Hermitage Capital Management
Hermitage Capital Management is an investment fund and asset management company specializing in Russian markets founded by Bill Browder and Edmond Safra. Hermitage Capital Management headquarters are in Guernsey, whilst it also maintains offices in the Cayman Islands and Moscow, Russia.
Its main investment fund, the Hermitage Fund created in 1996, has been extremely successful, earning 2,697% through December 2007, according to Opalesque.TV. It has been ranked the World’s Best Performing Emerging Markets Fund over the 1996-2001 five-year period by Nelsons.
Hermitage is an activist fund. One of its main tactics is to expose corporate corruption in the companies it is holding, in the hope of improving managerial behaviour and lessen the significant discount that corruption has on share prices. Most famously, Hermitage has helped to expose several high-profile cases of corruption in Russia's largest company Gazprom between 1998 and 2000. In October 2000, Hermitage reported that "investors are valuing this company as if 99 percent of its assets have been stolen. The real figure is around 10 percent so that's good news."
In April 2007 the firm launched Hermitage Global, an activist fund focused on global emerging markets.
Russian Government controversy
Although the fund's founder William Browder was a supporter of Russian president Vladimir Putin, in November of 2005 he was blacklisted by the Russian government as a "threat to national security" and denied entry to the country. The Economist has accused the Russian government that this blacklisting occurred because he interfered with the flow of money to "corrupt bureaucrats and their businessmen accomplices."
As the New York Times reported in 2008, over the next two years, several of his associates and lawyers, as well as their relatives, were 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. 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.
On 8 October Hermitage released a video on YouTube accusing Russian Police of fraud.
On November 16, 2009 Sergei Magnitsky, a partner of the legal company Firestone Duncan, who was a representative and legal consultant for William Browder in Moscow, having been accused in tax fraud and imprisoned for 11 months, died in prison. In 2013 it was announced that Magnitsky will go on trial posthumously.
Opalesque.TV released a video on February 8th 2010 in which Browder reveals details of Sergey Magnitsky's ordeal during his eleven months in detention.
- "Opalesque BACKSTAGE Video - Bill Browder: Sergey Magnitsky case reveals Russia's ugliest face". February 8, 2010. Retrieved 2010-02-08. "The Hermitage Fund has been extremely successful, gaining 2,697% through December 2007"
- "Gazprom and Hermitage Capital: Shareholder Activism in Russia", Stanford Graduate School of Business Case IB-36, 2002
- "An enemy of the people: The sad fate of a loyal Putinista". The Economist. March 25, 2006. 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 ..."
- 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."
- "Opalesque BACKSTAGE Video - Bill Browder: Sergey Magnitsky case reveals Russia's ugliest face". February 8, 2010. Retrieved 2010-02-08.