Testimony of William Browder. Commission on Security & Cooperation in Europe the U.S. Helsinki Commission.

June 23, 2009

”Mr. Chair­man and Dis­tin­guished Mem­bers of the Com­mis­sion, thank you for invit­ing me to appear before you today.

I have been asked to share my thoughts on the rule of law in Rus­sia. Unfor­tu­nate­ly, my own per­son­al expe­ri­ence shaped by fif­teen years of invest­ing in that coun­try con­firms to me that the sit­u­a­tion in Rus­sia is not a pret­ty pic­ture, and it is get­ting worse.

When I first start­ed Her­mitage in the mid-1990’s, my clients would ask me about the Russ­ian hor­ror sto­ries they had heard of share­hold­ers get­ting wiped off cor­po­rate reg­istries, hav­ing assets stolen by crooked man­age­ment or being the tar­gets of cor­rupt gov­ern­ment offi­cials seek­ing bribes. What I was able to tell my investors back then is that while cor­po­rate gov­er­nance was ter­ri­ble, val­u­a­tions were cheap, and investors would make mon­ey as Rus­sia evolved from “hor­ri­ble” to just “bad.” I am here today to tell you that Rus­sia is revert­ing. The investor hor­ror sto­ries that were large­ly fan­tas­tic in the 1990’s are now com­mon­place. The sit­u­a­tion in Rus­sia is going from “bad” back to “hor­ri­ble” ­ and it will be more than just investors who lose out in this process.

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