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Browder has been accused of using sophisticated tax evasion schemes in Russia. With the help of Magnitsky who was his tax consultant at the time, over a period of 1997-2005 he established companies in remote regions of Russia, such as [[Kalmyk Republic]], and employed handicapped people which allowed the companies not only to be considered as "Russian" but also give them tremendous tax breaks. According to a 2010 Russian journalist investigation, around 20 firm were set-up in the [[Kalmyk Republic]] where one of the employers - a veteran of the [[Afghan war]] - acknowledged of having been hired as a "financial analyst" of Hermitage Capital and provided clear documents under the signature of Browder. As a result, Hermitage Capital was paying a total 5,5 % of taxes in place of 38 % on its total revenue. <ref>http://tv.mk.ru/video/1013-skeletyi-uilyama-braudera.html</ref> <ref>http://www.compromat.ru/page_29912.htm</ref>
Browder has been accused of using sophisticated tax evasion schemes in Russia. With the help of Magnitsky who was his tax consultant at the time, over a period of 1997-2005 he established companies in remote regions of Russia, such as [[Kalmyk Republic]], and employed handicapped people which allowed the companies not only to be considered as "Russian" but also give them tremendous tax breaks. According to a 2010 Russian journalist investigation, around 20 firm were set-up in the [[Kalmyk Republic]] where one of the employers - a veteran of the [[Afghan war]] - acknowledged of having been hired as a "financial analyst" of Hermitage Capital and provided clear documents under the signature of Browder. As a result, Hermitage Capital was paying a total 5,5 % of taxes in place of 38 % on its total revenue. <ref>http://tv.mk.ru/video/1013-skeletyi-uilyama-braudera.html</ref> <ref>http://www.compromat.ru/page_29912.htm</ref>


With the help of such fictitious companies Browder is suspected of illegally getting hold during the early 2000s of 1 billion shares of Gazprom (7 %) at the price of $200 million and re-selling them. Foreign citizens were at the time not allowed to be direct owners of Gazprom, with the overall foreign ownership being capped at 2 %. Hence the cheaper domestic price of Gazprom shares compared to international market prices. <ref> http://www.bfm.ru/news/206733#.URtxiPJu68I </ref>
With the help of such fictitious companies Browder is accused of illegally obtaining 1 billion shares of Gazprom at the price of $200 million and re-selling them. Foreign citizens were at the time not allowed to be direct owners of Gazprom, with the overall foreign ownership being capped at 2 %. <ref> http://www.bfm.ru/news/206733#.URtxiPJu68I </ref>


The first tax evasion case against Browder was open in 2004 by the Russian tax authorities. However, this case, as well as 7 other later cases, were closed by the Ministry of the Interior where Browder may have bribed the officials, according to Russian investigators. In 2008 Browder's case moved from the Ministry of Interior to the [[Investigative Committee of Russia]] which proceeded with a more thorough investigation and turned out to be the beginning of the beginning of the Magnitsky case. <ref>http://tv.mk.ru/video/1013-skeletyi-uilyama-braudera.html</ref> <ref>http://www.compromat.ru/page_29912.htm</ref> End of 2012 the Russian Prosecutor General's Office forwarded a tax evasion criminal case charging with evading taxes in the amount of 522 million roubles (more than 17 million USD) - the cost calculated on the basis of one of the Kalmyk companies.<ref> http://rbth.ru/articles/2012/11/29/prosecutors_send_tax_evasion_criminal_case_against_browder_magnitsky_20516.html</ref>
The first tax evasion case against Browder was open in 2004 by the Russian tax authorities. However, this case, as well as 7 other later cases, were closed by the Ministry of the Interior where Browder may have bribed the officials, according to Russian investigators. In 2008 Browder's case moved from the Ministry of Interior to the [[Investigative Committee of Russia]] which proceeded with a more thorough investigation and turned out to be the beginning of the beginning of the Magnitsky case. <ref>http://tv.mk.ru/video/1013-skeletyi-uilyama-braudera.html</ref> <ref>http://www.compromat.ru/page_29912.htm</ref> End of 2012 the Russian Prosecutor General's Office forwarded a tax evasion criminal case charging with evading taxes in the amount of 522 million roubles (more than 17 million USD) - the cost calculated on the basis of one of the Kalmyk companies.<ref> http://rbth.ru/articles/2012/11/29/prosecutors_send_tax_evasion_criminal_case_against_browder_magnitsky_20516.html</ref>

Revision as of 12:13, 15 February 2013

See also William Browder (mathematician)
William Felix Browder
Browder at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 27, 2011
Born1964
NationalityBritish (formerly American)
EducationStanford, MBA; Chicago, BSc econ
EmployerHermitage Capital Management
TitleCEO
Parent(s)Felix Browder, father
RelativesEarl Browder, grandfather
William Browder, uncle
Andrew Browder, uncle

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

Hermitage Capital

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.[1] Browder exposed management corruption and corporate malfeasance in these partly state-owned companies.[2] He has been quoted as saying: "You had to become a shareholder activist if you didn’t want everything stolen from you".[3]

Bill Browder has amassed a significant fortune through his management of the Hermitage Fund. In 2006 he earned an estimated £125-150 million.[4] In 2007 he earned a further £125-£150 million.[5]

Criminal charges on tax evasion in Russia

Browder has been accused of using sophisticated tax evasion schemes in Russia. With the help of Magnitsky who was his tax consultant at the time, over a period of 1997-2005 he established companies in remote regions of Russia, such as Kalmyk Republic, and employed handicapped people which allowed the companies not only to be considered as "Russian" but also give them tremendous tax breaks. According to a 2010 Russian journalist investigation, around 20 firm were set-up in the Kalmyk Republic where one of the employers - a veteran of the Afghan war - acknowledged of having been hired as a "financial analyst" of Hermitage Capital and provided clear documents under the signature of Browder. As a result, Hermitage Capital was paying a total 5,5 % of taxes in place of 38 % on its total revenue. [6] [7]

With the help of such fictitious companies Browder is accused of illegally obtaining 1 billion shares of Gazprom at the price of $200 million and re-selling them. Foreign citizens were at the time not allowed to be direct owners of Gazprom, with the overall foreign ownership being capped at 2 %. [8]

The first tax evasion case against Browder was open in 2004 by the Russian tax authorities. However, this case, as well as 7 other later cases, were closed by the Ministry of the Interior where Browder may have bribed the officials, according to Russian investigators. In 2008 Browder's case moved from the Ministry of Interior to the Investigative Committee of Russia which proceeded with a more thorough investigation and turned out to be the beginning of the beginning of the Magnitsky case. [9] [10] End of 2012 the Russian Prosecutor General's Office forwarded a tax evasion criminal case charging with evading taxes in the amount of 522 million roubles (more than 17 million USD) - the cost calculated on the basis of one of the Kalmyk companies.[11]

Although Browder was a supporter of Russian president Vladimir Putin, 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 has accused the Russian government of blacklisting Browder because he interfered with the flow of money to "corrupt bureaucrats and their businessmen accomplices".[12]

As reported by the New York Times in 2008,[3] 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 stolen. In June 2007 dozens of police officers raided 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.

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.[13] Magnitsky died on November 16, 2009, after eleven months in pre-trial detention.[14]


Opalesque.TV released a video on February 8, 2010 where Browder reveals details of Sergey Magnitzky's ordeal during his eleven months in detention.[15]

End of 2012 the Russian Prosecutor General's Office has forwarded a tax evasion criminal case against Browder. Both Browder and Magnitsky have been charged with evading taxes in the amount of 522 million roubles (more than 17 million USD) [16].

Biography

Bill Browder is the grandson of Earl Browder, the former leader of the Communist Party USA,[3] 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[17] in 1989 where his classmates were Gary Kremen and Ryland Kelley. He later became a British citizen.[3][18]

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.

References

  1. ^ "The Hermitage Fund: Media and Corporate Governance in Russia,” Harvard Business School Case 703-010, 2002 (26)
  2. ^ "Gazprom and Hermitage Capital: Shareholder Activism in Russia", Stanford Graduate School of Business Case IB-36, 2002
  3. ^ 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. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  4. ^ "World's top-earning traders (2006)". Guardian News and Media Limited. Archived from the original on 13 July 2008. Retrieved 2008-07-24. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  5. ^ "London boasts 25% of best paid traders". Daily Mail, The Mail on Sunday & Metro Media Group. Retrieved 2008-07-24.
  6. ^ http://tv.mk.ru/video/1013-skeletyi-uilyama-braudera.html
  7. ^ http://www.compromat.ru/page_29912.htm
  8. ^ http://www.bfm.ru/news/206733#.URtxiPJu68I
  9. ^ http://tv.mk.ru/video/1013-skeletyi-uilyama-braudera.html
  10. ^ http://www.compromat.ru/page_29912.htm
  11. ^ http://rbth.ru/articles/2012/11/29/prosecutors_send_tax_evasion_criminal_case_against_browder_magnitsky_20516.html
  12. ^ "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 ... {{cite news}}: Cite has empty unknown parameter: |coauthors= (help); Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  13. ^ 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. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help); Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  14. ^ 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. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help); Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  15. ^ "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. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help); Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  16. ^ http://rbth.ru/articles/2012/11/29/prosecutors_send_tax_evasion_criminal_case_against_browder_magnitsky_20516.html
  17. ^ "Hermitage CEO Browder: Don't Invest in Russia Today". November 4, 2009. Retrieved 2009-12-15. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  18. ^ "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. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)

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