Bill Browder

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See also William Browder (mathematician)
William Felix Browder
William F. Browder - World Economic Forum Annual Meeting 2011.jpg
Browder at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 27, 2011
Born 1964
USA
Nationality British (formerly American)
Education Stanford, MBA; Chicago, BSc econ
Employer Hermitage Capital Management
Title CEO
Parents Felix Browder, father
Relatives Earl Browder, grandfather
William Browder, uncle

William Felix "Bill" Browder[1] (born in 1964) is the Chief Executive Officer and co-founder of the investment fund Hermitage Capital Management.

Early life and education[edit]

Bill Browder is the grandson of Earl Browder, the former leader of the Communist Party USA,[2] and the son of Felix Browder, the noted mathematician.

He grew up in Chicago, Illinois and attended the University of Chicago where he studied Economics. He received an MBA from Stanford Business School[3] in 1989 where his classmates were Gary Kremen and Ryland Kelley. He later became a British citizen.[2][4]

Prior to setting up Hermitage, Browder worked in the Eastern European practice of the Boston Consulting Group in London and managed the Russian proprietary investments desk at Salomon Brothers.

Hermitage Capital Management[edit]

Bill Browder and Edmond Safra founded Hermitage Capital Management in 1996 for the purpose of investing initial seed capital of $25 million in Russia. The business was very successful, profiting from the wave of privatizations occurring in Russia at that time, and increased its investor base substantially. Following the Russian financial crisis of 1998 Browder continued the business of Hermitage investing in Russia, despite significant outflows from the fund. His fund became a prominent activist shareholder in the Russian gas giant Gazprom, the large oil company Surgutneftegaz, RAO UES, Sberbank, Sidanco, Avisma and Volzhanka.[5] Browder exposed management corruption and corporate malfeasance in these partly state-owned companies.[6] He has been quoted as saying: "You had to become a shareholder activist if you didn’t want everything stolen from you".[2]

In 1995-2006 Hermitage Capital Management was one of the biggest foreign investors in Russia[7] and Browder has amassed a significant fortune through his management of the Fund. In 2006 he earned an estimated £125-150 million.[8] In 2007 he earned a further £125-£150 million.[9]

In March 2013, the bank HSBC, which is the trustee and manager of Hermitage Capital Management, announced that it would be ceasing the fund's operations in Russia. The decision was taken amid a libel court case in London and a trial in absentia for tax evasion in Moscow, both against Browder.[10]

Conflict with the Russian legal system[edit]

In 2006, after ten years doing business in the country, he was blacklisted by the Russian government as a "threat to national security" and denied entry to the country. The Economist wrote that the Russian government blacklisted Browder because he interfered with the flow of money to "corrupt bureaucrats and their businessmen accomplices". Browder had been a supporter of Russian president Vladimir Putin before, though.[11]

As reported by the New York Times in 2008, "over the next two years several of his associates and lawyers, as well as their relatives, became victims of crimes, including severe beatings and robberies during which documents were taken". In June 2007 dozens of police officers "swooped down on the Moscow offices of Hermitage and its law firm, confiscating documents and computers. When a member of the firm protested that the search was illegal, he was beaten by officers and hospitalized for two weeks, said the firm’s head, Jamison R. Firestone." Hermitage became "victim of what is known in Russia as "corporate raiding": seizing companies and other assets with the aid of corrupt law enforcement officials and judges". Three Hermitage holdings companies were seized on what the company's lawyers insist are bogus charges.[2]

Since this time, Browder has continued to run Hermitage from offices in London. Hermitage has alleged that the raids in June 2007 were a pretext by corrupt law enforcement officers, to steal the corporate registration documents of three Hermitage holding companies, and reclaim the $230 million of taxes paid by those companies to the Russian state in 2006. In November 2008 one of his lawyers, Sergei Magnitsky, was arrested on charges of tax evasion, which Browder claims were instigated as a retaliatory measure by the same officers Magnitsky had accused of involvement in the $230 million theft in sworn testimony.[12] Magnitsky died on November 16, 2009, after eleven months in pre-trial detention.[13] Opalesque.TV released a video on February 8, 2010 where Browder spoke about Sergey Magnitsky's ordeal during his eleven months in detention.[14]

In February 2013, Russian officials announced that Browder and Magnitsky would both be put on trial for evading $16.8 million in taxes. Both men will be tried in absentia.[15] Furthermore, as announced in March 2013, Russian authorities will be investigating Browder illegally obtaining Gazprom shares worth $70 million by his company Hermitage Capital. The investigation will be focusing on whether he violated any Russian laws when his fund, Hermitage Capital, used Russian companies registered in the region of Kalmykia which employed disabled veterans from the Soviet War in Afghanistan for tax break purposes[16] to purchase shares in the gas monopoly between 2001 and 2004, gain a seat on the board, and to exercise influence over its decisions. At the time, according to the Russian law, foreigners were barred from directly owning Gazprom shares. Browder has also been charged with trying to gain access to Gazprom's financial reports.[17] Browder admitted having sought influence in Gazprom but denied any wrongdoing;[18] in his view, purchasing Gazprom shares was an investment in the Russian economy, while the desire to influence the Gazprom management was driven by the need to expose a "huge fraud going on at the company", and the scheme with Russian-registered subsidiaries entitled to tax advantages was practised by other foreign investors at the time and was not illegal.[19] He also said that he believed the trial was in response to the United States passing the Magnitsky Act, which had blacklisted Russian officials involved in Magnitsky's death from entering the U.S. As claimed by The Financial Times, this trial was deemed to be the first in Russian history over a dead defendant.[20] Amnesty International described the trial as “a whole new chapter in Russia’s worsening human rights record” and a “sinister attempt to deflect attention from those who committed the crimes he Magnitsky exposed.”[21]

On 11 July 2013, Browder was convicted in absentia by a district criminal court in Moscow on charges under article 199 of the RF Criminal Code (tax-evasion by organisations), and sentenced to nine years.[22][23] In May 2013 and again in July 2013, Interpol rejected requests by Russia's Interior Ministry[24] to put Browder on its search list and locate and arrest him, saying that Russia's case against him was "predominantly political".[25]

References[edit]

  1. ^ http://www.companydirectorcheck.com/william-felix-browder Companies related to Bill Browder
  2. ^ a b c d Levy, Clifford J. (July 24, 2008). "An Investment Gets Trapped in Kremlin’s Vise". New York Times. Retrieved 2008-07-24. "For Mr. Browder, 44, Russia was more than a place to do business. His grandfather Earl Browder was a committed Communist from Kansas who moved to the Soviet Union in 1927, staying for several years and marrying a Russian. He returned with her to the United States to lead the Communist Party for a time, even running for president." 
  3. ^ "Hermitage CEO Browder: Don't Invest in Russia Today". November 4, 2009. Retrieved 2009-12-15. 
  4. ^ "William Browder". Hermitage Capital Management. Archived from the original on 27 July 2008. Retrieved 2008-07-24. "William F. Browder is the Founder and CEO of Hermitage Capital Management, the premier investment advisory firm specializing in Russian equities. The firm’s clients include high net worth individuals and major financial institutions. Hermitage Capital Management currently has around $3.3 billion invested in Russia." 
  5. ^ "The Hermitage Fund: Media and Corporate Governance in Russia,” Harvard Business School Case 703-010, 2002 (26)
  6. ^ "Gazprom and Hermitage Capital: Shareholder Activism in Russia", Stanford Graduate School of Business Case IB-36, 2002
  7. ^ "Magnitsky case: Russia accuses Browder over Gazprom". BBC News Europe. Retrieved 23 March 2013. "In 1995-2006 Hermitage Capital Management was one of the biggest foreign investors in Russia. Mr Browder campaigned for the rights of minority shareholders, criticising the governance of Russia's partly state-owned corporations." 
  8. ^ "World's top-earning traders (2006)". Guardian News and Media Limited. Archived from the original on 13 July 2008. Retrieved 2008-07-24. 
  9. ^ "London boasts 25% of best paid traders". Daily Mail, The Mail on Sunday & Metro Media Group. Retrieved 2008-07-24. 
  10. ^ Henry Meyer & Jason Corcoran (26 March 2013). "HSBC Shuts Russia’s Hermitage as Browder Sued in London". Bloomberg. Retrieved 27 March 2013. "HSBC Holdings Plc (HSBA) is closing Hermitage Capital Management Ltd.’s flagship Russia fund just as its co-founder, William Browder, is being sued for libel in London and tried in absentia for tax evasion in Moscow. “It was too small to continue as a viable concern,” Browder, 48, said by phone yesterday from London, where he’s based. Browder said the closing is “completely” in the hands of HSBC, which is the trustee and manager of the fund." 
  11. ^ "An enemy of the people: The sad fate of a loyal Putinista". The Economist. March 25, 2006. Archived from the original on 2 August 2008. Retrieved 2008-07-24. "As the manager of a big Russian investment fund, Bill Browder has contributed to the circulation of the first kind of money--as well as making a packet for himself, and making his rich clients even richer. But he has also interfered with the supply of the second sort of money--and been ..." 
  12. ^ Matthews, Owen (October 17, 2009). "Where Vultures Prey". Newsweek. Archived from the original on 8 December 2009. Retrieved 2009-12-15. "Retaliation came quickly. Clearly, the conspirators hadn't reckoned on publicity and so decided to cover their backs. In January, Sergei Magnitsky, one of Firestone Duncan's top lawyers, was unexpectedly arrested as he arrived to give evidence to a prosecutor assigned to investigate the case." 
  13. ^ Browder, William (December 22, 2009). "They Killed My Lawyer". Foreign Policy. Archived from the original on 27 December 2009. Retrieved 2009-12-26. "Sergei Magnitsky was our attorney, and friend, who died under excruciating circumstances in a Moscow pre-trial detention center on Nov. 16, 2009." 
  14. ^ "Opalesque BACKSTAGE Video - Bill Browder: Sergey Magnitsky case reveals Russia's ugliest face". February 8, 2010. Archived from the original on 14 February 2010. Retrieved 2010-02-08. 
  15. ^ "Dead Russian whistleblower set for day in court". Associated Press. February 18, 2013. Retrieved 26 February 2013. 
  16. ^ Matthias Schepp and Anne Seith. "Blood and Money: A Hedge Fund Manager's Crusade against Putin". Spiegel Online. Retrieved 17 March 2013. "To save on taxes, Browder established companies in remote regions of Russia, such as Kalmykia. He employed disabled veterans from the Soviet War in Afghanistan because that also gave him a tax break. Yet he truly seems hurt when he's portrayed as a having been purely a profiteer. "It was exciting and crazy, like the Wild West," is his strange explanation for his Russian adventure." 
  17. ^ "Police Set to Charge Browder for Buying Gazprom Stock". The Moscow Time. Associated Press. Retrieved 17 March 2013. 
  18. ^ "Russia alleges $70m fraud against Browder" by Charles Clover. Financial times, 5 March 2013.
  19. ^ "Magnitsky case: Russia accuses Browder over Gazprom". BBC News Europe. 5 March 2013. Retrieved 23 March 2013. "He said he had bought Gazprom shares in order to invest in the Russian economy and influence the Gazprom management because "we noticed that there was huge fraud going on at the company". Mr Browder insists that the way he bought the shares - through Russian-registered subsidiaries entitled to tax advantages - was legal and used by other foreign investors at the time." 
  20. ^ Clover, Charles; Courtney Weaver (February 17, 2013). "Dead lawyer to go on trial in Russia". The Financial Times. Retrieved 26 February 2013. 
  21. ^ Taylor, Jerome (February 17, 2013). "Russia set for posthumous Magnitsky trial". The Independent. The Independent. Retrieved 4 March 2013. 
  22. ^ Russia finds Magnitsky posthumously guilty of fraud BBC, 11 July 2013.
  23. ^ Суд приговорил Браудера к девяти годам, а дело признанного виновным Магнитского прекратил NEWSru, 11 July 2013.
  24. ^ Россия объявила в международный розыск Уильяма Браудера
  25. ^ "Interpol snubs Moscow again in chase of fund manager Browder". Reuters. July 26, 2013. Retrieved 26 July 2013. 

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