or sleeping space and was subjected to many tedious hours of questioning about the supposed money that was stolen by Hermitage Fund through tax fraud. But Sergei Magnitsky refused to lie. He stood tall, strong, courageous, and refused to recant. He was an honorable man caught up in a dishonorable system.

While Sergei was imprisoned, he wrote a prison diary about all that was happening to him. He knew his detention was not for lawful purposes. It was “a punishment, imposed merely for the fact I defended the interests of my client and the interests of the Russian state.” Sergei was placed in the hospital the night before his death, even though he had been complaining for months about his deteriorating health. He died in a hospital on November 17, 2009.

Bill was shocked by the death of his friend Sergei. Within hours he and some of his associates quickly drafted “a press release in English and Russian.”  With it they “included a forty-page, handwritten document that Sergei had prepared detailing his torture, the withholding of medical attention, and the intense hardship to which the prison authorities had subjected him.” Shortly afterwards Sergei’s story of injustice and torture went “viral” with the international news media.      The Russian government denied everything that Sergei had exposed. Even though it was no longer the Soviet Union, the tactics of the Russian government were typical of Soviet-style denial and cover-up.

Having exhausted all who he could do from London on Sergei’s behalf and wanting some justice and punishment for Sergei’s killers, Bill made appointments to see American government officials. He hoped to interest them in fighting for the human rights cause of Sergei’s family and associates against government corruption.

After seeing many minor government officials and not getting satisfactory results, in early March 2010, Bill finally met Jonathan Winer, a top international lawyer. He suggested to Bill to go to the State Department and “ask them to impose Proclamation Seventy-seven Fifty. It allows the State Department to impose visa sanctions on corrupt foreign officials.”

Bill thought “the idea of 7750” was brilliant. And it was. But the State Department did not want to use it against Russia! Before returning to London, Bill met with Kyle Parker. He was receptive to the use of 7750 and tried to get Senator Cardin to write a letter “to Secretary Clinton requesting her to invoke Seventy-seven Fifty.” Kyle paused “Let’s see if they treat a United States senator the same way.”

They didn’t.  Relatively quickly for Washington politicians,  Senators Ben Cardin, a Democrat, and John McCain, a Republican and independent senator Joe Lieberman sponsored the Sergei Magnitsky Act. This Act “was written in plain and simple  and direct language—anyone involved in the false arrest, torture or death of Sergei Magnitsky, or crimes he uncovered, would be public ly named banned from entering the United States, and have their US assets frozen.” The Act passed in the House on November 16, 2012, exactly three years since the death of Sergei Magnitsky. When the act reached the Senate on Thursday, December 6, 2012 it passed 92-4 in favor.

In small measure, justice was done. Although it couldn’t relieve the pain and loss to Sergei’s family, passage of the Act was vindication because it brought humiliation and shame to the perpetrators of the wrongful arrest, cruel imprisonment and eventual death of an innocent Russian citizen. Those listed in the Magnitsky Act and their families’ could no longer travel or do business in the United States.

A small victory for the memory of Sergei Magnitsky by Bill Browder against the Russian plutocracy, but, nevertheless, a victory! Bill Browder spent a great deal of energy and time to clear Sergei’s name and brought some peace of mind to the Magnitsky family.

Bill Browder chose the road of venture capitalism, played it honestly, was loyal to his friends and steadfast in his beliefs, not unlike his Stalinist grandfather, Earl Browder.

Red Notice is an easy and worthwhile read.

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Strom is professor emeritus of education at San Diego State University. Your comment may be sent to david.strom@sdjewishworld.com or posted on this website provided that the rules below are observed.

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