In 'Red Notice,' Success Draws Treachery, Tragedy In Putin's Russia

Feb 5, 2015
Originally published on March 13, 2015 10:48 am

William Browder's new book, Red Notice, is named for the type of warrant the Russian government has sought from Interpol in hopes of capturing him.

The hedge fund manager made huge profits with Hermitage Capital Management, a company he started in Russia in 1996. That, he says, drew the attention and machinations of a corrupt group of Russian officials.

In an interview with NPR's Robert Siegel, Browder discusses Red Notice and his experiences in Russia — which he calls "a place where lies reign supreme" in his book — as well as why he made an unusual capitalist missionary to the post-Soviet nation.

Interview Highlights

On growing up as the grandson of a Communist Party USA leader

When you come from a family of communists and you go through your teenage rebellion, what's the best way of rebelling from a family of communists? Well, I put on a suit and tie and became a capitalist. ... There was nothing I could do to upset my family more than that.

On the takeover of his companies

What was most remarkable about it was that it involved just about everybody right up the chain of command, up to probably a Cabinet-minister level. So they applied for this illegal tax refund after stealing our companies. And they applied for it on the 23rd of December 2007, and it was approved and paid out one day later — a $230 million tax refund, the largest refund in Russian history, paid out, with no questions asked. ...

And then the police go around to all of our banks looking for assets — but they didn't find anything there, because I had taken all the money out beforehand. We had $4 billion worth of assets and we sold every last penny and got it out of the country.

Russia is an interesting place because they're extremely evil but they're not that good at implementing their evil. So they kicked me out in 2005 and it took 18 months before they actually started moving forward on their scam.

As we learned about these raids and their frustration in not finding anything, I started to laugh because, I thought, all this effort ... and they didn't get anything.

On his lawyer, Sergei Magnitsky

Sergei was working with us on the investigation. And Sergei as I was laughing said: "Bill, you shouldn't relax. And the reason you shouldn't relax is there's much more to the story. There's never a sort of clean and happy ending like you think."

He was an idealist, a man of a new generation of Russians, and he thought that the country was a normal country. And so he thought, if police officers were involved in the theft of $230 million, that he would report that. And so he testified against a number of police officers involved, hoping that the good guys would get the bad guys.

Instead, he was arrested in November of 2008. They put him in pretrial detention, and then they started to torture him to get him to withdraw his testimony.

They put him in cells with 14 inmates in eight beds, left the lights on 24 hours a day to impose sleep deprivation. They put him in cells with no heat and no window panes in December in Moscow, so he nearly froze to death. They put him in cells with no toilet, just a hole in the floor where the sewage would bubble up. ...

They wanted to get him to withdraw his testimony against the police officers and sign a false confession to say that he stole the $230 million. And Sergei, in spite of this ever-increasing torture, refused to perjure himself. For him the idea of lying was worse than the idea of being tortured.

And so the torture got worse and his health broke down. He ended up losing 40 pounds, getting very severe pains in his stomach and being diagnosed as having pancreatitis and gallstones, and needing an operation. And a week before the operation was due, they came to him again with this Faustian bargain of "you sign a confession and then you can have your medical care."

He refused to sign this false confession. He went into critical condition. He was supposed to be taken to a prison with a hospital, but instead they put him in an isolation cell, and eight riot guards with rubber batons beat him to death on Nov. 16, 2009.

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Transcript

ROBERT SIEGEL, HOST:

For a few years now, William Browder has been telling the story of how he evolved from hedge fund manager to human rights activist. He started a company in Russia 1996. Hermitage Capital Management made huge profits. Then he ran up against a corrupt ring of Russian police, criminals, a tax court judge and others whose misdeeds were documented by his Russian tax lawyer. That lawyer, Sergei Magnitsky, was arrested, detained, jailed and died in a Russian prison. Browder and his associates responded with a series of YouTube videos called "Russian Untouchables."

(SOUNDBITE OF YOUTUBE VIDEO, "RUSSIAN UNTOUCHABLES")

UNIDENTIFIED MAN: In 2007, Lieutenant Colonel Artem Kuznetsov - a 34-year-old officer in the tax crimes unit of the Moscow Interior Ministry - along with a group of Russian officials, police officers and organized criminals, stole $230 million from the Russian people. It was the biggest tax fraud in Russia's history and resulted in the death of Sergei Magnitsky.

SIEGEL: William Browder traveled the world trying to bring justice for Sergei Magnitsky, and he succeeded in getting the U.S. Congress to pass a law that specifically targets Russian officials responsible for Magnitsky's death. And he's now written a book about all this. It's called "Red Notice," and it's out this week. Welcome to the program.

WILLIAM BROWDER: Thank you.

SIEGEL: Let's first acknowledge your unusual biography. You are the grandson of Earl Browder, who was head of the U.S. Communist Party, and you set out to be the biggest capitalist in Eastern Europe as he had been the biggest communist in the U.S. You're the black sheep multimillionaire in the family.

BROWDER: Well, you know, it was an interesting situation. When you come from a family of communists and you go through your teenage rebellion, what's the best way of rebelling from a family of communists? I put on a suit and tie and became a capitalist. And that seemed to - there was nothing I could do to upset my family more than that.

SIEGEL: Let's describe this scam that you ran up against in Russia, which is - it is breathtakingly audacious and therefore beggars belief so let's go - your Hermitage funds made a fortune in Russia.

BROWDER: Yeah.

SIEGEL: Russian police, at some point, raid your company's offices and those of its lawyers and its partners. They steal a couple of companies from you, assign new ownership to criminals, and then apply for enormous tax rebates for those companies.

BROWDER: What was most remarkable about it was that it involved just about everybody right up the chain of command up to probably a cabinet minister level. So they applied for this illegal tax refund after stealing our companies. And they applied for it on the 23 of December 2007, and it was approved and paid out one day later - a $230 million tax refund - the largest tax refund in Russian history paid out with no questions asked.

SIEGEL: By this time, you and your associates - having been tipped off to the fact that you were in trouble - you'd managed to get your assets out of Russia. So the companies they stole didn't actually have assets. It was just the claim - the fraudulent claim - to tax rebates.

BROWDER: So what happened was they raided our offices and then they tried to first steal our money, but when I - I was actually kicked out of Russia 18 months before. I was declared a threat to national security in November 2005. The offices were raided in June of 2007. They take all of our stuff, they steal our companies and then the police go around to all of our banks looking for assets, but they didn't find anything there because I had taken all the money out beforehand.

SIEGEL: How much money are we talking about?

BROWDER: We had $4 billion worth of assets and we sold every last penny and got it out of the country. Russia is an interesting place because they're extremely evil, but they're not that good at implementing their evilness. And so they kicked me out in 2005 and it took 18 months before they actually started moving forward on their scam.

As we learned about these raids and their frustration at not finding anything, I started to laugh because I thought all this effort - and a lot of effort went into all this scam - and they didn't get anything. And we had a young lawyer - named Sergei Magnitsky - as I was laughing, said, Bill, you shouldn't relax. And the reason you shouldn't relax is there's much more to this story. There's never a sort of clean and happy ending like you think.

SIEGEL: How did he die? How did Sergei Magnitsky die?

BROWDER: He was an idealist, a man of a new generation of Russians and he thought that the country was a normal country. And so he thought if police officers were involved in the theft of $230 million that he would report them. And so he testified against a number of police officers involved, hoping that the good guys would get the bad guys.

Instead, he was arrested in November of 2008. They put them in pretrial detention, and then they started to torture him to get him to withdraw his testimony. They put him in cells with 14 inmates in eight beds, left the lights on 24 hours a day to impose sleep deprivation. They put him in cells with no heat and no windowpanes in December in Moscow, so he nearly froze to death. And they wanted to get him to withdraw his testimony against the police officers and sign a false confession to say that he stole the $230 million. And Sergei, in spite of this ever-increasing torture, refused to perjure himself. For him, the idea of lying was worse than the idea of being tortured.

And so the torture got worse and his health broke down. He ended up losing 40 pounds, getting very severe pains in his stomach and being diagnosed as having pancreatitis and gallstones, and needing an operation. And a week before the operation was due, they came to him again with this Faustian bargain of you sign a confession and then you can have your medical care. He refused to sign this false confession. He went into critical condition. He was supposed to be taken to a prison with a hospital, but instead they put him in an isolation cell, and eight riot guards with rubber batons beat him to death on November 16, 2009.

SIEGEL: You and Sergei Magnitsky were tried on charges of tax evasion - convicted. You, in absentia, but he was already dead at that point.

BROWDER: Well, even Stalin never put dead people on trial. This is unprecedented for Russia. And what it shows is how upsetting Sergei and I were to Vladimir Putin that he would be provoked into such a drastic step.

SIEGEL: I wonder if you could just read this from the end of the book about that trial.

BROWDER: (Reading) It was all a show - a Potemkin court. This is Russia today - a stuffy room presided over by a corrupt judge, policed by unthinking guards with lawyers who are there just to give the appearance of a real trial and with no defendant in the cage. A place where a lie is reign supreme, a place where two and two is still five, white is still black and up is still down. A place where convictions are certain and guilt given, where a foreigner can be convicted in absentia of crimes he did not commit, a place where an innocent man who was murdered by the state - a man whose only crime was loving his country too much - can be made to suffer from beyond the grave. This is Russia today.

SIEGEL: At various times you were told there was a serious threat against your life. Is there still a serious threat against your life?

BROWDER: Even more so today than there's ever been. The Putin regime thinks of me as certainly their most hated foreign enemy because of the work that we've done to get sanctions imposed on Russian officials. So yes, I'm at risk. I'm at risk of assassination, of kidnapping, of - they went to Interpol recently to try to have Interpol arrest me so they could put me back in a Russian prison.

SIEGEL: The kind of warrant they sought from Interpol - that's a red notice.

BROWDER: That's a red notice, which is the name of my book.

SIEGEL: The name of your book.

BROWDER: Yep.

SIEGEL: William Browder - author of "Red Notice" - thank you very much for talking with us.

BROWDER: Thank you. Transcript provided by NPR, Copyright NPR.