Notes
May 7, 2020

Red Notice

Bill Browder
Reading Time: 6 Minutes

Browder On Business In Russia

  • Going after information in Russia is like hurtling down a rabbit hole. Ask a question, get a riddle. Track a lead, hit a wall. Nothing is self-evident or clear.

  • When it comes to money, Russians will sacrifice their own success to screw their neighbour.

  • Russian business culture is closer to that of a prison yard than anything else.

  • In prison, all you have is your reputation. Your position is hard-earned, and it is not relinquished easily. This is the calculus that every oligarch and politician lives by.

  • Russia is one of the most bureaucratic places in the world.

  • The Russians have great skill in talking without saying anything.

Browder On Hermitage

  • It’s hard to describe how small $50,000 is to an investment banker.

  • In a short time, our portfolio grew from $25 million to $125 million.

  • Ordinary shares of Russian companies were trading at a 90%-99% discount compared to similar companies in the west.

  • You’re lucky if you find a stock at a 30%-50% discount. 90% is unheard of.

  • The Hermitage Fund was ranked the best-performing fund in the world in 1997.

  • If the tide goes out in one place, then it goes out everywhere.

  • Losing love is a lot harder than losing money.

  • By the end of 2003, the fund was up more than 1,200%, salvaging the losses from ‘98.

  • The feeling of finding a ‘ten-bagger’ must be the financial equivalent of cocaine.

  • Exploit any avenue that can help you establish yourself as an expert in your niche.

  • Never let a suited corporate hack steal your business away from you.

  • In any major crisis, what you do in the first few hours defines it forever.

  • The best way to answer difficult questions is to find the people who know the answers and interview them about it.

Browder On Privatisation

  • During privatisation the valuation of the entire Russian economy was only $10 billion! Yet, Russia had 24% of the world’s natural gas, 9% of the world’s oil and produced 6.6% of the world’s steel, among many other things.

  • Instead of 150 million Russians sharing the spoils of privatisation, Russia wound up with 22 oligarchs owning 39% of the economy.

  • Post-Soviet Russia saw some of the most profitable investments in history.

  • 20~ men were reported to have stolen 39% of Russia after the fall of communism, becoming billionaires almost overnight.

  • To move from communism to capitalism, the Russian government had decided to give away most of the state’s property to the people.

  • The oligarchs engage in asset stripping, dilutions, transfer pricing and embezzlement, to name but a few of their tricks.

  • Raider attacks involve corrupt police officers fabricating criminal cases. Corrupt judges were approving the seizure of assets, and organised criminals hurting anyone in the way.

Browder On Russian Authorities

  • When the Russian government turns on you, it doesn’t do so mildly.

  • Russia is still a sovereign state that most Western governments cooperate with.

  • The FSB doesn’t just issue arrest warrants, it dispatches assassins.

  • Kazan’s police force has a reputation of being one of the most corrupt in Russia.

  • The Russian Interior Ministry was not a reputable police organisation, but rather a collection of officials abusing their positions to perpetrate massive financial frauds.

  • A strategy out of the FSB playbook is to create a character with a believable story. Then have this person pass valuable information to his target, wait for the target to disclose this information publicly, then show how the information is false.

  • Russia is such a decentralised country. The power of an influential businessman in some areas rivals that of the Moscow Interior Ministry.

  • The total value of assets owned by Kuznetsov was $2.6~ million. Kuznetsov would have had to work for 145 years on his official Interior Ministry salary to earn this.

  • The Russian government couldn’t have cared less about a couple of paragraphs in a US-government human rights report.

  • Butyrka is like Alcatraz, only worse.

  • When the mass graves of Katyn Forest were discovered in 1943, the Soviets claimed that Germany was responsible for the murder of 7,000 Polish prisoners.

  • Interpol has a reputation for cooperating with authoritarian regimes to chase down enemies.

  • Interpol’s red notice effectively prevented me from travelling. Russia was betting that this travel ban would stop the Magnitsky sanctions from spreading to Europe.

  • I’d suspended disbelief, wishfully thinking that Russia was beyond the principle of massive state-sponsored lying, but it wasn’t.

  • You can be untouchable by law enforcement, but not by the court of public opinion.

Browder On The Magnitsky Act

  • In the west, you might last two hours before you crawl to casualty with gallstones. Sergei had to deal with untreated gallstones for four months.

  • Sergei was a religious man, and he would not violate God’s ninth commandment; ‘Thou shalt not bear false witness’.

  • Every prisoner has his own way of dealing with the adversity of being in jail, and Sergei’s had been to write everything down.

  • Sergei’s story has given everyone in Russia, as well as millions of people around the world, a detailed picture of the real brutality of Vladimir Putin’s regime.

  • Visa sanctions and asset freezes are how you fight authoritarian regimes today.

  • The rumour in Washington was that John Kerry was blocking the Bill (Magnitsky Act) because he wanted to be Secretary of State after Hillary Clinton resigned.

  • From 2009-2015, 13,000~ bills had been proposed, and only 380~ made it out of the committee and voted into law in the USA.

  • While there is nothing wrong with pursuing a life in commerce, that world now feels like watching TV in black and white for me.

  • There is no feeling as satisfying as getting some justice in a highly unjust world.

  • No matter how scared you are at any particular moment, the feeling subsides. Your body can’t feel fear for an extended period.

  • They say there are five stages of grief. Recognising the pain is the vital one.

  • Over the last decade, Americans had adopted over 60,000 Russian orphans.

  • Nobody knows how much hardship one can endure until one is forced to handle it.

Browder On The Soviet Union

  • The Soviets severely penalised independent thinkers, hence over the 70 year period of communism the work ethic of Russians was destroyed.

  • In Soviet times, the wealthiest person in Russia was x6~ richer than the poorest. By the year 2000, the wealthiest person had become x250,000~ richer than the poorest.

  • During soviet times the FSB was universally known as the infamous KGB.

  • Russians are familiar with hardship and suffering – not with success and justice.

  • Russians adore children.

  • Russia was the world’s sixth-largest importer of US beef.

  • Russian stories never have happy endings.

  • I cannot forecast the action of Russia. It is a riddle wrapped in a mystery inside an enigma, but perhaps there is a key. That key is Russian national interest - Churchill.

Browder On Vladimir Putin

  • When Putin became president in 2000, the actual power of the presidency lay with the oligarchs, regional governors and organised-crime groups.

  • Putin’s golden rule: stay out of politics, and you’ll keep your ill-gotten gains.

  • As a show of symbolism, Putin allowed cameras into a courtroom to film Russia’s richest man as he sat silently in a courtroom cage.

  • Putin now has the oligarchs in his pocket, he has consolidated his power and, by many estimates, he has become the richest man in the world.

  • Putin never mentions his enemies by name.

  • Unpredictability is Putin’s modus operandi.

  • Putin put a dead man on trial (Sergei Magnitsky), not even Stalin, a man responsible for the death of 20~ million Russians stooped to that level.

  • When Vladimir Putin came to power in 2000, instead of dismantling the machine of lying and fabrication, he modified it and made it all the more powerful.

  • I knew that when my name passed Putin’s thin lips, my life had changed forever.

  • If there is no man, there is no problem - Stalin.