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  Contents

  Author’s Note

  1 Persona Non Grata

  2 How Do You Rebel Against a Family of Communists?

  3 Chip and Winthrop

  4 “We Can Get You a Woman to Keep You Warm at Night”

  5 The Bouncing Czech

  6 The Murmansk Trawler Fleet

  7 La Leopolda

  8 Greenacres

  9 Sleeping on the Floor in Davos

  10 Preferred Shares

  11 Sidanco

  12 The Magic Fish

  13 Lawyers, Guns, and Money

  14 Leaving Villa d’Este

  15 And We All Fall Down

  16 Tuesdays with Morrie

  17 Stealing Analysis

  18 Fifty Percent

  19 A Threat to National Security

  20 Vogue Café

  21 The G8

  22 The Raids

  23 Department K

  24 “But Russian Stories Never Have Happy Endings”

  25 High-Pitched Jamming Equipment

  26 The Riddle

  27 DHL

  28 Khabarovsk

  29 The Ninth Commandment

  30 November 16, 2009

  31 The Katyn Principle

  32 Kyle Parker’s War

  33 Russell 241

  34 Russian Untouchables

  35 The Swiss Accounts

  36 The Tax Princess

  37 Sausage Making

  38 The Malkin Delegation

  39 Justice for Sergei

  40 Humiliator, Humiliatee

  41 Red Notice

  42 Feelings

  Acknowledgments

  About the Author

  Index

  To Sergei Magnitsky, the bravest man I’ve ever known.

  Author’s Note

  Everything in this book is true and will surely offend some very powerful and dangerous people. In order to protect the innocent, some names and locations have been changed.

  Red Notice n. A communication issued by Interpol requesting the arrest of wanted persons, with a view to extradition. An Interpol Red Notice is the closest instrument to an international arrest warrant in use today.

  1

  Persona Non Grata

  November 13, 2005

  I’m a numbers guy, so I’ll start with some important ones: 260; 1; and 4,500,000,000.

  Here’s what they mean: every other weekend I traveled from Moscow, the city where I lived, to London, the city I called home. I had made the trip 260 times over the last ten years. The “1” purpose of this trip was to visit my son, David, then eight, who lived with my ex-wife in Hampstead. When we divorced, I made a commitment to visit him every other weekend no matter what. I had never broken it.

  There were 4,500,000,000 reasons to return to Moscow so regularly. This was the total dollar value of assets under management by my firm, Hermitage Capital. I was the founder and CEO, and over the previous decade I had made many people a lot of money. In 2000, the Hermitage Fund had been ranked as the best performing emerging-markets fund in the world. We had generated returns of 1,500 percent for investors who had been with us since we launched the fund in 1996. The success of my business was far beyond my most optimistic aspirations. Post-Soviet Russia had seen some of the most spectacular investment opportunities in the history of financial markets, and working there had been as adventurous—and occasionally, dangerous—as it was profitable. It was never boring.

  I had made the trip from London to Moscow so many times I knew it backward and forward: how long it took to get through security at Heathrow; how long it took to board the Aeroflot plane; how long it took to take off and fly east into the darkening country that, by mid-November, was moving fast into another cold winter. The flight time was 270 minutes. This was enough to skim the Financial Times, the Sunday Telegraph, Forbes, and the Wall Street Journal, along with any important emails and documents.

  As the plane climbed, I opened my briefcase to get out the day’s reading. Along with the files and newspapers and glossy magazines was a small leather folder. In this folder was $7,500 in $100 bills. With it, I would have a better chance of being on that proverbial last flight out of Moscow—like those who had narrowly escaped Phnom Penh or Saigon before their countries fell into chaos and ruin.

  But I was not escaping from Moscow, I was returning to it. I was returning to work. And, therefore, I wanted to catch up on the weekend’s news.

  One Forbes article I read near the end of the flight caught my eye. It was about a man named Jude Shao, a Chinese American who, like me, had an MBA from Stanford. He had been a few years behind me at business school. I didn’t know him, but also like me, he was a successful businessman in a foreign land. In his case, China.

  He’d gotten into a conflict with some corrupt Chinese officials, and in April 1998, Shao was arrested after refusing to pay a $60,000 bribe to a tax collector in Shanghai. Shao was eventually convicted on trumped-up charges and sentenced to sixteen years in prison. Some Stanford alumni had organized a lobbying campaign to get him out, but it didn’t work. As I read, Shao was rotting away in some nasty Chinese prison.

  The article gave me the chills. China was ten times safer than Russia when it came to doing business. For a few minutes, as the plane descended through ten thousand feet over Moscow’s Sheremetyevo Airport, I wondered if perhaps I was being stupid. For years, my main approach to investing had been shareholder activism. In Russia that meant challenging the corruption of the oligarchs, the twenty-some-odd men who were reported to have stolen 39 percent of the country after the fall of communism and who became billionaires almost overnight. The oligarchs owned the majority of the companies trading on the Russian stock market and they were often robbing those companies blind. For the most part, I had been successful in my battles with them, and while this strategy made my fund successful, it also made me a lot of enemies.

  As I finished the story about Shao, I thought, Maybe I should cool it. I have a lot to live for. Along with David, I also had a new wife in London. Elena was Russian, beautiful, incredibly smart, and very pregnant with our first child. Maybe I should give it a rest.

  But then the wheels touched down and I put the magazines away, powered up my BlackBerry, and closed my briefcase. I started checking emails. My focus turned from Jude Shao and the oligarchs to what I had missed while in the air. I had to get through customs, to my car, and back to my apartment.

  Sheremetyevo Airport is a strange place. The terminal that I was most familiar with, Sheremetyevo-2, was built for the 1980 Summer Olympics. It must have looked impressive when it opened, but by 2005 it was far worse for the wear. It smelled of sweat and cheap tobacco. The ceiling was decorated with row upon row of metal cylinders that looked like rusty cans of Folgers coffee. There was no formal line at passport control, so you had to take your place in a mass of people and stay on guard so that no one jumped ahead of you. And God forbid you checked a bag. Even after your passport was stamped you’d have to wait another hour to claim your luggage. After a four-hour-plus flight, it was not a fun way to gain entry into Russia, particularly if you were doing the trip every other weekend as I was.

  I had done it this way since 1996, but around 2000 a friend of mine told me about the so-called VIP service. For a small fee it saved about an hour, sometimes two. It was by no means luxurious, but it was worth every penny.

  I went directly from the plane to the VIP lounge. The walls and ceilin
g were painted pea-soup green. The floor was tan linoleum. The lounge chairs, upholstered with reddish brown leather, were just comfortable enough. The attendants there served weak coffee or overbrewed tea while you waited. I opted for the tea with a slice of lemon and gave the immigration officer my passport. Within seconds, I was engrossed in my BlackBerry’s email dump.

  I barely noticed when my driver, Alexei, who was authorized to enter the suite, came in and started chatting with the immigration officer. Alexei was forty-one like me, but unlike me was six feet five inches, 240 pounds, blond, and hard-featured. He was a former colonel with the Moscow Traffic Police and didn’t speak a word of English. He was always on time—and always able to talk his way out of minor jams with traffic cops.

  I ignored their conversation, answered emails, and drank my lukewarm tea. After a while, an announcement came over the public address system that the baggage from my flight was ready for retrieval.

  That’s when I looked up and thought, Have I been in here for an hour?

  I looked at my watch. I had been there for an hour. My flight landed around 7:30 p.m. and now it was 8:32. The other two passengers from my flight in the VIP lounge were long gone. I shot Alexei a look. He gave me one back that said, Let me check.

  While he spoke with the agent, I called Elena. It was only 5:32 p.m. in London so I knew she would be home. While we talked, I kept an eye on Alexei and the immigration officer. Their conversation quickly turned into an argument. Alexei tapped the desk as the agent glared at him. “Something’s wrong,” I told Elena. I stood and approached the desk, more irritated than worried, and asked what was going on.

  As I got closer, I realized something was seriously wrong. I put Elena on speakerphone and she translated for me. Languages are not my thing—even after ten years, I still spoke only taxi Russian.

  The conversation went around and around. I watched like a spectator at a tennis match, my head bouncing back and forth. Elena said at one point, “I think it’s a visa issue, but the agent isn’t saying.” Just then two uniformed immigration officers entered the room. One pointed at my phone and the other at my bags.

  I said to Elena, “There’re two officers here telling me to hang up and go with them. I’ll call back as soon as I can.”

  I hung up. One officer picked up my bags. The other collected my immigration papers. Before I left with them, I looked to Alexei. His shoulders and eyes drooped, his mouth slightly agape. He was at a loss. He knew that when things go bad in Russia, they usually go bad in a big way.

  I went with the officers and we snaked through the back hallways of Sheremetyevo-2 toward the larger, regular immigration hall. I asked them questions in my bad Russian, but they said nothing as they escorted me to a general detention room. The lights there were harsh. The molded-plastic chairs were bolted to the ground in rows. The beige paint on the walls peeled here and there. A few other angry-looking detainees lolled around. None talked. All smoked.

  The officers left. Sealed off behind a counter-and-glass partition on the far side of the room was a collection of uniformed agents. I chose a seat near them and tried to make sense of what was happening.

  For some reason I was allowed to keep all my things, including my mobile phone, which had a workable signal. I took this as a good sign. I tried to settle in, but as I did, the story of Jude Shao reregistered in my mind.

  I checked my watch: 8:45 p.m.

  I called Elena back. She wasn’t worried. She told me she was preparing a briefing fax for the British embassy officials in Moscow and would fax it to them as soon as it was ready.

  I called Ariel, an Israeli ex-Mossad agent who worked as my company’s security adviser in Moscow. He was widely considered to be one of the best in the country, and I was confident that he could sort out this problem.

  Ariel was surprised to hear what was happening. He said he’d make some calls and get back to me.

  At around 10:30 I called the British embassy and spoke to a man named Chris Bowers, in the consular section. He had received the fax from Elena and already knew my situation, or at least knew as much as I did. He double-checked all my information—date of birth, passport number, date my visa was issued, everything. He said because it was Sunday night, he probably wouldn’t be able to do much, but he would try.

  Before hanging up, he asked, “Mr. Browder, have they given you anything to eat or drink?”

  “No,” I answered. He made a little humming noise, and I thanked him before saying good-bye.

  I tried to make myself comfortable on the plastic chair but couldn’t. Time crawled by. I got up. I paced through a curtain wall of cigarette smoke. I tried not to look at the vacant stares of the other men who were also being detained. I checked my email. I called Ariel, but he didn’t answer. I walked to the glass and started talking to the officers in my poor Russian. They ignored me. I was nobody to them. Worse, I was already a prisoner.

  It bears mentioning that in Russia there is no respect for the individual and his or her rights. People can be sacrificed for the needs of the state, used as shields, trading chips, or even simple fodder. If necessary, anyone can disappear. A famous expression of Stalin’s drives right to the point: “If there is no man, there is no problem.”

  That’s when Jude Shao from the Forbes article wedged back into my consciousness. Should I have been more cautious in the past? I’d gotten so used to fighting oligarchs and corrupt Russian officials that I had become inured to the possibility that, if someone wanted it badly enough, I could disappear too.

  I shook my head, forcing Jude out of my mind. I went back to the guards to try to get something—anything—out of them, but it was useless. I went back to my seat. I called Ariel again. This time, he answered.

  “What’s going on, Ariel?”

  “I’ve spoken to several people, and none of them are talking.”

  “What do you mean none of them are talking?”

  “I mean none of them are talking. I’m sorry, Bill, but I need more time. It’s Sunday night. No one’s available.”

  “Okay. Let me know as soon as you hear anything.”

  “I will.”

  We hung up. I called the embassy again. They hadn’t made any progress either. They were getting stonewalled or I wasn’t in the system yet or both. Before hanging up, the consul asked again, “Have they given you anything to eat or something to drink?”

  “No,” I repeated. It seemed like such a meaningless question, but Chris Bowers clearly thought otherwise. He must have had experience with this type of situation before, and it struck me as a very Russian tactic not to offer either food or water.

  The room filled with more detainees as the clock passed midnight. All were men, all looked as if they had come from former Soviet republics. Georgians, Azerbaijanis, Kazakhs, Armenians. Their luggage, if they even had any, was simple duffel bags or strange, oversize nylon shopping bags that were all taped up. Each man smoked incessantly. Some spoke in low whispers. None showed any kind of emotion or concern. They made as much effort to notice me as the guards did, even though I was clearly a fish out of water: nervous, blue blazer, BlackBerry, black rolling suitcase.

  I called Elena again. “Anything on your end?”

  She sighed. “No. And yours?”

  “Nothing.”

  She must have heard the concern in my voice. “It’ll be fine, Bill. If this really is just a visa issue, you’ll be back here tomorrow. I’m sure of it.”

  Her calmness helped. “I know.” I looked at my watch. It was 10:30 p.m. in England. “Go to sleep, honey. You and the baby need the rest.”

  “Okay. I’ll call you straightaway if I get any information.”

  “Me too.”

  “Good night.”

  “Good night. I love you,” I added, but she’d already hung up.

  A flicker of doubt crossed my mind: What if this wasn’t simply a visa issue? Would I ever see Elena again? Would I ever meet our unborn child? Would I ever see my son, David?

&nbs
p; As I fought these dire feelings, I tried to arrange myself across the hard chairs, using my jacket as a pillow, but the chairs were made for preventing sleep. Not to mention I was surrounded by a bunch of menacing-looking people. How was I going to drift off around these characters?

  I wasn’t.

  I sat up and started typing on my BlackBerry, making lists of people I had met over the years in Russia, Britain, and America who might be able to help me: politicians, businesspeople, reporters.

  Chris Bowers called one last time before his shift ended at the embassy. He assured me that the person taking over for him would be fully briefed. He still wanted to know whether I had been offered food or water. I hadn’t. He apologized, even though there was nothing he could do. He was clearly keeping a record of mistreatment should the need for one ever arise. After we hung up, I thought, Shit.

  By then it was two or three in the morning. I turned off my BlackBerry to conserve its battery and tried again to sleep. I threw a shirt from my bag over my eyes. I dry-swallowed two Advil for a headache that had started. I tried to forget about it all. I tried to convince myself that I’d be leaving tomorrow. This was just a problem with my visa. One way or another, I’d be leaving Russia.

  After a while, I drifted off.

  I woke at around 6:30 a.m., when there was a crush of new detainees. More of the same. No one like me. More cigarettes, more whispering. The smell of sweat increased by several orders of magnitude. My mouth tasted foul, and for the first time I realized how thirsty I was. Chris Bowers had been right to ask if they’d offered me anything to eat or drink. We had access to a rank toilet, but these bastards should have given us food and water.

  All the same, I’d awakened feeling positive that this was just a bureaucratic misunderstanding. I called Ariel. He still hadn’t been able to figure out what was going on, but he did say that the next flight to London left at 11:15 a.m. I had only two alternatives: I would either be arrested or deported, so I tried to convince myself I’d be on that flight.