WORCESTER – Congressional representative Jim McGovern and businessman, author and political activist Bill Browder discussed Russia, Vladimir Putin, and corruption in Russia in a talk attended by hundreds of attendees at Worcester State University on Thursday evening.
Browder was a co-founder of Hermitage Capital Management in 1996, which managed the Hermitage Fund. The investment fund and asset management company specialized in Russian markets and grew from $25 million in seed funding to $4.5 billion in assets under management. In 1997, it was the best performing fund in the world, growing at 228%.
Browder told the story of how Hermitage went from the largest foreign investor in Russia to his being expelled from the country and named a threat to national security. He also explained how the arrest, torture and death of the company’s lawyer led to his political activism and the Global Magnitsky Act of 2016, which allows the U.S. government to sanction human rights offenders worldwide, freeze their assets, and prohibit their entry into the U.S.
When Putin became acting president of Russia on the last day of 1999 and elected president in 2020, Browder said his interests and Putin’s were aligned. Putin had campaigned against oligarchs, the wealthiest men in Russia who controlled its biggest businesses. Browder was challenging some of those companies with Hermitage investments.
After arresting one oligarch in 2000, Browder said Putin met with other oligarchs and told them how they could continue their lavish lifestyles and businesses in Russia.
Media mogul Vladimir Gusinsky was arrested in June 2000 on charges related to stealing $10 million in state funds. His portfolio included Russia’s first privately owned television station, which had broadcast programming critical of Putin.
Gusinsky was released to house arrest and in July sold his empire to a subsidiary of Gazprom, an energy company which the Russian government had taken a controlling interest in earlier that year. Gusinsky said he was threatened with being sent back to prison if he refused the deal. He left Russia soon after and never returned.
Putin held a meeting with over 20 of Russia’s biggest business leaders later the same month.
With Putin’s interests now aligned with the oligarchs, Browder said his interests no longer aligned with Putin’s.
In Nov. 2005, Browder was refused entry into Russia, deported, and declared a national security threat. Russian authorities raided the Hermitage offices and the offices of its law firm in June 2007. Computers and documents were seized, including corporate registration documents.
Later that same year, Browder became aware a firm related to the Hermitage was going to trial based on accusations of owning millions in unpaid debts. Browder asked an auditor with the company’s law firm, Sergei Magnitsky, to investigate, as he was not aware of the case or the lawyers representing the company in it.
Magnitsky’s investigation revealed that the materials seized in the raid were fraudulently used to forge a change of ownership of the Hermitage. Forged contracts were used to claim the company had $1 billion in debt. That debt was used to file for a $230 million tax rebate.
Browder said that tax rebate, the largest in Russian history, was issued the day after the fraudulent company owners filed for it on Christmas Eve 2007.
Magnitsky accused police, judges, bankers and organized crime as part of the fraud.
When the evidence was presented to the Russian government, it opened a criminal investigation against Magnitsky, not the fraudulent takeover of Hermitage. Magnitsky was arrested in Nov. 2008. He died in prison eight days before Russian law would require his release, as he was never brought to trial.
Browder described Magnitsky’s treatment in prison to pressure him to testify against Hermitage and drop accusations against police and government officials, including denial of visitation, increasing being moved into worse conditions, and being denied adequate medical care for gallstones and pancreatitis. Browder said while facing serious medical ailments, Magnitsky was tortured and eventually beaten to death.
According to the Spectator, Magnitsky’s prison diary described being moved into worsening conditions in the prison and being denied medical care. A letter from a leader of the Moscow Helsinki Group, a leading human rights organization in Russia, to the Russian general prosecutor in 2010 said Magnitsky died as a result of torture carried out by Interior Ministry officials.
In 2012, the U.S. Congress passed and President Barack Obama signed the Global Magnitsky Act of 2016. Browder’s efforts and testimony before congressional committees played an important role in the legislation being enacted. Browder said the first time he testified before a congressional committee, McGovern was its chair.
In 2013, Browder was tried in absentia, and Magnitsky posthumously, for tax evasion. Both were convicted. Interpol has declined to enforce a Russian warrant for Browder. Browder was again tried in absentia in Russia in 2017.
During a July 2018 joint press conference with President Donald Trump in Helsinki, Putin accused Browder of never paying taxes in Russia and funneling $400 million to the Hillary Clinton campaign. No evidence was provided.
Browder said the charges in Russia and the accusation of funneling funds to the Clinton campaign are due to his involvement in the enactment of the Magnitsky Act.
Browder has written two books on his experiences in Russia. “Red Notice” was released in 2015. “Freezing Order” was released this year.
