Bill Browder
Big Brains podcst

Vladimir Putin’s No. 1 Enemy, with Bill Browder (Ep. 39)

What turned a powerful businessman into an international advocate for human rights.

Bill Browder
Big Brains podcst

Show Notes

University of Chicago alumnus Bill Browder’s story sounds like the plot of a Hollywood thriller—except it’s all true. He just wanted to be a businessman, but his experience as a foreign investor in Russia would push him to become an international activist.

Today, Browder, AB’85, travels the globe trying to convince countries to adopt a law called the Magnitsky Act, which he says is the future of how we fight human rights abuse. The law is revolutionary in the way it targets these individuals where it hurts: their money.

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(Episode published January 27, 2020)



Paul Rand: If you know the name Bill Browder, you probably know that he's considered.

Tape: Putin's number one enemy.

Tape: Putin's enemy number one.

Tape: Probably Putin's number one enemy.

Tape: Browder has been called Putin enemy number one.

Bill Browder: So, I mean, I am, by some people's measurements, Putin's number one foreign enemy.

Paul Rand: Browder was a hedge fund CEO. So how does someone like that end up in Vladimir Putin's cross hairs?

Bill Browder: Yeah, I mean I've done something which is unforgivable to him, which is that I created a law called the Magnitsky Act.

Paul Rand: The Magnitsky Act is one of the most important pieces of international legislation you've probably never heard of. And it's part of the reason Browder received the U Chicago Alumni Professional Achievement Award last year. The law revolutionized the way we go after and punish international bad actors.

Tape: President Trump continues to defend his oldest son for meeting with a Russian lawyer last year.

Tape: He has said that, in the meeting, the Russian lawyer, Natalia Veselnitskaya, wanted to talk about the Magnitsky Act. That is a 2012 American law that punishes Russians who are seen to be human rights abusers.

Paul Rand: Browder detailed his experiences in his bestselling book, “Red Notice”. It's a story that sounds like a Hollywood movie, except it's all true. So what's behind the Magnitsky Act and what role did this famous University of Chicago alum play in getting it passed in America and advocating for it abroad?

Bill Browder: That's all I do. I've given up my life as a businessman. I'm a full time political activist, human rights activist, on getting the Magnitsky Act passed in countries around the world.

Paul Rand: From the University of Chicago. This is Big Brains, a podcast about pioneering research and pivotal breakthroughs that are reshaping our world today. Bill Browder, and how his fight for justice changed international politics. I'm your host, Paul Rand.

Paul Rand: Bill Browder's story starts right here, at the University of Chicago.

Bill Browder: Yes. Intense, deep roots with the University of Chicago. Maybe too deep. Or it felt too deep at one point in my life.

Paul Rand: His father was chair of the mathematics department and Browder himself attended the university's undergraduate college.

Bill Browder: I think it was expected of me to become an academic like everybody else in my family. And in addition to my father, my Uncle Bill was a mathematician at Princeton and my Uncle Andy was a mathematician at Brown, all heads of their math departments. And so, it's expected that I become a scientist of some sort. And so, I was really the black sheep in the family and maybe it might've been acceptable to be a lowly engineer, but to be a businessman? Oh my God, that was like the worst thing in the world. And so it took me a long time to regain the confidence and respect of my father after my decision to go into business.

Paul Rand: I think I remember sharing in one of your Ted Talks, in your early forms of rebellion, one was growing an Afro. What was another one that you talked about?

Bill Browder: I followed the Grateful Dead around the UK.

Paul Rand: That's quite impressive.

Bill Browder: Yeah it was. But none of that stuff really upset him. But becoming a businessman really did. That was just the worst thing you could do.

Paul Rand: And that wasn't just about not following in his father's mathematical footsteps. It was also about communism. Browder's grandfather was a leader in the US Communist Party in the 30s and 40s, and is even said to have worked for Soviet intelligence, recruiting spies.

Bill Browder: And I came up with this idea, which was that, if my grandfather was the biggest communist in America, and the Berlin Wall has just come down, I'm going to try to become the biggest capitalist in Eastern Europe.

Paul Rand: Capitalism was directly antithetical to everything his family stood for. It was the ultimate way to rebel. So, in 1996, Browder started an investment company in Russia called Hermitage Capital Management.

Bill Browder: And eventually, we grew become the largest investment fund in Russia.

Paul Rand: Browder was lauded as a financial genius by Time magazine, and in 1997, he was one of the best performing hedge fund managers in the world. Then, just one year later, Russia defaulted on its bonds. It devalued its currency and Hermitage Capital took a nosedive.

Bill Browder: I lost 90% of my clients' money. And then, after that, with the last 10 cents of the dollar that I had left, the oligarchs were going to swoop in and try to steal the rest.

Paul Rand: So, what did you do?

Bill Browder: Well, I said to myself, "The police don't police. The regulators don't regulate. But the one thing that I can do is to research."

Paul Rand: These oligarchs, powerful Russian businessmen, routinely skim money off the top of big companies. So, Browder decided to expose it. He and his team started with one of the biggest companies in Russia, the oil giant Gazprom.

Bill Browder: And so, one of the things which we did, was we did a stealing analysis of Gazprom. And people will often think of Russia as being a very untransparent, opaque place. And it is, in certain respects, but Russia is also a country with incredible bureaucracy, and all the bureaucrats collect information on everything. And so we took that information and we analyzed it, and we figured out what was being stolen out of Gazprom and how they went about doing the stealing.

Paul Rand: They found the oligarchs had stolen 9% of Gazprom's assets, billions of dollars. Browder fed that information to American journalists, who jumped on the story and sparked an international scandal.

Bill Browder: And in the end, it created such a public scandal that Putin stepped in and fired the CEO who was doing all the stealing, and replaced him with a new guy whose job it was not to steal assets. He could steal other things, just not assets. And then the day after the new guy came on, the share price went up 138%.

Paul Rand: Now, at this point, you had thought Putin would be okay with this. Is this right?

Bill Browder: Well, at this point, I didn't know what Putin was, but he appeared to like what I was doing. Why did he like it? There's an expression, "Your enemy's enemy is your friend," and the oligarchs who were stealing from me, stealing money from me, they were stealing power from him.

Bill Browder: Understood. He had come to become of Russia, but he was really only president of the presidential administration of Russia because the oligarchs had privatized the power of the presidency by bribing police, bribing army generals, everybody was doing something for somebody else. Platoons in the army were building roads for the oligarchs and police officers were finding stashes of cocaine in the trunks of competitors to oligarchs and arresting them. Everyone was doing something for the wrong reason.

Bill Browder: And so it was going well for a while. And every time I would publicize a scandal involving one of his enemies, he would come down like a ton of bricks on his enemies. And it all worked well. The trouble was that Vladimir Putin wasn't doing this because he wanted to clean up Russia. He was doing this because he wanted to destroy the oligarchs.

Paul Rand: After Gazprom, Browder and his team at Hermitage did this again and again. They investigated the oligarchs that ran Russia's National Electricity Company, Savings Bank, and several other oil companies, and they exposed the theft.

Bill Browder: And that worked for a while until it didn't.

Paul Rand: Putin wanted to consolidate power. And in October 2003, he got his moment. He arrested the richest man in Russia.

Bill Browder: A man named Mikhail Khodorkovsky.

Paul Rand: And threw him in jail.

Bill Browder: And in Russia, when you go on trial, you sit in a cage, and they allowed the television cameras to film Mikhail Khodorkovsky, the richest man in Russia, sitting in a cage. Now imagine you're the 17th richest person in Russia, and you see a guy far better, far richer, far more powerful than you sitting in a cage. What's your natural reaction? You don't want to sit in that cage yourself.

Bill Browder: And so, in June of 2004, after Khodorkovsky was found guilty and sentenced to 10 years in prison, these other oligarchs went to Putin, one by one, and said, "Vladimir, what do we have to do so we don't sit in a cage?" And Putin said, "It's real simple. 50%." And this is not 50% for the Russian government or 50% for the presidential administration of Russia. This is 50% for Vladimir Putin. At that moment in time, he became the richest man in the world.

Paul Rand: Putin was now the central oligarch Browder was going after. He was naming and shaming Putin's own financial interests. It didn't go over very well.

Bill Browder: I was flying back to Russia from London on a weekend trip. I arrived at Sheremetyevo Airport, and I'd been going back and forth so many times that I had this VIP lounge card. And I go to the VIP lounge. I give them my passport, and what should have been like a three minute thing, an hour later they still haven't given me my passport back.

Paul Rand: Something's not right.

Bill Browder: I'm starting to make a fuss. I have my driver there, who's also starting to figure out what's going on, and all of a sudden four heavily armed border guards come into the VIP lounge. They grab me and they frog march me down to, they have a little jail in the airport.

Bill Browder: And I don't know whether I've been arrested and I'm going to go to the Siberia. The next flight back to London was at 11 o'clock in the morning. And so I couldn't sleep all night and I was just having all sorts of dark thoughts about where this was going to go. But I figured at maybe 9:45 they'd probably need to take me if they want to process my papers, whatever they do in a situation like this.

Bill Browder: And so I kept banging on the bars like, "Are you going to deport me? You better get me going." And they completely ignored me. And by 10:30 I figured they're not going to have enough time to do the processing or whatever they do in a deportation. And I'm convinced now, and my adrenaline is really pumping through my veins. I figure I'm going to Siberia. And it was like, at 10:47, they finally come to get me and they just marched me onto an Aeroflot plane, stuck me in a middle seat in economy and off I went.

Paul Rand:  At this point, Browder was shocked. He didn't know what specifically set Putin off or how else the Russians might come after him.

Bill Browder: And there's two places they could go after me. One is that I had a lot of people who they could arrest, my employees.

Paul Rand: And still in Russia.

Bill Browder: In Russia. And we had a lot of assets in Russia. And so I organized an emergency evacuation of my employees. I got them and their family members out, and we all got to London. We got into some temporary office space, and then we quietly sold every last security we held in Russia. We were able to get all of our money out.

Paul Rand: Okay. Remarkable.

Bill Browder: And people say, "Why did they let you get your money out?" And the answer is that they're evil, but they're highly inefficient at exercising their evil. And the only thing I kept in Russia was a small office and one secretary, and it was there in the hopes that maybe one day this whole thing would blow over.

Paul Rand: Wishful thinking.

Bill Browder: 18 months after I was expelled, I got a frantic call from the secretary at the Moscow office. And she says, "Bill! Bill! There's 25 police officers here raiding the office. What should I do?" And I'd never been in a situation like this. And so the only thing I could think of was to call my lawyer. I had an American lawyer in Moscow.

Bill Browder:  So, I call the lawyer and I say, "I got 25 police officers raiding my office. What should I do?" And he said, "I don't know. I've got 25 police officers raiding my office looking for your documents."

Paul Rand: They wanted the stamps, seals and certificates for Browder's investment company. When they found them, they seized them.

Bill Browder: And the next thing we know, we no longer own our investment holding companies. Using the documents seized by the police, they'd been fraudulently re-registered out of our name into the name of a man who was a convicted killer, who was let out of jail early by the police, presumably to put his name on these documents. So, at this point, I'm terrified. I'm terrified, not for economic reasons. Look, our money is safe, right? But if the police are working with murderers to steal our companies, what else are they going to do? So, I went and hired the smartest lawyer I knew in Russia. It was a 35 year old young man named Sergei Magnitsky.

Paul Rand: Sergei Magnitsky, the namesake of what would become the Magnitsky Act. That's coming up after the break.


Paul Rand: When the investment company assets were seized, Browder turned to his lawyer, Sergei Magnitsky.

Bill Browder: And I said, "Sergei, could you help me figure this thing out?" And he said yes. And so he went out and started to investigate, and it came back and he said, "I figured out there was two parts of the scam. The first part was they wanted to steal all of your assets, but they got to them too late."

Paul Rand: And you'd already liquidated them.

Bill Browder: Yeah. "The second part," he said. "They did succeed." And the second part was something that was truly cynical. So, when we were selling all of our securities, after I was kicked out and liquidating everything, we had a huge profit. We had $1 billion of profit, and we paid, to the Russian government, $230 million of capital gains tax. And what Sergei had discovered was that the people who stole our companies went back to the tax authorities and they filed an amended tax return, which said that there was a mistake made in the previous year's tax filing, that these companies didn't earn $1 billion. They earned zero. Therefore, the $230 million of taxes was paid in error.

Paul Rand: So the Russians who had taken over the company applied for a tax refund. It was the largest tax refund in Russian history.

Bill Browder: Sergei and I were convinced this must be a rogue operation because Putin, he's a nationalist, right? He wouldn't allow nearly a quarter of $1 billion to be stolen from his own country. That seemed inconceivable.

Paul Rand: Browder thought Putin may allow money to be stolen from the company, but why would he allow money to be stolen from his government?

Bill Browder: So, we wrote criminal complaints to the heads of all the major law enforcement agencies in Russia. I went to the press and then Sergei went to the Russian State Investigative Committee and gave sworn testimony about the involvement of the police officers in the fraud. And we sat back and we waited for the good guys to get the bad guys. It turns out, in Vladimir Putin's Russia, there are no good guys.

Bill Browder: Five weeks after Sergei testified at the Russian state investigative committee, the same individuals he testified against came to his home on the 24th of November, 2008, and arrested him, put him in pretrial detention, where he was then tortured to withdraw his testimony. They put him in cells with 14 inmates and eight beds, and left lights on 24 hours a day to impose sleep deprivation. They put him in cells with no heat and no window panes. They put him in cells with no toilet, just a hole in the floor where the sewage would bubble up. And the purpose of all this was to get him to withdraw his testimony against the corrupt police officers, and to get him to sign a false confession, to say that he stole the $230 million, and he did so on my instruction. And they figure, "Here is this tax lawyer, works in a fancy..."

Paul Rand: He'll cave.

Bill Browder: Of course he'll cave. They looked at him and said, "Within a week." But they completely misjudged Sergei Magnitsky. Sergei, for him, his integrity, his honesty, was more important than the physical pain they were subjecting him to and he refused, and the torture and the pressure got worse and worse and worse.

Bill Browder: And six months into this, he started to develop terrible pains in his stomach. He ended up losing 40 pounds. He was diagnosed as having pancreatitis and gallstones, and he was prescribed an operation which was supposed to happen on the 1st of August, 2009. A week before the operation, they came to him again and they again asked him to sign a false confession, and again, he refused. In retaliation for that, they abruptly moved him to a maximum security prison called Butyrka.

Bill Browder: Butyrka is considered to be one of the worst and most horrible prisons in Russia. And most significantly for Sergei, there was no medical facilities there. At Butyrka, his health completely broke down and went into a terrible downward spiral. Ear piercing pain. And they refused him all medical attention. Sergei wrote, and his lawyers wrote, 20 different requests for medical attention. Every one of those requests was either ignored or denied in writing.

Bill Browder: On the night of November 16, 2009, Sergei Magnitsky went into critical condition. On that night, the Butyrka authorities didn't want to have responsibility for him anymore. So, they put them in an ambulance and sent him to a different prison across town that had a medical wing. When he arrived at the different prison, instead of putting him in the emergency room, they put him in an isolation cell. They chained him to a bed and eight riot guards with rubber batons came into the cell and beat him until he died.

Paul Rand: Sergei was 37 years old, and he left behind a wife and two children. Browder found out the next morning. He was heartbroken and he knew that somehow he was responsible. He says, if Sergei hadn't been his lawyer, he'd still be alive today.

Bill Browder: And that burden of guilt has driven me, for 10 years, to put aside everything else that I'm doing, and to use all of my time, all of my resources and all of my energies, to go after the people who killed him and make sure they face justice.

Paul Rand: Easier said than done. Putin exonerated everyone involved in Sergei's murder. So, Browder came up with another idea.

Bill Browder: Which was, we can't get justice in Russia. We should get justice in the West. But the trouble was the West didn't have any mechanisms for justice. And so I went to Washington and I told the story of Sergei and what they did to him, to a democratic Senator from Maryland named Benjamin Cardin, and a Republican Senator from Arizona, John McCain.

Bill Browder: And I said, "Can we freeze their assets and ban their visas?" And they said, "Yes, we can." And that became known as the Magnitsky Act. And, at first, it started out just as a piece of legislation for Sergei Magnitsky, but as soon as it was launched, other victims started coming forward from Russia and saying, "My God, you found the Achilles heel of the Putin regime. This is what they care about, their money abroad. Can you possibly sanction the people who killed my husband, my brother, my sister, my aunt?"

Bill Browder: And after about a dozen of these calls, these senators realized there was something much bigger than Sergei Magnitsky. And they added 65 words to the law, which would sanction all Russian human rights abusers.

Paul Rand: This is what's made Browder Putin's number one enemy.

Bill Browder: And Vladimir Putin went out of his mind because the next thing he did was he banned the adoption of Russian orphans by American families. And you have to understand how heinous that is. The orphans that the Russians were putting up for adoption were the sick ones. They didn't give the Americans and the healthy orphans. The Americans came year after year, in the thousands, and took these babies back and nursed them to health. In Russia, the orphans often die. And so by refusing to allow them to be adopted by American families, Vladimir Putin was sentencing them to death.

Bill Browder: Vladimir Putin was so determined to repeal the Magnitsky Act that, on June 9th, 2016, he sent an Emissary named Natalia Veselnitskaya to Trump Tower to meet with Donald Trump, Jr., Jared Kushner, and Paul Manafort with one simple request: if he became president to repeal the Magnitsky Act.

Paul Rand: These Russian human rights abusers have all been financially blacklisted. But since then, the Act has been expanded to include any human rights abuser, regardless of country. Here's how it works.

Bill Browder: If they want to sanction you, you get put on something called the OFAC sanctions list. And the moment that you get added to the sanctions list, every bank in the world closes your account. It doesn't even matter if it's American bank or a Chilean bank or a Dubai bank or a Korean bank. That bank doesn't want to be in trouble with the US treasury. And they get in big trouble. If they do business for somebody on the sanctions list, they get fined by the treasury three times the amount of business.

Bill Browder: Let's say that you have $1 million in a bank account, you're a sanctioned individual, and your bank moves that money to another bank account. Let's say it's going from a Swiss bank to a Russian bank. If the treasury finds out, they fine the bank $3 million, and what does the bank make off that wire transfer? $150. And so the moment you're on the sanctions list, you become a financial non-person in the world, a financial leper, a financial pariah, and you can't do business anywhere. It ruins the business of any person on the sanctions list. And so everybody hates it more than anything.

Paul Rand: There are about 150 people around the world who are sanctioned because of the Magnitsky Act, but Browder says thousands more live in fear that they will be sanctioned.

Bill Browder: It's devastating. This is like the new technology we're going after bad guys. And you can't imagine the number of people who are absolutely living in terror right now about possibly being sanctioned. It is in the tens of thousands. The worst people on the planet are all absolutely terrified that they're going to get caught and sanctioned by the US government.

Bill Browder: And the reason why this is so valuable is that, all of a sudden, it used to be that they could just brazenly act with impunity, and do anything they wanted to, and do all sorts of terrible things to people without any consequence. Now, all of a sudden, there's a consequence.

Paul Rand: And the Magnitsky Act has turned into a global phenomenon. Similar laws have been passed in the UK, Canada, and others.

Bill Browder: Now, it's not just about me and Sergei, it's not just about Russia, it's about everybody. And so the Uyghers in China who are being rounded up in concentration camps, the people in Hong Kong, the Venezuelan dissidents that are being the opposition, that are being gunned down, in Nicaragua, in Myanmar, this whole situation with Jamal Khashoggi in Saudi Arabia, and other journalists in Saudi Arabia who have been murdered, everybody now has a tool to go after their bad guys.

Bill Browder: And so, I have people from all over the world that are advocating to add people to the countries that have Magnitsky lists and to push for Magnitsky legislation in countries that don't have it yet.

Paul Rand: Tell me. So you spend a good majority of your time still working to promote the Magnitsky Act, is that right?

Bill Browder: That's all I do. I've given up my life as a businessman.

Paul Rand: Okay.

Bill Browder: I'm a full time political activist, human rights activist, working on getting the Magnitsky Act passed in countries around the world.

Paul Rand: I bet you never thought you'd turn out to be a global activist, did you?

Bill Browder: Never in my wildest dreams. Life hands out different circumstances, it deals you different cards and you play those cards.

Paul Rand: And are you keeping up with Sergei's widow and kids?

Bill Browder: Yeah, absolutely. She works in the office on the campaign with us.

Paul Rand: Based in?

Bill Browder: In London.

Paul Rand: Okay.

Bill Browder: Son is about to go to university. He's finished his education after all this trauma in London, and he's now a very talented young artist. You know, they're safe. I mean, obviously, no one could ever bring back their-

Paul Rand: Their dad.

Bill Browder: Yeah. But Sergei Magnitsky's life, his legacy, was this legislation.

Paul Rand: Okay. Do you see this as an ongoing, lifelong goal to continue this or do you see there's a point where you say, "Okay, I've accomplished what I set out plus to accomplish."

Bill Browder: There is so much evil going on in the world that I'll never accomplish what I set out to accomplish, but this is a righteous mission. It's something I feel very strongly and passionately and good about. I mean, the reasons for why it started were horrific. The tragedy is horrific, but it's pushed me into an area of great meaning, and of course, fighting over justice is infinitely more satisfying than fighting over money.

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