Hermitage Reveals $230 Million Stolen From Russian People

October 8, 2009

Today, Octo­ber 8, 2009, inves­ti­ga­tors from the Russ­ian Inte­ri­or Min­istry announced charges against Her­mitage Cap­i­tal Management’s legal advis­er, Sergey Mag­nit­skiy, and alle­ga­tions against Hermitage’s CEO, William Browder.
These charges and alle­ga­tions have been fab­ri­cat­ed and brought direct­ly in response to Her­mitage and Mag­nit­skiy impli­cat­ing cer­tain Inte­ri­or Min­istry offi­cials in the theft of $230 mil­lion from the Russ­ian budget.

Due to the high lev­el of cor­rup­tion in the Russ­ian Inte­ri­or Min­istry, along with the arbi­trary pow­ers they poss­es, many Russ­ian news­pa­pers have been afraid to write about the Inte­ri­or Min­istry’s role in this fraud. In an envi­ron­ment like this, where the free­dom of the press is com­pro­mised, it is nec­es­sary to use new chan­nels of com­mu­ni­ca­tion to fight cor­rup­tion in Rus­sia. In order to avoid putting Russ­ian jour­nal­ists at risk, we are, there­fore, releas­ing the fol­low­ing YouTube video to lay out sto­ry in full.

The Financial Times: Russian sharks are feeding on their own blood

July 6, 2009

By William Browder

When pres­i­dents Barack Oba­ma and Dmit­ry Medvedev met on Mon­day for their first major sum­mit, the main agen­da items were arms con­trol and Iran, and progress was made on the for­mer, at least. This may encour­age those who believe these issues can be dealt with in iso­la­tion from oth­er chal­lenges to US-Rus­sia relations.

As some­one who has been famil­iar with the coun­try for the past 15 years, I believe that approach ignores fun­da­men­tal dif­fer­ences between Rus­sia today and most oth­er nations. Sim­ply put, Rus­sia is not a “state” as we under­stand it. Gov­ern­ment insti­tu­tions have been tak­en over as con­duits for pri­vate inter­ests, some of them crim­i­nal. Prop­er­ty rights no longer exist, peo­ple who are sup­posed to enforce the law are break­ing it, inno­cent peo­ple are vic­timised and courts have turned into polit­i­cal tools.

Rather than a nor­mal­ly func­tion­ing bureau­cra­cy, Russia’s clans fight over con­trol of gov­ern­ment posi­tions and the pow­er to use state resources to expro­pri­ate assets. While cor­rup­tion and legal abuse go on every­where, the scale of them in Rus­sia should affect the way all coun­tries, par­tic­u­lar­ly the US, deal with it.

My own case is illus­tra­tive of the break­down of the state in Rus­sia. From 1996 until 2005, I was the largest port­fo­lio investor in the coun­try, with $4bn (£2.5bn, €3bn) invest­ed. In Novem­ber 2005, the gov­ern­ment sud­den­ly took my visa away and declared me a “threat to nation­al secu­ri­ty”, I believe because I was out­spo­ken about cor­rup­tion at state-owned com­pa­nies. This was fol­lowed by a cas­cade of malfea­sance so extreme it would make a hard­ened crim­i­nal blush – which I believe was orches­trat­ed by the authorities.

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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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The New York Times: An Investment Gets Trapped in Kremlin’s Vise

July 24, 2008

William F. Brow­der was one of the most promi­nent for­eign investors here, a cor­po­rate provo­ca­teur who brought the tac­tics of Wall Street share­hold­er activists to the free-for-all of post-Sovi­et cap­i­tal­ism. Until, that is, the Krem­lin expelled him in 2005.

Mr. Brow­der then focused on pro­tect­ing his bil­lions of dol­lars of stakes in major Krem­lin-con­trolled com­pa­nies, like Gazprom, and on fight­ing to return to a land where he had deep and unusu­al fam­i­ly ties. So when he ran into Dmitri A. Medvedev, the coun­try’s future pres­i­dent, at the World Eco­nom­ic Forum in Davos last year, he saw his chance.

In a brief con­ver­sa­tion at a din­ner at the Swiss resort, he pressed Mr. Medvedev for help in regain­ing his Russ­ian visa. Mr. Medvedev, then a top aide to Pres­i­dent Vladimir V. Putin, agreed to pass along his request.

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